9. Stock Option and Compensation Plans

The Company adopted its 2007 Stock Incentive Plan (the “2007 Plan”) for employees, non-employee directors and consultants for the purpose of advancing the interests of the Company’s stockholders by enhancing its ability to attract, retain and motivate persons who are expected to make important contributions to the Company. The 2007 Plan provided for the granting of stock option awards, RSUs, and other stock-based and cash-based awards. Following the effectiveness of the 2013 Stock Incentive Plan described below in connection with the closing of the Company’s initial public offering, the Company is no longer granting additional awards under the 2007 Plan.

In August 2013, the Company’s board of directors adopted and the Company’s stockholders approved the 2013 stock incentive plan (the “2013 Plan”), which became effective immediately prior to the closing of the Company’s initial public offering. In June 2015, the Company’s board of directors adopted a first amendment to the 2013 Plan. The 2013 Plan provides for the grant of incentive stock options, nonstatutory stock options, stock appreciation rights, RSUs, restricted stock awards and other stock-based awards. Upon the effectiveness of the 2013 Plan, the number of shares of the Company’s common stock that were reserved for issuance under the 2013 Plan was the sum of (1) such number of shares (up to approximately 3,359,641 shares) as is equal to the sum of 739,317 shares (the number of shares of the common stock then available for issuance under the 2007 Plan), and such number of shares of the Company’s common stock that are subject to outstanding awards under the 2007 Plan that expire, terminate or are otherwise surrendered, canceled, forfeited or repurchased by the Company at their original issuance price pursuant to a contractual repurchase right plus (2) an annual increase, to be added the first business day of each fiscal year, beginning with the fiscal year ending December 31, 2014 and continuing until, and including, the fiscal year ending December 31, 2023, equal to the lowest of 2,542,372 shares of the Company’s common stock, 4% of the number of shares of the Company’s common stock outstanding on the first day of the fiscal year and an amount determined by its board of directors. The Company’s employees, officers, directors, consultants and advisors are eligible to receive awards under the 2013 Plan. However, incentive stock options may only be granted to employees of the Company.

In connection with the evergreen provisions of the 2013 Plan, the number of shares available for issuance under the 2013 Plan was increased by approximately 1,257,000 shares, effective as of January 1, 2014, by approximately 1,360,000 shares, effective as of January 1, 2015, and by approximately 1,408,000 shares, effective as of January 1, 2016. As of September 30, 2016, the Company had approximately 1,048,000 shares available for grant under the 2013 Plan.

In April 2016, the board of directors adopted the ESPP pursuant to which the Company may sell up to an aggregate of 1,000,000 shares of common stock. The ESPP was approved by the Company’s stockholders in June 2016. The ESPP allows eligible employees to purchase common stock at a price per share equal to 85% of the lower of the fair market value of the common stock at the beginning or end of each six month offering period during the term of the ESPP. The first offering period began in September 2016.

A summary of the stock option activity, weighted average exercise prices, options outstanding and exercisable as of September 30, 2016 is as follows:



	Common Stock Options		Weighted Average Exercise Price

Outstanding, December 31, 2015	3,009		$	30.43
Granted	952		$	60.81
Exercised	(350	)	$	16.89
Expired or forfeited	(188	)	$	48.59
Outstanding, September 30, 2016	3,423		$	39.26

Options exercisable at September 30, 2016			1,399
Weighted average grant date fair value (per share) of options granted during the period			$	38.49

As of September 30, 2016, there were approximately 3,198,000 options outstanding, net of estimated forfeitures, that had vested or are expected to vest. The weighted-average exercise price of these options was $39.42 per option; the weighted-average remaining contractual life of these options was 7.8 years; and the aggregate intrinsic value of these options was approximately $35.2 million. A summary of the stock options outstanding and exercisable as of September 30, 2016 is as follows:



			As of September 30, 2016
			Options Outstanding			Options Exercisable
Range of Exercise Prices	Total Options Outstanding		Weighted Average Remaining Life (Years)	Weighted Average Exercise Price		Number Exercisable		Weighted Average Exercise Price

$0.12-$10.03	257		5.6	$	6.77	158		$	4.74
$10.04-$20.00	274		6.7	$	13.44	151		$	13.48
$20.01-$30.00	154		7.1	$	25.56	102		$	25.51
$30.01-$40.00	1,093		6.9	$	32.67	699		$	33.05
$40.01-$55.00	1,115		8.8	$	46.24	267		$	45.65
$55.01-$73.22	530		9.3	$	71.26	22		$	70.28
	3,423		7.8	$	39.26	1,399		$	30.18

Aggregate Intrinsic Value	$	38,226				$	23,077

Cash proceeds from, and the aggregate intrinsic value of, stock options exercised during the three and nine months ended September 30, 2016 and 2015, respectively, were as follows:



	Three months ended September 30,				Nine months ended September 30,
	2016		2015		2016		2015

Cash proceeds from options exercised	$	1,591	$	1,813	$	5,398	$	6,024
Aggregate intrinsic value of options exercised	$	5,185	$	10,092	$	12,607	$	39,033

In connection with stock option awards granted to employees, the Company recognized approximately $5.6 million and $3.4 million in share-based compensation expense during the three months ended September 30, 2016 and 2015, respectively, net of expected forfeitures. In connection with stock option awards granted to employees, the Company recognized approximately $17.3 million and $11.4 million in share-based compensation expense during the nine months ended September 30, 2016 and 2015, respectively, net of expected forfeitures. As of September 30, 2016, there were approximately $48.3 million of unrecognized compensation costs, net of estimated forfeitures, related to stock option awards granted to employees, which are expected to be recognized over a remaining weighted average period of 2.7 years.

In connection with stock option awards granted to consultants, the Company recognized approximately $0.6 million and $1.8 million in share-based compensation expense during the three months ended September 30, 2016 and 2015, respectively, net of expected forfeitures. In connection with stock option awards granted to consultants, the Company recognized approximately $1.5 million and $3.4 million in share-based compensation expense during the nine months ended September 30, 2016 and 2015, respectively, net of expected forfeitures. As of September 30, 2016, there were approximately $1.4 million of unrecognized compensation costs, net of estimated forfeitures, related to stock option awards granted to consultants, which are expected to be recognized over a remaining weighted average period of 1.4 years.

The following table presents a summary of the Company’s outstanding RSU awards granted as of September 30, 2016:



	Restricted Stock Units		Weighted Average Grant-Date Fair Value

Outstanding, December 31, 2015	288		$	44.54
Awarded	574		$	58.43
Vested	(103	)	$	44.07
Forfeited	(38	)	$	50.84
Outstanding, September 30, 2016	721		$	55.32

As of September 30, 2016, there were approximately 513,000 RSUs outstanding, net of estimated forfeitures, that are expected to vest. The weighted-average fair value of these RSUs was $54.45 and the aggregate intrinsic value of these RSUs was approximately $23.7 million.

In connection with RSUs granted to employees, the Company recognized approximately $2.0 million and $1.8 million in share-based compensation expense during the three months ended September 30, 2016 and 2015, respectively, net of expected forfeitures. In connection with RSUs granted to employees, the Company recognized approximately $6.1 million and $3.7 million in share-based compensation expense during the nine months ended September 30, 2016 and 2015, respectively, net of expected forfeitures. As of September 30, 2016, there were approximately $31.7 million of unrecognized compensation costs, net of estimated forfeitures, related to RSUs granted to employees, which are expected to be recognized over a remaining weighted average period of 2.5 years.

In connection with the ESPP made available to employees, the Company recognized a de minimis amount of share-based compensation expense during the three and nine months ended September 30, 2016. As of September 30, 2016, there were approximately $0.3 million of unrecognized compensation costs, net of estimated forfeitures, related to the ESPP, which are expected to be recognized over 0.5 years.