Stock-Based Compensation

12 Months Ended

Dec. 31, 2020

Share-based Payment Arrangement [Abstract]

Stock-Based Compensation2015 Stock Incentive Plan

In conjunction with our IPO in 2015, our Board of Directors and stockholders adopted the 2015 Stock Incentive Plan (the "2015 Plan"). Upon adoption of the 2015 Plan, 2,000,000 shares of our Class A common stock were reserved and available for grant and issuance. On January 1 of each subsequent calendar year, the number of shares available for grant and issuance under the 2015 Plan increase by the lesser of (i) the number of shares of our Class A common stock subject to awards granted under the 2015 Plan during the preceding calendar year and (ii) such lesser number of shares of our Class A common stock determined by our Board of Directors. At December 31, 2020, we have reserved an aggregate of 4,026,493 shares of our Class A common stock for grant and issuance under the 2015 Plan. The number of shares of our Class A common stock is also subject to adjustment in the event of a recapitalization, stock split, reclassification, stock dividend or other change in our capitalization. The 2015 Plan authorizes the award of stock options, stock appreciation rights, RSAs, RSUs, performance awards and stock bonuses. The 2015 Plan provides for the grant of awards to our employees, directors, consultants and independent contractors, subject to certain exceptions. RSUs, PSUs, and RSAs have been issued during 2020 pursuant to the 2015 Plan.

Stock options may vest based on the passage of time or the achievement of performance conditions at the discretion of our compensation committee. Our compensation committee may provide for stock options to be exercised only as they vest or to be immediately exercisable with any shares issued on exercise being subject to our right of repurchase that lapses as the shares vest. The maximum term of stock options granted under the 2015 Plan is 10 years.

RSUs and PSUs represent the right on the part of the holder to receive shares of our Class A common stock at a specified date in the future or the achievement of performance conditions at the discretion of our compensation committee, subject to forfeiture of that right due to termination of employment. If an RSU or PSU has not been forfeited, then, on the specified date, we will deliver to the holder of the RSU or PSU shares of our Class A common stock.

2007 Stock Incentive Plan

On February 14, 2007, our Board of Directors adopted the 2007 Stock Incentive Plan (the “2007 Plan”). Following our IPO, our Board of Directors determined not to make any further awards under the 2007 Plan. The 2007 Plan expired on February 14, 2017. The 2007 Plan will continue to govern outstanding awards granted under the 2007 Plan.

Stock Options

A summary of our stock option activity for the year ended December 31, 2020 is as follows (number of shares in thousands):


	Number of Shares	Weighted Average Exercise Price per Share		Weighted Average Remaining Contractual Life in Years
Options outstanding as of December 31, 2019	1,342	$	11.84	5.9
Options granted	—	—
Options exercised	(119)	6.93
Options cancelled/forfeited	(55)	23.75
Options outstanding as of December 31, 2020	1,168	$	11.77	5.0

At December 31, 2020:
Options vested and expected to vest	1,168	$	11.77	5.0
Options exercisable	1,168	$	11.77	5.0

During the year ended December 31, 2020, 77,000 PSOs vested based on the achievement of 95% of the pre-established free cash flow performance target for the year ended December 31, 2019, and 40,000 PSOs vested based on the achievement of 115% of the pre-established gross margin target for the year ended December 31, 2019.

Our stock-based compensation expense for stock options for the years ended December 31, 2020 was not material. Our stock-based compensation expense for stock options for the years ended December 31, 2019 and 2018 was $0.6 million and $1.6 million, respectively. At December 31, 2020, the total remaining stock-based compensation expense for unvested stock options was not material.

The fair value of stock options is estimated on their date of grant using the Black-Scholes option-pricing model. No stock options were granted during the years ended December 31, 2020, 2019 or 2018.

The total intrinsic value of options exercised in 2020, 2019 and 2018 was $17.9 million, $11.5 million, and $7.5 million, respectively. This intrinsic value represents the difference between the fair value of our common stock on the date of

exercise and the exercise price of each option. Based on the fair value of our common stock at December 31, 2020, the total intrinsic value of all outstanding options, exercisable options, and options vested and expected to vest was $196.6 million.

The excess tax benefit realized from option exercises during the years ended December 31, 2020, 2019 and 2018 was $30.1 million, $20.5 million, and $7.7 million, respectively.

Restricted Stock Units

A summary of activity in connection with our RSUs for the year ended December 31, 2020 is as follows (number of shares in thousands):


	Number of Shares	Weighted Average Grant Date Fair Value per Share
Unvested as of December 31, 2019	646	$	52.42
Granted	174	112.24
Vested	(268)	36.58
Forfeited	(69)	70.52
Unvested as of December 31, 2020	483	$	80.20

During the year ended December 31, 2020, we granted a total of 160,000 RSUs that are subject to time-based vesting in equal annual installments over four years, and 14,000 PSUs that are subject to vesting based on the achievement of pre-established consolidated net revenue growth targets for the years ending December 31, 2020, 2021 and 2022, assuming continued employment throughout the performance period. The number of PSUs granted, as included in the above table, assumes achievement of the performance metric at 100% of the performance target. The actual number of shares to be issued at the end of the performance period will range from 0% to 100% of the initial target awards. Achievement of the performance metric between 100% and 150% of the performance target will result in a performance-based cash bonus payment between 100% and 165% of the initial target awards.

During the year ended December 31, 2020, 84,000 PSUs vested and 4,000 PSUs were cancelled based on the achievement of 95% of the pre-established free cash flow performance target for the year ended December 31, 2019.

Included in the unvested RSUs and PSUs at December 31, 2020 are 32,000 and 82,000 PSUs granted in 2019 and 2018, respectively. Of these PSUs, 48,000 are subject to vesting based on the achievement of a pre-established consolidated net revenue growth target for the year ending December 31, 2020, 42,000 are subject to vesting based on the achievement of a pre-established consolidated net revenue growth target for the year ending December 31, 2021, and 24,000 are subject to vesting based on the achievement of a pre-established consolidated net revenue growth target for the year ending December 31, 2022. The number of PSUs granted assumes achievement of the performance metric at 100% of the performance target. The actual number of shares to be issued at the end of the performance period will range from 0% to 100% of the initial target awards. Achievement of the performance metric between 100% and 150% of the performance target will result in a performance-based cash bonus payment between 100% and 165% of the initial target awards.

We recognize expense for the PSUs based on the grant date fair value of the PSUs that we determine are probable of vesting. Adjustments to compensation expense are made each period based on changes in our estimate of the number of PSUs that are probable of vesting. Our stock-based compensation expense for the RSUs and PSUs for the years ended December 31, 2020, 2019 and 2018, was $10.4 million, $8.3 million and $5.5 million, respectively.

At December 31, 2020, the total remaining stock-based compensation expense for these RSUs was $23.4 million, which is expected to be recognized over a weighted average period of 2.2 years.

Restricted Stock Awards

A summary of activity in connection with our RSAs for the year ended December 31, 2020 is as follows (number of shares in thousands):


	Number of Shares	Weighted- Average Grant Date Fair Value per Share
Unvested as of December 31, 2019	5	$	105.88
Granted	5	153.41
Vested	(5)	105.88
Forfeited	—	—
Unvested as of December 31, 2020	5	$	153.41

We have the right to repurchase any unvested RSAs subject to certain conditions. RSAs vest over a one-year period. For the years ended December 31, 2020, 2019 and 2018, we recognized stock-based compensation expense for RSAs of $0.7 million, $0.3 million and $0.3 million, respectively. During 2020, the grant date fair value of the shares vested was $0.5 million.

At December 31, 2020, the total remaining stock-based compensation expense for unvested RSAs was $0.4 million, which is expected to be recognized over a weighted average period of 0.7 years.