Equity Incentive Plans | Equity Incentive Plans Equity Incentive Plans We maintain two equity incentive plans: the 2009 Equity Incentive Plan (our 2009 Plan) and the 2015 Equity Incentive Plan (our 2015 Plan). In August 2015, our board of directors adopted, and in September 2015 our stockholders approved, the 2015 Plan, which became effective in connection with our IPO and serves as the successor to our 2009 Plan. Our 2015 Plan provides for grants of incentive stock options, non-statutory stock options, stock appreciation rights, restricted stock awards, restricted stock unit awards, performance stock awards, performance cash awards, and other forms of stock awards to our employees, directors and consultants. We ceased grants of new awards under our 2009 Plan after the effective date of our 2015 Plan, and no new grants will be made from our 2009 Plan. Outstanding awards granted under our 2009 Plan will remain subject to the terms of our 2009 Plan and applicable award agreements, until such outstanding awards that are stock options are exercised, terminated or expired by their terms. We initially reserved 27,000,000 shares of our Class A common stock for issuance under our 2015 Plan. The number of shares reserved for issuance under our 2015 Plan increases automatically on the first day of February of each of 2016 through 2025, in an amount equal to 5% of the total number of shares of our capital stock outstanding as of the immediately preceding January 31. The exercise price of stock options will generally not be less than 100% of the fair market value of our common stock on the date of grant, as determined by our board of directors. Our equity awards generally vest over a two to four year period and expire no later than ten years from the date of grant. 2015 Employee Stock Purchase Plan In August 2015, our board of directors adopted and our stockholders approved, the 2015 Employee Stock Purchase Plan (2015 ESPP), which became effective in connection with our IPO. A total of 3,500,000 shares of Class A common stock was initially reserved for issuance under the 2015 ESPP. The number of shares reserved for issuance under our 2015 ESPP increases automatically on the first day of February of each of 2016 through 2025, in an amount equal to the lesser of (i) 1% of the total number of shares of our capital stock outstanding as of the immediately preceding January 31, and (ii) 3,500,000 shares of Class A common stock. The 2015 ESPP allows eligible employees to purchase shares of our Class A common stock at a discount through payroll deductions (or other payroll contributions) of up to 30% of their eligible compensation, subject to a cap of 3,000 shares on any purchase date or $25,000 in any calendar year (as determined under applicable tax rules). Except for the initial offering period, the 2015 ESPP provides for 24 month offering periods beginning March 16th and September 16th of each year, and each offering period will consist of four six -month purchase periods, subject to a reset provision. If the closing stock price on the offering date of a new offering falls below the closing stock price on the offering date of an ongoing offering, the ongoing offering would terminate immediately following the purchase of ESPP shares on the purchase date immediately preceding the new offering and participants in the terminated ongoing offering would automatically be enrolled in the new offering (ESPP reset). On each purchase date, eligible employees will purchase our Class A common stock at a price per share equal to 85% of the lesser of the fair market value of our Class A common stock (1) on the first trading day of the applicable offering period or (2) the purchase date. The initial offering period began on October 7, 2015 and ended on March 15, 2016 as our closing stock price on the new offering date of March 16, 2016 was lower than the closing stock price on October 7, 2015, which triggered an ESPP reset. The ESPP reset resulted in a modification charge of approximately $10.6 million which is being recognized over the new 24 -month offering period ending March 15, 2018. We recognized stock-based compensation related to our 2015 ESPP of $907,000 and $4.8 million during the three months ended October 31, 2015 and 2016 and $907,000 and $13.4 million during the nine months ended October 31, 2015 and 2016 . As of October 31, 2016 , there was $27.2 million of unrecognized stock-based compensation expense related to our 2015 ESPP that is expected to be recognized over the term of the related offering periods. Stock Options A summary of stock option activity under our equity incentive plans and related information is as follows: Options Outstanding Number of Shares Weighted- Average Exercise Price Weighted- Average Remaining Contractual Life (In Years) Aggregate Intrinsic Value (in thousands) Balance as of January 31, 2016 68,879,087 $ 6.43 7.9 $ 505,131 Options granted 1,999,000 12.69 Options exercised (6,111,682 ) 1.75 Options forfeited/cancelled (2,196,344 ) 11.67 Balance as of October 31, 2016 62,570,061 $ 6.90 7.3 $ 400,802 Vested and exercisable as of October 31, 2016 27,652,418 $ 3.59 6.4 $ 250,249 The aggregate intrinsic value of options vested and exercisable as of October 31, 2016 is calculated based on the difference between the exercise price and the closing price of $12.34 of our Class A common stock on October 31, 2016 . As of October 31, 2016 , total unrecognized employee compensation cost related to outstanding options was $153.3 million , which is expected to be recognized over a weighted-average period of approximately 3.1 years . During the three months ended October 31, 2015 and nine months ended October 31, 2015 and 2016 , we granted options to purchase 50,000 , 133,000 and 780,000 shares of common stock that vest upon satisfaction of a performance condition. No performance options were granted during the three months ended October 31, 2016 . For those options that management determined it is probable that the performance condition will be satisfied, we recognized stock-based compensation expense of $797,000 and $193,000 for the three months ended October 31, 2015 and 2016 and $1.8 million and $2.2 million for the nine months ended October 31, 2015 and 2016 . In November 2016, we modified certain employee stock option awards to accelerate the vesting, contingent, in part, on certain conditions. This modification is expected to result in stock-based compensation expense of $5.9 million to be recognized during the three months ended January 31, 2017. Restricted Stock Units A summary of the restricted stock unit activity under our 2015 Plan and related information is as follows: Number of Restricted Stock Units Outstanding Weighted- Average Grant Date Fair Value Unvested Balance as of January 31, 2016 53,000 $ 16.98 Granted 8,906,750 13.36 Vested (622,500 ) 14.13 Forfeited (309,878 ) 13.69 Unvested Balance as of October 31, 2016 8,027,372 $ 13.32 As of October 31, 2016 , total unrecognized employee compensation cost related to outstanding restricted stock units was $98.1 million , which is expected to be recognized over a weighted-average period of approximately 2.8 years . Stock-Based Compensation Expense The following table summarizes the components of stock-based compensation expense recognized in the condensed consolidated statements of operations (in thousands): Three Months Ended Nine Months Ended 2015 2016 2015 2016 Cost of revenue—product $ 43 $ 138 $ 139 $ 425 Cost of revenue—support 657 1,178 1,511 3,982 Research and development 8,195 15,241 18,624 40,875 Sales and marketing 4,559 8,468 10,539 24,719 General and administrative 2,085 3,210 5,385 9,128 Total stock-based compensation expense $ 15,539 $ 28,235 $ 36,198 $ 79,129 |