13. Stock Based Compensation

Stock-based compensation expense, net of estimated forfeitures, is reflected in the statements of operations as follows (in thousands):

	Year Ended December 31,
	2013		2012		2011
Research and development	$	2,295	$	1,452	$	1,164
General and administrative		2,679		1,357		1,189
Total stock-based compensation	$	4,974	$	2,809	$	2,353

As of December 31, 2013, total unamortized employee and nonemployee stock-based compensation was $12.5 million, which is expected to be recognized over the remaining vesting period of 2.8 years. The weighted-average grant date fair value of employee options granted during the years ended December 31, 2013, 2012 and 2011 was $12.46, $5.90 and $4.70 per share, respectively.

Valuation Assumptions

The employee stock-based compensation expense was determined using the Black-Scholes option valuation model. Option valuation models require the input of subjective assumptions and these assumptions can vary over time. The risk-free rate is based on U.S. Treasury zero-coupon issues with remaining terms similar to the expected terms of the awards. The expected term of employee options granted is determined using the simplified method (based on the midpoint between the vesting date and the end of the contractual term). As sufficient trading history does not yet exist for our common stock, our estimate of expected volatility is based on the volatility of other companies with similar products under development, market, size and other factors. To date, we have not declared or paid any cash dividends and do not have any plans to do so in the future. Therefore, we used an expected dividend yield of zero.

The following table illustrates the weighted-average assumptions for the Black-Scholes option-pricing model used in determining the fair value of options granted to employees:

	Year Ended December 31,
	2013	2012	2011
Risk-free interest rate	1.43%	1.10%	1.10%
Expected life	6.0 years	6.0 years	6.0 years
Expected volatility	79%	72%	85%
Dividend yield	–	–	–

The following table illustrates the weighted-average assumptions for the Black-Scholes option-pricing model used in determining the fair value of ESPP purchase rights granted to employees:

	Year Ended December 31,
	2013	2012	2011
Risk-free interest rate	0.10%	–	–
Expected life	0.42 years	–	–
Expected volatility	62%	–	–
Dividend yield	–	–	–

Options Granted to Nonemployees

We have granted options to purchase shares of common stock to consultants in exchange for services performed. We granted options to purchase 32,943 and 6,380 shares with average exercise prices of $19.88 and $7.00 per share, respectively, during the years ended December 31, 2013 and 2012, respectively. These options vest upon grant or various terms up to four years. We recognized non-employees stock compensation expense of $775,000, $144,000 and $65,000 during the years ended December 31, 2013, 2012 and 2011, respectively. The fair value of non-employees’ options was measured using the Black-Scholes option-pricing model reflecting the same assumptions as applied to employee options in each of the reported years, other than the expected life, which is assumed to be the remaining contractual life of the option.

Employee Stock Purchase Plan

The Board of Directors adopted the 2013 Employee Stock Purchase Plan, effective upon the completion of Portola’s initial public offering of its common stock. Portola reserved a total of 1,000,000 shares of common stock for issuance under the plan. Eligible employees may purchase common stock at 85 percent of the lesser of the fair market value of Portola’s common stock on the first or last day of the offering period. The reserve for shares available under the plan will automatically increase on January 1^st each year, beginning in 2014, by an amount equal to 2 percent of the total number of outstanding shares of our common stock on December 31^st of the preceding fiscal year.