Green Dot 2010 Annual Report Download - page 87

Note 9 — Stockholders’ Equity (continued)
beneficial conversion features. We accreted the carrying value of the stock to its redemption value at each
reporting period with a charge to retained earnings.
On December 19, 2008, we entered into an agreement with the sole holder of Series D for an early
redemption of the 2,926,458 outstanding shares. The agreed redemption value was $39.2 million, or
$13.38 per share, which we paid in cash on December 19, 2008. Upon redemption, the Series D preferred
shares were canceled.
In addition, on December 19, 2008, we purchased a call option, which entitled us to purchase the
freestanding warrant on 500,000 shares of common stock at an exercise price of approximately $2.0 mil-
lion. The call option was exercisable any time during the period March 1, 2009 to September 1, 2009. In
June 2009, we exercised the call option and repurchased the warrant.
Note 10 — Stock-Based Compensation
Employee Stock-Based Compensation
In January 2001, we adopted the 2001 Stock Plan. The 2001 Stock Plan provided for the granting of
incentive stock options, nonqualified stock options and other stock awards. Options granted under the
2001 Stock Plan generally vest over four years and expire five or ten years from the date of grant.
In June 2010, our board of directors adopted, and in July 2010 our stockholders approved, the 2010
Equity Incentive Plan, which replaced our 2001 Stock Plan, and the 2010 Employee Stock Purchase Plan.
We reserved 2,000,000 shares of our Class A common stock for issuance under our 2010 Equity Incentive
Plan. The number of shares reserved for issuance under our 2010 Equity Incentive Plan will increase
automatically on the first day of January of each of 2011 through 2014 by up to a number of shares equal to
3% of the total outstanding shares our Class A and Class B common stock as of the immediately preceding
December 31st. The 2010 Equity Incentive Plan authorizes the award of stock options, restricted stock
awards, stock appreciation rights, restricted stock units, performance shares and stock bonuses. Options
granted under the 2010 Equity Incentive Plan generally vest over four years and expire five or ten years
from the date of grant.
The 2010 Employee Stock Purchase Plan enables eligible employees to purchase shares of our
Class A common stock periodically at a discount. Our 2010 Employee Stock Purchase Plan is intended to
qualify as an employee stock purchase plan under Section 423 of the Internal Revenue Code. We reserved
200,000 shares of our Class A common stock for issuance under our 2010 Employee Stock Purchase
Plan. The number of shares reserved for issuance under our 2010 Employee Stock Purchase Plan will
automatically increase on the first day of January of each of 2011 through 2018 by up to the number of
shares equal to 1% of the total outstanding shares of our Class A and Class B common stock as of the
immediately preceding December 31st.
Our board of directors or its compensation committee may reduce the amount of the annual increase
under the 2010 Equity Incentive Plan or 2010 Employee Stock Purchase Plan in any particular year.
Options granted under the 2010 Equity Incentive Plan generally vest over four years and expire five or ten
years from the date of grant.
The total stock-based compensation expense recognized was $7.3 million for the year ended Decem-
ber 31, 2010, including $334,000 related to our employee stock purchase plan, $6.8 million for the five
months ended December 31, 2009 and $2.5 million and $1.2 million for the years ended July 31, 2009 and
2008, respectively. The total income tax expense recognized as a component of stock-based compensation
was $1.3 million for the year ended December 31, 2010, $2.6 million for the five months ended December 31,
2009 and $0.4 million and $0.3 million for the years ended July 31, 2009 and 2008, respectively.
78
GREEN DOT CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)