Stock Incentive Plans

12 Months Ended

Dec. 31, 2019

Share-based Payment Arrangement [Abstract]

2006 Plan

In October 2006, the Company adopted the 2006 Equity Incentive Plan, as amended, (the “2006 Plan”). The Plan provided for the granting of stock options to employees and non-employees of the Company. Options granted under the Plan were either incentive stock options or nonqualified stock options. Incentive stock options (“ISO”) were granted only to employees (including officers and directors who are also employees). Nonqualified stock options (“NSO”) may be granted to employees and non-employees. The board of directors had the authority to determine to whom options will be granted, the number of options, the term and the exercise price.

Options under the Plan were granted for periods of up to ten years and at the fair value of the shares on the date of grant as determined by the board of directors. In general, options become exercisable at a rate of 25% after the first anniversary of the grant and then monthly vesting for an additional three years from date of grant. The term for options is no longer than five years for ISOs for which the grantee owns greater than 10% of the voting power of all classes of stock and no longer than ten years for all other options. The Company issues new shares upon the exercise of options.

2016 Plan

In October 2016, the Company adopted the 2016 Equity Incentive Plan, (the “2016 Plan”). The 2016 Plan was subsequently approved by the Company’s stockholders and became effective on October 19, 2016, immediately before the effective date of the IPO. Following the effectiveness of the 2016 Plan, no additional options will be granted under the 2006 Plan. In addition, to the extent that any awards outstanding or subject to vesting restrictions under the 2006 Plan are subsequently forfeited or terminated for any reason before being exercised or settled, the shares of common stock reserved for issuance pursuant to such awards as of the closing of the IPO will become available for issuance under the 2016 Plan. The remaining shares available for grant under the 2006 Plan became available for issuance under the 2016 Plan upon the closing of the IPO. On the first day of each year, the 2016 Plan authorizes an annual increase of the least of 3,865,000 shares, 5% of outstanding shares on the last day of the immediately preceding fiscal year or an amount as determined by the Company's Board of Directors. As of December 31, 2019, the Company has reserved 7,359,234 shares of common stock for issuance under the 2016 Plan.

Pursuant to the 2016 Plan, stock options, restricted shares, stock units, including restricted stock units and stock appreciation rights may be granted to employees, consultants, and outside directors of the Company. Options granted may be either ISOs or NSOs.

Stock options are governed by stock option agreements between the Company and recipients of stock options. ISOs and NSOs may be granted under the 2016 Plan at an exercise price of not less than 100% of the fair market value of the common stock on the date of grant, determined by the Compensation Committee of the Board of Directors. Options become exercisable and expire as determined by the Compensation Committee, provided that the term of ISOs may not exceed ten years from the date of grant.

Employee Stock Purchase Program (“ESPP”)

In October 2016, the Company’s Board of Directors and stockholders approved the Employee Stock Purchase Plan (the “ESPP”). Under the ESPP, the Company initially reserved 483,031 shares of common stock for issuance as of its effective date of October 19, 2019 On the first day of each calendar year, the number of shares reserved increases by the least of 966,062 shares, 1.5% of the shares of the Company’s common stock outstanding on the last day of the immediately preceding fiscal year, or an amount as determined by the Company’s Board of Directors. The ESPP allows eligible employees to purchase shares of the Company’s common stock at a discount through payroll deductions of up to 15% of their eligible compensation, subject to any plan limitations. The ESPP provides for 12 month offering periods that each contain two 6 month purchase periods. At the end of each purchase period, employees are able to purchase shares at 85% of the lower of the fair market value of the Company’s common stock on the first trading day of the offering period or on the last day of the purchase period.

As of December 31, 2019, 350,198 shares of common stock have been issued to employees participating in the ESPP and 1,181,103 shares were available for issuance under the ESPP.

The Company used the following assumptions to estimate the fair value of the ESPP offered for the year ended December 31, 2019: expected term of 0.5 – 1 year, volatility of 43.61% - 48.05%, risk-free interest rate of 1.60% - 2.35% and expected dividend yield of zero.

The Company used the following assumptions to estimate the fair value of the ESPP offered for the year ended December 31, 2018: expected term of 0.5 – 1 year, volatility of 41.46% - 44.55%, risk-free interest rate of 2.19% - 2.64% and expected dividend yield of zero.

The Company used the following assumptions to estimate the fair value of the ESPP offered for the year ended December 31, 2017: expected term of 0.5 – 1 year, volatility of 42.18% - 57.69%, risk-free interest rate of 0.52% - 1.62% and expected dividend yield of zero.

Equity Incentive Plan Activity

A summary of share-based awards available for grant under the 2016 Equity Incentive Plan is as follows:


			Shares Available for Grant
Balance at December 31, 2016			3,743,037
Additional options authorized			1,106,966
Awards granted			(837,436)
Awards forfeited			21,585
Balance at December 31, 2017			4,034,152
Additional awards authorized			1,168,865
Awards granted			(666,913)
Awards forfeited			124,478
Awards withheld for tax purposes			56,710
Balance at December 31, 2018			4,717,292
Additional awards authorized			1,218,402
Awards granted			(649,911)
Awards forfeited			181,513
Awards withheld for tax purposes			60,836
Balance at December 31, 2019			5,528,132

During the year ended December 31, 2019, 629,901 restricted stock units ("RSUs") were granted, 180,842 RSUs vested, and 110,920 RSUs were forfeited.

The following table summarizes stock option activity under the 2006 and 2016 Plans, including grants to nonemployees:


			Options Outstanding
		Options Outstanding			Weighted- Average Exercise Price Per Share		Weighted- Average Remaining Contractual Life (years)			Aggregate Intrinsic Value (in thousands)
Balance at December 31, 2016	2,977,218		$	6.16		6.93		$	70,979
Options granted	465,271		$	36.76
Options exercised	(827,556)		$	4.11
Options forfeited	(13,752)		$	14.43
Balance at December 31, 2017	2,601,181		$	12.24		7.17		$	113,958
Options granted	366,928		$	68.32
Options exercised	(798,424)		$	7.19
Options forfeited	(75,548)		$	34.30
Balance at December 31, 2018	2,094,137		$	23.20		7.02		97,976
Options granted	20,010		$	82.77
Options exercised	(540,307)		$	9.59
Options forfeited	(70,593)		$	54.54
Balance at December 31, 2019	1,503,247		$	27.40		6.43		62,401
Options exercisable – December 31, 2019	1,147,525		$	19.64		6.02		55,919
Options vested and expected to vest – December 31, 2019	1,487,867		$	27.07		6.41		62,220

The aggregate intrinsic values of options outstanding, exercisable, vested and expected to vest were calculated as the difference between the exercise price of the options and the closing price of the Company’s common stock.

During the years ended December 31, 2019, 2018 and 2017, the Company granted options with a weighted-average grant date fair value of $38.29, $32.38 and $18.69 per share, respectively.

The aggregate intrinsic value of options exercised was $36.9 million, $52.4 million and $32.5 million for the years ended December 31, 2019, 2018 and 2017, respectively. The total estimated grant date fair value of options vested during the period was $7.8 million, $5.3 million and $2.4 million for the years ended December 31, 2019, 2018 and 2017, respectively.

The fair value of non-vested restricted stock units (“RSUs”) is based on the Company’s closing stock price on the date of grant. A summary for the year ended December 31, 2019, is as follows:


	Shares Underlying RSUs	Weighted Average Grant Date Fair Value		Weighted Remaining Vesting Period (in years)	Aggregate Intrinsic Value (in thousands)
Non-vested as of December 31, 2018	547,891	$	56.62	2.45	$	38,067
Granted	629,901	$	87.72
Vested	(180,842)	$	52.52
Forfeited	(110,920)	$	69.77
Non-vested as of December 31, 2019	886,030	$	77.92	1.39	$	60,330