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. 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, 2016 and 2017, the number of shares authorized for issuance under the 2012 Incentive Plan was increased by 1,611,191 shares and 2,144,867 shares, respectively. 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; RSUs; 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; RSUs; 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. On May 11, 2016, the Company’s stockholders approved an amendment to the 2015 Director Plan that limits the maximum number of shares of stock subject to awards granted in any calendar year to any non-employee director of the Company to 50,000 shares and affirms that 500,000 shares are reserved for issuance under the 2015 Director Plan.

The following table presents stock-based compensation expense as reflected in the Company’s condensed consolidated statements of operations and comprehensive loss (in thousands):


	Three Months Ended June 30,				Six Months Ended June 30,
	2016		2017		2016		2017
Research and development	$	4,479	$	7,862	$	8,222	$	14,987
Selling, general and administrative		7,206		15,646		12,924		26,922
Total stock-based compensation expense	$	11,685	$	23,508	$	21,146	$	41,909

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, 2016	6,978,621	$	40.65
Granted	661,657		162.65
Exercised	(373,078)		43.65
Cancelled	(62,837)		50.38
Outstanding at June 30, 2017	7,204,363	$	51.62

Vested at June 30, 2017	3,779,553	$	28.34

At June 30, 2017, there was approximately $142.6 million of unrecognized compensation cost related to unvested stock options, which the Company expects to recognize over a remaining weighted-average period of 2.5 years.

Restricted Stock Units

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


		Weighted-average
		grant date fair
	Shares	value per share
Unvested restricted stock units at December 31, 2016	760,123	$	58.55
Granted	566,446		169.31
Vested	(150,162)		46.51
Forfeited	(18,473)		85.74
Unvested restricted stock units at June 30, 2017	1,157,934	$	113.86

At June 30, 2017, there was approximately $118.5 million of unrecognized compensation cost related to unvested RSUs, which the Company expects to recognize over a remaining weighted-average period of 3.2 years.

In July 2016, the Company issued 15,000 RSUs with service and performance conditions to certain employees, of which 5,073 vested during the three months ended June 30, 2017. Vesting of these awards is contingent on the occurrence of certain milestone events and fulfillment of any remaining service condition. As a result, the related compensation cost is recognized as an expense when achievement of the milestone is considered probable. The Company recognized $0.5 million of related expense during the six months ended June 30, 2017.

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 June 30, 2017, 176,561 shares remained available for issuance. During the six months ended June 30, 2016 and 2017, the Company issued 25,225 and 17,684 shares under the 2012 ESPP, and recognized approximately $0.5 million and $1.0 million in related stock-based compensation expense, respectively.