Chegg 2013 Annual Report Download - page 137

CHEGG, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
consultants at exercise prices of not less than 85% of the fair market value of the common stock on the grant
date, as determined by the Board of Directors, provided however, that (i) the exercise price of an incentive stock
option and non-qualified stock (option was not less than 100% and 85% of the deemed fair value of the common
stock on the grant date, respectively, and (ii) the exercise price of an incentive stock option or non-qualified stock
option granted to a 10% stockholder was not less than 110% of the fair market value of a common stock on the
date of grant. Options granted under the 2005 Plan generally expire no later than ten years and in general vest
over four years from the date of grant. However, an incentive stock option granted to a 10% stockholder may
have only a maximum term of five years from the date of grant. The Board of Directors determined that no
further grants of awards under the 2005 Plan would be made effective as of November 10, 2013.
Designated IPO Equity Incentive Program
On February 15, 2012, the Board of Directors approved the Designated IPO Equity Incentive Program, or
the IPO Equity Incentive Program. The purpose of the IPO Equity Incentive Program was to provide incentives
to certain individuals who provided services to the Company or any Company subsidiary to (i) incentivize and
motivate them, including in the event of our IPO, and (ii) continue in the employment of the Company through
and after the closing of our IPO. In connection with our IPO, on November 12, 2013, we granted 931,791 options
and 472,644 RSUs under the IPO Equity Incentive Program at the IPO price of our common stock under the 2005
Stock Incentive Plan. No further grants of awards may be made under the IPO Equity Incentive Program.
2013 Equity Incentive Plan
On June 6, 2013, the Board of Directors adopted our 2013 Equity Incentive Plan, or the 2013 Plan, which
was subsequently approved by our stockholders on August 29, 2013. The 2013 Plan became effective on
November 11, 2013 and replaced the 2005 Plan. On the effective date of the 2013 Plan, 12,000,000 shares of our
common stock were reserved for issuance, plus an additional 3,838,985 shares reserved but not issued or subject
to outstanding awards under our 2005 Plan on the effective date of the 2013 Plan, plus, on and after the effective
date of the 2013 Plan, (i) shares that are subject to outstanding awards under the 2005 Plan which cease to be
subject to such awards, (ii) shares issued under the 2005 Plan that are forfeited or repurchased at their original
issue price and (iii) shares subject to awards under the 2005 Plan that are used to pay the exercise price of an
option or withheld to satisfy the tax withholding obligations related to any award. As of December 31, 2013 there
were 10,980,894 available for grant under the 2013 Plan. The 2013 Plan permits the granting of incentive stock
options, non-qualified stock options, RSUs, stock appreciation rights, restricted shares of common stock and
performance share awards. The exercise price of stock options may not be less than the 100% of the fair market
value of the common stock on the date of grant. Options granted pursuant to the 2013 Plan generally expire no
later than ten years.
2013 Employee Stock Purchase Plan
On June 6, 2013, our board of directors adopted our 2013 Employee Stock Purchase Plan, or the 2013 ESPP
and our stockholders subsequently approved the 2013 ESPP Plan on August 29, 2013 in order to enable eligible
employees to purchase shares of our common stock at a discount following the date of our IPO. The 2013 ESPP
permits eligible employees to acquire shares of our common stock by accumulating funds through periodic
payroll deductions of up to 15% of base salary. Our 2013 ESPP is intended to qualify as an ESPP under
Section 423 of the Code and employees will receive a 15% discount to the lesser of the fair market value of our
common stock on (i) the first trading day of the applicable offering period or (ii) the last day of each purchase
period in the applicable offering period. Each offering period may run for no more than six months. We have
reserved 4,000,000 shares of our common stock under our 2013 ESPP. The aggregate number of shares issued
over the term of our 2013 ESPP will not exceed 20,000,000 shares of our common stock. As of December 31,
2013, there were 4,000,000 shares of common stock available for future issuance under the 2013 ESPP.
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