Common Stock and Stockholders' Equity

6 Months Ended

Jul. 31, 2019

Share-based Payment Arrangement [Abstract]

Common Stock and Stockholders’ Equity

Common Stock

As of July 31, 2019, there were 164 million shares of Class A common stock, and 64 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.

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 2019. As of July 31, 2019, we had approximately 71 million shares of Class A common stock available for future grants.

In connection with the acquisition of Adaptive Insights in fiscal 2019, we assumed unvested awards that had been granted under the Adaptive Insights 2013 Equity Incentive Plan.

We also have a 2012 Employee Stock Purchase Plan (“ESPP”). 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 July 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 restricted stock units (“RSUs”) to employees and non-employees. RSUs generally vest over four years. A summary of information related to RSU activity during the six months ended July 31, 2019, is as follows:



	Number of Shares		Weighted-Average Grant Date Fair Value
Balance as of January 31, 2019	13,013,289		$	108.12
RSUs granted	4,623,949		191.13
RSUs vested	(3,426,770	)	103.56
RSUs forfeited	(511,962	)	119.05
Balance as of July 31, 2019	13,698,506		136.87

As of July 31, 2019, there was a total of $1.7 billion in unrecognized compensation cost related to unvested RSUs, which is expected to be recognized over a weighted-average period of approximately three years.

Performance-Based Restricted Stock Units

During fiscal 2019, 0.5 million shares of performance-based restricted stock units (“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, 2019. During the six months ended July 31, 2019, we recognized $15 million in compensation cost related to these PRSUs.

Additionally, during the second quarter of fiscal 2020, 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. We expect to grant additional shares related to this program for employees hired in fiscal 2020. These PRSU awards will vest if the performance conditions are achieved for the fiscal year ended January 31, 2020 and if the individual employee continues to provide service through the vesting date of March 15, 2020. During each of the three and six months ended July 31, 2019, we recognized $19 million in compensation cost related to these PRSUs, and there is a total of $94 million in unrecognized compensation cost which is expected to be recognized over a weighted-average period of approximately seven 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 ten years and generally vest over five years. A summary of information related to stock option activity during the six months ended July 31, 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, 2019	5,780,742		$	7.96	$	1,003
Stock options granted	—		—
Stock options exercised	(1,250,557	)	5.62
Stock options canceled	(18,568	)	22.23
Balance as of July 31, 2019	4,511,617		8.55		864
Vested and expected to vest as of July 31, 2019	4,467,012		8.31		856
Exercisable as of July 31, 2019	3,947,066		5.67		767

As of July 31, 2019, there was a total of $52 million in unrecognized compensation cost related to unvested stock options, which is expected to be recognized over a weighted-average period of approximately two years.