Pandora 2016 Annual Report Download - page 108

of directors (the "Plan Administrator").
The 2011 Plan provides for the issuance of stock options, restricted stock units and other stock-based awards. Shares of
common stock reserved for issuance under the 2011 Plan include 12,000,000 shares of common stock reserved for issuance
under the 2011 Plan and€1,506,424 shares of common stock previously reserved but unissued under the 2004 Plan as of June€14,
2011. To the extent awards outstanding as of June€14, 2011 under the 2004 Plan expire or terminate for any reason prior to
exercise or would otherwise return to the share reserve under the 2004 Plan, the shares of common stock subject to such awards
will instead be available for future issuance under the 2011 Plan. Each year, the number of shares in the reserve under the Plan
may be increased by the lesser of€10,000,000 shares, 4.0% of the outstanding shares of common stock on the last day of the
prior fiscal year or another amount determined by our board of directors. The 2011 Plan is scheduled to terminate in 2021,
unless our board of directors determines otherwise.
Under the 2011 Plan, the Plan Administrator determines various terms and conditions of awards including option
expiration dates (no more than ten years from the date of grant), vesting terms (generally over a four-year period) and payment
terms. For stock option grants the exercise price is determined by the Plan Administrator, but generally may not be less than the
fair market value of the common stock on the date of grant.
In December 2013, our board of directors approved the ESPP, which was approved by our stockholders at the annual
meeting in June 2014. The ESPP allows eligible employees to purchase shares of our common stock through payroll deductions
of up to€15%€of their eligible compensation, subject to a maximum of their eligible compensation, subject to a maximum of
$25,000 per calendar year. Shares reserved for issuance under the ESPP include 4,000,000 shares of common stock. The ESPP
provides for€six- month offering periods, commencing in February and August of each year. At the end of each offering period
employees are able to purchase shares at€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.
Shares available for grant as of December€31, 2015 and the activity during the twelve months ended December€31, 2015
are as follows:
Shares Available for Grant
Equity Awards ESPP Total
Balance as of December 31, 2014 14,326,460 3,857,735 18,184,195
Additional shares authorized 8,323,469 — 8,323,469
Ticketfly shares authorized 3,215,223 — 3,215,223
Options granted (2,940,736)— (2,940,736)
Restricted stock granted (11,678,792)— (11,678,792)
Market stock units granted (776,000)—(776,000)
ESPP shares issued — (538,398)(538,398)
Options forfeited 7,709 — 7,709
Restricted stock forfeited 1,245,994 — 1,245,994
Balance as of December 31, 2015 11,723,327 3,319,337 15,042,664
Employee Stock Purchase Plan ("ESPP")
€
We estimate the fair value of shares to be issued under the ESPP on the first day of the offering period using the Black-
Scholes valuation model. The determination of the fair value is affected by our stock price on the first date of the offering
period, as well as other assumptions including the risk-free interest rate, the estimated volatility of our stock price over the term
of the offering period, the expected term of the offering period and the expected dividend rate. Stock-based compensation
expense related to the ESPP is recognized on a straight-line basis over the offering period, net of estimated forfeitures.
€
The per-share fair value of shares to be granted under the ESPP is determined on the first day of the offering period using
the Black-Scholes option pricing model using the following assumptions:
€
Table of Contents
Pandora Media,€Inc.
Notes to Consolidated Financial Statements - Continued
97