6. Stock-Based Compensation

The Company maintains several equity compensation plans, including the TESARO, Inc. 2012 Omnibus Incentive Plan, or the 2012 Incentive Plan, the TESARO, Inc. 2010 Stock Incentive Plan, or the 2010 Incentive Plan, the TESARO, Inc. 2015 Non-Employee Director Stock Incentive Plan, or the 2015 Director Plan, and the TESARO, Inc. 2012 Employee Stock Purchase Plan, or the 2012 ESPP.

On April 27, 2012, the stockholders of the Company approved the 2012 Incentive Plan, which had been previously adopted by the board of directors. Upon effectiveness of the 2012 Incentive Plan, the Company ceased making awards under the 2010 Incentive Plan. The 2012 Incentive Plan initially allowed the Company to grant awards for up to 1,428,571 shares of common stock plus the number of shares of common stock available for grant under the 2010 Incentive Plan as of the effectiveness of the 2012 Incentive Plan (an additional 6,857 shares) plus the number of shares of common stock related to awards outstanding under the 2010 Incentive Plan that terminate by expiration, forfeiture, cancellation, cash settlement or otherwise. In addition, each year starting in 2014, the number of shares available for grants of awards under the 2012 Incentive Plan is increased automatically on January 1 by a number of shares of common stock equal to the lesser of 4% of the shares of common stock outstanding at such time or the number of shares determined by the Company’s board of directors. Most recently, on January 1, 2015 and 2016, the number of shares authorized for issuance under the 2012 Incentive Plan was increased by 1,444,403 shares and 1,611,191 shares, respectively. On May 14, 2015, the stockholders of the Company approved an increase of 2,000,000 shares of common stock available for grant under the 2012 Incentive Plan. Awards under the 2012 Incentive Plan may include the following award types: stock options, which may be either incentive stock options or nonqualified stock options; stock appreciation rights; restricted stock; restricted stock units; dividend equivalent rights; performance shares; performance units; cash-based awards; other stock-based awards, including unrestricted shares; or any combination of the foregoing. The exercise price of stock options granted under the 2012 Incentive Plan is equal to the closing price of a share of the Company’s common stock on the grant date.

On May 14, 2015, the stockholders of the Company approved the 2015 Director Plan, which had been previously adopted by the board of directors in order to have a plan in addition to the 2012 Incentive Plan for purposes of granting awards to non-employee directors. The 2015 Director Plan allows the Company to grant awards for up to 500,000 shares of common stock. Awards under the 2015 Director Plan may include the following award types: stock options; stock appreciation rights; restricted stock; restricted stock units; unrestricted stock; or any combination of the foregoing. The exercise price of stock options granted under the 2015 Director Plan is equal to the closing price of a share of the Company’s common stock on the grant date.

Stock-based compensation expense as reflected in the Company’s condensed consolidated statements of operations and comprehensive loss was as follows (in thousands):


	Three Months Ended March 31,
	2015		2016
Research and development	$	1,814	$	3,666
Selling, general and administrative		2,106		5,592
Total stock-based compensation expense	$	3,920	$	9,258

Stock Options

The following table presents a summary of the Company’s stock option activity and related information:



		Weighted-average
		exercise price per
	Shares	share
Outstanding at December 31, 2015	5,878,352	$	35.00
Granted	1,298,421		43.22
Exercised	(29,689)		24.56
Cancelled	(79,531)		49.95
Outstanding at March 31, 2016	7,067,553	$	36.39

Vested at March 31, 2016	2,646,197	$	18.39
Vested and expected to vest at March 31, 2016 (a)	6,527,560	$	35.44

(a)

This represents the number of vested options as of March 31, 2016, plus the number of unvested options expected to vest as of March 31, 2016, based on the unvested options at March 31, 2016, adjusted for the estimated forfeiture rate.

At March 31, 2016, there was approximately $97.4 million of total unrecognized compensation cost related to unvested stock options, which the Company expects to recognize over a remaining weighted-average period of 3.1 years.

Restricted Stock Units

The following table presents a summary of the Company’s restricted stock unit, or RSU, activity and related information:


		Weighted-average
		grant date fair
	Shares	value per share
Unvested restricted stock units at December 31, 2015	60,000	$	56.00
Granted	480,995		43.31
Vested	—		—
Forfeited	(3,700)		43.39
Unvested restricted stock units at March 31, 2016	537,295	$	44.72

At March 31, 2016, there was approximately $19.4 million of unrecognized compensation cost related to RSUs, which the Company expects to recognize over a remaining weighted-average period of 3.8 years.

ESPP

Under the Company’s 2012 ESPP, an aggregate of 275,000 shares of common stock have been reserved for issuance pursuant to purchase rights granted to the Company’s employees or to employees of the Company’s designated subsidiaries. As of March 31, 2016, 236,723 shares remained available for issuance. During the three months ended March 31, 2015 and 2016, the Company did not issue any shares under the 2012 ESPP, and recognized approximately $0.1 million and $0.3 million in related stock-based compensation expense, respectively.