Stock Option and Other Benefit Plans | Note 11 — Stock Option and Other Benefit Plans 2007 Equity Incentive Plan In April 2018, the Company’s Board of Directors approved, and in June 2018, the Company’s stockholders approved, the fourth Amended and Restated 2007 Equity Incentive Plan (the “Fourth Amended 2007 Plan”). The Fourth Amended 2007 Plan included an increase of 10,000 shares in the aggregate number of shares of common stock authorized for issuance under the plan. It also removed the limitation on the number of shares that can be issued in any calendar year to a participant. In April 2019, the Company’s Board of Directors approved, and in June 2019, the Company’s stockholders approved, the fifth Amended and Restated 2007 Equity Incentive Plan (the “Fifth Amended 2007 Plan”). The Fifth Amended 2007 Plan includes an increase of 4,600 shares in the aggregate number of shares of common stock authorized for issuance under the plan. Performance-based Equity Awards The Company awards performance-based stock options (“PSOs”) and/or performance-based restricted stock units (“PSUs”) to its executives and certain employees in the Company. These performance-based awards are subject to the achievement of specified performance goals. They become eligible to vest only if the applicable performance goals are achieved and will vest only if the grantee remains employed with the Company through each applicable vesting date. The number of shares that may vest depend on the extent to which the Company achieves the specified performance goals. The fair value of these awards is estimated on the date of grant. The PSOs have a contractual term of 10 years. If the performance goals are not met as of the end of the performance period, no compensation expense is recognized and any previously recognized expense is reversed. The expected cost is based on the awards that are probable to vest and is recognized over the service period. The awards under these programs were granted under the 2007 Equity Incentive Plan. 2007 Employee Stock Purchase Plan In April 2017, the Company’s Board of Directors approved, and in June 2017, the Company’s stockholders approved, the Amended and Restated 2007 Employee Stock Purchase Plan (the “Amended 2007 Purchase Plan”). The Amended 2007 Purchase Plan included an increase of 4,000 shares in the aggregate number of shares of common stock authorized for issuance under the plan and removal of the expiration date of the plan. 2018 Equity Inducement Plan In April 2018, the Compensation Committee of the Company’s Board of Directors adopted the 2018 Equity Inducement Plan (the “2018 Plan”). The 2018 Plan replaced the Company’s 2008 Equity Inducement Plan that expired by its terms in March 2018, and is intended to augment the shares available for issuance under the Fourth Amended 2007 Plan. The Company did not seek stockholder approval for the 2018 Plan. As such, awards under the Inducement Plan will be granted in accordance with Nasdaq Listing Rule 5635(c)(4) and only to persons not previously an employee or director of the Company, or following a bona fide period of non-employment, as an inducement material to such individuals entering into employment with the Company. The Company initially reserved 400 shares of common stock for issuance under the 2018 Plan. RSU Activity A summary of the Company’s RSU activity for the six months ended June 30, 2019 is as follows: Weighted Weighted Number of Average Average Remaining Aggregate Units Grant Date Contractual Intrinsic Outstanding Fair Value Term (Years) Value Awarded and unvested, December 31, 2018 3,021 $ 3.01 Granted 878 $ 8.82 Vested (1,013) $ 3.53 Forfeited (132) $ 2.77 Awarded and unvested, June 30, 2019 2,754 $ 4.69 1.16 $ 19,745 PSU Activity A summary of the Company’s PSU activity for the six months ended June 30, 2019 is as follows: Weighted Weighted Number of Average Average Remaining Aggregate Units Grant Date Contractual Intrinsic Outstanding Fair Value Term (Years) Value Awarded and unvested, December 31, 2018 3,530 $ 5.45 Granted 327 $ 9.16 Vested (538) $ 4.27 Forfeited (179) $ 6.03 Awarded and unvested, June 30, 2019 3,140 $ 6.01 1.32 $ 22,544 PSUs expected to vest at June 30, 2019 414 $ 4.45 0.45 $ 2,969 PSO Activity A summary of the Company’s PSO activity for the six months ended June 30, 2019 is as follows: Weighted Weighted Number of Average Average Remaining Aggregate Share Exercise Contractual Intrinsic Outstanding Price Term (Years) Value Balance as of December 31, 2018 6,756 $ 4.51 Exercised (173) $ 3.59 Balance as of June 30, 2019 6,583 $ 4.54 8.65 $ 17,393 PSOs expected to vest at June 30, 2019 364 $ 3.60 8.35 $ 1,312 PSO exercisable at June 30, 2019 3,339 $ 3.60 8.30 $ 11,961 Stock Option Activity The following table summarizes the Company’s stock option activity for the six months ended June 30, 2019: Options Outstanding Weighted Weighted Number Average Average Remaining Aggregate of Exercise Contractual Intrinsic Shares Price Term (Years) Value Balances at December 31, 2018 18,491 $ 3.39 Options granted 538 8.74 Options canceled (592) 5.42 Options exercised (652) 2.89 Balances at June 30, 2019 17,785 $ 3.50 7.53 $ 65,871 Options exercisable at June 30, 2019 8,607 $ 3.02 6.81 $ 35,780 The aggregate intrinsic value in the preceding table is calculated as the difference between the exercise price of the underlying awards and the quoted closing price of the Company’s common stock on The Nasdaq Global Select Market of $7.18 per share as of June 28, 2019 Stock-Based Compensation The cost of RSUs and PSUs are determined using the fair value of the Company’s common stock based on the quoted closing price of the Company’s common stock on the date of grant. RSUs typically vest and are settled over approximately a four-year period with 25% of the shares vesting on or around the one-year anniversary of the grant date and the remaining shares vesting quarterly thereafter. Compensation cost is amortized on a straight-line basis over the requisite service period. Vesting of PSOs and PSUs requires continuous services by the recipient of those awards and achieving performance-based goals which are solely related to the Company’s operations. Under Accounting Standard Codification 718, Compensation-Stock Compensation Performance Stock Options Three Months Ended Six Months Ended June 30, June 30, 2019 2018 2019 2018 Dividend yield — % — % — % — % Risk-free interest rate — % — % — % 2.36 % Expected volatility — % — % — % 62.6 % Expected term (years) — — — 5.97 Stock Options Three Months Ended Six Months Ended June 30, June 30, 2019 2018 2019 2018 Dividend yield — % — % — % — % Risk-free interest rate 2.07 % 2.71 % 2.15 % 2.49 % Expected volatility 56.1 % 57.9 % 56.1 % 58.4 % Expected term (years) 4.00 4.00 4.00 4.00 The expected term of stock options gave consideration to early exercises, post-vesting cancellations and the options’ contractual term ranging from 6 to 10 years. The Company does not have sufficient historical exercise data to provide a reasonable basis upon which to estimate the expected term for the PSOs as the Company had not granted such awards prior to October 2017. As a result, the Company used the simplified method to calculate the expected term estimate based on the vesting and contractual terms of the PSOs. Under the simplified method, the expected term is equal to the average of the stock-based awards vesting period and their contractual term. The risk-free interest rate for the expected term of the option is based on the U.S. Treasury Constant Maturity Rate as of the date of grant. The Company based its expected volatility on its own historical volatility. The weighted-average fair value of stock options granted during the six months ended June 30, 2019 and 2018 was $3.94 and $1.92 per share, respectively. The following table summarizes the consolidated stock-based compensation expense by line items in the unaudited condensed consolidated statement of operations: Three Months Ended Six Months Ended June 30, June 30, 2019 2018 2019 2018 Research and development $ 1,128 $ 2,728 $ 5,074 $ 5,927 Sales and marketing 55 609 881 1,262 General and administrative 852 2,006 2,887 4,462 Total stock-based compensation expense $ 2,035 $ 5,343 $ 8,842 $ 11,651 Stock-based compensation expense for the three and six months ended June 30, 2019 included a reversal of previously accrued expense of $2,526 due to a decrease in the vesting probability of certain performance-based equity awards. The following table summarizes total compensation expense related to unvested awards not yet recognized as of June 30, 2019: Unrecognized Expense for Awards Stock options $ 15,217 RSUs 11,667 PSUs (1) 632 PSOs (1) 443 Total unrecognized compensation expense $ 27,959 (1) The unrecognized compensation for PSOs and PSUs vesting in FY2021 and FY2022 is excluded in the table above as the Company does not have a reasonable basis upon which to estimate the vesting probability of such awards in those future periods. The unrecognized compensation expense related to stock options and RSUs will be recognized over a weighted average period of 2.25 years and 2.08 years, respectively. The unrecognized compensation expense related to PSOs and PSUs will be recognized over a weighted average period of 0.63 and 0.45 years, respectively. |