STOCK-BASED COMPENSATION

Second Amended and Restated 2004 Equity Incentive Plan—The Company’s Second Amended and Restated Equity Incentive Plan (the “2004 EIP”) was adopted by the Board of Directors in February 2008 (termination date of January 4, 2014). Pursuant to the 2004 EIP, the Company may grant options, restricted stock and stock purchase rights to employees, directors, or consultants of the Company. Options granted may be either incentive stock options or nonstatutory stock options. Incentive stock options may be granted to employees (including offices and directors, who are also employees). Nonstatutory stock options may be granted to employees, directors or consultants. In March 2011, the Company’s Board of Directors approved a 2,000,000 increase in the options reserved for issuance under the Company’s 2004 EIP. On May 25, 2011, in conjunction with the Company’s initial public offering, the 2004 EIP terminated so that no further awards may be granted under the 2004 EIP. Although the 2004 EIP terminated, all outstanding awards will continue to be governed by their existing terms.

2011 Equity Incentive Plan—On May 26, 2011, the Company’s 2011 Equity Incentive Plan (the “2011 EIP”, and together with the 2004 EIP (the “Plans”)) became effective. The Company initially reserved 7,000,000 shares of common stock for issuance under the 2011 EIP. Starting on May 26, 2011, any shares subject to outstanding awards granted under the 2004 EIP that expire or terminate for any reason prior to the issuance of shares shall become available for issuance under the 2011 EIP. The 2011 EIP also provides for automatic annual increases in the number of shares reserved for future issuance, and during the year ended December 31, 2015 an additional 3,969,403 shares were reserved under the 2011 EIP as a result of this provision. As of December 31, 2015 there were 8,130,211 shares available for issuance under the 2011 EIP.

Options under the Plans may be granted for periods up to ten years. All options issued to date have had up to a ten year life. The exercise price of incentive and nonstatutory stock options shall not be less than 100% of the fair market value of the shares on the date of grant. The Board of Directors determines the vesting period of stock-based awards. The Company’s stock options generally vest over four years. Restricted stock awards are subject to forfeiture if certain vesting requirements are not met. The Company issues new common stock from authorized shares upon the exercise of stock options.

2011 Employee Stock Purchase Plan—On May 26, 2011, the Company’s 2011 Employee Stock Purchase Plan (the “2011 ESPP”) became effective. The Company initially reserved 750,000 shares of common stock for issuance under the 2011 ESPP. The purchase price of the common stock under the Employee Stock Purchase Plan is 85% of the lower of the fair market value of a share of common stock on the first day of the offering period or the last day of the purchase period. The 2011 ESPP also provides for automatic annual increases in the number of shares reserved for future issuance, and during the year ended December 31, 2015 an additional 793,880 shares were reserved under the 2011 ESPP as a result of this provision. As of December 31, 2015 there were 2,749,083 shares available for issuance under the 2011 ESPP.

The Company recognized stock-based compensation expense related to its 2011 ESPP of $0.1 million, $0.7 million and $0.6 million for the years ended December 31, 2015, 2014 and 2013, respectively.

Stock Options

A summary of the Company’s stock option activity under the Plans and related information is as follows:



	Number of Options		Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (in years)	Aggregate Intrinsic Value⁽¹⁾
						(in thousands)
Balance at December 31, 2014	13,740,204		$	7.82	7.7	$	1,680
Granted	5,915,112		$	2.67
Exercised	(157,975	)	$	1.32
Forfeited, canceled or expired	(7,596,670	)	$	9.62
Balance at December 31, 2015	11,900,671		$	4.20	7.7	$	999
Options vested and exercisable at December 31, 2015	4,260,008		$	6.43	6.5	$	945
Options vested and expected to vest as of December 31, 2015	10,443,746		$	4.37	7.7	$	989


⁽¹⁾	The aggregate intrinsic value represents the value by which the Company’s closing stock price on the last trading day of the year ended December 31, 2015 exceeds the exercise price of the stock multiplied by the number of options outstanding or exercisable, excluding any that have a negative intrinsic value.

The weighted-average grant date fair value of options granted was $1.68, $3.98 and $5.07 for the years ended December 31, 2015, 2014 and 2013, respectively. The total intrinsic value of options exercised was $251,000, $5.8 million and $7.5 million for the years ended December 31, 2015, 2014 and 2013, respectively.

The total fair value of options vested was $3.8 million, $14.7 million and $12.9 million for the years ended December 31, 2015, 2014 and 2013, respectively.

The following table presents the composition of options outstanding and vested and exercisable as of December 31, 2015:



	Options Outstanding				Options Vested and Exercisable
Range of Exercise Prices	Number of Options	Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (in years)	Number of Vested and Exercisable Options	Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (in years)
$0.044-2.35	1,268,956	$	1.73	4.2	1,180,523	$	1.69	3.9
$2.46-2.54	3,108,991	$	2.47	8.9	691,191	$	2.47	8.6
$2.58-3.60	4,965,565	$	2.70	8.3	186,560	$	3.06	9.3
$6.79-9.72	1,173,475	$	8.12	6.5	990,176	$	8.12	6.2
$10.56-27.03	1,383,684	$	12.41	7.1	1,211,558	$	12.46	7.0
Totals	11,900,671	$	4.20	7.7	4,260,008	$	6.43	6.5

Stock-based compensation expense related to stock-based awards granted to employees and nonemployees were allocated to research and development and sales, general and administrative expense as follows (in thousands):



	Year ended December 31,
	2015		2014		2013
Research and development	$	4,562	$	7,407	$	5,917
Sales, general and administrative	11,122		18,142		12,736
Total	$	15,684	$	25,549	$	18,653

No income tax benefits have been recognized related to stock-based compensation expense for the years ended December 31, 2015, 2014 and 2013.

Employee Stock-Based Compensation—Stock-based compensation expense was $14.7 million, $23.9 million and $17.3 million for the years ended December 31, 2015, 2014 and 2013, respectively, for stock-based awards granted to employees. There was unrecognized stock-based compensation cost of $12.0 million related to nonvested stock options granted to employees as of December 31, 2015, and the Company expects to recognize this cost over a weighted-average period of 1.5 years as of December 31, 2015. The grant date fair value of employee stock-based awards was estimated using the following weighted-average assumptions:



	Year ended December 31,
	2015	2014	2013
Expected term (in years)	5.3-6.0	5.3-6.0	5.1-6.0
Volatility	67%-73%	51%-68%	60%-62%
Risk-free interest rate	0.86%-1.85%	1.58%-2.0%	0.8%-2.1%
Dividend yield	—%	—%	—%

Nonemployee Stock-Based Compensation—Stock-based compensation expense was $1.0 million, $1.7 million and $1.4 million for the years ended December 31, 2015, 2014 and 2013, respectively, for stock-based awards granted to nonemployees. There was unrecognized stock-based compensation cost of approximately $0.6 million related to nonvested stock options granted to nonemployees as of December 31, 2015, and the Company expects to recognize this cost over a weighted-average period of 0.9 year as of December 31, 2015. The fair value of non-employee stock-based awards was estimated using the following weighted-average assumptions:



	Year ended December 31,
	2015	2014	2013
Expected term (in years)	8.2-8.6	8.3-8.6	7.8-8.9
Volatility	65%-67%	53%-64%	60%-61%
Risk-free interest rate	1.83%-2.21%	2.0%-2.5%	1.6%-2.8%
Dividend yield	—%	—%	—%

Restricted Stock Units—A summary of the Company's restricted stock unit activity is as follows:



	Number of Shares		Weighted Average Grant Date Fair Value
Unvested at December 31, 2014	1,812,332		$	10.91
Granted	1,139,531		$	2.82
Vested	(820,401	)	$	2.78
Canceled	(247,910	)	$	8.66
Unvested at December 31, 2015	1,883,552		$	9.85

Stock-based compensation expense related to RSUs was $5.6 million, $8.6 million and $5.5 million for the years ended December 31, 2015, 2014 and 2013, respectively.

Stock Option Modification—In October 2014, the Company modified an employee’s stock options which resulted in the Company recording $2.3 million of additional stock-based compensation expense in the year ended December 31, 2014.

Employee Stock Option Exchange Program-In January 2015, the Company commenced an exchange offer to allow employees the opportunity to exchange, on a grant-by-grant basis, their outstanding eligible options that had an exercise price per share equal to or greater than $6.79 for new stock options on a two-for-one basis that the Company granted under its 2011 EIP. Generally, all employees with options were eligible to participate in the program, which expired on February 18, 2015. Non-employee members of Solazyme’s Board of Directors were not eligible to participate. Each new stock option has an exercise price of $2.58, the last reported sale price per share of Solazyme common stock on the NASDAQ Global Select Market on the new stock option grant date, which was February 19, 2015.

Each new stock option has a maximum term that is equal to the remaining term of the corresponding eligible option. Each new stock option has the same final vesting date as the corresponding eligible option. Each new stock option has the same rate of vesting, from the same vesting commencement date, as the corresponding eligible option, provided that any vesting that would have occurred prior to January 1, 2016 cumulates and cliff vests on January 1, 2016. This is the case even if the eligible options were fully vested on the date of the exchange. The optionee must be employed by the Company on January 1, 2016 to benefit from this new option cliff vest.

On February 19, 2015, the Company granted new options to eligible options holders to purchase 2,745,279 shares of common stock in exchange for the cancellation of the tendered options. The Company will record a charge of approximately $0.5 million associated with the stock option modification over the vesting periods of the new options which range from ten months to four years. This modification charge was recorded as additional stock-based compensation expense beginning in the first quarter of 2015.