Stockholders' Deficit

12 Months Ended

Dec. 31, 2015

Stockholders' Deficit

Stockholders' Deficit

Note 8. Stockholders’ Deficit

Preferred Stock.  We are authorized to issue 5,000,000 shares of preferred stock, none of which was outstanding as of December 31, 2015 and 2014. The Board of Directors may determine the rights, preferences and privileges of any preferred stock issued in the future.

Common Stock.  We are authorized to issue 400,000,000 shares of common stock.

Stock Compensation Plans.  As of December 31, 2015, we had reserved a total of 12,595,671 shares of our common stock for future issuance related to our stock plans as described below.

2010 Stock Incentive Plan.  In May 2010 the Board of Directors adopted the 2010 Stock Incentive Plan, which was amended and restated in April 2013 (the “2010 Plan”) for issuance of common stock to employees, non‑employee directors, consultants, and scientific advisors. Options granted to employees, consultants, and scientific advisors under the 2010 Plan vest over three years, pursuant to a formula determined by our Board of Directors, and expire after seven years. All options are exercisable at the fair market value of the stock on the date of grant. Non‑employee director options expire after ten years. In May 2012, our stockholders approved an increase in the number of shares of common stock reserved for issuance under the 2010 Plan from 12,553,475 to 16,553,475. In May 2013, our stockholders approved an increase in the number of shares of common stock reserved for issuance under the 2010 Plan from 16,553,475 to 21,753,475. In May 2014, our stockholders approved an increase in the number of shares of common stock reserved for issuance under the 2010 Plan from 21,753,475 to 24,753,475.

Option activity under the 2010 Stock Plan was as follows:

		Shares Subject to
		Outstanding Options
	Shares Available		Weighted Average
	for Grant	Shares	Exercise Price
Balance at December 31, 2014	5,399,816	14,655,043	$	21.96
Options granted	(1,900,855)	1,900,855	$	79.14
Options exercised	—	(5,155,863)	$	16.62
Options cancelled	347,756	(347,756)	$	45.52
Balance at December 31, 2015	3,846,717	11,052,279	$	33.55

Options to purchase a total of 8,239,929,  10,486,757 and 12,474,199 shares as of December 31, 2015,  2014 and 2013, respectively, were exercisable and vested. The aggregate intrinsic value of options exercised for the years ended December 31, 2015,  2014 and 2013were $416.3 million, $359.7 million and $141.8 million, respectively. At December 31, 2015 the aggregate intrinsic value of options outstanding and vested options are $828.9 million and $824.6 million, respectively.

The following table summarizes information about stock options outstanding as of December 31, 2015 for the 2010 Plan:

	Options Outstanding				Options Exercisable
			Weighted			Weighted
		Weighted Average	Average			Average
	Number	Remaining	Exercise		Number	Exercise
Range of Exercise Prices	Outstanding	Contractual Life	Price		Exercisable	Price
$2.80 - $13.34	1,180,265	1.31	$	8.32	1,180,265	$	8.32
$13.50 - $17.47	1,111,868	2.13		14.81	1,111,868		14.81
$17.50 - $17.50	71,811	3.86		17.50	71,811		17.50
$17.79 - $17.79	1,501,624	3.01		17.79	1,501,624		17.79
$17.89 - $17.89	164,302	3.48		18.09	161,939		18.10
$18.32 - $18.32	2,572,415	4.05		18.32	2,378,291		18.32
$18.97 - $40.85	1,126,574	4.32		27.91	925,169		26.41
$47.24 - $64.55	1,441,393	5.20		59.92	866,339		60.18
$67.06 - $67.97	67,589	5.83		67.22	25,778		67.21
$73.21 - $128.21	1,814,438	6.82		79.39	16,845		76.10
	11,052,279				8,239,929

Restricted Stock Units and Performance Stock Units.

In January 2014, we began granting RSUs and PSUs to our employees at the share price on the date of grant.   Each RSU represents the right to acquire one share of our common stock and cliff vest in three years and are recognized as stock compensation expense over the vesting period.  Also, in January 2014, Hervé Hoppenot, our President and Chief Executive Officer, was granted a one-time grant of 400,000 RSUs outside of our 2010 Stock Incentive Plan. Vesting of the RSUs will be subject to Mr. Hoppenot’s continued employment on the applicable vesting dates, with one‑sixth of the RSUs vesting at the end of each of the calendar years 2014 through 2019, subject to earlier acceleration of vesting upon the occurrence of certain events in accordance with the terms of his employment agreement. As of December 31, 2015, a total of 133,333 RSUs granted to Mr. Hoppenot vested and were released, leaving 266,667 RSUs outstanding.

We did not grant any PSUs during the year ended December, 31, 2015.  We granted a total of 55,326 PSUs during the year ended December 31, 2014.  At December 31, 2015, we have recognized stock compensation expense for these awards if the performance conditions were deemed probable of achievement at that date.  For PSUs containing performance conditions which have not been deemed probable of achievement at December 31, 2015,  no stock compensation expense has been recognized for these awards.  The actual number of shares of our common stock into which each PSU may convert are subject to a multiplier of up to 125% based on the level at which the performance conditions are achieved.

Based on our historical experience of employee turnover, we have assumed an annualized forfeiture rate of 5% for our options, PSUs and RSUs.  Under the true-up provisions of the stock compensation guidance, we will record additional expense as the awards vest if the actual forfeiture rate is lower than we estimated, and will record a recovery of prior expense if the actual forfeiture is higher than we estimated.

RSUs and PSUs award activity under the 2010 Stock Plan was as follows:

		Shares Subject to
	Shares Available	Outstanding Awards
	for Grant	Shares	Grant Date Value
Balance at December 31, 2014	1,001,523	398,477		—
RSUs granted	(206,614)	206,614	$	79.52
PSUs granted	—	—		—
RSUs cancelled	34,566	(34,566)	$	62.50
PSUs cancelled	4,958	(4,958)	$	64.55
Balance at December 31, 2015	834,433	565,567		—

Employee Stock Purchase Plan.  On May 21, 1997, our stockholders adopted the 1997 Employee Stock Purchase Plan (the “ESPP”). Each regular full‑time and part‑time employee working 20 hours or more per week is eligible to participate after one month of employment. We issued194,453,193,657 and 390,000 shares under the ESPP in 2015,  2014 and 2013, respectively. For the years ended December 31, 2015,  2014 and 2013 we recorded stock compensation expense of $2.4 million, $1.9 million and $1.5 million, respectively, as the ESPP is considered compensatory under the FASB stock compensation rules. As of December 31, 2015,711,158 shares remain available for issuance under the ESPP.