| Share-based Compensation | Share-Based Compensation Share Options Plans and Employee Warrants Grants (BSPCE) The Board of Directors has been authorized by the general meeting of the shareholders to grant employee warrants (Bons de Souscription de Parts de Créateur d’Entreprise or “BSPCE”) and to implement share options, free shares plans as follows: • Issuance of 2,112,000 BSPCE, authorized at the General Meeting of Shareholders on October 24, 2008, making available up to 2,112,000 BSPCE until April 24, 2010 (“Plan 1”); • Issuance of 1,472,800 BSPCE, authorized at the General Meeting of Shareholders on April 16, 2009, making available up to 1,472,800 BSPCE until October 16, 2010 (“Plan 2”); • 1,584,000 Share Options, authorized at the General Meeting of Shareholders on September 9, 2009, making available up to 1,584,000 share options until November 8, 2012. This Plan has been amended at the General Meeting of Shareholders on November 16, 2010, making available up to 2,700,000 share options or BSPCE (“Plan 3”); • Issuance of 361,118 BSPCE, granted to Criteo co-founders at the General Meeting of Shareholders on April 23, 2010 (“Plan 4”); • 2,800,000 BSPCE or Share Options (Options de Souscription d'Actions or “OSA”) , authorized at the General Meeting of Shareholders on November 18, 2011, making available up to 2,800,000 share options or BSPCE (“Plan 5”); • 1,654,290 BSPCE or Share Options, authorized at the General Meeting of Shareholders on September 14, 2012, making available up to 1,654,290 share options or BSPCE (“Plan 6”). • 6,627,237 BSPCE or Share Options, authorized at the General Meeting of Shareholders on August 2, 2013, making available up to 6,627,237 share options or BSPCE (“Plan 7”). • 9,935,710 Share Options, authorized at the General Meeting of Shareholders on June 18, 2014, making available up to 9,935,710 share options (“Plan 8”). The Board of Directors has also authorized free shares/restricted stock units ("RSUs") to Criteo employees under presence condition and to certain senior managers, employees and members of the Management, subject to the achievement of internal performance objectives and presence condition. • 4,600,000 Share Options or RSUs, authorized at the General Meeting of Shareholders on June 29, 2016 and 100,000 BSAs (any BSA granted will also be deducted from the 4,600,000 limit), such authorizations collectively referred to as “Plan 9”. The Board of Directors has authorized RSUs to Criteo employees subject to a presence condition and to certain senior managers, employees and members of management, subject to the achievement of internal performance objectives and a presence condition. • 4,600,000 Share Options or RSUs, authorized at the General Meeting of Shareholders on June 28, 2017 and 120,000 BSAs (any BSA granted will also be deducted from the 4,600,000 limit), such authorizations collectively referred to as “Plan 10”. The Board of Directors has authorized RSUs to Criteo employees subject to a presence condition and to certain senior managers, employees and members of management, subject to the achievement of internal performance objectives and a presence condition. • 4,200,000 Share Options or RSUs, authorized at the General Meeting of Shareholders on June 27, 2018 and 150,000 BSAs (any BSA granted will also be deducted from the limit), such authorizations collectively referred to as “Plan 11”. The Board of Directors has authorized RSUs to Criteo employees subject to a presence condition and to certain senior managers, employees and members of management, subject to the achievement of internal performance objectives and a presence condition. • 6,200,000 Share Options or RSUs, authorized at the General Meeting of Shareholders on May 16, 2019 and 175,000 BSAs (any BSA granted will also be deducted from the limit), such authorizations collectively referred to as “Plan 12”. The Board of Directors has authorized RSUs to Criteo employees subject to a presence condition and to members of management, subject to the achievement of internal performance objectives and a presence condition. Upon the exercise of the BSPCEs or Share Options, we grant beneficiaries newly issued ordinary shares of the Parent. We also grant beneficiaries ordinary shares of the Parent upon the vesting of RSUs. Prior to the beginning of our share repurchase programs described elsewhere in this Form 10-K, these grants relating to vested RSUs were completed using newly issued ordinary shares. Since the initiation of our share repurchase programs, the grants relating to vested RSUs are completed using existing ordinary shares that were repurchased as part of our share repurchase programs. The vesting schedule for the BSPCEs and OSAs is the following for the Plans 1, 2 and 3: • up to one third (1/3) of the BSPCEs on the first anniversary of the date of grant; • up to one twelfth (1/12) at the expiration of each quarter following the first anniversary of the date of grant, and this during twenty-four ( 24 ) months thereafter. • The BSPCEs and OSAs may be exercised at the latest within ten ( 10 ) years from the date of grant. For the Plan 3 amended to Plan 12, the vesting schedule is as follows: • up to one fourth (1/4) of the BSPCEs/share options on the first anniversary of the date of grant; • up to one-sixteenth (1/16) at the expiration of each quarter following the first anniversary of the date of grant, and this during thirty-six ( 36 ) months thereafter. • The BSPCEs and OSAs may be exercised at the latest within ten ( 10 ) years from the date of grant. The vesting schedule for the RSUs is as follows: • 50% at the expiration of a two year period • 6.25% at the expiration of each quarter following the first two years-period during twenty four ( 24 ) months. When the Company was not listed, exercise prices were determined by reference to the latest capital increase as of the date of grant, unless the Board of Directors decided otherwise. Since our initial public offering, exercise prices are determined by reference to the closing share price the day before the date of the grant if higher than a floor value of 95% of the average of the closing share price for the last 20 trading days. In the following tables, exercise prices, grant date share fair values and fair value per equity instruments are provided in euros, as the Company is incorporated in France and the euro is the currency used for the grants. Details of BSPCE / OSA / RSU plans Plans 1 & 2 Plan 3 Plan 5 Plan 6 Plan 6 Plan 7 Plan 8 Plan 9 Plan 10 Plan 11 Plan 12 Dates of grant (Boards of Directors) Oct 24, 2008 - Sept 14, 2010 Sept 9, 2009 - Sept 21, 2011 Nov 18, 2011 - May 22, 2012 Oct 25, 2012 Oct 25, 2012 - Sept 3, 2013 - April 23, 2014 July 30, 2014 - June 28, 2016 July 28, 2016 - June 27, 2017 July 27, 2017 - June 26, 2018 July 26, 2018 - June 25, 2019 July 25, 2019 - December 11, 2019 Vesting period 3 years 3 - 4 years 4 years 1 year 4-5 years 4 years 4 years 4 years 4 years 4 years 4 years 4 years 4 years 4 years 4 years 4 years Contractual life 10 years 10 years 10 years 10 years 10 years 10 years 10 years — 10 years — 10 years — 10 years — 10 years — Expected option life 8 years 8 years 8 years 8 years 8 years 6 - 8 years 6 years — 6 years — 6 years — 6 years — 6 years — Number of instruments granted 1,819,120 4,289,940 1,184,747 257,688 1,065,520 2,317,374 4,318,551 2,534,262 502,410 2,556,315 947,565 2,150,498 128,380 2,712,014 375,467 1,907,653 Type : Share Option (S.O.) / BSPCE / RSU BSPCE BSCPCE & OSA BSCPCE & OSA BSPCE BSCPCE & OSA BSCPCE & OSA OSA RSU OSA RSU OSA RSU OSA RSU OSA RSU Share entitlement per option 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 Exercise price €0.45 - €0.20 - €5.95 €8.28 €8.28 - €12.08 - €22.95 - — €38.20 - €43.45 — €24.63 - €28.69 — €15.86 - €17.98 €15.86 - €30.80 €15.67 €15.67 - €17.44 Valuation method Black & Scholes Grant date share fair value €0.20 - €0.20 - €4.98 €6.43 €5.45 - €12.08 - €22.50 - €35.18 - €38.20 - €43.45 €33.98 - €24.63 - €28.69 €22.92 - €44.37 €15.86 - €17.98 €15.86 - €30.80 €15.67 €15.67 - €17.44 Expected volatility (1) 53.0% - 55.7% 55.2% - 57.8% 52.1% - 52.9% 50.2% 49.6% - 50.2% 44.2% - 50.1% 39.4% - 44.5% — 40.6% - 41.3% — 41.0% - 41.5% — 40.7% - 41.2% — 39.2% — Discount rate (2) 2.74% - 4.10% 2.62% - 3.76% 2.79% - 3.53% 2.2% 1.80% - 2.27% 1.20% - 2.40% 0.00% - 0.71% N/A N/A N/A 0.6% - 0.7% N/A 0.1% - 0.9% N/A —% N/A Performance conditions No Yes (A) No Yes (B) No No No Yes (C) No Yes (D) (E) No No No Yes (F) No Yes (G) Fair value per option / RSU €0.08 - €0.08 - €2.75 - €3.28 €3.28 - €6.85 - €9.47 - €26.16 - €14.49 - €16.82 €33.98 - €9.85 - €11.40 €22.92 - €44.37 €6.15 - €6.94 €15.86 - €30.80 €5.78 €15.67-€17.44 (1) Based on similar listed entities. (2) Based on Obligation Assimilables du Trésor, i.e. French government bonds with a ten -year maturity (“TEC 10 OAT floating-rate bonds”). (A) Options subject to performance condition: Among the 960,000 share options granted in April 7, 2011, 180,000 are subjected to performance conditions based on revenue excluding traffic acquisition costs targets that were met in 2012. (B) On October 25, 2012, the Board of Directors of the Parent also granted a total of 257,688 BSPCE to our co-founders. The conditions of exercise of these BSPCE are linked to a future liquidity event or a transfer of control of the Company, and the number of BSPCE that can be exercised are determined by the event’s date which cannot occur after March 31, 2014. Based on the assumptions known as at December 31, 2012, we determined that the share-based compensation expense would be recognized over a one -year period. This assumption was confirmed in 2013. (C) On October 29, 2015, the Board of Directors of the Parent also granted a total of 337,960 RSU to Criteo employees under condition of presence and to certain senior managers, employees and members of the management, subject to the achievement of internal performance objectives and condition of presence. Based on the assumptions known at December 31, 2015, we determined the share-based compensation expense by applying a probability ratio on performance objectives completion. This assumption was confirmed in 2016. On January 29, 2016, the Board of Directors of the Parent granted a total of 33,010 RSUs to members of the management, subject to the achievement of internal performance objectives and condition of presence. Based on the assumptions known at December 31, 2016, we determined the share-based compensation expense by applying a probability ratio on performance objectives completion. This assumption was confirmed in 2016. (D) On July 28, 2016, the Board of Directors of the Parent granted a total of 195,250 RSUs to certain senior managers and members of the management, subject to the achievement of internal performance objectives and condition of presence. Based on the assumptions known at December 31, 2016, we determined the share-based compensation expense by applying a probability ratio on performance objectives completion. This assumption was confirmed in 2017. (E) On June 27, 2017, the Board of Directors of the Parent granted a total of 135,500 RSUs to certain senior managers and members of the management, subject to the achievement of internal performance objectives and condition of presence. Based on the assumptions known at December 31, 2017, we determined the share-based compensation expense by applying a probability ratio on performance objectives completion. This assumption was confirmed in 2018. (F) On July 26, 2018, the Board of Directors of the Parent granted a total of 203,332 RSUs to certain senior managers and members of the management, subject to the achievement of internal performance objectives and condition of presence. Based on the assumptions known at December 31, 2018, we determined the share-based compensation expense by applying a probability ratio on performance objectives completion. (G) On April 25, 2019, the Board of Directors of the Parent granted a total of 257,291 RSUs to members of the management, subject to the achievement of internal performance objectives and condition of presence. Based on the assumptions known at December 31, 2019, we determined the share-based compensation expense by applying a probability ratio on performance objectives completion. Change in Number of outstanding BSPCE / OSA / RSU OSAs RSUs Total Balance at January 1, 2017 4,960,092 3,243,279 8,203,371 Granted 355,010 1,891,702 2,246,712 Exercised (BSPCE and OSA) (1,668,838 ) — (1,668,838 ) Vested (RSU) — (379,135 ) (379,135 ) Forfeited (453,556 ) (543,338 ) (996,894 ) Expired — — — Balance at December 31, 2017 3,192,708 4,212,508 7,405,216 Granted 1,013,065 3,133,644 4,146,709 Exercised (BSPCE and OSA) (137,348 ) — (137,348 ) Vested (RSU) — (1,362,873 ) (1,362,873 ) Forfeited (880,960 ) (1,203,142 ) (2,084,102 ) Expired — — — Balance at December 31, 2018 3,187,465 4,780,137 7,967,602 Granted 438,347 3,147,751 3,586,098 Exercised (BSPCE and OSA) (83,266 ) — (83,266 ) Vested (RSU) — (1,219,112 ) (1,219,112 ) Forfeited (983,012 ) (1,729,789 ) (2,712,801 ) Expired — — — Balance at December 31, 2019 2,559,534 4,978,987 7,538,521 Breakdown of the Closing Balance Plans 1 & 2 Plan 3 Plan 5 Plan 6 Plan 7 Plan 8 Plan 9 Plan 10 Plan 11 Plan 12 RSUs Total Balance at December 31, 2017 Number outstanding 15,020 89,921 251,306 70,803 372,590 1,929,403 463,665 — — — 4,212,508 7,405,216 Weighted-average exercise price € 0.87 € 4.03 € 5.95 € 9.65 € 17.70 € 32.07 € 42.04 € — € — € — € — € 28.33 Number exercisable 15,020 89,921 251,306 70,803 359,702 1,145,511 38,867 — — — — 1,971,130 Weighted-average exercise price € 0.87 € 4.03 € 5.95 € 9.65 € 17.31 € 30.88 € 38.20 € — € — € — € — € 23.16 Weighted-average remaining contractual life 1.6 years 3.4 years 4.3 years 5.1 years 5.8 years 7.2 years 9.2 years — — — — 6.9 years Balance at December 31, 2018 Number outstanding 3,600 67,751 242,613 41,338 306,172 1,599,033 328,726 532,732 65,500 — 4,780,137 7,967,602 Weighted-average exercise price € 0.70 € 4.43 € 5.95 € 9.26 € 17.95 € 30.99 € 41.75 € 25.79 € 18.72 € — € — € 26.94 Number exercisable 3,600 67,751 242,613 41,338 306,172 1,417,904 161,658 — — — — 2,241,036 Weighted-average exercise price € 0.70 € 4.43 € 5.95 € 9.26 € 17.95 € 30.04 € 41.37 € — € — € — € — € 25.39 Weighted-average remaining contractual life 1.2 years 2.4 years 3.3 years 4.0 years 4.9 years 6.2 years 8.2 years 9.3 years 9.8 years — — 6.7 years Balance at December 31, 2019 Number outstanding 3,600 63,544 230,673 26,350 216,157 1,080,017 116,580 318,766 128,380 375,467 4,978,987 7,538,521 Weighted-average exercise price € 0.70 € 4.37 € 5.95 € 9.28 € 17.70 € 29.69 € 41.50 € 26.58 € 17.32 € 15.67 € — € 23.09 Number exercisable 3,600 63,544 230,673 26,350 216,157 1,066,670 80,966 129,908 16,375 — — 1,834,243 Weighted-average exercise price € 0.70 € 4.37 € 5.95 € 9.28 € 17.70 € 29.58 € 41.17 € 26.42 € — — € — € 24.12 Weighted-average remaining contractual life 0.2 years 1.4 years 2.3 years 3.0 years 3.9 years 5.1 years 7.1 years 8.3 years 9.1 years 9.9 years — 6.2 years Non-Employee Warrants (Bons de Souscription d’Actions or BSA) In addition to the RSUs, share options and BSPCE grants, the shareholders of the Parent also authorized the grant of non-employee warrants or Bons de Souscription d’Actions (“BSA”), as indicated below: • Plan A : up to one-eighth (1/8) at the expiration of each quarter following the date of grant, and this during twenty-four ( 24 ) months; and at the latest within ten ( 10 ) years as from the date of grant. • Plan B : up to one third (1/3) of the non-employee warrants on the first anniversary of the date of grant; then up to one twelfth (1/12) at the expiration of each quarter following the first anniversary of the beginning of the vesting period, and this during twenty-four ( 24 ) months thereafter; and at the latest within ten ( 10 ) years as from the date of grant. • Plan C : up to one-twenty fourth (1/24) at the expiration of each month following the date of grant, and this during twenty-four ( 24 ) months, and at the latest within ten ( 10 ) years as from the date of grant. • Plan D (member of the advisory board) : up to one-twenty fourth (1/24) at the expiration of each month following the date of grant, and this during twenty-four ( 24 ) months; and at the latest within ten ( 10 ) years as from the date of grant. • Plan D (not member of the advisory board): one-third (1/3) at the date of grant; one third (1/3) at the first anniversary of the date of grant; one third (1/3) at the second anniversary of the date of grant; and at the latest within ten ( 10 ) years as from the date of grant. • Plans E, F, G, H and I : up to one fourth (1/4) of the non-employee warrants on the first anniversary of the date of grant; up to one-sixteenth (1/16) at the expiration of each quarter following the first anniversary of the date of grant, and this during thirty-six ( 36 ) months thereafter; and at the latest within ten ( 10 ) years from the date of grant. Upon exercise of the non-employee warrants, we offer settlement of the warrants in newly issued ordinary shares of the Parent. Details of Non-Employee Warrants Plan A Plan B Plan C Plan D Plan E Plan F Plan G Plan H Plan I Dates of grant November 17, 2009 March 11, 2010 November 16, 2010 - September 21, 2011 October 25, 2012 - March 6, 2013 March 19, 2015 - October 29, 2015 April 20, 2016 - March 1, 2017 July 27, 2017 - October 26, 2017 October 25, 2018 October 24, 2019 Vesting period 2 years 3 years 2 years 2 years 1 - 4 years 1 - 4 years 1 - 4 years 1 - 4 years 1 - 4 years Contractual life 10 years 10 years 10 years 10 years 10 years 10 years 10 years 10 years 10 years Number of warrants granted 231,792 277,200 192,000 125,784 38,070 59,480 46,465 125,000 105,680 Share entitlement per warrant 1 1 1 1 1 1 1 1 1 Share warrant price €0.02 €0.07 - €0.11 €0.04 - €0.30 €0.43 - €0.48 €9.98 - €16.82 €13.89 - €17.44 €13.88 - €17.55 € 6.91 € 6.81 Exercise price €0.70 €0.70 €0.70 - €5.95 €8.28 - €9.65 €35.18 - €41.02 €33.98 - €43.42 €35.80 - €44.37 € 19.71 € 17.44 Valuation method Binomial method Grant date share fair value €0.20 €0.70 €0.70 - €4.98 €6.43 - €9.65 €35.18 - €41.02 €33.98 - €44.33 €35.80 - €44.37 € 19.71 € 17.44 Expected volatility (1) 55.7 % 55.2 % 53.5% - 55.0% 50.0% - 50.2% 39.9 % 40.6% - 40.9% 41.0% - 41.3% 40.7 % 37.2 % Discount rate (2) 3.58 % 3.44 % 2.62% - 3.38% 2.13% - 2.27% 0% - 0.52% 0.10% - 0.66% 0.54% - 0.60% 0.6 % (0.2 )% Performance conditions No Yes (A) No No No No No No No Fair value per warrant €0.05 €0.33 - €0.38 €0.40 - €2.58 €2.85 - €4.98 €9.98 - €16.82 €13.89 - €14.55 €13.88 - €17.55 € 6.91 € 6.81 (1) Based on similar listed entities. (2) Based on Obligations Assimilables du Trésor, i.e. French government bonds with a ten-year maturity (“TEC 10 OAT floating-rate bonds”). (A) All the performance conditions were achieved during the period ended December 31, 2010. Changes in Number of Non-Employee Warrants Balance at January 1, 2017 188,125 Granted 57,290 Exercised (59,139 ) Forfeited Balance at December 31, 2017 186,276 Granted 125,000 Exercised — Forfeited (19,606 ) Balance at December 31, 2018 291,670 Granted 105,680 Exercised — Forfeited (33,583 ) Balance at December 31, 2019 363,767 Breakdown of the Closing Balance Non-employee warrants Balance at December 31, 2017 Number outstanding 186,276 Weighted-average exercise price € 23.93 Number exercisable 86,385 Weighted-average exercise price € 15.86 Weighted-average remaining contractual life 7.6 years Balance at December 31, 2018 Number outstanding 291,670 Weighted-average exercise price € 13.02 Number exercisable 108,780 Weighted-average exercise price € 18.95 Weighted-average remaining contractual life 7.9 years Balance at December 31, 2019 Number outstanding 363,767 Weighted-average exercise price € 14.83 Number exercisable 156,604 Weighted-average exercise price € 17.52 Weighted-average remaining contractual life 7.6 years Reconciliation with the Consolidated Statements of Income Balance for the year ended December 31, 2017 Balance for the year ended December 31, 2018 Balance for the year ended December 31, 2019 (in thousands) R&D S&O G&A Total R&D S&O G&A Total R&D S&O G&A Total RSUs (19,377 ) (30,753 ) (13,295 ) (63,425 ) (20,499 ) (27,025 ) (12,179 ) (59,703 ) (9,742 ) (17,282 ) (11,109 ) (38,133 ) Share options / BSPCE (1,635 ) 22 (4,870 ) (6,483 ) (860 ) (1,616 ) (2,938 ) (5,414 ) 422 398 (2,300 ) (1,480 ) Plan 5 — — — — — — — — — — — — Plan 6 (7 ) 1 (15 ) (21 ) — — — — — — — — Plan 7 (52 ) 224 (35 ) 137 (2 ) (1 ) (1 ) (4 ) — — — — Plan 8 (1,085 ) 186 (2,883 ) (3,782 ) 169 (553 ) (493 ) (877 ) 131 90 (187 ) 34 Plan 9 (491 ) (389 ) (1,937 ) (2,817 ) (495 ) (461 ) (902 ) (1,858 ) 202 258 (314 ) 146 Plan 10 — — — — (532 ) (601 ) (1,485 ) (2,618 ) 89 178 (1,454 ) (1,187 ) Plan 11 — — — — — — (57 ) (57 ) — (128 ) (269 ) (397 ) Plan 12 — — — — — — — — — — (76 ) (76 ) Total share-based compensation (21,012 ) (30,731 ) (18,165 ) (69,908 ) (21,359 ) (28,641 ) (15,117 ) (65,117 ) (9,320 ) (16,884 ) (13,409 ) (39,613 ) BSAs — — (1,704 ) (1,704 ) — — (1,483 ) (1,483 ) (1,386 ) (1,386 ) Total equity awards compensation expense $ (21,012 ) $ (30,731 ) $ (19,869 ) $ (71,612 ) $ (21,359 ) $ (28,641 ) $ (16,600 ) $ (66,600 ) $ (9,320 ) $ (16,884 ) $ (14,795 ) $ (40,999 ) |
