| Stock Option Plan | 7. Stock Option Plan
Stock Option Plans
The Company adopted its stock option plan in 2000 (the “2000
Plan”). Under the 2000 Plan, as amended, the Company was able
to grant options to purchase up to 1,181,689 shares of common stock
to certain employees, directors and consultants. Under the terms of
the 2000 Plan, the Company may grant incentive stock options
(“ISO”), non-statutory stock options
(“NSO”), common stock purchase agreements
(“CSPA”) and stock purchase rights (“SPR”).
Such awards are exercisable at prices generally equal to the fair
value of the Company’s common stock at the date of grant, as
determined by the board of directors. Awards granted under the 2000
Plan generally vest over four years with a six-month cliff period
and may be exercised for a period of up to ten years. Vested
options generally expire 30 days after termination of employment.
In December 2010, the board of directors approved a decrease in the
number of shares of common stock reserved for issuance under the
2000 Plan to 644,366 shares. No shares were available for future
grant under the 2000 Plan due to the adoption of the 2010 stock
incentive plan described below.
The Company adopted the 2010 stock incentive plan (the “2010
Plan”) in June 2010. The 2010 Plan provides that only
employees are eligible for the grant of ISOs and that employees,
consultants and outside directors are eligible for the grant of
NSOs. The 2010 Plan also allows for the grant of SPRs and
restricted stock units (“RSU”). Awards granted under
the 2010 Plan also generally vest over four years with a six-month
cliff period and may be exercised for a period of up to ten years.
Vested options generally expire three months after termination of
employment. No shares were available for future grant under the
2010 Plan due to the adoption of the 2012 stock incentive plan as
more fully described below.
The Company adopted the 2012 stock incentive plan (the “2012
Plan”) in June 2011, as amended in April 2012. The 2012 Plan
provides that only employees are eligible for the grant of ISOs and
that employees, consultants and outside directors are eligible for
the grant of NSOs. The 2012 Plan also allows for the grant of SPRs,
RSUs and other types of equity awards. Awards granted under the
2012 Plan also generally vest over four years with a twelve-month
cliff period and may be exercised for a period of up to ten years.
In general, the vesting of awards granted under the 2012 Plan
accelerates as to 25% of the then remaining unvested portion of the
awards upon a change in control of the Company. Vested options
generally expire three months after termination of employment.
Shares of common stock reserved for issuance under the 2012 Plan
consist of 2,298,364 and 1,409,021 shares as of July 31,
2015 and January 31, 2015, respectively. In addition, up to
1,696,075 shares subject to outstanding awards under the 2000 Plan
or 2010 Plan that are subsequently forfeited or terminated for any
reason before being exercised will be made available for issuance
under the 2012 Plan. The number of shares that have been authorized
for issuance under the 2012 Plan will be automatically increased on
the first day of each fiscal year beginning in fiscal 2014 and
ending in fiscal 2023, in an amount equal to the lesser of
(i) 2,000,000 shares, (ii) 4% of the outstanding shares
of the Company’s common stock on the last day of the
immediately preceding fiscal year, or (iii) another amount
determined by the Company’s board of directors.
At the beginning of fiscal 2016, the board of directors ratified an
automatic annual increase in the number of shares authorized for
issuance under the 2012 Plan based on 4% of the outstanding shares
of the Company’s common stock on the last day of fiscal year
2015, or 1,190,311 shares. These shares were registered under the
Securities Act of 1933 on Securities and Exchange Commission Form
S-8 filed on April 23, 2015.
The following table summarizes the stock-based award activity for
the 2000 Plan, 2010 Plan and the 2012 Plan during the six months
ended July 31, 2015:
Shares Stock Weighted- Average Aggregate (in thousands)
January 31, 2015 1,409,021 3,586,791 $ 1.89 7.2 $ 1,565
Additional options authorized 1,190,311 0 $
—
— $
—
Options granted (434,457 ) 434,457 $ 1.62
— $
—
Options expired and forfeited 70,056 (70,056 ) $ 3.27
— $
—
RSUs expired 63,433 0 $
—
— $
—
Exercised 0 (16,849 ) $ 1.02
— $
—
July 31, 2015 2,298,364 3,934,343 $ 1.84 7.1 $ 2,260
Vested and expected to vest - July 31, 2015 3,775,313 $ 1.83 7.0 $ 2,249
Vested-July 31, 2015 2,277,612 $ 1.59 5.7 $ 2,166
Stock Purchase Rights and Common Stock Purchase
Agreements
The Company grants SPRs to its French employees and in limited past
instances, CSPAs to service providers in the U.S. The SPRs and
CSPAs provide the holder with a note equal to the aggregate
exercise price of the related options, therefore, allowing the
holder to legally exercise the related options at the time of
issuance in consideration of the notes. Generally, the SPRs and
CSPAs are subject to a vesting period of four years with the
Company retaining the right to repurchase unvested shares at the
aggregate exercise price of the underlying options. In the event
that a holder’s status as an employee ceases for any reason,
the notes and the related options are cancelled. As of
July 31, 2015, 388,474 shares were subject to repurchase under
the provisions of the SPRs and 97,464 shares were subject to
repurchase under the provisions of the CSPAs.
The notes receivable issued to employees in conjunction with the
SPRs and CSPAs are secured by the underlying shares and carry
interest rates ranging from 0.65% to 5.9%. While the note terms
indicate that they are full recourse, the Company has not pursued
recourse in instances when a note receivable balance exceeds the
fair value of the shares at the date of repurchase, and
accordingly, the exercises of the SPRs and CSPAs have been
considered non-substantive. Notes receivable relating to the SPRs
and CSPAs are not recorded on the consolidated balance sheet due to
the non-substantive exercise consideration. Accordingly, the SPRs
and CSPAs have been accounted for as stock options and are included
within the outstanding stock options as of each year end.
Restricted Stock Units
The Company grants RSUs to employees, executives and directors of
the Company. As of July 31, 2015 the Company had 276,975 RSUs
outstanding.
Of the total RSUs outstanding, 152,715 are subject to service,
market and performance-based vesting terms that include the
requirement that the Company’s stock price exceed specified
milestones relative to the Company’s stock price following
the initial public offering and, in some cases, are subject to
acceleration under certain circumstances, including a change in
control. The Company uses a modified binary option pricing model
(European call option) to establish the expected value of these
RSUs.
During the three and six months ended July 31, 2015, the
Company recorded $6,000 and $14,000 of stock-based compensation
expense related to RSUs with service, market and performance-based
vesting, respectively. During the three and six months ended
July 31, 2015, the Company recorded $113,000 and $152,000 of
stock-based compensation related to RSUs with only service-based
vesting, respectively.
A summary of the Company’s RSU activity for the three months
ended July 31, 2015 is presented below:
RSUs Weighted
January 31, 2015 342,408 $ 5.97
Released (2,000 ) 1.58
Forfeited (63,433 ) 5.59
July 31, 2015 276,975 $ 6.74
Stock-based Compensation
Total stock-based compensation expense during the three and six
months ended July 31, 2015 and 2014 are recognized in the
consolidated statements of operations as follows (in
thousands):
Three Months Ended July 31,
Six Months Ended July 31,
2015 2014 2015 2014
Cost of revenue $ 11 $ 7 $ 21 $ 14
Research and development 14 35 24 70
Sales and marketing 52 78 101 160
General and administrative 151 504 361 993
Total stock-based compensation $ 228 $ 624 $ 507 $ 1,237
The weighted average assumptions used to estimate the fair value of
the Company’s employee stock options at the grant dates
during the three and six months ended July 31, 2015 and 2014
were as follows:
Three Months Ended July 31,
Six Months Ended July 31,
2015 2014 2015 2014
Expected term (in years) 6.25 6.25 6.25 6.25
Volatility 77 % 70 % 75 % 70 %
Risk-free interest rate 1.91 % 1.93 % 1.83 % 2.00 %
Expected dividend 0 % 0 % 0 % 0 %
As of July 31, 2015, total compensation costs not yet
recognized for unvested stock option grants and unvested stock
awards were $1.7 million and $2,000 respectively, which are
expected to be recognized over the following 2.9 years and 1.1
years based on the weighted average vesting term, respectively. |
