Stock-Based Awards

3 Months Ended

Mar. 31, 2014

Disclosure Of Compensation Related Costs Sharebased Payments [Abstract]

Stock-Based Awards

8. STOCK-BASED AWARDS

Stock Options—The Company’s stock options generally vest over a four-year period and expire 10 years from the date of grant. Upon option exercise, the Company issues shares of common stock.

The following table summarizes information related to stock options outstanding as of March 31, 2014 (in thousands, except per share and term information):

	Shares		Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Life (in Years)		Aggregate Intrinsic Value
Exercisable—March 31, 2014		1,983	$	5.56		6.16	$	116,010
Options vested and expected to vest—March 31, 2014		2,841	$	13.71		6.82	$	143,550

During the three months ended March 31, 2014, the Company granted 112,700 stock options at a weighted average exercise price of $68.74, with a weighted average grant-date fair value of $34.09. During the three months ended March 31, 2013, the Company granted 150,050 stock options at a weighted average exercise price of $26.72, with a weighted average grant-date fair value of $11.06. Unrecognized compensation expense relating to stock options was $15.3 million at March 31, 2014, which is expected to be recognized over a weighted-average period of approximately three years.

Restricted Stock Awards—The Company’s restricted stock awards generally vest over a two- or four-year period and upon vesting, the Company issues shares of common stock. During the three months ended March 31, 2014, the Company granted 370,350 shares of restricted stock at a weighted average grant-date fair value of $73.38. Also in March 2014, the Company granted performance-based restricted stock awards to certain executive officers, which allow the grant of up to an aggregate 39,900 restricted shares if certain performance goals and continued service requirements are met on or before March 31, 2015. Upon performance achievement, 25% of the awards will vest immediately and then quarterly thereafter over a three-year period. During the three months ended March 31, 2013, the Company granted 517,850 shares of restricted stock at a weighted average grant-date fair value of $28.81. Unrecognized compensation expense relating to restricted stock awards was $53.8 million at March 31, 2014, which is expected to be recognized over a weighted-average period of approximately three years.

Employee Stock Purchase Plan— The Employee Stock Purchase Plan (“ESPP”) and its foreign corollaries permit eligible employees to purchase shares of our common stock through accumulated payroll deductions. 400,000 shares have been allocated for the ESPP. Each offering is a six month period (a “Plan Period”), and the purchase price of the stock is equal to 85% of the lesser of the market value of such shares at the first or last business day of a Plan Period.

Stock-Based Compensation—Stock-based compensation cost is measured at the grant date, based on the fair value of the award, and is recognized as an expense over the service period, which is generally the vesting period of the equity grant. For awards with a performance-based measure, the Company accrues stock-based compensation cost if it is probable that the performance condition will be achieved. The Company estimates forfeitures at the time of grant and revises the estimates, if necessary, in subsequent periods if actual forfeitures differ from those estimates. The following table presents stock-based compensation expense included in the Company’s consolidated statements of operations and comprehensive loss (in thousands):

	Three Months Ended March 31,
	2014		2013
Cost of subscription revenue	$	133	$	115
Cost of service revenue		393		382
Sales and marketing		1,493		1,096
Research and development		1,536		913
General and administration		2,112		1,480
Total	$	5,667	$	3,986

Stock-based compensation cost for the three months ended March 31, 2014 and 2013 includes $1.4 million and $1.8 million, respectively, related to stock options, and $0.1 million and zero, respectively, related to the ESPP. The remaining expense for each period relates to restricted stock.