Equity Compensation
 6 Months Ended
Jun. 30, 2015
Equity Compensation  
Equity Compensation

7. Equity Compensation

 

Stock Options

 

In 2003, the Board of Directors adopted the 2003 Equity Incentive Plan (the “2003 Plan”), which provided for the granting of nonqualified and incentive stock options, stock appreciation rights, stock awards and restricted stock. Under the 2003 Plan, the Company was able to grant nonqualified and incentive stock options to directors, employees and non-employees providing services to the Company. On June 11, 2013, the Company’s Board of Directors adopted the 2013 Stock Option and Incentive Plan (the “2013 Plan”), which was subsequently approved by the Company’s stockholders. The 2013 Plan became effective as of the closing of the Company’s initial public offering. To the extent that any awards outstanding under the 2003 Plan are forfeited or lapse unexercised subsequent to August 1, 2013, the shares of common stock subject to such awards will become available for issuance under the 2013 Plan. The 2013 Plan provides for annual increases in the number of reserved shares of up to 5% of the outstanding number of shares of the Company’s Common Stock as of the preceding December 31. On January 1, 2015, the number of reserved shares was increased by 1,215,269 shares in accordance with the provisions of the 2013 Plan.

 

A summary of stock option activity for the six months ended June 30, 2015 is presented below:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

   

 

   

 

 

   

 

 

   

Weighted

 

 

 

 

 

Weighted

 

 

 

 

Average

 

 

 

Shares Subject

 

Average

 

Weighted

 

Remaining

 

 

 

to Options

 

Grant Date

 

Average

 

Contractual

 

 

   

Outstanding

   

Fair Value

   

Exercise Price

   

Life (Years)

 

Balance at December 31, 2014

 
4,851,221

 

 

 

 

$
10.57

 

 

 

Granted

 
166,916

 

$
5.88

 

 
11.64

 

 

 

Exercised

 
(151,776)

 

 

 

 

 
4.89

 

 

 

Expired

 
(5,364)

 

 

 

 

 
11.82

 

 

 

Forfeited

 
(38,736)

 

 

 

 

 
13.92

 

 

 

Balance at June 30, 2015

 
4,822,261

 

 

 

 

 
10.76

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Exercisable options at June 30, 2015

 
2,856,014

 

 

 

 

 
7.84

 
5.6

 

Vested and expected to vest at  June 30, 2015

 
4,666,097

 

 

 

 

 
10.59

 
6.7

 

 

The following table summarizes information about stock options outstanding and exercisable at June 30, 2015:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Options Outstanding

 

Options Exercisable

 

 

 

 

 

   

 

 

   

 

   

Weighted-

   

 

   

Weighted-

 

 

 

 

 

 

Weighted

 

 

 

Average

 

 

 

Average

 

 

 

 

 

 

Average

 

Number of

 

Remaining

 

Number of

 

Remaining

 

 

 

 

 

 

Exercise

 

Underlying

 

Contractual

 

Underlying

 

Contractual

 

Range of Exercise Prices

   

Price

   

Shares

   

Life (in years)

   

Shares

   

Life (in years)

 

$
0.78

-
1.72

 

$
1.17

 
13,880

 
0.3

 
13,880

 
0.3

 

$
1.97

-
3.38

 

 
2.57

 
238,101

 
1.4

 
238,101

 
1.4

 

$
3.58

-
6.14

 

 
5.66

 
1,478,548

 
5.2

 
1,424,564

 
5.2

 

$
6.34

-
9.94

 

 
8.32

 
991,857

 
6.8

 
723,881

 
6.6

 

$
11.28

-
16.97

 

 
13.72

 
1,301,220

 
8.6

 
188,834

 
6.0

 

$
17.66

-
22.92

 

 
21.00

 
798,655

 
8.6

 
266,754

 
8.5

 

 

 

 

 

 

 

 

 
4,822,261

 

 

 
2,856,014

 

 

 

 

For the stock option awards vested during the three and six months ended June 30, 2015, the total fair value was $1.3 million and $4.3 million, respectively. The following table summarizes the aggregate intrinsic-value of options exercised, exercisable and vested and expected to vest (in thousands):

 

 

 

 

 

 

 

 

 

 

 

 

For the Six Months Ended

 

 

 

and as of June 30,

 

 

    

2014

    

2015

 

Options Exercised

 

$
16,907

 

$
1,039

 

Options Exercisable

 

 
37,576

 

 
6,991

 

Options Vested and Expected to Vest

 

 
49,142

 

 
7,266

 

 

The fair value of each option award is estimated on the date of grant using the Black-Scholes option-pricing model with the following assumptions:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

Six Months Ended

 

 

 

June 30,

 

June 30,

 

 

    

2014

    

 

2015

    

 

2014

    

 

2015

 

 

Expected volatility

 

 

 

59

%  

 

 

 

53

%  

 

56

-

60

%  

 

53

-

55

%  

 

Expected dividends

 

 

 

 —

%  

 

 

 

 —

%  

 

 

 

 —

%  

 

 

 

 —

%  

 

Expected terms (in years)

 

6.0

-

6.1

 

 

5.3

-

6.1

 

 

3.8

-

6.1

 

 

5.3

-

6.1

 

 

Risk-free rate

 

1.7

-

1.9

%  

 

1.5

-

1.8

%  

 

1.1

-

2.0

%  

 

1.3

-

1.8

%  

 

 

Total stock-based compensation expense has been classified as follows in the accompanying statements of operations (in thousands):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

Six Months Ended

 

 

 

June 30,

 

June 30,

 

 

    

2014

    

2015

    

2014

    

2015

 

Cost of revenue

 

$
28

 

$
39

 

$
48

 

$
86

 

Research and development

 

 
642

 

 
667

 

 
1,120

 

 
1,439

 

Sales and marketing

 

 
292

 

 
387

 

 
514

 

 
841

 

General and administrative

 

 
446

 

 
586

 

 
973

 

 
1,162

 

Total stock-based compensation expense

 

$
1,408

 

$
1,679

 

$
2,655

 

$
3,528

 

 

At June 30, 2015, there was $15.7 million of total unrecognized compensation cost related to non-vested stock option awards that will be recognized over a weighted-average period of 2.7 years.