Chegg 2015 Annual Report Download - page 125

Table of Contents
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satisfy their tax obligations. Payment of taxes related to this net share settlement of RSUs is reflected as a financing activity
in our consolidated statements of cash flows. The shares withheld by us as a result of the net settlement are no longer
considered issued and outstanding, thereby reducing our shares outstanding used to calculate earnings per share. These
shares are returned to the reserves and are available for future issuance under the 2013
In February 2014, we granted PSUs under the 2013 Plan to certain of our executive officers. The PSUs entitle the
executives to receive a certain number of shares of our common stock based on our satisfaction of certain financial and
strategic performance targets during 2014 (the 2014 Performance Period). Based on the achievement of the performance
conditions during the 2014 Performance Period for the February grants, the final settlement of the PSU awards was 120% of
the target shares underlying the PSU awards based on a specified objective formula approved by the Compensation
Committee. These PSUs will vest annually over a three year period, with the first year vesting in February 2015. In June
2014, we granted PSUs under the 2013 Plan to the employees of InstaEDU, which are based on achieving certain revenue
targets in 2014 and
The target number of shares underlying the 2014 Performance Period PSUs that were granted to certain executive
officers during the year ended December 31, 2014 totaled 1,208,560 shares and had a weighted average grant date fair value
of $6.37 per share. As of December 31, 2014, 120% of the PSUs vested. The target number of shares underlying the PSUs
that were granted to certain employees of our InstaEDU acquisition during the year ended December 31,
2014 totaled 2,280,081 and had a weighted average grant date fair value of $6.00 per share. As of December 31, 2015,
metrics related to the 2014 and 2015 periods were not achieved and the shares will be subsequently canceled once the
attainment is certified by our compensation committee.
In February 2015, we granted PSUs under the 2013 Plan to certain of our key employees. The PSUs entitle the
employees to receive a certain number of shares of our common stock based on our satisfaction of certain financial and
strategic performance targets during 2015 (the 2015 Performance Period). Based on the achievement of the performance
conditions during the 2015 Performance Period for the February 2015 grants, the final settlement met the minimum
threshold for the 2015 Performance Period based on a specified objective formula approved by the Compensation
Committee of the Board of Directors. These PSUs will vest annually over a one or three year period depending on the
employee, with the initial vesting in February 2016.
The target number of shares underlying the PSUs that were granted to certain key employees during the year ended
December 31, 2015 totaled 2,300,824 shares and had a weighted average grant date fair value of $6.59 per share.
As of December 31, 2015, we had a total of approximately $41.7 million of unrecognized compensation costs
related to RSUs and PSUs that is expected to be recognized over the remaining weighted average period of 1.6 years.
Acquisition-related Stock Awar
In connection with an acquisition in 2010, acquired employees had the option to sell any vested shares back to us at
a fixed price of $11.94 per share prior to or 90 days after termination. The vested portion of the 189,516 restricted shares has
been classified as a liability in accrued liabilities on the 2014 consolidated balance sheets, as our obligation to purchase the
shares from the employees is outside our control. During 2014 and 2013, we recorded compensation expense of
approximately $0.4 million and $0.5 million, respectively, due to the vesting of the restricted stock and a resulting liability
of approximately $1.1 million as of December 31, 2014 related to the employees’ option to sell the vested shares back to the
Company. As of December 31, 2014, all employees had exercised their right to sell the vested shares back to the Company.
During the year ended December 31, 2015 all employees were paid and therefore we no longer have a liability related to
these awards.
Note 15. Income Taxes
We recorded an income tax provision of approximately $1.5 million, $0.2 million and $0.6 million for the years ended
December 31, 2015, 2014 and 2013, respectively. The income tax provision for the year ended December 31, 2015 was
primarily due to state and foreign income tax expense and federal tax expense related to tax amortization of acquired indefinite
lived intangible assets. The income tax provision for year ended December 31, 2014 was primarily the result of foreign and
state income taxes offset by the release of valuation allowance of $1.3 million resulting from our acquisition of InstaEDU. The
income tax provision for the year ended December 31, 2013 was due to state and foreign income tax expense offset by the
release of certain income tax benefits. Our income tax provision consisted of the following (in thousands):