Fair Value of Our Common Stock.
Because our stock is not publicly traded, we must estimate
the fair value of common stock, as discussed in «Common Stock Valuations» below.
In light of the strength we were beginning to experience in our business, we performed a contemporaneous valuation of our common stock as of September 15, 2009 and determined
the fair value of our common stock to be $ 3.50 per share as of such date.
In light of our improved financial performance, we performed a contemporaneous valuation of our common stock as of May 7, 2010 and determined
the fair value of our common stock to be $ 6.20 per share.
The Company recognizes compensation expense equal to the grant date
fair value of the common stock on a straight - line basis over the period during which the employee is required to perform service in exchange for the award.
and considered a number of other objective and subjective factors to determine the best estimate of
the fair value of our common stock, including; issuances of preferred stock and the rights, preferences and privileges of our preferred stock relative to those of our common stock; and the likelihood of achieving a liquidity event, such as an initial public offering or sale given prevailing market conditions.
Fair Value of Common Stock.
The fair value of the common stock underlying the stock - based awards is determined by our board of directors, which considered numerous objective and subjective factors to determine the fair value of common stock at each grant date.
on a pro forma basis, giving effect to (i) the automatic conversion of all of our outstanding shares of convertible preferred stock other than Series FP preferred stock into shares of Class B common stock and the conversion of Series FP preferred stock into shares of Class C common stock in connection with our initial public offering, (ii) stock - based compensation expense of approximately $ 1.1 billion associated with outstanding RSUs subject to a performance condition for which the service - based vesting condition was satisfied as of December 31, 2016 and which we will recognize on the effectiveness of our registration statement in connection with a qualifying initial public offering, as further described in Note 1 to our consolidated financial statements included elsewhere in this prospectus, (iii) the increase in accrued expenses and other current liabilities and an equivalent decrease in additional paid - in capital of $ 187.2 million in connection with the withholding tax obligations, based on $ 16.33 per share, which is
the fair value of our common stock as of December 31, 2016, as we intend to issue shares of Class A common stock and Class B common stock on a net basis to satisfy the associated withholding tax obligations, (iv) the net issuance of 7.6 million shares of Class A common stock and 5.5 million shares of Class B common stock that will vest and be issued from the settlement of such RSUs, (v) the issuance of the CEO award, as described below, and (vi) the filing and effectiveness of our amended and restated certificate of incorporation which will be in effect on the completion of this offering.
The fair value of our common stock has been determined in accordance with applicable elements of the practice aid issued by the American Institute of Certified Public Accountants, Valuation of Privately Held Company Equity Securities Issued as Compensation.
The pro forma consolidated balance sheet data gives effect to (i) the automatic conversion of all of our outstanding shares of convertible preferred stock other than Series FP preferred stock into shares of Class B common stock and the conversion of Series FP preferred stock into shares of Class C common stock in connection with our initial public offering, (ii) stock - based compensation expense of approximately $ 1.1 billion associated with outstanding RSUs subject to a performance condition for which the service - based vesting condition was satisfied as of December 31, 2016 and which we will recognize on the effectiveness of our registration statement in connection with this offering, as further described in Note 1 to our consolidated financial statements included elsewhere in this prospectus, (iii) the increase in accrued expenses and other current liabilities and an equivalent decrease in additional paid - in capital of $ 187.2 million in connection with the withholding tax obligations, based on $ 16.33 per share, which is
the fair value of our common stock as of December 31, 2016, as we intend to issue shares of Class A common stock and Class B common stock on a net basis to satisfy the associated withholding tax obligations, (iv) the net issuance of 7.6 million shares of Class A common stock and 5.5 million shares of Class B common stock that will vest and be issued from the settlement of such RSUs, (v) the issuance of the CEO award, as described below, and (vi) the filing and effectiveness of our amended and restated certificate of incorporation which will be in effect on the completion of this offering.
Given the absence of a public trading market of our common stock, and in accordance with the American Institute of Certified Public Accountants Accounting and Valuation Guide, Valuation of Privately - Held Company Equity Securities Issued as Compensation, our board of directors exercised reasonable judgment and considered numerous and subjective factors to determine the best estimate of
fair value of our common stock, including independent third - party valuations of our common stock; the prices at which we sold shares of our convertible preferred stock to outside investors in arms - length transactions; the rights, preferences, and privileges of our convertible preferred stock relative to those of our common stock; our operating results, financial position, and capital resources; current business conditions and projections; the lack of marketability of our common stock; the hiring of key personnel and the experience of our management; the introduction of new products; our stage of development and material risks related to our business; the fact that the option grants involve illiquid securities in a private company; the likelihood of achieving a liquidity event, such as an initial public offering or a sale of our company given the prevailing market conditions and the nature and history of our business; industry trends and competitive environment; trends in consumer spending, including consumer confidence; and overall economic indicators, including gross domestic product, employment, inflation and interest rates, and the general economic outlook.
We determined
the fair value of our common stock to be $ 17.00 per share as of February 25, 2013.
From 2007 through February 2009, the Board determined
the fair value of the common stock by using discounted future cash flows under the income method, after considering current rounds of financing.
We determined
the fair value of our common stock to be $ 17.41 per share as of May 15, 2013 based on the subject company transaction method.
We determined
the fair value of our common stock to be $ 17.00 per share as of December 4, 2012.
We utilized the arm's - length transactions of our equity securities in the secondary market since our most recent common stock valuation date, February 25, 2013, and the tender offer completed on March 4, 2013 to estimate
the fair value of our common stock.
We utilized the arm's - length transactions of our equity securities in the secondary market since our most recent common stock valuation date, May 15, 2013, to estimate
the fair value of our common stock.
In order to understand what the intrinsic value or
fair value of a common stock is, you must think like a long - term business owner and not like a stock trader.
Not exact matches
A
stock appreciation right entitles a participant to receive a payment, in cash,
common stock, or a combination
of both, in an amount equal to the difference between the
fair market
value of the
stock at the time
of exercise and the exercise price
of the award, which may not be lower than the
fair market
value of the Company's
common stock on the day
of grant.
granted any options since August 2008, we performed a contemporaneous valuation
of our
common stock as
of December 24, 2008 and determined the
fair value to be $ 2.32 per share as
of such date.
This column reflects the aggregate grant date
fair value computed in accordance with ASC Topic 718
of the options to purchase shares
of our
common stock granted to the named executive officers.
To determine the
Fair Value of one share of common stock, we relied on the Hybrid Method, in which we utilized the PWERM to allocate the value under certain Initial Public Offering (IPO) scenarios, and the OPM to allocate the value under scenarios other than an IPO (the All Other scena
Value of one share
of common stock, we relied on the Hybrid Method, in which we utilized the PWERM to allocate the
value under certain Initial Public Offering (IPO) scenarios, and the OPM to allocate the value under scenarios other than an IPO (the All Other scena
value under certain Initial Public Offering (IPO) scenarios, and the OPM to allocate the
value under scenarios other than an IPO (the All Other scena
value under scenarios other than an IPO (the All Other scenario).
A
stock appreciation right gives a participant the right to receive the appreciation in the fair market value of Company Common Stock between the date of grant of the award and the date of its exer
stock appreciation right gives a participant the right to receive the appreciation in the
fair market
value of Company
Common Stock between the date of grant of the award and the date of its exer
Stock between the date
of grant
of the award and the date
of its exercise.
Subject to the provisions
of our 2015 Plan, the administrator will determine the other terms
of stock appreciation rights, including when such rights become exercisable and whether to pay any amount
of appreciation in cash, shares
of our Class A
common stock, or a combination thereof, except that the per share exercise price for the shares to be issued pursuant to the exercise
of a
stock appreciation right must be no less than 100 %
of the
fair market
value per share on the date
of grant.
The purchase price
of the shares will be 85 %
of the lower
of the
fair market
value of our Class A
common stock on the first trading day
of each offering period or on the exercise date.
The 2004 Plan permits the grant
of the following types
of Awards: (1) nonstatutory
stock options, incentive
stock options and
stock appreciation rights granted at the
fair market value of our common stock on the date of grant (Fair Market Value Awards), and (2) restricted stock awards and restricted stock units (Full Value Awar
fair market
value of our common stock on the date of grant (Fair Market Value Awards), and (2) restricted stock awards and restricted stock units (Full Value Awa
value of our
common stock on the date
of grant (
Fair Market Value Awards), and (2) restricted stock awards and restricted stock units (Full Value Awar
Fair Market
Value Awards), and (2) restricted stock awards and restricted stock units (Full Value Awa
Value Awards), and (2) restricted
stock awards and restricted
stock units (Full
Value Awa
Value Awards).
If the shares
of common stock are sold or otherwise disposed
of before the end
of the one - year and two - year periods specified above, the difference between the option exercise price and the
fair market
value of the shares on the date
of the options» exercise will
The exercise price may not be less than 100 %
of fair market
value of the
common stock on the date
of grant.
(2) 85 %
of the
fair market
value of a share
of our Class A
common stock on the date
of purchase.
In addition to the non-employee director compensation policy, in connection with this offering, we adopted a director
stock ownership policy encouraging non-employee directors to hold shares
of our Class A
common stock with a
value equal to at least one times the
fair value of the director's annual equity award.
The plan administrator determines the purchase price or strike price for a
stock appreciation right, which generally can not be less than 100 %
of the
fair market
value of our Class A
common stock on the date
of grant.
No participant will have the right to purchase shares
of our Class A
common stock in an amount, when aggregated with purchase rights under all our employee
stock purchase plans that are also in effect in the same calendar year, that have a
fair market
value of more than $ 25,000, determined as
of the first day
of the applicable purchase period, for each calendar year in which that right is outstanding.
Because there is no public market for our
common stock, our board
of directors determined the
common stock fair value at the
stock option grant date by considering several objective and subjective factors, including the price paid by investors for our preferred
stock, our actual and forecasted operating and financial performance, market conditions and performance
of comparable publicly traded companies, developments and milestones in our company, the rights and preferences
of our
common and preferred
stock, the likelihood
of achieving a liquidity event, and transactions involving our preferred
stock.
The purchase price
of the shares will be 85 %
of the lower
of the
fair market
value of our
common stock on the first trading day
of the offering period or on the last day
of the offering period.
Provided, however, that an incentive
stock option held by a participant who owns more than 10 %
of the total combined voting power
of all classes
of our
stock, or
of certain
of our parent or subsidiary corporations, may not have a term in excess
of five years and must have an exercise price
of at least 110 %
of the
fair market
value of our
common stock on the grant date.
nonstatutory
stock options may not be less than 85 %
of the
fair market
value of our
common stock on the date
of grant.
We determined the
fair market
value of the contingent consideration, according to which we may be obligated to issue additional
common stock or pay cash, to be $ 7.7 million as
of the acquisition date.
When the
stock appreciation right is exercised, the recipient will generally be required to include as taxable ordinary income in the year
of exercise an amount equal to the sum
of the amount
of cash received and the
fair market
value of any
common stock received upon the exercise.
upon the exercise
of an Option or
Stock Appreciation Right or upon the payout of a Restricted Stock Unit, Performance Unit or Performance Share, for each Share subject to such Award, to be solely common stock of the successor corporation or its Parent equal in fair market value to the per share consideration received by holders of Common Stock in the Change in Con
Stock Appreciation Right or upon the payout
of a Restricted
Stock Unit, Performance Unit or Performance Share, for each Share subject to such Award, to be solely common stock of the successor corporation or its Parent equal in fair market value to the per share consideration received by holders of Common Stock in the Change in Con
Stock Unit, Performance Unit or Performance Share, for each Share subject to such Award, to be solely
common stock of the successor corporation or its Parent equal in fair market value to the per share consideration received by holders of Common Stock in the Change in Co
common stock of the successor corporation or its Parent equal in fair market value to the per share consideration received by holders of Common Stock in the Change in Con
stock of the successor corporation or its Parent equal in
fair market
value to the per share consideration received by holders
of Common Stock in the Change in Co
Common Stock in the Change in Con
Stock in the Change in Control.
Subject to the provisions
of our 2016 Plan, the administrator determines the other terms and conditions
of stock appreciation rights, including when such rights become exercisable and whether to pay any increased appreciation in cash or with shares
of our
common stock, or a combination thereof, except that the per share exercise price for the shares to be issued pursuant to the exercise
of a
stock appreciation right will be no less than 100 %
of the
fair market
value per share on the date
of grant.
Stock appreciation rights provide for a payment, or payments, in cash or shares of our Class A common stock, to the holder based upon the difference between the fair market value of our Class A common stock on the date of exercise and the stated exercise price at grant up to a maximum amount of cash or number of sh
Stock appreciation rights provide for a payment, or payments, in cash or shares
of our Class A
common stock, to the holder based upon the difference between the fair market value of our Class A common stock on the date of exercise and the stated exercise price at grant up to a maximum amount of cash or number of sh
stock, to the holder based upon the difference between the
fair market
value of our Class A
common stock on the date of exercise and the stated exercise price at grant up to a maximum amount of cash or number of sh
stock on the date
of exercise and the stated exercise price at grant up to a maximum amount
of cash or number
of shares.
All
stock options and
stock appreciation rights will have an exercise price equal to at least the
fair market
value of our
common stock on the date the
stock option or
stock appreciation right is granted, except in certain situations in which we are assuming or replacing options granted by another company that we are acquiring.
In addition to the non-employee director compensation policy, we intend to adopt a director
stock ownership policy encouraging non-employee directors to hold shares
of our Class A
common stock with a
value equal to at least one times the
fair value of the director's annual equity award.
Each non-employee director who, as
of the date
of this offering, is serving on our board
of directors and is expected to continue his or her service following this offering will be granted an option to purchase shares
of our Class A
common stock with a grant date
fair value of $ 50,000 (or, if such director is unaffiliated with any significant stockholder
of the Company, $ 75,000) on the date the shares subject to this offering are priced.
On the date the shares subject to this offering are priced, each non-employee director who, as
of the date
of this offering, is serving on our board
of directors and is expected to continue his or her service following this offering will be granted (a) an option to purchase shares
of our Class A
common stock with a grant date
fair value of $ 50,000 (or, if such director is unaffiliated with any significant stockholder
of the Company, $ 75,000) and (b) to the extent such director is (i) unaffiliated with any significant stockholder
of the Company and (ii) the chairman
of any committee
of our board
of directors, an additional option to purchase shares
of our Class A
common stock with a
fair value of $ 10,000 with respect to each such chairmanship.
Subject to the provisions
of our 2010 Plan, the administrator determines the terms
of stock appreciation rights, including when such rights vest and become exercisable and whether to settle such awards in cash or with shares
of our
common stock, or a combination thereof, except that the per share exercise price for the shares to be issued pursuant to the exercise
of a
stock appreciation right will be no less than 100 %
of the
fair market
value per share on the date
of grant.
Since the number
of shares
of common stock ultimately issuable under the warrant will vary, this warrant will be carried at its estimated
fair value with changes in
fair value reflected in other income (expense), net, until its expiration or exercise.
For the initial offering, which we expect will commence on the execution and delivery
of the underwriting agreement relating to this offering, the
fair market
value on the first day
of the offering period will be the price at which shares
of Class A
common stock are first sold to the public.
The purchase price for shares
of our Class A
common stock purchased under our 2015 ESPP will be 85 %
of the lesser
of the
fair market
value of our Class A
common stock on (i) the first trading day
of the applicable offering period and (ii) the last trading day
of each purchase period in the applicable offering period.