Equity Awards

6 Months Ended

Jun. 30, 2017

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Equity Awards

Equity Awards

We currently have two equity incentive plans, our 2005 Stock Option Plan (the 2005 Plan) and our 2012 Equity Incentive Plan (the 2012 Plan). Our 2005 Plan was terminated in connection with our initial public offering in 2012 but continues to govern the terms of outstanding stock options that were granted prior to the termination of the 2005 Plan. We no longer grant equity awards pursuant to our 2005 Plan.

Our 2012 Plan provides for the grant of incentive stock options, nonqualified stock options, stock appreciation rights, RSUs, performance-based stock awards and other forms of equity compensation (collectively, equity 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 equity awards may be granted to employees, including officers, as well as directors and consultants. The share reserve may increase to the extent outstanding stock options under the 2005 Plan expire or terminate unexercised. The share reserve also automatically increases on January 1 of each year until January 1, 2022, by up to 5% of the total number of shares of common stock outstanding on December 31 of the preceding year as determined by the board of directors. On January 1, 2017, 8,371,539 shares of common stock were automatically added to the 2012 Plan pursuant to the provision described in the preceding sentence.

Our 2012 Employee Stock Purchase Plan (the 2012 ESPP) authorizes the issuance of shares of common stock pursuant to purchase rights granted to our employees. 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. Offering periods are six months long and begin on February 1 and August 1 of each year. The number of shares of common stock reserved for issuance automatically increases on January 1 of each year until January 1, 2022, by up to 1% of the total number of shares of common stock outstanding on December 31 of the preceding year as determined by the board of directors. On January 1, 2017, 1,674,308 shares of common stock were automatically added to the 2012 ESPP pursuant to the provision described in the preceding sentence.

Stock Options

A summary of the stock option activity for the six months ended June 30, 2017 is as follows:

	Number of Shares		Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Term (Years)	Aggregate Intrinsic Value (in thousands)
Outstanding at December 31, 2016	5,818,435		$	20.57
Granted	566,720		84.81
Exercised	(697,446	)	15.77			$	51,560
Canceled	(38,334	)	71.68
Outstanding at March 31, 2017	5,649,375		$	27.26
Granted	50,000		103.60
Exercised	(705,807	)	8.62			$	62,617
Canceled	(1,174	)	57.78
Outstanding at June 30, 2017	4,992,394		$	30.65	5.57	$	376,150
Vested and expected to vest as of June 30, 2017	4,919,086		$	29.99	5.52	$	373,914
Vested and exercisable as of June 30, 2017	3,772,067		$	15.16	4.42	$	342,656

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 fair value per share of options granted was $37.57 for the six months ended June 30, 2017. The total fair value of stock options vested during the six months ended June 30, 2017 was $5.3 million.

Included in the number of options granted during the six months ended June 30, 2017 are 396,720 options with both service and market-based criteria, which were granted to our new President and Chief Executive Officer, who started his employment with us during the second quarter. The fair values of the options granted and the corresponding derived service periods were calculated using a Monte Carlo simulation, which estimates the potential outcome of reaching the market condition based on simulated future stock prices. The stock-based compensation expense associated with these options are recorded on a graded vesting basis.

As of June 30, 2017, total unrecognized compensation cost, adjusted for estimated forfeitures, related to unvested stock options was approximately $33.8 million. The weighted-average remaining vesting period of unvested stock options at June 30, 2017 was 3.55 years.

RSUs

A summary of RSU activity for the six months ended June 30, 2017 is as follows:

	Number of Shares		Weighted Average Grant Date Fair Value (Per Share)		Aggregate Intrinsic Value (in thousands)
Non-vested at December 31, 2016	12,222,282		$	63.66
Granted	4,216,410		88.05
Vested	(1,801,659	)	55.73		$	164,367
Forfeited	(507,680	)	73.14
Non-vested at March 31, 2017	14,129,353		71.60
Granted	763,940		97.79
Vested	(1,177,903	)	63.84		$	115,487
Forfeited	(445,303	)	68.78
Non-vested at June 30, 2017	13,270,087		$	73.89	$	1,406,629

RSUs granted to employees under the 2012 Plan generally vest over a four-year period. As of June 30, 2017, total unrecognized compensation cost, adjusted for estimated forfeitures, related to unvested RSUs was approximately $737.9 million and the weighted-average remaining vesting period was 2.91 years.