LinkedIn 2012 Annual Report Download - page 92

being, and the estimated amount of, a loss related to such matters, and the Company’s judgment may be
incorrect. The outcome of any proceeding is not determinable in advance. Until the final resolution of any
such matters that the Company may be required to accrue for, it may be exposed to loss in excess of the
amount accrued, and such amounts could be material.
Indemnifications
In the ordinary course of business, the Company enters into contractual arrangements under which it
agrees to provide indemnification of varying scope and terms to business partners and other parties with
respect to certain matters, including, but not limited to, losses arising out of the Company’s breach of
such agreements and out of intellectual property infringement claims made by third parties. In these
circumstances, payment may be conditional on the other party making a claim pursuant to the procedures
specified in the particular contract. Further, the Company’s obligations under these agreements may be
limited in terms of time and/or amount, and in some instances, it may have recourse against third parties
for certain payments. In addition, the Company has indemnification agreements with certain of its
directors and executive officers that require it, among other things, to indemnify them against certain
liabilities that may arise by reason of their status or service as directors or officers with the Company. The
terms of such obligations may vary.
11. Stockholders’ Equity
Initial Public Offering
In May 2011, the Company closed its IPO of 9,016,000 shares of its Class A common stock, which
included 6,003,804 shares of Class A common stock sold by the Company (inclusive of 1,176,000 shares of
Class A common stock from the full exercise of the overallotment option of shares granted to the
underwriters) and 3,012,196 shares of Class A common stock sold by the selling stockholders. The public
offering price of the shares sold in the offering was $45.00 per share. The Company did not receive any
proceeds from the sales of shares by the selling stockholders. The total gross proceeds from the offering
to the Company were $270.2 million. After deducting underwriting discounts and commissions and
offering expenses payable by the Company, the aggregate net proceeds received by the Company totaled
approximately $248.4 million.
Follow-on Offering
In November 2011, the Company closed its follow-on offering of 10,062,500 shares of its Class A
common stock, which included 2,583,755 shares of Class A common stock sold by the Company (inclusive
of 1,312,500 shares of Class A common stock from the full exercise of the overallotment option of shares
granted to the underwriters) and 7,478,745 shares of Class A common stock sold by the selling
stockholders. The public offering price of the shares sold in the offering was $71.00 per share. The
Company did not receive any proceeds from the sales of shares by the selling stockholders. The total gross
proceeds from the offering to the Company were $178.1 million. After deducting underwriting discounts
and commissions and offering expenses payable by the Company, the aggregate net proceeds received by
the Company totaled approximately $177.3 million.
Preferred Stock
Prior to its IPO, the Company had outstanding 17,238,579 shares designated as Series A convertible
preferred stock, 17,450,991 shares designated as Series B convertible preferred stock, 4,357,644 designated
as Series C redeemable convertible preferred stock and 6,599,987 designated as Series D redeemable
convertible preferred stock. Each share of preferred stock was convertible into one share of common
stock. Immediately prior to the completion of the Company’s IPO on May 19, 2011, all shares of
outstanding preferred stock automatically converted into 45,647,201 shares of the Company’s Class B
common stock. After its IPO, the Company had 100,000,000 shares of preferred stock authorized, none of
which were issued and outstanding as of December 31, 2012 and 2011.
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