Stock-Based Compensation and Employee Benefit Plans

Stock-Based Compensation Plans

2014 Equity Incentive Plan

Our board of directors adopted, and our stockholders approved, our 2014 Equity Incentive Plan (“2014 Plan”). Our 2014 Plan provides for the grant of incentive stock options, within the meaning of Section 422 of the Internal Revenue Code, to our employees, and for the grant of nonstatutory stock options, restricted stock, restricted stock units, stock appreciation rights, performance units and performance shares to our employees, directors and consultants. When initially adopted, there were up to 7,200,000 shares of our common stock authorized for issuance under the 2014 Plan subject to increase pursuant to the terms of the 2014 Plan. The shares of common stock available for issuance pursuant to the 2014 Plan is increased by shares returned that would otherwise return to our 2007 Plan as the result of the expiration or termination of awards. In addition, the number of shares available for issuance under the 2014 Plan will also include an annual increase on the first day of each fiscal year beginning in fiscal 2016 and ending immediately following fiscal 2020, equal to the least of:


•	7,200,000 shares of our common stock;


•	4% of the outstanding shares of our common stock as of the last day of our immediately preceding fiscal year, which is referred to as the threshold percentage;


•	a percentage equal to the threshold percentage, plus the difference between the threshold percentage and the percentage added to the 2014 Plan for each prior fiscal year; or


•	such other amount as our board of directors may determine.

2014 Employee Stock Purchase Plan

Our board of directors adopted, and our stockholders approved, the 2014 Employee Stock Purchase Plan (“ESPP”), which became effective in connection with our IPO in December 2014. The ESPP allows eligible employees to purchase shares of our common stock at a discount through payroll deductions of up to 15% of their eligible compensation, subject to any plan limitations. The offering periods generally start on the first trading day on or after March 15 and September 15 of each year and end on the first trading approximately six months later. The administrator may, in its discretion, modify the terms of future offering periods. Due to the timing of the IPO, the first offering period started December 22, 2014 and ended on September 15, 2015. At the end of each offering period, employees are able to purchase shares at 85% of the lower of the fair market value of our common stock on the first trading day of the offering period or on the last trading day of the offering period. When initially adopted, there were 1,800,000 shares of our common stock are available for sale under our ESPP. In addition, our ESPP provides for annual increases in the number of shares available for issuance under the ESPP on the first day of each fiscal year beginning in fiscal 2016, equal to the lesser of:


•	1% of the outstanding shares of our common stock on the first day of such fiscal year;


•	1,800,000 shares of our common stock; or


•	such other amount as may be determined by our board of directors.

2007 Stock Option Plan

Our Amended and Restated 2007 Stock Incentive Plan (“2007 Plan”) was terminated in connection with the IPO, and accordingly, no shares are available for issuance under this plan. Our 2007 Plan continues to govern outstanding awards granted thereunder. Our 2007 Plan allowed for the grant of incentive stock options, nonqualified stock options and restricted stock. The terms of the stock option grants under the 2007 Plan, including the exercise price per share and vesting periods, were determined by our Compensation Committee of the Board (“Committee”). Stock options were granted at exercise prices defined by the Committee but, historically, were equal to the fair market value of our common stock at the date of grant. As of December 31, 2014 and 2013, we had 0 and 1,109,292 shares, respectively, allocated to the 2007 Plan.

Options

The following table summarizes the assumptions used for estimating the fair value of stock options granted under our option plans for the years ended December 31:



	2015	2014	2013
Risk-free interest rate	1.65-2.13%	1.02-2.08%	0.88-2.29%
Expected term (years)	5.5 - 6.0	3.2 - 6.1	5.8 - 8.5
Expected volatility	41 - 47%	35 - 59%	54 - 60%
Dividend yield	—%	—%	—%
Weighted-average grant date fair value per share	$5.70	$5.57	$0.65

The following is a summary of option activity for the year ended December 31, 2015:



	Number of Options		Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Term (in years)	Aggregate Intrinsic Value (in thousands)
Outstanding at January 1, 2015	10,371,469		$	4.59	—	—
Granted	1,611,617		$	13.84	—	—
Exercised	(804,857	)	$	1.24	—	—
Forfeited	(430,878	)	$	7.42	—	—
Expired	(36,030	)	$	6.19	—	—
Outstanding at December 31, 2015	10,711,321		$	6.16	7.8	$	53,012
Exerciseable at December 31, 2015	5,146,604		$	3.18	7.1	$	37,857
Vested or expected to vest as of December 31, 2015	10,393,562		$	6.00	7.8	$	52,643

Total compensation cost related to nonvested option awards not yet recognized as of December 31, 2015 was $20.5 million and will be recognized over a weighted-average period of approximately 2.8. The aggregate intrinsic value of employee options exercised during the years ended December 31, 2015, 2014 and 2013 was $10.8 million, $12.1 million and $1.0 million, respectively.

Restricted Stock Units

During 2015, we began issuing RSUs to certain employees, officers and directors. The following table summarizes our activities of RSUs during the year ended December 31, 2015:



	Number of RSUs		Weighted-Average Grant Date Fair Value
Unvested at December 31, 2014	—		—
RSUs granted	1,939,462		$	12.99
RSUs vested	—		—
RSUs forfeited/expired	(86,010	)	$	16.06
Unvested at December 31, 2015	1,853,452		$	12.85
Expected to vest after December 31, 2015	1,384,650		$	12.98

As of December 31, 2015, there was $21.5 million of unrecognized compensation cost related to unvested RSUs, which is expected to be recognized over the next 3.6 years.

Employee Stock Purchase Plan

As of December 31, 2015, there was $0.3 million of unrecognized compensation expense related to the ESPP.

The assumptions used to calculate our Black-Scholes-Merton Option Pricing Model for each stock purchase right granted under the ESPP were as follows or the year ended December 31:



	2015		2014
Risk-free interest rate	0.27	%	0.17	%
Expected term (years)	0.50		0.75
Expected volatility	42	%	42	%
Dividend yield	—	%	—	%

Stock-based compensation expense related to stock options, RSUs and ESPP are included in the following line items in our accompanying consolidated statements of operations for the year ended December 31 (in thousands):



	2015		2014
Sales and marketing	$	3,081	$	686
Technology and analytics	2,351		539
Processing and servicing	775		219
General and administrative	5,375		1,398
Total	$	11,582	$	2,842

401(k) Plan

We maintain a 401(k) defined contribution plan that covers substantially all of our employees. Participants may elect to contribute their annual compensation up to the maximum limit imposed by federal tax law. During the years ended December 31, 2015, 2014 and 2013 we had $1.0 million, $0.3 million, and $0 in employer related match expense, respectively.