Stock Based Compensation

3 Months Ended

Mar. 31, 2015

Disclosure Of Compensation Related Costs Sharebased Payments [Abstract]

Stock Based Compensation

8. Stock Based Compensation

In January 2013, our Board of Directors adopted our 2013 Equity Incentive Plan, or the 2013 Plan, which became effective upon of the closing of our initial public offering in May 2013. On January 1, 2015, the number of shares available for issuance under the 2013 Plan automatically increased by a number of shares equal to 5% of the total common stock outstanding at December 31, 2014. As of March 31, 2015 there were 9,415,404 shares reserved under the 2013 Plan for the future issuance of equity awards.

The following table summarizes option activity under our 2013 Equity Incentive Plan and related information during the three months ended March 31, 2015:

	Shares
	Subject to			Weighted-
	Outstanding			Average Exercise
	Options			Price Per Share
Balance at December 31, 2014		4,249,168		$	14.77
Options granted		1,016,766			32.36
Options exercised		(379,146	)		10.14
Options canceled		(98,919	)		24.37
Balance at March 31, 2015		4,787,869		$	18.67

The estimated grant date fair values of the employee stock options were calculated using the Black Scholes valuation model, based on the following assumptions:

	Three Month Ended March 31,
	2015		2014
Risk-free interest rate		1.54%		1.88%
Expected life	6.0 years		6.0 years
Expected volatility		66%		79%
Dividend yield	–		–

The table below sets forth the functional classification of stock-based compensation expense, net of estimated forfeitures, for the periods presented (in thousands):  

	Three Months Ended March 31,
	2015		2014
Research and development	$	2,209	$	1,066
Selling, general and administrative		2,963		1,236
Total stock-based compensation	$	5,172	$	2,302

During the first quarter of 2015, we granted restricted stock units (RSUs) to certain employees of the Company. RSUs are share awards that entitle the holder to receive freely tradable shares of our common stock upon vesting. The RSUs cannot be transferred, and until they vest, the shares are subject to forfeiture if employment terminates prior to the release of the vesting restrictions. The RSUs, generally vest equal amounts on each of the first three year anniversaries of the grant date, provided the employee remains continuously employed with us. The fair value of the RSUs is equal to the closing price of our Common Stock on the grant date.

In January 2015, we granted market-based performance stock unit (PSU) awards to certain members of senior management. Each PSU represents a contingent right to receive one share of the Company’s Common Stock upon achievement of a market-based performance measurements and subject to the recipients continued employment. At any time during the four years following the date of the grant, half of the PSUs will vest one year after the date the average closing price of Portola’s stock on the NASDAQ Global Select Market is above $50.00 per share for 45 consecutive trading days, and an additional half of the shares will vest one year after the date the average closing price of Portola’s stock is above $60.00 per share for 45 consecutive trading days.  The weighted-average fair value of the PSUs was determined using the Monte Carlo simulation models incorporating the following weighted average assumptions:

	Three Month Ended March 31, 2015
	PSUs
Number of PSUs granted		140,000
Grant price at date of grant	$	29.72
Risk-free interest rate		1.10%
Volatility		63%
Dividend yield	–
Weighted- average fair value per share of PSUs granted ($50 Vesting Hurdle)	$	23.10
Weighted- average fair value per share of PSUs granted ($60 Vesting Hurdle)	$	20.87

The estimated PSU expense is being recognized, on an accelerated basis over the estimated requisite service period, with no adjustments in the future periods based upon the Company’s actual stock price over the performance period.