XML 28 R17.htm IDEA: XBRL DOCUMENT v3.7.0.1
Stock Compensation
6 Months Ended
Jun. 30, 2017
Stock Compensation  
Stock Compensation

10.     Stock compensation

We recorded $33.8 million and $64.4 million of stock compensation expense on our condensed consolidated statements of operations for the three and six months ended June 30, 2017, respectively. We recorded $21.3 million and $42.1 million of stock compensation expense on our condensed consolidated statements of operations for the three and six months ended June 30, 2016, respectively. Stock compensation expense included within our condensed consolidated statements of operations included research and development expense of $22.9 million, $44.4 million, $13.6 million and $26.6 million for the three and six months ended June 30, 2017 and 2016, respectively. Stock compensation expense included within our condensed consolidated statements of operations also included selling, general and administrative expense of $10.9 million, $20.0 million, $7.7 million and $15.5 million for the three and six months ended June 30, 2017 and 2016, respectively.

We utilized the Black-Scholes valuation model for estimating the fair value of the stock compensation granted, with the following weighted-average assumptions:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Employee Stock Options

 

Employee Stock Purchase Plan

 

 

 

For the Three Months Ended

For the Six Months Ended

 

For the Three Months Ended

For the Six Months Ended

 

 

 

June 30,

 

June 30,

 

 

 

2017

       

2016

      

2017

      

2016

      

 

2017

      

2016

      

2017

      

2016

      

 

Average risk-free interest rates

 

1.56

%  

1.20

%  

1.79

%  

1.47

%  

 

1.38

%  

0.58

%  

1.31

%  

0.71

%  

 

Average expected life (in years)

 

5.41

 

5.08

 

5.36

 

5.01

 

 

0.50

 

0.50

 

0.50

 

0.50

 

 

Volatility

 

50

%  

51

%  

49

%  

50

%  

 

42

%  

45

%  

42

%  

54

%  

 

Weighted-average fair value (in dollars)

 

60.44

 

36.27

 

52.87

 

40.90

 

 

17.55

 

16.33

 

18.80

 

18.45

 

 

 

The risk-free interest rate is derived from the U.S. Federal Reserve rate in effect at the time of grant. The expected life calculation is based on the observed and expected time to the exercise of options by our employees based on historical exercise patterns for similar type options. Expected volatility is based on the historical volatility of our common stock over the period commensurate with the expected life of the options. A dividend yield of zero is assumed based on the fact that we have never paid cash dividends and have no present intention to pay cash dividends.

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, 2016

 

6,327,138

 

11,504,572

 

$

48.40

 

Options granted

 

(1,653,785)

 

1,653,785

 

$

116.29

 

Options exercised

 

 —

 

(2,163,830)

 

$

29.74

 

Options cancelled

 

90,745

 

(90,745)

 

$

94.63

 

Balance at June 30, 2017

 

4,764,098

 

10,903,782

 

$

62.02

 

 

In July 2016, we revised the terms of our annual stock option grants to provide that new option grants would generally have a 10-year term and vest over four years, with 25% vesting after one year and the remainder vesting in 36 equal monthly installments. Previously, our option grants generally had 7-year terms and vested over three years, with 33% vesting after one year and the remainder vesting in 24 equal monthly installments.

Restricted stock unit (“RSU”) and performance share (“PSU”) 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, 2016

    

1,146,152

    

1,246,570

 

 

 —

 

RSUs granted

 

(92,732)

 

92,732

 

$

120.36

 

RSUs cancelled

 

29,459

 

(29,459)

 

$

85.80

 

RSUs released

 

 —

 

(284,903)

 

$

119.64

 

PSUs released

 

 —

 

(43,376)

 

$

122.29

 

Balance at June 30, 2017

 

1,082,879

 

981,564

 

 

 —

 

 

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.  Each RSU granted prior to July 2016 was subject to cliff vesting after three years. In July 2016, we revised the terms of our RSU grants to provide that the awards will vest 25% annually over four years. 

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 June 30, 2017, a cumulative total of 200,000 RSUs granted to Mr. Hoppenot had vested and were released, leaving 200,000 RSUs outstanding.

Based on our historical experience of employee turnover, we have assumed an annualized forfeiture rate of 5% for our options and RSUs.  Under the true-up provisions of the stock compensation guidance, we will record additional expense 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.

Total compensation cost of options granted but not yet vested, as of June 30, 2017, was $94.1 million, which is expected to be recognized over the weighted average period of approximately 1.5 years. Total compensation cost of RSUs granted but not yet vested, as of June 30, 2017, was $42.6 million, which is expected to be recognized over the weighted average period of approximately 1.5 years.  There were no unvested PSUs as of June 30, 2017.