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Stock-Based Compensation | 12 Months Ended
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Aug. 03, 2019
Share-based Payment Arrangement [Abstract] |
Stock-Based Compensation | Stock-Based Compensation 2011 Equity Incentive Plan In 2011, we adopted the 2011 Equity Incentive Plan (the “2011 Plan”). The 2011 Plan provided for the grant of stock-based awards to employees, directors, and nonemployees under terms and provisions established by the board of directors. As of July 29, 2017, the number of shares authorized for issuance under the 2011 Plan was 23,223,374, of which 2,023,424 were available for grant. The 2011 Plan allowed for the grant of incentive stock options or nonqualified stock options as well as restricted stock units, restricted stock and stock appreciation rights. Only incentive and nonqualified stock options were granted under the 2011 Plan. Effective upon our IPO, the 2011 Plan was replaced by the 2017 Incentive Plan. 2017 Incentive Plan In November 2017, our board of directors and stockholders adopted our 2017 Incentive Plan (the “2017 Plan”). The remaining shares available for issuance under the 2011 Plan became reserved for issuance under the 2017 Plan. The 2017 Plan provides for the grant of incentive stock options to employees, including employees of any parent or subsidiary, and for the grant of nonqualified stock options, stock appreciation rights, restricted stock awards, restricted stock unit awards, performance stock awards, performance cash awards, and other forms of stock awards to employees, directors, and consultants, including employees and consultants of our subsidiaries. Under the 2017 Plan, the number of shares available for issuance may be increased annually by an amount not to exceed 5% of the outstanding shares of our common stock as of the last day of the immediately preceding fiscal year. The Board of Directors approved an increase of 5,069,874 shares available for issuance under the 2017 Plan as of August 4, 2019. The number of shares authorized for issuance under the 2017 Plan was 17,137,824 as of August 3, 2019. Employee stock options generally vest 25% on the first anniversary of the grant date with the remaining vesting ratably over the next three years. Options generally expire after 10 years. The following table summarizes the shares available for grant under the 2017 Plan:
|  | Shares Available for Grant
Balance – July 28, 2018 |  | 3,743,623 |
Authorized |  | — |
Granted |  | (4,113,084 | )
Cancelled |  | 1,502,719 |
Balance – August 3, 2019 |  | 1,133,258 |
Stock option activity under the 2011 Plan and 2017 Plan is as follows:
|  | Options Outstanding
|  | Number of Options |  | Weighted- Average Exercise Price |  | Weighted- Average Remaining Contractual Life (in Years) |  | Aggregate Intrinsic Value (in thousands)
Balance – July 28, 2018 |  | 9,052,160 |  |  | $ | 11.74 |  |  | 8.23 |  | $ | 160,856 |
Granted |  | 1,090,890 |  |  | 24.77 |  |  |  |  |
Exercised |  | (2,198,655 | ) |  | 6.79 |  |  |  |  |
Cancelled |  | (874,270 | ) |  | 16.15 |  |  |  |  |
Balance – August 3, 2019 |  | 7,070,125 |  |  | $ | 14.48 |  |  | 7.72 |  | $ | 73,861 |
Options vested and exercisable - August 3, 2019 |  | 2,263,236 |  |  | $ | 9.48 |  |  | 6.77 |  | $ | 35,009 |
Options vested and expected to vest - August 3, 2019 |  | 6,450,028 |  |  | $ | 14.40 |  |  | 7.61 |  | $ | 69,652 |
The weighted-average grant date fair value of options granted during 2019, 2018, and 2017 was $11.60, $8.40, and $9.11 per share, respectively. The total grant date fair value of options that vested during 2019, 2018, and 2017 was $13.1 million, $8.5 million, and $2.6 million, respectively. The aggregate intrinsic value of options exercised during 2019, 2018, and 2017 was $49.1 million, $59.6 million, and $17.4 million, respectively. The aggregate intrinsic value of options exercised is the difference between the fair value of the underlying common stock on the date of exercise and the exercise price for in-the-money stock options. Employee restricted stock units are granted under the 2017 Plan and generally vest 25% on the first anniversary of the grant date with the remaining vesting ratably over the next three years. The following table summarizes the restricted stock unit (“RSU”) award activity under the 2017 Plan:
|  | Unvested RSUs
|  | Class A Common Stock |  | Weighted- Average Grant Date Fair Value
Unvested at July 28, 2018 |  | 2,432,326 |  |  | $ | 21.58 |
Granted |  | 3,022,194 |  |  | 30.25 |
Vested |  | (397,226 | ) |  | 20.67 |
Forfeited |  | (628,449 | ) |  | 23.50 |
Unvested at August 3, 2019 |  | 4,428,845 |  |  | $ | 27.30 |
Stock-Based Compensation Expense Stock-based compensation expense for options granted to employees was $35.2 million, $15.4 million, and $3.4 million for 2019, 2018, and 2017, respectively. Stock-based compensation expense for options granted to non-employees was less than $0.1 million in 2019 and 2018, and $0.2 million for 2017. The income tax benefit related to stock-based compensation was $8.9 million, $4.7 million, and $1.3 million for 2019, 2018, and 2017, respectively. Stock-based compensation expense is included in selling, general, and administrative expenses in our consolidated statements of operations. As of August 3, 2019, the total unrecognized compensation expense related to unvested options and RSUs, net of estimated forfeitures, was $147.9 million, which we expect to recognize over an estimated weighted average period of 3.0 years. In determining the fair value of the stock-based awards, we use the Black-Scholes option-pricing model and assumptions discussed below. Each of these inputs is subjective and generally requires significant judgment. Fair Value of Common Stock - As of August 3, 2019, the fair value of the shares of common stock underlying our stock options has been determined based on market prices. Prior to our IPO on November 16, 2017, the fair value of the shares of common stock underlying our stock options was determined by the board of directors. As there was no public market for our common stock, the board of directors determined the fair value of the common stock on the stock option grant date by considering a number of objective and subjective factors, including third-party valuations of our common stock, sales of our common stock, operating and financial performance, the lack of marketability of our common stock and general macroeconomic conditions. Expected Term - The expected term represents the period that our stock options are expected to be outstanding and is determined using the simplified method (generally calculated as the mid-point between the vesting date and the end of the contractual term). Expected Volatility - The expected volatility was estimated based on the average volatility for publicly traded companies that we considered comparable, over a period equal to the expected term of the stock option grants. Risk-Free Interest Rate - The risk-free interest rate is based on the U.S. Treasury zero coupon notes in effect at the time of grant for periods corresponding with the expected term of the option. Expected Dividend - We have not paid dividends on our common stock and do not anticipate paying dividends on our common stock; therefore, we use an expected dividend yield of zero. The fair value of stock options granted to employees was estimated at the grant date using the Black-Scholes option-pricing model with the following assumptions:
|  | For the Fiscal Year Ended
|  | August 3, 2019 |  | July 28, 2018 |  | July 29, 2017
Expected term (in years) |  | 5.1 - 6.5 |  |  | 5.4 - 6.6 |  |  | 5.1 - 7.7 |
Volatility |  | 41.7 - 52.2% |  |  | 41.4 - 43.5% |  |  | 42.6 - 46.0% |
Risk free interest rate |  | 2.3 - 3.0% |  |  | 1.9 - 3.0% |  |  | 1.3 -2.3% |
Dividend yield |  | — | % |  | — | % |  | — | %
In July 2017, options to purchase an aggregate of 1,097,463 shares of common stock which had both a service-based condition and a liquidity event-related performance condition were granted to certain members of our executive management team. Such options vest ratably over the 24-month period following the fourth anniversary of the grant date, subject to an IPO occurring within 12 months of the grant date and the option holder’s continuous service through each vesting date. The aggregate grant-date fair value of such option awards was $14.0 million. Since an IPO is not deemed probable until such event occurs, no compensation cost related to the performance condition was recognized prior to the consummation of our IPO in November 2017. Subsequently, we recorded stock-based compensation expense of $0.5 million related to periods prior to the IPO. Early Exercise of Employee Options We allow certain employees to exercise options granted under the 2011 Plan prior to vesting in exchange for shares of restricted common stock subject to a right of repurchase that lapses according to the original option vesting schedule. The proceeds from the exercise of options are recorded in other current liabilities and other long-term liabilities in our consolidated balance sheets at the time the options are exercised and reclassified to common stock and additional paid-in capital as our repurchase right lapses. Upon termination of employment, any unvested shares are subject to repurchase by us at the original purchase price. We did not issue any shares upon exercise of unvested stock options during 2019 and 2018. We issued 111,557 shares of common stock during 2017 upon exercise of unvested stock options. As of August 3, 2019, there were no shares of common stock subject to repurchase. As of July 28, 2018, and July 29, 2017 there were 160,417, and 702,144 shares of common stock, respectively, held by employees subject to repurchase at an aggregate price of $0.2 million, and $1.2 million, respectively. Sales of Our Stock In November 2016, we initiated a cash tender offer which was completed in December 2016 for the purchase of our common stock, including shares underlying then-unexercised vested options, at a purchase price of $22.61 per share. To be eligible to participate in the tender offer, employees must have received equity grants with vesting start dates on or before October 31, 2014. Such employees could elect to sell up to 10% of their total vested holdings. The total number of tendered shares was 526,620 for total cash consideration of $11.9 million. The purchase price per share in the tender offer was in excess of the fair value of our common stock at the time of the transaction. As a result, during 2017, we recorded the excess of the purchase price above fair value of $8.3 million as compensation expense. In January 2017, two of our former employees sold 554,799 shares of our common stock for a total of $12.5 million to existing investors. In addition, an employee sold 85,000 shares of our Series C convertible preferred stock for a total purchase price of $1.9 million to an existing investor. The purchase price was in excess of the fair value of such shares. During 2017, we recorded $13.0 million as compensation expense related to these transactions.

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- Definition The entire disclosure for shareholders' equity and share-based payment arrangement. Includes, but is not limited to, disclosure of policy and terms of share-based payment arrangement, deferred compensation arrangement, and employee stock purchase plan (ESPP). + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 505 -URI http://asc.fasb.org/topic&trid=2208762 Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 718 -URI http://asc.fasb.org/topic&trid=2228938 + Details
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