Stock-Based Compensation

12 Months Ended

Dec. 31, 2021

Share-based Payment Arrangement [Abstract]

Stock-Based Compensation We grant stock-based incentive awards to attract, motivate and retain qualified employees, non-employee directors and consultants, and to align their financial interests with those of our stockholders. We utilize stock-based compensation in the form of restricted stock units, options to purchase Class A common stock and ESPP purchase rights. Prior to our corporate conversion in December 2014, awards were provided under the 2009 Unit Incentive Plan (“the 2009 Plan”). The 2009 Plan was amended to provide that no further awards will be issued thereunder, and our board of directors and stockholders adopted and approved our 2014 Equity Incentive Plan (“the 2014 Plan” and, together with the 2009 Plan, “the Plans”).

As of December 31, 2021, awards granted under the 2009 Plan consisted of stock options and awards granted under the 2014 Plan consisted of stock options and restricted stock units. There were no other grants of any other award types under the Plans. As of December 31, 2021, 1,180,086 shares of Class A common stock were available for grant under the 2014 Plan.

Our ESPP became effective on June 13, 2017. Under the ESPP, eligible employees are granted options to purchase shares of Class A common stock 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 July 15 and January 15 and are exercisable on or about the succeeding January 14 and July 14, respectively, of each year. As of December 31, 2021, 4,296,514 shares of Class A common stock were available for issuance under the ESPP. No participant may purchase more than $12,500 worth of Class A common stock in a six-month offering period.

Stock-Based Compensation Expense

Stock-based compensation expense was recorded in the following cost and expense categories consistent with the respective employee or service provider’s related cash compensation (in thousands):


	Year ended December 31,
	2021		2020		2019
Cost of revenue
Subscription and support	$	2,868	$	1,709	$	1,554
Professional services	1,729		1,434		1,725
Operating expenses
Research and development	9,590		8,100		8,006
Sales and marketing	13,901		11,062		8,792
General and administrative	20,545		23,466		15,707
Total	$	48,633	$	45,771	$	35,784

Stock Options

The following table summarizes the option activity under the Plans for the year ended December 31, 2021:


	Options	Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Term (Years)	Aggregate Intrinsic Value
					(in thousands)
Outstanding at December 31, 2020	2,903,167	$	14.48	4.7	$	223,941
Granted	—	—
Forfeited	(6,895)	19.29
Exercised	(1,141,092)	14.55
Outstanding at December 31, 2021	1,755,180	$	14.42	4.0	$	203,720

Exercisable at December 31, 2021	1,755,180	$	14.42	4.0	$	203,720

Options to purchase Class A common stock generally vest over a three- or four-year period and are generally granted for a term of ten years. The total intrinsic value of options exercised during the years ended December 31, 2021, 2020 and 2019 was $123.4 million, $55.8 million and $75.6 million, respectively.

No options were granted during the years ended December 31, 2021, 2020 and 2019. The total fair value of options vested during the years ended December 31, 2021, 2020 and 2019 was approximately $0.9 million, $3.5 million and $5.8 million, respectively. As of December 31, 2021 there was no unrecognized compensation expense related to options.

Restricted Stock Units

Restricted stock units granted to employees generally vest over a three- or four-year period in equal, annual installments or with three-year cliff vesting. Restricted stock units granted to non-employee members of our Board of Directors generally have one-year cliff vesting from the date of grant. The recipient of a restricted stock unit award under the 2014 Plan will have no rights as a stockholder until share certificates are issued by us, but, at the discretion of our Compensation Committee, has the right to receive a dividend equivalent payment in the form of additional restricted stock units. Additionally, until the shares are issued, they have no voting rights and may not be bought or sold. The fair value for restricted stock unit awards is calculated based on the stock price on the date of grant. The total fair value of restricted stock units vested during the years ended December 31, 2021, 2020, and 2019 was approximately $54.9 million, $27.7 million, and $8.8 million, respectively.

The following table summarizes the restricted stock unit activity under the Plan for the year ended December 31, 2021:


	Number of Shares	Weighted-Average Grant Date Fair Value

Unvested at December 31, 2020	2,904,616	$	35.72
Granted	916,634	109.64
Forfeited	(218,852)	64.36
Vested(1)	(1,710,699)	31.89
Unvested at December 31, 2021	1,891,699	$	73.04

(1) During the year ended December 31, 2021, in accordance with our Nonqualified Deferred Compensation Plan, recipients of 402,832 shares had elected to defer settlement of the vested restricted stock units and 270,567 were released from deferral. This resulted in total deferred units of 695,869 as of December 31, 2021.

Compensation expense associated with unvested restricted stock units is recognized on a straight-line basis over the vesting period. At December 31, 2021, there was approximately $100.6 million of total unrecognized compensation expense related to restricted stock units, which is expected to be recognized over a weighted-average period of 2.7 years.

Employee Stock Purchase Plan

The fair value of each option grant issued under the ESPP is estimated on the date of grant using the Black-Scholes option-pricing model. Expected volatility is based on the historical volatility of our Class A common stock, and the expected term represents the period of time the ESPP purchase rights are expected to be outstanding and approximates the offering period. The risk-free interest rate is based on yields on U.S. Treasury STRIPS (“Separate Trading of Registered Interest and Principal of Securities”) with a maturity similar to the estimated expected term of the ESPP purchase rights.

The fair value of our ESPP purchase rights was estimated assuming no expected dividends and the following weighted-average assumptions:


	Year ended December 31,
	2021	2020	2019
ESPP
Expected term (in years)	0.5	0.5	0.5
Risk-free interest rate	0.1%	0.2% - 1.5%	1.9% - 2.6%
Expected volatility	41.8% - 45.0%	40.6% - 61.0%	35.0% - 49.0%

The following table summarizes the ESPP activity under the Plan for the years ended December 31, 2021, 2020 and 2019:


	For the year ended December 31,
	2021		2020		2019
Shares issued	148,864		186,855		188,390
Weighted-average purchase price	$	59.52	$	38.68	$	26.13
Total proceeds (in thousands)	$	8,861	$	7,227	$	4,922

Compensation expense associated with ESPP purchase rights is recognized on a straight-line basis over the vesting period. At December 31, 2021, there was approximately $129,438 of total unrecognized compensation expense related to the ESPP, which is expected to be recognized over a weighted-average period of 14 days.