| Stockholders' Equity (Deficit) | 6. STOCKHOLDERS’ EQUITY (DEFICIT)
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, as amended (the “2011 Plan”), was
terminated as to future grants 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
September 30, 2018, options to purchase 2,907,071 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 shares that had been available for
issuance but not covered by outstanding awards under the 2011 Plan
rolled into the 2014 Plan following the consummation of the IPO.
The 2014 Plan allows the plan administrator 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. This was in addition to the 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 and that rolled into the 2014 Plan. The 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 plan administrator. This
number is subject to adjustment in the event of a stock split,
stock dividend or other change in the Company’s
capitalization. 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. In April, June and July 2015, under the 2014 Plan,
the Company granted an aggregate of 421,484 performance-based
restricted 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 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 performance a pre-selected group In September 2017, under the Amended 2014 Plan, the
Company granted 714,711 market-based PSUs to the Company’s
Chief Executive Officer that vest upon (a) the achievement of
a specific market-based performance goal related to the price of
the Company’s common stock over forty consecutive trading
days during a performance cycle of four years, with such
performance cycle commencing on September 10, 2017 and
(b) the Chief Executive Officer remaining employed through
achievement of the performance goal. If the Company achieves the
performance goal within the performance cycle, and the Chief
Executive Officer remains employed through such achievement,
100 percent of the PSUs will vest upon achievement of the
market-based performance goal.
As of September 30, 2018, options to purchase
shares of stock, restricted stock units (“RSUs”) and
PSUs covering an aggregate of 9,731,054 shares of common stock were
outstanding under the Amended 2014 Plan. On January 1, 2018, the shares reserved for
issuance under the Amended 2014 Plan was increased by 3,637,815
shares. As of September 30, 2018, there were 26,293,667 shares
reserved for issuance under the Amended 2014 Plan, of which 555,813
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. As of September 30, 2018, there was
$3.1 million of unrecognized stock-based compensation expense
related to the ESPP, which is expected to be recognized over a
weighted-average period of 0.60 years.
Stock Options A summary of information related to stock options
for the nine months ended September 30, 2018 is presented
below:
Number of Weighted- Weighted- Aggregate
(in thousands)
Outstanding—December 31, 2017 4,490,445 $ 11.08 6.14 $ 41,525
Granted — —
Exercised (1,043,938 ) 9.20
Canceled/forfeited (121,151 ) 19.15
Outstanding—September 30, 2018 3,325,356 11.37 5.49 $ 38,198
Exercisable—September 30, 2018 3,280,006 $ 11.22 5.47 $ 38,131
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 and
nine months ended September 30, 2018 was $5.4 million and
$11.9 million, respectively. The aggregate intrinsic value of
options exercised for the three and nine months ended
September 30, 2017 was $7.4 million and
$12.8 million, respectively.
As of September 30, 2018, there was
$0.4 million of unrecognized stock-based compensation expense
related to unvested stock options which is expected to be
recognized over a weighted-average period of 0.46 years.
Restricted Stock A summary of information related to restricted
stock for the nine months ended September 30, 2018 is
presented below:
Number of Weighted-Average
Unvested balance—December 31, 2017 137,919 $ 23.76
Granted — —
Vested (137,919 ) 23.76
Canceled/forfeited — —
Unvested balance—September 30, 2018 — $ —
(*)
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. The remaining 137,919 shares
were vested as of September 30, 2018. No restricted stock was granted during the three or
nine months ended September 30, 2018. The fair value of the
restricted stock vested during both the three and nine months ended
September 30, 2018 was $3.1 million and the fair value of
the restricted stock vested during the three and nine months ended
September 30, 2017 was $2.3 million. As of September 30, 2018, there was no
unrecognized stock-based compensation expense related to restricted
stock.
Restricted Stock Units A summary of information related to RSUs for the
nine months ended September 30, 2018 is presented below:
Number of Weighted-Average
Unvested balance—December 31, 2017 9,579,841 $ 13.10
Granted 5,037,789 19.75
Vested (4,932,258 ) 13.65
Canceled/forfeited (1,087,314 ) 13.83
Unvested balance—September 30, 2018 8,598,058 $ 16.59
The fair value of the RSUs that vested during the
three and nine months ended September 30, 2018 was
$31.8 million and $93.8 million, respectively. The fair
value of the RSUs that vested during the three and nine months
ended September 30, 2017 was $24.1 million and
$68.0 million, respectively. As of September 30, 2018, there was
$122.9 million of unrecognized stock-based compensation
expense related to RSUs to be recognized over a weighted-average
period of 1.52 years.
Performance-Based Restricted Stock Units A summary of information related to PSUs for the
nine months ended September 30, 2018 is presented below:
Number of Weighted-Average
Unvested balance—December 31, 2017 839,857 $ 14.58
Granted — —
Vested (84,818 ) 19.19
Canceled/forfeited (40,328 ) 21.57
Unvested balance—September 30, 2018 714,711 $ 13.39
The fair value of the PSUs that vested during the
three and nine months ended September 30, 2018 was
$0.4 million and $1.7 million, respectively. The fair
value of PSUs vested during the three and for the nine months ended
September 30, 2017 was $0.6 million and
$1.9 million, respectively. As of September 30, 2018, there was no
unrecognized stock-based compensation expense related to PSUs.
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 are shares that have not vested and
are deemed to be restricted stock; they are subject to a vesting
schedule identical to the vesting schedule of the related 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 All shares of restricted stock and early exercised
options have vested and there were no repurchase liabilities as of
September 30, 2018. 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
December 31, 2017 was 10,500, which had repurchase prices
ranging from $8.46 to $14.22 per share. The liability for shares
subject to repurchase as of December 31, 2017 was
immaterial.
Stock-Based Compensation Expense Total stock-based compensation expense, including
stock-based compensation expense to non-employees,
Three Months Ended September 30, Nine Months Ended September 30,
2018 2017 2018 2017
Cost of revenue $ 2,500 $ 2,090 $ 7,476 $ 5,489
Sales and marketing 7,736 10,011 22,735 26,606
Research and development 6,042 9,463 23,331 30,401
General and administrative 8,466 6,969 28,932 16,659
Total stock-based compensation expense $ 24,744 $ 28,533 $ 82,474 $ 79,155
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. In 2017, Verizon Communications, Inc.
(“Verizon”) acquired the operating assets of Yahoo!.
Yahoo! was subsequently renamed Altaba Inc. (“Altaba”),
and the July 2011 warrant remained an asset of Altaba. 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 described above, in 2017, Verizon acquired the operating
assets of Yahoo!, and Yahoo! was subsequently renamed Altaba. The
June 2014 warrant remained an asset of Altaba. The warrants vested upon consummation of the
Company’s IPO in December 2014 and would have expired nine
years from the date of issuance. On January 31, 2018, Altaba
(formerly, Yahoo!) net exercised the warrants issued in July 2011
and June 2014 for a total of 3,522,730 shares of the
Company’s common stock. |
