Equity Incentive Plans | Equity Incentive Plans Equity Incentive Plans We maintain two equity incentive plans: the 2009 Equity Incentive Plan (the 2009 Plan) and the 2015 Equity Incentive Plan (the 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 initial public offering (IPO) and serves as the successor to the 2009 Plan. The 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 the 2009 Plan after the effective date of the 2015 Plan, and no new grants will be made from the 2009 Plan. Outstanding awards granted under the 2009 Plan will remain subject to the terms of the 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 year 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 year 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). The 2015 ESPP provides for 24 month offering periods beginning March 16th and September 16th of each year, and each offering period consists 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. Our closing stock price on the new offering date of March 16, 2017 was lower than the closing stock prices for both the offerings that started on March 16, 2016 and September 16, 2016, which triggered an ESPP reset for those offerings. The ESPP reset resulted in a modification charge of approximately $9.0 million , which is being recognized over the new 24 -month offering period ending on March 15, 2019. In addition, the original remaining unamortized stock-based compensation expense for each of the offerings is being recognized over the same 24 -month offering period ending on March 15, 2019. We recognized stock-based compensation expense related to our 2015 ESPP of $4.8 million and $4.7 million during the three months ended October 31, 2016 and 2017 , and $13.4 million and $12.6 million during the nine months ended October 31, 2016 and 2017 . As of October 31, 2017 , there was $32.2 million of unrecognized stock-based compensation expense related to our 2015 ESPP which is expected to be recognized over a weighted-average period of approximately 1.4 years. 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, 2017 56,840,189 $ 7.15 7.0 $ 315,502 Options granted 1,000,000 14.92 Options exercised (5,502,179 ) 2.86 Options forfeited/cancelled (2,362,891 ) 14.41 Balance as of October 31, 2017 49,975,119 $ 7.43 6.4 $ 457,252 Vested and exercisable as of October 31, 2017 30,500,061 $ 4.84 5.9 $ 355,871 The aggregate intrinsic value of options vested and exercisable as of October 31, 2017 is calculated based on the difference between the exercise price and the closing price of $16.43 of our Class A common stock on October 31, 2017 . The weighted average fair value of the options granted during the nine months ended October 31, 2017 was $5.58 . As of October 31, 2017 , total unrecognized employee compensation cost related to outstanding options was $89.3 million , which is expected to be recognized over a weighted-average period of approximately 2.7 years. 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 Aggregate Unvested Balance as of January 31, 2017 8,783,024 $ 13.06 $ 99,863 Granted 14,315,164 11.65 Vested (3,627,367 ) 12.33 Forfeited (1,292,330 ) 11.75 Unvested Balance as of October 31, 2017 18,178,491 $ 12.21 $ 298,674 As of October 31, 2017 , total unrecognized employee compensation cost related to unvested restricted stock units was $191.6 million , which is expected to be recognized over a weighted-average period of approximately 2.6 years. In March 2017, we granted 750,000 performance stock units (net of 77,000 canceled units during the nine months ended October 31, 2017 ) with both performance and service vesting conditions payable in common shares from 0% to 150% of the target number granted, contingent upon the degree to which the performance condition is met. In August 2017, we granted 464,744 performance stock units with both performance and service vesting conditions payable in common shares from 0% to 120% of the target number granted, contingent upon the degree to which the performance condition is met. For the performance stock units granted in March 2017, management determined it is probable that the performance condition will be satisfied and accordingly, we began recognizing stock-based compensation expense during the three months ended April 30, 2017. Stock-based compensation expense for these performance stock units was $1.3 million and $2.9 million for the three and nine months ended October 31, 2017 , recognized on an accelerated attribution method. The performance condition for the performance stock units granted in August 2017 will be determined at a future date and accordingly, there is no grant date for these awards from an accounting perspective and grant date fair value is not considered in the calculation of weighted-average grant date fair value in the table above. No stock-based compensation expense was recognized for these performance awards in the three and nine months ended October 31, 2017 . 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 2016 2017 2016 2017 Cost of revenue—product $ 138 $ 143 $ 425 $ 898 Cost of revenue—support 1,178 2,422 3,982 6,441 Research and development 15,241 18,073 40,875 51,632 Sales and marketing 8,468 12,104 24,719 34,169 General and administrative 3,210 6,121 9,128 14,780 Total stock-based compensation expense $ 28,235 $ 38,863 $ 79,129 $ 107,920 The tax benefit related to stock-based compensation expense for all periods presented was not material. |