Shutterfly 2014 Annual Report Download - page 102

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Restricted Stock Units
The Company grants restricted stock units (‘‘RSUs’’) to its employees under the provisions of the 2006
Plan and inducement awards to certain new employees upon hire in accordance with NASDAQ Listing
Rule 5635(c)(4). The cost of RSUs is determined using the fair value of the Company’s common stock on
the date of grant. RSUs typically vest and are settled annually, based on a three or four year total vesting
term. Compensation cost is amortized on a straight-line basis over the requisite service period.
Restricted Stock Unit Activity
A summary of the Company’s restricted stock unit activity for the twelve months ended December 31,
2014, is as follows (share numbers in thousands):
Number Weighted
of Average
Units Grant Date
Outstanding Fair Value
Awarded and unvested, December 31, 2013 ........................ 3,862 $ 38.59
Granted ................................................ 1,889 45.34
Vested ................................................. (1,481) 38.36
Forfeited ................................................ (566) 41.99
Awarded and unvested, December 31, 2014 ........................ 3,704 $ 42.17
Restricted stock units expected to vest, December 31, 2014 ............. 3,314
The chart below summarizes grant activity during the twelve months ended December 31, 2014 by
equity plan (share numbers in thousands):
Grants in 2014
2006 Equity Incentive Plan
Restricted stock units(1) .............................................. 1,356
Performance-based restricted stock units(2)(3) .............................. 341
Total grants under 2006 Plan ............................................ 1,697
Inducement Awards
Restricted stock units(4) .............................................. 96
Performance-based restricted stock units(4) ................................ 96
Total grants pursuant to Inducement Awards ................................ 192
Total awards granted in 2014 ............................................ 1,889
(1) Awards issued under the 2006 Plan include restricted stock unit awards granted to new and
current employees. Awards issued under this plan typically vest over a three or four year total
vesting term.
(2) Includes performance-based restricted stock units (PBRSUs) issued under the 2006 Equity
Incentive Plan to specific employees which are tied to the Company’s 2014 financial performance
and which have four year service criteria. Compensation cost associated with these PBRSUs is
recognized on an accelerated attribution model and ultimately based on whether or not
satisfaction of the performance criteria is probable. As of December 31, 2014, the performance
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