| Stockholders' (Deficit) Equity | 6. STOCKHOLDERS’ (DEFICIT) 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. The Company has not paid a dividend since its inception, and
has no current plans to do so. 2011 Stock Option and Grant Plan In December 2014, in connection with the closing of
the Company’s IPO, the Hortonworks, Inc. 2011 Stock Option
and Grant Plan (the “2011 Plan”) was terminated and
shares authorized for issuance under the 2011 Plan were canceled
(except for those shares reserved for issuance upon exercise of
outstanding stock options). As of March 31, 2017, options to
purchase 6,178,205 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. All remaining shares available in the 2011
Plan rolled into the 2014 Plan following the consummation of the
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 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 that remained available for issuance under the
Company’s 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 five 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 an aggregate of 421,484 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 performance cycles 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 of
actual billings relative to the performance target value. In October 2015, under the 2014 Plan, the Company
granted an aggregate of 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 pre-selected As of March 31, 2017, options to purchase
shares of stock, RSUs, PSUs and restricted stock covering an
aggregate of 12,748,482 shares of common stock were outstanding
under the Amended 2014 Plan. On January 1, 2017, the shares reserved for
issuance under the Amended 2014 Plan increased by 3,071,470,
resulting in 22,342,530 total shares reserved for issuance under
the Amended 2014 Plan as of March 31, 2017, of which 5,892,336
shares remained available for issuance. 2014 Employee Stock Purchase Plan The Company’s ESPP was adopted and approved
by the Company’s Board of Directors in September 2014, was
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.
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 the ESPP. As of March 31, 2017, there was
$0.9 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 three months ended March 31, 2017 is presented
below:
Number of Weighted- Weighted- Aggregate
(in thousands)
Outstanding—December 31, 2016 7,430,094 $ 9.81 6.73 $ 16,523
Options granted
—
—
Options exercised (267,685 ) 3.27
Options canceled/forfeited (253,100 ) 15.68
Outstanding—March 31, 2017 6,909,309 $ 9.85 6.57 $ 20,155
Vested and expected to vest—March 31, 2017 6,909,309 $ 9.85 6.54 $ 20,155
Exercisable—March 31, 2017 5,180,074 $ 8.60 6.32 $ 18,706
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 March 31, 2017 and 2016 was $1.8 million and
$4.7 million, respectively. Restricted Stock A summary of information related to restricted
stock for the three months ended March 31, 2017 is presented
below:
Number of Weighted-Average
Unvested balance—December 31, 2016 275,835 $ 23.76
Granted
—
—
Vested
—
—
Canceled/forfeited
—
—
Unvested balance—March 31, 2017 275,835 $ 23.76
(*)
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, Inc., of which 275,835 shares are
unvested as of March 31, 2017. No restricted stock was granted or vested during
the three months ended March 31, 2017. The fair value of the
restricted stock vested during the three months
ended March 31, 2016 was $1.4 million.
As of March 31, 2017, there was
$16.7 million of unrecognized stock-based compensation expense
related to unvested stock options and restricted stock to be
recognized over a weighted-average period of 1.51 years. Restricted Stock Units and Performance Stock
Units A summary of information related to RSUs and PSUs
for the three months ended March 31, 2017 is presented
below:
Number of Weighted-Average
Unvested balance—December 31, 2016 11,261,011 $ 13.21
Granted 2,247,128 9.16
Vested (910,072 ) 11.34
Canceled/forfeited (580,689 ) 13.85
Unvested balance—March 31, 2017 12,017,378 $ 12.57
The fair value of the RSUs and PSUs that vested
during the three months ended March 31, 2017 and 2016 was
$9.1 million and $62,000, respectively. As of March 31, 2017, there was
$105.1 million of unrecognized stock-based compensation
expense related to RSUs and PSUs to be recognized over a
weighted-average period of 1.62 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 condensed
consolidated balance sheets and will be reclassified into common
stock and additional paid-in The number of shares of restricted stock and early
exercised options to purchase common stock outstanding subject to
the Company’s right of repurchase as of March 31, 2017
and December 31, 2016 was 25,656 and 30,708, respectively,
which had repurchase prices ranging from $8.46 to $14.22 per share.
The liability for shares subject to repurchase as of March 31,
2017 and December 31, 2016 was $0.3 million and
$0.4 million, respectively. Stock-Based Compensation Expense Total stock-based compensation expense, including
stock-based compensation expense to non-employees,
Three Months Ended March 31,
2017 2016
Cost of revenue $ 1,410 $ 1,358
Sales and marketing 7,466 5,619
Research and development 9,878 7,804
General and administrative 4,621 14,661
Total stock-based compensation expense $ 23,375 $ 29,442
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 during the three months ended March 31,
2016. Warrants In July 2011, the Company issued a warrant to
purchase 6,500,000 shares of Series A preferred stock at an
exercise price of $0.005 per share. The warrant was issued to
Yahoo! Inc. (“Yahoo!”) in connection with the
Company’s Series A financing and the transactions
contemplated thereby, including commercial agreements with Yahoo!
providing for support subscription offerings and certain rights to
technology. As of March 31, 2017, the warrant was exercisable
into 3,250,000 shares of common stock. In June 2014, the Company issued to Yahoo!
a warrant to purchase a number of shares of common stock up to
one percent of the sum of (i) 45,585,496, plus (ii) the
number of shares of Series D preferred stock or shares of such
stock issuable upon exercise of warrants to purchase such stock (on
an as converted to common stock basis) issued or issuable upon
exercise of warrants to purchase Series D preferred stock that
were sold, if any, by the Company during the period commencing on
June 9, 2014 and ending immediately prior to the occurrence of
a corporate event at an exercise price of $8.46 per
share. As of March 31, 2017, the warrant was exercisable into
476,368 shares of common stock. Each warrant expires nine years from the date of
issuance. The warrants vested upon consummation of the
Company’s IPO in December 2014. As of March 31, 2017,
neither warrant had been exercised into shares of common stock. |
