Stock Plans

In March 2015, the Company adopted the 2015 Equity Incentive Plan (the “2015 Plan”). The 2015 Plan replaces the Company’s prior 2000 Equity Incentive Plan (the “2000 Plan”) and the 2006 Equity Incentive Plan (the “2006 Plan”) (collectively, the “Plans”). Beginning March 2015, all awards were granted under the 2015 Plan. In addition, any awards that were previously granted under any prior Plans that terminate without issuance of shares, shall be eligible for issuance under the 2015 Plan.

Under the 2015 Plan, the Company may grant to its employees, outside directors and consultants awards in the form of non-qualified stock options, shares of restricted stock, stock units, or stock appreciation rights and performance shares. The Company’s Board of Directors administers the Plan and is responsible for determining the individuals to be granted options or shares, the number of options or shares each individual will receive, the price per share and the exercise period of each option. As of December 31, 2017, there were 2.0 million shares available for grant or award under the Company’s 2015 Plan.

During 2017, the Company’s Board of Directors approved the issuance of market-based restricted stock to certain executives which are eligible to vest if the volume-weighted average closing price over 20 consecutive trading days equals or exceeds certain stock prices during the specific performance period from July 2017 to July 2019. The Company utilized the Monte Carlo simulation to estimate the fair value of the restricted stock on its grant date.

In connection with the appointment a new Chief Executive Officer in November 2017, the Company entered into an employment agreement which provided for the grant of restricted stock awards, stock options and performance stock awards. These awards were approved by the Compensation Committee of Synchronoss’ Board of Directors and granted as an inducement equity award outside the 2015 Plan in accordance with the Nasdaq Listing Rule 5635(c)(4) (the “Inducement Rule”).

On December 15, 2017, the Compensation Committee adopted the 2017 New Hire Equity Incentive Plan (“2017 New Hire Plan”), which is intended to be exempt from the stockholder approval requirements under the “inducement grant exception” provided by the Inducement Rule. The Committee authorized the issuance of up to 1.5 million Common Shares to new hires, with the purpose of promoting the long-term success of the Company and the creation of stockholder value by (a) providing for the attraction and retention of new employees with exceptional qualifications, (b) encouraging new employees to focus on critical long-range objectives, and (c) linking new employees directly to stockholder interests through increased stock ownership. As required by the Inducement Rule, the Company issues a press release promptly upon issuing shares to new employees pursuant to the 2017 New Hire Plan. As of December 31, 2017, all of the 1.5 million shares of common stock available for issuance under the 2017 New Hire Plan.

Stock-Based Compensation

The following table summarizes stock-based compensation expense related to all of the Company’s stock awards included in operating expense categories as follows:



	December 31,
	2017		2016		2015
			(Restated)		(Restated)
Cost of revenues	$	4,602	$	7,310	$	6,922
Research and development	6,030		8,891		7,461
Selling, general and administrative	11,863		17,977		17,021
Total stock-based compensation	$	22,495	$	34,178	$	31,404

The following table summarizes stock-based compensation expense:



	December 31,
	2017		2016		2015
			(Restated)		(Restated)
Stock options	$	6,311	$	7,778	$	8,495
Restricted stock awards	15,802		25,583		22,285
ESPP Plan	382		817		624
Total stock-based compensation before taxes	$	22,495	$	34,178	$	31,404
Tax benefit	$	3,921	$	11,108	$	10,130

The total stock-based compensation cost related to unvested equity awards as of December 31, 2017 was approximately $54.2 million. The expense is expected to be recognized over a weighted-average period of approximately 2.50 years.

As part of the work force reduction driven by corporate restructuring initiated in 2016, the Company terminated certain employees in 2017 and accelerated the vesting of certain unvested restricted stock awards and stock options for these employees. The Company accounted for the acceleration of these awards as a result of the restructuring termination as a Type III modification under ASC Topic 718 and recorded a one-time expense of $1.1 million.

In July 2017, the Company modified the terms of performance-based restricted stock awards granted to certain employees in 2015 and 2016 to modify the performance period as the performance targets for 2017 established previously were not considered probable due to the changes in the business driven by significant acquisitions and divestitures by the Company. The modification of the performance-based shares was considered a Type III modification under ASC Topic 718, and as a result, the Company reversed all previously recorded expense for these awards and recorded the new compensation expense over the new requisite service period as a result of the modification. The total incremental compensation expense resulting from these modifications was $2.0 million.

Replacement Awards

On January 19, 2017, certain equity awards granted under the Intralinks Holdings, Inc. 2010 Equity Incentive Plan and the Intralinks Holdings, Inc. 2007 Stock Option and Grant Plan (together, the “Intralinks Plans”) were assumed by the Company’s 2015 Equity Incentive Plan (the “2015 Plan”). The assumed awards are subject to the vesting and service conditions of the 2015 Plan. Subsequently, these were accelerated as part of the Intralinks Transaction.

Among the equity awards assumed were restricted stock units subject to market-based performance targets in order for them to vest. Vesting is subject to continued service requirements through the vesting date. The grant date fair value for such unvested restricted stock units was estimated using a Monte Carlo simulation that incorporates option-pricing inputs covering the period from the grant date through the end of the performance period. Stock-based compensation expense for such unvested restricted stock units is recognized on a straight-line basis over the vesting period, regardless of whether the market condition is satisfied. All of these awards were canceled during 2017 pursuant to termination of related employees.

Stock Options

Options that were granted under the Company’s 2000, 2006 and 2015 Plans generally vest 25% on the first-year anniversary of the date of grant plus an additional 1/48th for each month of continuous service thereafter.

Options that were granted under the Company’s 2010 Plan generally vest 50% on the second-year anniversary and an additional 1/48th for each month of continuous service thereafter.

Incentive options that were granted under the 2000 and 2006 Plans generally vest 25% on the first-year anniversary on the date of grant and an additional 1/48th for each month of continuous service thereafter.

The weighted-average assumptions used in the Black-Scholes option pricing model are as follows:



	December 31,
	2017			2016			2015
Expected stock price volatility	57.0		%	45.0		%	47.0		%
Risk-free interest rate	1.8		%	1.2		%	1.3		%
Expected life of options (in years)	4.08			4.00			4.00
Expected dividend yield	—		%	—		%	—		%
Weighted-average fair value (grant date) of the options	$	6.30		$	11.13		$	15.88

The following table summarizes information about stock options outstanding:



Options	Number of Options		Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Term (Years)	Aggregate Intrinsic Value
Outstanding at December 31, 2016 (restated)	2,306		$	32.43
Options Granted	2,891		$	15.09
Options Exercised	(104	)	$	11.34
Options Cancelled	(1,143	)	$	12.93
Outstanding at December 31, 2017	3,950		$	21.54	5.34	$	—
Vested and exercisable at December 31, 2017	1,185		$	32.35	3.26	$	—

The below table summarizes additional information related to stock options:



	December 31,
	2017		2016		2015
Total intrinsic value for stock options exercised	$	1,007	$	8,953	$	18,369

Awards of Restricted Stock and Performance Stock

Restricted stock awards (“Restricted Stock”) granted under the Company’s Plans generally vest 25% of the applicable shares on the first anniversary of the date of grant and thereafter an additional 1/16th for each three months of continuous service.

Performance stock awards granted under the Company’s 2006 Plan generally vest with respect to one-third of the applicable shares on the date that the performance objectives under the performance stock awards are achieved and thereafter an additional one-third for each year of continuous service.

Generally, performance stock awards granted under the Company’s 2015 Plan vest at the end of a three-year period based on service and achievement of certain performance objectives determined by the Company’s Board of Directors.

A summary of the Company’s unvested restricted stock at December 31, 2017, and changes during the year ended December 31, 2017, is presented below:



Non-Vested Restricted Stock	Number of Awards		Weighted- Average Grant Date Fair Value
Non-vested at December 31, 2016 (restated)	1,645		$	36.27
Granted	3,426		22.75
Vested	(946	)	32.16
Forfeited	(2,061	)	22.21
Non-vested at December 31, 2017	2,064		$	22.75

Restricted stock awards are granted subject to other service conditions or service and performance conditions (“Performance-Based Awards”). Restricted stock and performance-based awards are measured at the closing stock price at the date of grant and are recognized straight line over the requisite service period. During 2017, the Company issued 43,413 shares of restricted stock related to the 2016 performance share objectives. In 2017, the Company issued 304,300 market awards.

Employee Stock Purchase Plan

On February 1, 2012, the Company established a 10 years Employee Stock Purchase Plan (“ESPP” or “the ESPP Plan”) for certain eligible employees. The ESPP Plan is to be administered by the Company’s Board of Directors. The total number of shares available for purchase under the ESPP Plan is 0.5 million shares of the Company’s common stock. Employees participate over a six-month period through payroll withholdings and may purchase, at the end of the six-month period, the Company’s common stock at the lower of 85% of the fair market value on the first day of the offering period or the fair market value on the purchase date. No participant will be granted a right to purchase common stock under the ESPP Plan if such participant would own more than 5% of the total combined voting power of the Company. In addition, no participant may purchase more than a thousand shares of common stock within any purchase period or with a value greater than $25 thousand in any calendar year. The plan was indefinitely suspended on July 27, 2017.