Stock Awards

We have a 2005 Stock Option Plan, or 2005 Stock Plan, which provides for grants of stock awards, including options to purchase shares of common stock, stock purchase rights and RSUs to certain employees, officers, directors and consultants. As of December 31, 2012, there were 55,592,864 total shares of common stock authorized for issuance under the 2005 Plan, which includes shares already issued under such plan and shares reserved for issuance pursuant to outstanding options and RSUs, and shares available for future issuance.

On April 27, 2012, the board of directors approved the 2012 Plan, and the 2012 Employee Stock Purchase Plan, or the 2012 ESPP, which became effective on June 27, 2012 and June 28, 2012, respectively.

The 2012 Plan provides for the grant of incentive stock options, nonqualified stock options, stock appreciation rights, restricted stock awards, RSUs, performance-based stock awards and other forms of equity compensation, or collectively, stock awards. In addition, the 2012 Plan provides for the grant of performance cash awards. Incentive stock options may be granted only to employees. All other awards may be granted to employees, including officers, as well as directors and consultants. As of December 31, 2012, there were 13,587,576 total shares of common stock authorized for issuance under the 2012 Plan. The number of shares of common stock reserved for issuance under the 2012 Plan will automatically increase on January 1 of each year, starting on January 1, 2013 and continuing through January 1, 2022, by up to 5% of the total number of shares of the common stock outstanding on December 31 of the preceding calendar year as determined by the board of directors. The share reserve may increase to the extent that outstanding options under the 2005 Stock Plan expire or terminate unexercised.

The 2012 ESPP authorizes the issuance of shares of common stock pursuant to purchase rights granted to our employees. As of December 31, 2012, we had 5,000,000 total shares of common stock reserved for issuance under the 2012 ESPP. The number of shares of common stock reserved for issuance will automatically increase on January 1 of each calendar year, from January 1, 2013 through January 1, 2022, by up to 1% of the total number of shares of the common stock outstanding on December 31 of the preceding calendar year.

Stock Options

The stock options are exercisable at a price equal to the market value of the underlying shares of common stock on the date of the grant as determined by our board of directors or, for those stock options issued subsequent to our IPO, the closing price of our common stock as reported on the New York Stock Exchange on the date of grant. Stock options granted under our 2005 Stock Plan and the 2012 Plan to new employees generally vest 25% one year from the date the requisite service period begins and continue to vest monthly for each month of continued employment over the remaining three years. Options granted to members of our board of directors and to employees who have previously been granted options generally vest in 48 equal monthly installments. Options that were granted to members of our board of directors in June 2012 vest in 3 equal annual installments. Options granted generally are exercisable for a period of up to 10 years. Option holders under the 2005 Stock Plan can exercise unvested options to acquire restricted stock. Upon termination of service, we have the right to repurchase at the original purchase price any unvested (but issued) shares of common stock. Shares of common stock purchased under our 2005 Stock Plan are subject to certain restrictions.

On September 9, 2011, we granted 275,808 stock options subject to performance-based vesting criteria to an executive. Vesting was contingent upon meeting certain board-approved financial performance targets over a period of one year ending on June 30, 2012. Upon conclusion of the measurement period, the executive achieved 98% of his target, resulting in 243,744 stock options eligible to vest. These stock options vest over a period of four years with 25% vesting one year from the date his requisite service period began and continue to vest monthly for each month of continued employment over the remaining three years. We recorded stock-based compensation expense of $1.3 million related to this grant for the year ended December 31, 2012 as part of sales and marketing expense on the consolidated statements of comprehensive income (loss). No expense was recognized in the six months ended December 31, 2011 as achievement was not deemed probable during that period.

A summary of the stock option activity for the year ended December 31, 2012, the six months ended December 31, 2011, fiscal 2011 and 2010 is as follows:



	Number of Shares		Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Term (Years)	Aggregate Intrinsic Value (in thousands)
Outstanding at June 30, 2009	19,164,000		$	0.07
Granted	4,684,000		1.00
Exercised	(7,036,768	)	0.03			$	10,054
Forfeited	(290,248	)	0.41
Outstanding at June 30, 2010	16,520,984		0.34
Granted	15,402,456		2.15
Exercised	(4,279,456	)	0.25			$	7,489
Forfeited	(867,590	)	0.87
Cancelled	(450,000	)	0.18
Outstanding at June 30, 2011	26,326,394		1.40
Granted	17,055,120		3.29
Exercised	(1,469,118	)	1.45			$	2,380
Forfeited	(2,310,756	)	1.61
Outstanding at December 31, 2011	39,601,640		2.20
Granted	7,695,730		15.03
Exercised	(6,654,558	)	0.76			$	84,215
Forfeited	(4,187,185	)	3.47
Cancelled	(340,167	)	1.90
Outstanding at December 31, 2012	36,115,460		$	5.05	8.31	$	905,846
Vested and expected to vest as of December 31, 2012	35,427,432		$	4.99	8.30	$	890,661
Vested and exercisable as of December 31, 2012	13,155,248		$	2.11	7.57	$	367,353

Aggregate intrinsic value represents the difference between the estimated fair value of our common stock and the exercise price of outstanding, in-the-money options. The weighted-average grant date per share fair value of options granted was $7.68, $2.52, $1.16 and $0.61 for the year ended December 31, 2012, the six months ended December 31, 2011 and for fiscal 2011 and 2010, respectively. The total fair value of shares vested was $19.2 million, $2.6 million, $2.0 million and $0.3 million for the year ended December 31, 2012, the six months ended December 31, 2011 and for fiscal 2011 and 2010, respectively.

As of December 31, 2012, total unrecognized compensation cost, adjusted for estimated forfeitures, related to unvested stock options was approximately $76.0 million. The weighted-average remaining vesting period of unvested stock options at December 31, 2012 was 2.65 years.

Under our 2005 Stock Plan, we issue shares of restricted stock as a result of the cash exercise of unvested stock options. The proceeds initially are recorded as a liability from the early exercise of stock options and reclassified to common stock as our repurchase right lapses. A summary of the restricted stock activity for the year ended December 31, 2012, the six months ended December 31, 2011 and fiscal 2011 is as follows:



	Shares Outstanding		Weighted-Average Grant Date Fair Value
Balance at June 30, 2010	—		$	—
Early exercised	453,243		0.86
Vested	(37,755	)	0.58
Balance at June 30, 2011	415,488		0.89
Early exercised	360,852		1.29
Vested	(185,640	)	0.66
Repurchased	(12,084	)	0.74
Balance at December 31, 2011	578,616		1.21
Early exercised	263,970		2.38
Vested	(573,352	)	1.62
Repurchased	(34,168	)	1.42
Balance at December 31, 2012	235,066		1.49

RSUs



	Number of Shares		Weighted Average Grant Date Fair Value		Weighted- Average Remaining Contractual Term (Years)	Aggregate Intrinsic Value (in thousands)
Non-vested share units at December 31, 2011	—		$	—
Granted	1,470,072		17.02
Vested	—		—			$	—
Forfeited	(12,202	)	31.97
Non-vested share units at December 31, 2012	1,457,870		$	16.89	9.40	$	43,780
Expected to vest as of December 31, 2012	1,399,510				9.40	$	42,027

RSUs granted under the 2005 Stock Plan and the 2012 Plan to employees generally vest annually over a four-year period. As of December 31, 2012, total unrecognized compensation cost, adjusted for estimated forfeitures, related to unvested RSUs was approximately $16.8 million and the weighted-average remaining vesting period was 3.38 years.

ESPP

The price at which common stock is purchased under the 2012 ESPP is equal to 85% of the fair market value of the common stock on the first or last day of the offering period, whichever is lower. As the current offering period is June 28, 2012 through January 31, 2013, no shares were issued under the 2012 ESPP during the year ended December 31, 2012.