13. Commitments and Contingencies

Operating Leases and Subleases

The Company leases approximately 170,000 square feet of office and laboratory space in two buildings in South San Francisco, California, under a non-cancelable operating lease that ends in May 2030. In addition, the Company’s Irish subsidiary leases approximately 6,100 square feet of office space in Dublin, Ireland. Future minimum lease payments under the leases, exclusive of executory costs, as of December 31, 2018, are as follows:


(In thousands)
Years ending December 31:
2019	$	7,817
2020		6,547
2021		9,501
2022		9,766
Thereafter		80,281
Total	$	113,912

Rent expense (net of sublease income) and sublease income associated with operating leases were as follows:


	Year Ended December 31,
(In thousands)	2018		2017		2016
Rent expense, net	$	9,965	$	7,740	$	6,865
Sublease income	$	73	$	209	$	244

Performance-Contingent Awards

In 2016, the Company granted long-term retention RSAs and RSUs to members of senior management and incentive cash bonus awards to certain employees. The vesting and payout of such awards is dependent on the Company meeting its critical operating goals and objectives during a five-year period from 2016 to December 31, 2020. These goals are strategically important for the Company, and it believes the goals, if achieved, will increase shareholder value. The awards have dual triggers of vesting based upon the achievement of these goals and continued employment, and they are broken into three separate tranches.

The Company determined that achievement of the requisite performance conditions for the first tranche were completed as of June 30, 2018. The maximum potential remaining expense associated with the second and third tranches of this program is $17.8 million related to share-based compensation expense and $21.0 million related to cash bonus expense, which would be recognized in increments based on achievement of the performance conditions. With the completed achievement of the first tranche’s requisite performance conditions and the second tranche being probable due to achievement of certain performance conditions and multiple advancements of programs within the Company’s development pipeline, the Company recognized $4.3 million in share-based compensation expense and $5.4 million in cash bonus expense for the year ended December 31, 2018. For the year ended December 31, 2017, the Company recognized $8.9 million in share-based compensation expense and $18.2 million in cash bonus expense. The Company determined that the remaining third tranche was not probable of vesting and, as a result, no compensation expense related to this tranche has been recognized to date.

Guarantees and Indemnifications

The Company indemnifies its officers and directors for certain events or occurrences, subject to certain limits. The Company believes the fair value of these indemnification agreements is minimal. Accordingly, the Company has not recognized any liabilities relating to these agreements as of December 31, 2018.