The Company maintained a stock plan, the 2008 Stock Option Plan, as amended and restated (the “2008 Plan”), which allowed the Company to grant incentive (“ISO”), non‑statutory (“NSO”) stock options and restricted stock units (“RSU”) to its employees, directors and consultants to participate in the Company’s future performance through stock‑based awards at the discretion of the board of directors. Under the 2008 Plan, options to purchase the Company’s common stock could not be granted at a price less than fair value in the case of ISOs and NSOs. Fair value was determined by the board of directors, in good faith, with input from valuation consultants. On June 22, 2016, the plan was terminated in connection with the Company’s IPO. Accordingly, no shares are available for future issuance under the 2008 Plan. The 2008 Plan continues to govern outstanding equity awards granted thereunder. The Company’s right of first refusal for outstanding equity awards granted under the 2008 Plan terminated upon completion of the IPO. Options granted include provisions for early exercisability.

The Company’s 2016 Stock Option and Incentive Plan (the “2016 Plan”) became effective on June 21, 2016. The 2016 Plan provides for the grant of ISOs, NSOs, restricted stock, RSUs, stock appreciation rights, unrestricted stock awards, performance share awards, dividend equivalent rights and cash-based awards to employees, directors and consultants of the Company. A total of 11,500,000 shares of the Company’s Class A common stock were initially reserved for issuance under the 2016 Plan. These available shares automatically increase each January 1, beginning on January 1, 2017, by 5% of the number of shares of the Company’s Class A and Class B common stock outstanding on the immediately preceding December 31, or such lesser number of shares as determined by the Company’s compensation committee. On January 1, 2019 and 2018, the shares available for grant under the 2016 Plan were automatically increased by 5,004,011 shares and 4,698,490 shares, respectively.

Under the 2016 Plan, the stock options are granted at a price per share not less than 100% of the fair market value per share of the underlying common stock on the date of grant. Under both plans, stock options generally expire 10 years from the date of grant and vest over periods determined by the board of directors. The vesting period for new-hire options and restricted stock units is generally a four year term from the date of grant, at a rate of 25% after one year, then monthly or quarterly, respectively, on a straight-line basis thereafter. In July 2017, the Company began granting restricted stock units to existing employees that vest in equal quarterly installments over a four year service period.

In connection with its acquisition of SendGrid, the Company assumed all stock options and restricted stock units issued under SendGrid’s 2009, 2012 or 2017 Stock Incentive Plans that were outstanding on the date of acquisition. The assumed equity awards will continue to be outstanding and will be governed by the provisions of their respective plans. Additionally, the Company assumed shares of SendGrid common stock that were reserved and available for issuance under SendGrid's 2017 Equity Incentive Plan, on an as converted basis. These shares can be utilized for future equity grants under the Company’s 2016 Plan, to the extent permitted by New York Stock Exchange rules.

The Company’s Employee Stock Purchase Plan (“2016 ESPP”), as amended, initially became effective on June 21, 2016. A total of 2,400,000 shares of the Company’s Class A common stock were initially reserved for issuance under the 2016 ESPP. These available shares automatically increase each January 1, beginning on January 1, 2017, by the lesser of 1,800,000 shares of the common stock, 1% of the number of shares of the Company’s Class A and Class B common stock outstanding on the immediately preceding December 31 or such lesser number of shares as determined by the Company’s compensation committee. On January 1, 2019 and 2018, the shares available for grant under the 2016 ESPP were automatically increased by 1,000,802 shares and 939,698 shares, respectively.

The 2016 ESPP allows eligible employees to purchase shares of the Company’s Class A common stock at a discount of up to 15% through payroll deductions of their eligible compensation, subject to any plan limitations. Except for the initial offering period, the 2016 ESPP provides for separate six-month offering periods beginning in May and November of each fiscal year, starting in May 2017.

On each purchase date, eligible employees purchase the Company’s stock at a price per share equal to 85% of the lesser of (i) the fair market value of the Company’s Class A common stock on the offering date or (ii) the fair market value of the Company’s Class A common stock on the purchase date. As of December 31, 2019, total unrecognized compensation cost related to the 2016 ESPP was $4.4 million, which will be amortized over a weighted-average period of 0.4 years.



	Number of options outstanding		Weighted- average exercise price (Per share)		Weighted- average remaining contractual term (in years)	Aggregate intrinsic value (In thousands)
Outstanding options as of December 31, 2018	7,423,369		$	16.07	6.80	$	543,640
Granted	909,229		118.35
Assumed in acquisition	2,978,555		14.91
Exercised	(3,620,866	)	10.43
Forfeited and canceled	(539,439	)	51.28
Outstanding options as of December 31, 2019	7,150,848		$	28.79	6.47	$	511,971
Options vested and exercisable as of December 31, 2019	4,721,801		$	14.00	5.65	$	398,490



	Year Ended December 31,
	2019		2018		2017
	(In thousands, except per share amounts)
Aggregate intrinsic value of stock options exercised ⁽¹⁾	$	394,998	$	178,504	$	131,955
Total estimated grant date fair value of options vested	$	81,292	$	21,761	$	15,831
Weighted-average grant date fair value per share of options granted	$	58.13	$	18.40	$	13.33

⁽¹⁾ Aggregate intrinsic value represents the difference between the fair value of the Company’s Class A common stock as reported on the New York Stock Exchange and the exercise price of outstanding “in-the-money” options.

On February 28, 2017, the Company granted a total of 555,000 shares of performance-based stock options in three distinct awards to an employee with grant date fair values of $13.48, $10.26 and $8.41 per share for a total grant value of $5.9 million. The first half of each award vests upon satisfaction of a performance condition and the remainder vests thereafter in equal monthly installments over a two year period. The achievement window expires after 4.3 years from the date of grant and the stock options expire seven years after the date of grant. The stock options are amortized over a derived service period, as adjusted, of 3.1 years, 3.9 years and 4.6 years, respectively. The stock options value and the derived service period were estimated using the Monte-Carlo simulation model. The following table summarizes the details of the performance options:



	Number of options outstanding	Weighted- average exercise price (Per share)		Weighted- average remaining contractual term (in years)	Aggregate intrinsic value (In thousands)
Outstanding options as of December 31, 2018	555,000	$	31.72	6.00	$	—
Granted	—	—
Exercised	—	—
Forfeited and canceled	—	—
Outstanding options as of December 31, 2019	555,000	$	31.72	4.16	$	36,941
Options vested and exercisable as of December 31, 2019	427,812	$	31.72	4.16	$	28,475



	Number of awards outstanding		Weighted- average grant date fair value (Per share)		Aggregate intrinsic value (In thousands)
Nonvested RSUs as of December 31, 2018	8,262,902		$	42.70	$	729,373
Granted	3,413,404		119.04
Assumed in acquisition	561,999		112.88
Vested	(2,893,119	)	51.15
Forfeited and canceled	(854,669	)	$	61.94
Nonvested RSUs as of December 31, 2019	8,490,517		$	74.21	$	830,167



	Year Ended December 31,
Employee Stock Options:	2019	2018	2017
Fair value of common stock	$103.70 - $130.70	$33.01 - $76.63	$23.60 - $31.96
Expected term (in years)	0.33 - 6.08	1.00 - 6.08	6.08
Expected volatility	49.0% - 66.5%	38.6% - 44.2%	44.3% - 47.6%
Risk-free interest rate	1.6% - 2.5%	2.9% - 3.0%	1.9% - 2.3%
Dividend rate	—%	—%	—%



	Year Ended December 31,
Employee Stock Purchase Plan:	2019	2018	2017
Expected term (in years)	0.49 - 0.50	0.5	0.5
Expected volatility	43.1% - 50.3%	39.8% - 47.5%	33.2% - 33.9%
Risk-free interest rate	1.6% - 2.4%	2.1% - 2.5%	1.1% - 1.4%
Dividend rate	—%	—%	—%

The Company recorded the total stock-based compensation expense as follows. In the year ended December 31, 2019, the stock-based compensation expense associated with awards assumed in the SendGrid acquisition was $81.8 million.



	Year Ended December 31,
	2019		2018		2017
	(In thousands)
Cost of revenue	$	7,123	$	1,126	$	650
Research and development	126,012		42,277		22,808
Sales and marketing	60,886		23,616		9,822
General and administrative	70,297		26,254		16,339
Total	$	264,318	$	93,273	$	49,619