Pandora 2016 Annual Report Download - page 109

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Twelve Months Ended€
€December 31,
2014 2015
Expected life (in years) 0.5 0.5
Risk-free interest rate 0.06%0.12%
Expected volatility 42%52%
Expected dividend yield 0%0%
€
During the twelve months ended December€31, 2014 and 2015, we withheld $6.4 million and $7.6 million in
contributions from employees and recognized $2.1 million and $3.3 million of stock-based compensation expense related to the
ESPP. In the twelve months ended December€31, 2014 and 2015, 149,378 and 538,398€shares of common stock were issued
under the ESPP at a weighted average purchase price of $23.95 and $17.80. There was no stock-based compensation expense
related to the ESPP or shares of common stock issued under the ESPP in the eleven months ended December 31, 2013.
Stock Options€
Stock option activity during the twelve months ended December€31, 2015 was as follows:
Options Outstanding
Outstanding
Stock
Options
Weighted-
Average
Exercise
Price
Weighted-
Average
Remaining
Contractual
Term (in years)
Aggregate
Intrinsic
Value (1)
(in thousands, except share and per share data)
Balance as of December 31, 2014 10,980,256 $7.91 1.08 $120,033
Granted 2,940,736 3.44
Exercised (1,077,797)4.78
Forfeited (27,304)6.09
Balance as of December 31, 2015 12,815,891 7.15 1.09 101,151
Vested and exercisable as of December€31, 2015 9,292,855 5.74 0.57 81,541
Expected to vest as of December 31, 2015 (2) 3,259,020 $10.81 2.47 $18,156
(1)Amounts represent the difference between the exercise price and the fair value of common stock at
each period end for all in the money options outstanding based on the fair value per share of common
stock of $17.83 and $13.41 as of December 31, 2014 and 2015.
(2)Options expected to vest reflect an estimated forfeiture rate.
The per-share fair value of stock options granted during the eleven months ended December 31, 2013, the twelve months
ended December 31, 2014 and the twelve months ended December€31, 2015 was determined on the grant date using the Black-
Scholes option pricing model with the following assumptions:
Eleven Months Ended€
€December 31,
Twelve Months Ended€
€December 31,
2013 2014 2015
Expected life (in years) 5.99 - 6.32 6.08 6.08
Risk-free interest rate 1.00% - 2.04% 1.71% - 1.93% 1.75% - 1.92%
Expected volatility 58% - 59% 58% - 59% 49% - 50%
Expected dividend yield 0%0%0%
The expected term of stock options granted represents the weighted average period that the stock options are expected to
remain outstanding. We determined the expected term assumption based on our historical exercise behavior combined with
estimates of the post-vesting holding period. Expected volatility is based on historical volatility of peer companies in our
Table of Contents
Pandora Media,€Inc.
Notes to Consolidated Financial Statements - Continued
98