| Stockholders' Equity | 7. STOCKHOLDERS’ EQUITY
Common Stock
Each share of common stock is entitled to one vote for matters to
be voted on by the stockholders of the Company. The holders of
common stock are also entitled to receive dividends whenever
declared by the Board of Directors from legally available
funds.
2011 Stock Option and Grant Plan
In December 2014, in connection with the closing of the
Company’s initial public offering, the Hortonworks, Inc. 2011
Stock Option Plan and Grant Plan (the “2011 Plan”) was
terminated and shares authorized for issuance under the 2011 Plan
were cancelled (except for those shares reserved for issuance upon
exercise of outstanding stock options). As of June 30, 2016,
options to purchase 7,942,736 shares of common stock were
outstanding under the 2011 Plan pursuant to their original terms
and no shares were available for future grant.
2014 Stock Option and Incentive Plan
The Hortonworks, Inc. 2014 Stock Option and Incentive Plan (the
“2014 Plan”) was adopted by the Company’s Board
of Directors in September 2014. The 2014 Plan was approved by the
Company’s stockholders in November 2014 and became effective
immediately prior to the closing of the Company’s IPO. An
amendment and restatement of the 2014 Plan (the “Amended 2014
Plan”) was approved by the Board of Directors in April 2016
and by the Company’s stockholders in May 2016. The Amended
2014 Plan allows the Compensation Committee to make equity-based
incentive awards to the Company’s full or part-time officers,
employees, non-employee directors and other key persons (including
consultants).
The Company initially reserved 6,000,000 shares of the
Company’s common stock for the issuance of awards under the
2014 Plan, plus 923,732 shares of the Company’s common stock
which remained available for issuance under the 2011 Plan as of the
Company’s IPO date. The amendment and restatement of the 2014
Plan increased the number of shares reserved for issuance under the
Amended 2014 Plan by 7,000,000 shares. The Amended 2014 Plan also
provides that the number of shares reserved and available for
issuance under the plan will automatically increase each
January 1, beginning on January 1, 2015, by 5 percent of
the outstanding number of shares of the Company’s common
stock on the immediately preceding December 31 or such lesser
number of shares as determined by the Company’s Compensation
Committee. This number is subject to adjustment in the event of a
stock split, stock dividend or other change in the Company’s
capitalization.
In April, June and July 2015, under the 2014 Plan, the Company
granted 421,484 Performance Stock Units (“PSUs”) to
certain executive and senior officers (the “Grantees”)
that vest upon (a) the achievement of specified performance
targets as set by the Compensation Committee and (b) the
Grantee remaining employed during the respective six-month
performance cycle over a service period of up to three years, with
such service periods commencing on July 1, 2015. The
performance target value for each performance cycle is based on an
average of the applicable internal and external billings amounts
for the respective performance cycle. The number of PSUs that vest
for a given performance cycle is based on the Company’s
achievement percentile of actual billings relative to the
performance target value.
In October 2015, under the 2014 Plan, the Company granted 266,084
PSUs to the Grantees that vest upon (a) the achievement of
specified performance targets as set by the Compensation Committee
and (b) the Grantee remaining employed for the duration of the
respective 12-month performance cycle over a service period of up
to two years, with such service periods commencing on
January 1, 2016. The number of PSUs that vest for a given
performance cycle is based on the Company’s achievement
percentile for earnings before interest, taxes, depreciation and
amortization growth and revenue growth relative to the linear
ranking of a pre-selected group of the Company’s peers.
As of June 30, 2016, options to purchase, restricted stock
units (“RSUs”), PSUs and restricted stock covering an
aggregate 11,853,036 shares of common stock were outstanding under
the Amended 2014 Plan.
On January 1, 2016, the shares reserved for issuance under the
2014 Plan increased by 2,326,899, resulting in 18,512,142 total
shares reserved for issuance under the Amended 2014 Plan as of
June 30, 2016, of which 5,353,314 remained available for
issuance.
2014 Employee Stock Purchase Plan
The Company’s 2014 Employee Stock Purchase Plan (the
“ESPP”) was adopted and approved by the Company’s
Board of Directors in September 2014, adopted and approved by the
Company’s stockholders in November 2014 and was amended in
August 2015, to allow employees of certain of the Company’s
non-U.S. subsidiaries to participate in the ESPP. The ESPP
initially reserved and authorized the issuance of up to a total of
2,500,000 shares of common stock to participating employees.
The ESPP provides that the number of shares reserved and available
for issuance will automatically increase each January 1,
beginning on January 1, 2015, by the lesser of
(i) 1,000,000 shares of common stock, (ii) 1 percent of
the outstanding number of shares of the Company’s common
stock on the immediately preceding December 31, or
(iii) such lesser number of shares as determined by the ESPP
administrator. This number is subject to adjustment in the event of
a stock split, stock dividend or other change in the
Company’s capitalization. On January 1, 2016, the shares
reserved for issuance increased by 465,225 resulting in total
shares reserved for issuance under the ESPP of 3,392,473 as of
June 30, 2016.
Each employee who is a participant in the ESPP may purchase shares
by authorizing payroll deductions of up to 15 percent of his or her
base compensation during an offering period. Unless the
participating employee has previously withdrawn from the offering,
his or her accumulated payroll deductions will be used to purchase
shares on the last business day of the offering period at a price
equal to 85 percent of the fair market value of the shares on the
first business day or the last business day of the offering period,
whichever is lower. Under applicable tax rules, an employee may
purchase no more than $25,000 worth of shares of common stock,
valued at the start of the purchase period, under the ESPP in any
calendar year. There is no minimum holding period associated with
shares purchased pursuant to this plan.
As of June 30, 2016, there was $1.7 million of unrecognized
stock-based compensation expense related to the ESPP, which is
expected to be recognized over a weighted-average period of 0.43
years.
Stock Options
A summary of information related to stock options for the six
months ended June 30, 2016 is presented below:
Number of Weighted- Weighted- Aggregate
(In thousands)
Outstanding—December 31, 2015 11,552,487 $ 9.80 7.82 $ 140,873
Options granted
—
—
Options exercised (905,163 ) 2.57
Options canceled/forfeited (1,731,446 ) 14.42
Outstanding—June 30, 2016 8,915,878 $ 9.64 7.13 $ 32,199
Vested and expected to vest—June 30, 2016 8,677,829 $ 9.52 7.11 $ 31,958
Exercisable—June 30, 2016 5,199,817 $ 7.43 6.64 $ 25,816
Aggregate intrinsic value represents the difference between the
exercise price of the options to purchase common stock and the fair
value of the Company’s common stock. The aggregate intrinsic
value of options exercised for the three months ended June 30,
2016 and 2015 was $3.4 million and $18.0 million, respectively, and
for the six months ended June 30, 2016 and 2015 was $8.1
million and $26.6 million, respectively.
Restricted Stock
A summary of information related to restricted stock for the six
months ended June 30, 2016 is presented below:
Number of Number of Weighted- Weighted-Average Aggregate
(In thousands)
Unvested balance—December 31, 2015 145,968 644,014 $ 0.67 $ 23.76 $ 4,551
Granted
—
—
—
—
Vested (142,843 ) (140,711 ) 0.66 23.76
Canceled/forfeited
—
—
—
—
Unvested balance—June 30, 2016 3,125 503,303 $ 1.28 $ 23.76 $ 2,824
( * The weighted-average grant-date fair
value per share relates to 1,424,946 shares of restricted stock
paid as part of the acquisition of Onyara, of which 503,303 shares
are unvested as of June 30, 2016.
The fair value of the restricted stock vested during the three
months ended June 30, 2016 and 2015 was $0.8 million and $3.2
million, respectively, and for the six months ended June 30,
2016 and 2015 was $2.0 million and $6.3 million, respectively. As
of June 30, 2016, there was $28.8 million of unrecognized
stock-based compensation expense related to unvested stock options
and restricted stock to be recognized over a weighted-average
period of 1.93 years.
Restricted Stock Units and Performance Stock
Units
A summary of information related to RSUs and PSUs for the six
months ended June 30, 2016 is presented below:
Number of Option Plan Weighted-Average
Unvested balance—December 31, 2015 5,852,619 $ 23.33
Granted 6,651,295 10.61
Vested (1,195,990 ) 23.61
Canceled/forfeited (428,030 ) 19.33
Unvested balance—June 30, 2016 10,879,894 $ 15.57
The fair value of the RSUs and PSUs that vested during each of the
three and six months ended June 30, 2016 was $14.1 million and
for the three and six months ended June 30, 2015 was $1.1
million. As of June 30, 2016, there was $136.8 million of
unrecognized stock-based compensation expense related to RSUs and
PSUs to be recognized over a weighted-average period of 1.89
years.
Restricted Stock and Stock Options Subject to
Repurchase
The 2011 Plan allowed for the granting of options that may be
exercised before the options have vested. Shares issued as a result
of early exercise and shares that had not vested are deemed to be
restricted stock and are subject to a vesting schedule identical to
the vesting schedule of the related restricted stock and options,
as well as certain other restrictions. Shares issued as a result of
early exercise that have not vested are subject to repurchase by
the Company upon termination of the purchaser’s employment or
services, at the price paid by the purchaser, and are not deemed to
be issued for accounting purposes until those related shares vest.
The amounts received in exchange for these shares have been
recorded as a liability on the accompanying balance sheets and will
be reclassified into common stock and additional paid-in-capital as
the shares vest. The Company’s right to repurchase these
shares generally lapses 1/48 of the original grant date per month
over four years.
The number of shares of restricted stock and early exercised
options to purchase common stock outstanding subject to the
Company’s right of repurchase at prices ranging from $1.28 to
$14.22 per share as of June 30, 2016 was 47,746. The liability
for shares subject to repurchase as of June 30, 2016 was $0.6
million, of which $0.3 million is included in accrued expenses and
other current liabilities and $0.3 million is included in other
long-term liabilities.
Stock-Based Compensation Expense
Total stock-based compensation expense, including stock-based
compensation expense to non-employees, by category was as follows
(in thousands):
Three Months Ended Six Months Ended
2016 2015 2016 2015
Cost of revenue $ 1,417 $ 521 $ 2,775 $ 791
Sales and marketing 6,039 1,947 11,658 3,364
Research and development 8,778 2,231 16,582 4,354
General and administrative 5,664 2,447 20,325 3,831
Total stock-based compensation expense $ 21,898 $ 7,146 $ 51,340 $ 12,340
In February 2016, one of the executives of the Company voluntarily
canceled a stock option to purchase 1,185,000 shares. As a result,
the Company recognized in general and administrative expense a
stock-based compensation expense of $10.0 million for the six
months ended June 30, 2016. |
