XOMA Corporation Quarterly report pursuant to Section 13 or 15(d)

Quarterly report pursuant to Section 13 or 15(d)

Stock-based Compensation

Stock-based Compensation

3 Months Ended

Mar. 31, 2016

Disclosure Of Compensation Related Costs Sharebased Payments [Abstract]

11. Stock-based Compensation

The Company grants qualified and non-qualified stock options, RSUs, common stock and other stock-based awards under various plans to directors, officers, employees and other individuals. Stock options are granted at exercise prices of not less than the fair market value of the Company’s common stock on the date of grant. Additionally, the Company has an Employee Stock Purchase Plan (“ESPP”) that allows employees to purchase Company shares at a purchase price equal to 85% of the lower of the fair market value of the Company’s common stock on the first trading day of the offering period or on the last day of the offering period.

Stock Options

The stock options generally vest monthly over four years for employees and one year for directors. Stock options held by employees who qualify for retirement age (defined as employees that are a minimum of 55 years of age and the sum of their age plus years of full-time employment with the Company exceeds 70 years) vest on the earlier of scheduled vest date or the date of retirement.

The fair value of the stock options granted during the three months ended March 31, 2016 and 2015, was estimated based on the following weighted average assumptions:

	Three Months Ended March 31,
	2016			2015
Dividend yield		0	%		0	%
Expected volatility		106	%		82	%
Risk-free interest rate		1.27	%		1.34	%
Expected term	5.6 years			5.6 years

Stock option activity for the three months ended March 31, 2016, was as follows:

	Options			Weighted Average Exercise Price Per Share		Weighted Average Remaining Contractual Life (in years)		Aggregate Intrinsic Value (in thousands)
Outstanding at January 1, 2016		7,690,297		$	6.33
Granted		65,900			1.04
Forfeited, expired or cancelled		(330,940	)		8.71
Outstanding at March 31, 2016		7,425,257		$	6.18		6.43	$	—
Vested and expected to vest at March 31, 2016		7,255,365		$	6.21	6.37		$	—
Exercisable at March 31, 2016		5,739,469		$	6.58		5.84	$	—

Restricted Stock Units

RSUs generally vest over three years for employees and one year for directors. In the first quarter of 2016, the Company granted 2.3 million RSUs to employees that will vest one year from the date of grant. RSUs held by employees who qualify for retirement age (defined as employees that are a minimum of 55 years of age and the sum of their age plus years of full-time employment with the Company exceeds 70 years) vest on the earlier of scheduled vest date or the date of retirement.

The valuation of RSUs is determined at the date of grant using the closing stock price.

Unvested RSU activity for the three months ended March 31, 2016, is summarized below:

				Weighted-
	Number of			Average Grant-
	Shares			Date Fair Value
Unvested balance at January 1, 2016		2,125,761		$	4.07
Granted		2,290,344			0.76
Vested		(1,052,929	)		3.24
Forfeited		(117,627	)		3.52
Unvested balance at March 31, 2016		3,245,549		$	2.03

Stock-based Compensation Expense

The following table shows total stock-based compensation expense for stock options, RSUs and ESPP in the condensed consolidated statements of comprehensive loss (in thousands):

	Three Months Ended March 31,
	2016		2015
Research and development	$	1,137	$	2,196
Selling, general and administrative		1,169		1,469
Total stock-based compensation expense	$	2,306	$	3,665