Common Stock and Stockholders' Equity (Deficit)

9 Months Ended

Oct. 31, 2012

Common Stock and Stockholders' Equity (Deficit) [Abstract]

Common Stock and Stockholders' Equity (Deficit)

Note 7. Common Stock and Stockholders’ Equity (Deficit)

Common Stock

In connection with our IPO, we amended our certificate of incorporation to provide for Class A common stock, Class B common stock and preferred stock. Upon the closing of the IPO, all shares of our then-outstanding redeemable convertible preferred stock and convertible preferred stock automatically converted into an aggregate of 98.0 million shares of Class B common stock and an aggregate of 42.1 million shares of our then outstanding common stock converted into an equal number of Class B common stock.

Employee Equity Plans

Our board of directors adopted the 2012 Employee Stock Purchase Plan (“ESPP”) in August 2012 which became effective on October 10, 2012. The ESPP was approved with a reserve of 2.0 million shares of Class A common stock for future issuance under various terms provided for in the ESPP. We have not yet determined the start date of the initial purchasing period under the ESPP.

Our board of directors adopted the 2012 Equity Incentive Plan (“EIP”) in August 2012 which became effective on October 10, 2012 and serves as the successor to our 2005 Stock Plan. The EIP was approved with a reserve of 25.0 million shares for future issuance under various terms provided for in the EIP. Additionally, shares not issued or subject to outstanding grants under the 2005 Stock Plan were rolled into the EIP resulting in a total of 39.2 million available shares under the EIP. Shares issued under the 2005 Stock Plan were Class B common stock and shares issued under the EIP are Class A common stock.

Common Stock Subject to Repurchase

The 2005 Stock Plan and Stock Option Agreements allow for the early exercise of stock options for certain individuals as determined by the board of directors. We have the right to purchase at the original exercise price any unvested (but issued) common shares during the repurchase period following termination of services of an employee. The consideration received for an exercise of an option is considered to be a deposit of the exercise price and the related dollar amount is recorded as a liability. The shares and liability are reclassified into equity as the awards vest. As of October 31, 2012, we had $11.4 million recorded in liabilities related to early exercises of stock options.

As of October 31, 2012, there were 7.6 million exercisable but unvested options outstanding with early exercise provisions. These options had a weighted-average exercise price of $2.65 per share and a weighted-average remaining contractual life of 8.2 years. The total intrinsic value of these exercisable but unvested options as of October 31, 2012 was $350.7 million.

Stock Options

The 2005 Stock Plan provided, and the EIP provides, for the issuance of incentive and nonstatutory options to employees and nonemployees. We have also issued nonstatutory options outside of these plans. Options issued under and outside of the 2005 Stock Plan generally are exercisable for periods not to exceed 10 years and generally vest over five years. Options issued under the EIP generally are exercisable for periods not to exceed 10 years and generally vest over four to five years.

Restricted Stock Awards

The 2005 Stock Plan provided, and the EIP provides, for the issuance of restricted stock awards to employees. Restricted stock awards issued under the 2005 Stock Plan generally vest over five years and restricted stock awards issued under the EIP generally vest over five years. Under these plans, the Company has issued 1.3 million restricted shares of Class B common stock, all of which are subject to forfeiture as of October 31, 2012.

The combined activity under the 2005 Stock Plan and the EIP is as follows:


						Options Outstanding
		Shares Available for Grant				Outstanding Stock Options				Weighted- Average Exercise Price				Aggregate Intrinsic Value
														(in thousands)
Balance as of January 31, 2012			5,443,075				29,211,475				1.55			$	98,241
New shares authorized under the 2005 Stock Plan			15,000,000				—				—
New shares authorized at adoption of the EIP			25,000,000				—				—
Stock option grants			(5,329,200	)			5,329,200				8.35
Restricted stock awards granted			(1,240,000	)
Stock options exercised			—				(4,426,380	)			2.28
Stock options canceled			327,725				(327,725	)			3.85

Balance as of October 31, 2012			39,201,600				29,786,570				2.64			$	1,366,115

The total grant-date fair value of stock options vested during the nine months ended October 31, 2012 was $3.5 million. The aggregate intrinsic value is the difference between the closing price of our common stock on October 31, 2012 and the exercise price of the outstanding stock options.

Donation to the Workday Foundation

In August 2012, with approval of the board of directors, we donated 500,000 shares of Class B common stock to the Workday Foundation. We have recorded a share-based charge of $11.3 million for the value of the donated shares to general and administrative expense in the three month period ended October 31, 2012.