Common Stock and Stockholders’ Equity

Common Stock

As of January 31, 2019, there were 157 million shares of Class A common stock and 65 million shares of Class B common stock outstanding. The rights of the holders of Class A common stock and Class B common stock are identical, except with respect to voting and conversion. Each share of Class A common stock is entitled to one vote per share and each share of Class B common stock is entitled to 10 votes per share. Each share of Class B common stock can be converted into a share of Class A common stock at any time at the option of the holder. All of our Class A and Class B shares will convert to a single class of common stock upon the date that is the first to occur of (i) October 11, 2032, (ii) such time as the shares of Class B common stock represent less than 9% of the outstanding Class A and Class B common stock, (iii) nine months following the death of both Mr. Duffield and Mr. Bhusri, and (iv) the date on which the holders of a majority of the shares of Class B common stock elect to convert all shares of Class A common stock and Class B common stock into a single class of common stock.

Employee Equity Plans

Our 2012 Equity Incentive Plan (“EIP”) serves as the successor to our 2005 Stock Plan (together with the EIP, the “Stock Plans”). Pursuant to the terms of the EIP, the share reserve increased by 11 million shares in March 2018. As of January 31, 2019, we had approximately 65 million shares of Class A common stock available for future grants.

In connection with the acquisition of Adaptive Insights, we assumed unvested awards that had been granted under the Adaptive Insights, Inc. 2013 Equity Incentive Plan.

We also have a 2012 Employee Stock Purchase Plan. Under the ESPP, eligible employees are granted options to purchase shares at the lower of 85% of the fair market value of the stock at the time of grant or 85% of the fair market value at the time of exercise. Options to purchase shares are granted twice yearly on or about June 1 and December 1 and exercisable on or about the succeeding November 30 and May 31, respectively, of each year. As of January 31, 2019, approximately 6 million shares of Class A common stock were available for issuance under the ESPP.

Restricted Stock Units

The Stock Plans provide for the issuance of RSUs to employees and non-employees. RSUs generally vest over four years. A summary of information related to RSU activity during fiscal 2019 is as follows:



	Number of Shares		Weighted-Average Grant Date Fair Value
Balance as of January 31, 2018	12,819,516		$	84.77
RSUs granted	6,991,459		129.62
RSUs vested	(5,893,133	)	84.58
RSUs forfeited	(904,553	)	96.79
Balance as of January 31, 2019	13,013,289		$	108.12

The weighted-average grant-date fair value of RSUs granted during fiscal 2019, 2018, and 2017 was $129.62, $88.90, and $75.71, respectively. The total fair value of RSUs vested as of the vesting dates during fiscal 2019, 2018, and 2017 was $801 million, $528 million, and $303 million, respectively.

As of January 31, 2019, there was a total of $1.2 billion in unrecognized compensation cost related to unvested RSUs, which is expected to be recognized over a weighted-average period of approximately 2.7 years.

Performance-based Restricted Stock Units

During fiscal 2018, 0.4 million shares of PRSUs were granted to all employees other than executive management that included both service conditions and performance conditions related to company-wide goals. These performance conditions were met and the PRSUs vested on March 15, 2018. During fiscal 2019, we recognized $7 million in compensation cost related to these PRSUs.

Additionally, during fiscal 2019, 0.5 million shares of PRSUs were granted to all employees other than executive management that included both service conditions and performance conditions related to company-wide goals. These performance conditions were met and the PRSU awards will vest if the individual employee continues to provide service through the vesting date of March 15, 2019. During fiscal 2019, we recognized $51 million in compensation cost related to these PRSUs, and as of January 31, 2019, there was a total of $15 million in unrecognized compensation cost which is expected to be recognized over a weighted-average period of approximately 2 months.

Stock Options

The Stock Plans provide for the issuance of incentive and nonstatutory stock options to employees and non-employees. Stock options issued under the Stock Plans generally are exercisable for periods not to exceed 10 years and generally vest over five years. A summary of information related to stock option activity during fiscal 2019 is as follows (in millions, except share and per share data):



	Outstanding Stock Options		Weighted-Average Exercise Price		Aggregate Intrinsic Value
Balance as of January 31, 2018	6,595,486		$	4.23	$	763
Stock options assumed	1,103,942		26.84
Stock options exercised	(1,872,545	)	5.68
Stock options canceled	(46,141	)	18.77
Balance as of January 31, 2019	5,780,742		$	7.96	$	1,003
Vested and expected to vest as of January 31, 2019	5,706,507		$	7.66	$	992
Exercisable as of January 31, 2019	4,985,686		$	4.74	$	881

The total grant-date fair value of stock options vested during fiscal 2019, 2018, and 2017 was $29 million, $5 million, and $14 million, respectively. The total intrinsic value of stock options exercised during fiscal 2019, 2018, and 2017 was $261 million, $234 million, and $273 million, respectively. The intrinsic value is the difference between the current fair value of the stock and the exercise price of the stock option. The weighted-average remaining contractual life of vested and expected to vest stock options as of January 31, 2019 is approximately 3.2 years.

As of January 31, 2019, there was a total of $72 million in unrecognized compensation cost related to unvested assumed stock options, which is expected to be recognized over a weighted-average period of approximately 2.3 years.

The stock options that are exercisable as of January 31, 2019 have a weighted-average remaining contractual life of approximately 2.4 years. The weighted-average remaining contractual life of outstanding stock options as of January 31, 2019 is approximately 3.3 years.

The weighted-average grant-date fair value of stock options assumed during fiscal 2019 was $100.69. The fair value of stock options assumed was estimated using the following assumptions:



	Year Ended January 31, 2019
Expected volatility	31.5% – 34.3%
Expected term (in years)	0.03 – 2.42
Risk-free interest rate	2.10% – 2.72%
Dividend yield	—%

There were no stock options granted during fiscal 2019, 2018, or 2017.

Employee Stock Purchase Plan

For fiscal 2019, approximately 1 million shares of Class A common shares were purchased under the ESPP at a weighted-average price of $96.12 per share, resulting in cash proceeds of $83 million.

The fair value of stock purchase rights granted under the ESPP was estimated using the following assumptions:



	Year Ended January 31,
	2019	2018	2017
Expected volatility	30.9% – 41.7%	25.3% – 32.0%	34.5% – 44.5%
Expected term (in years)	0.5	0.5	0.5
Risk-free interest rate	2.09% – 2.50%	1.11% – 1.45%	0.53% – 0.91%
Dividend yield	—%	—%	—%
Grant date fair value per share	$126.29 – $167.80	$98.39 – $100.52	$69.00 – $79.30