Etsy 2015 Annual Report Download - page 97

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
Etsy, Inc.
Notes to Consolidated Financial Statements
Common Stock Issuances
In April 2014, the Company issued 3,301,887 shares of common stock to certain investors at $10.60 per share for an aggregate value of $35.0 million.
Additionally, the Company issued a total of 3,580,476 shares of common stock in connection with the acquisitions of Grand St. and ALM, of which
2,652,399 shares with an aggregate fair value of $27.7 million on the applicable acquisition dates are included in the Company’s purchase price and 928,077
shares with an aggregate fair value of $9.7 million on the applicable acquisition dates are tied to continued employment with the Company and are being
accounted for as post-acquisition compensation expense.
Stock Repurchases
In 2013, the board of directors authorized the repurchase and retirement of 23,500 shares of outstanding common stock at a cost of $0.2 million. The
repurchased shares were retired and have been removed from both the issued and outstanding number of shares in the consolidated balance sheet and
consolidated statement of stockholders’ equity.
Secondary Transactions
In the year ended December 31, 2014, the Company recorded $0.5 million as compensation expense related to the excess of the selling price per share paid to
certain of the Company’s former employees over the fair value of the shares sold to an investor by these former employees in secondary transactions.

The Company's 2015 Equity Incentive Plan (the "2015 Plan") was adopted by its board of directors and approved by stockholders in March 2015. The 2015
Plan became effective immediately upon adoption although no awards were made under it until the effective date of the IPO. The 2015 Plan replaced the
2006 Stock Plan, and no further grants were made under the 2006 Stock Plan as of the effective date of the IPO.
Under the 2006 Stock Plan, incentive and nonqualified stock options or rights to purchase common stock were granted to eligible participants. Options were
generally granted for a term of 10 years and generally vested 25% after the first year of service and ratably each month over the remaining 36-month period
contingent on continued employment with the Company on each vesting date. At December 31, 2014, 24,252,967 shares were authorized under the 2006
Stock Plan and 1,518,002 shares were available for future grant.
The 2015 Plan provides for the grant of incentive stock options, non-statutory stock options, stock appreciation rights, restricted stock, restricted stock units
("RSUs") and performance cash awards to employees, directors and consultants. Beginning in 2016, the number of shares available for issuance under the
2015 Plan may be increased annually by an amount equal to the lesser of 7,050,000 shares of common stock, 5% of the outstanding shares of common stock
as of the last day of the immediately preceding fiscal year, or such other amount as determined by the Company's board of directors. The Board of Directors
approved an increase of 2,814,083 shares available for issuance under the 2015 Plan as of January 4, 2016. Any awards issued under the 2015 Plan that are
forfeited by the participant will become available for future grant under the 2015 Plan. The number of shares of the Company’s common stock initially
reserved for issuance under the 2015 Plan equaled the sum of 14,100,000 shares plus up to 12,653,075 shares reserved for issuance or subject to outstanding
awards under the 2006 Stock Plan. At December 31, 2015, 14,735,179 shares were authorized under the 2015 Plan, and 14,362,827 shares were available for
future grant.
In the year ended December 31, 2015, we granted incentive stock options, nonqualified stock options and RSUs to eligible participants. Options were
generally granted for a term of 10 years and vest 25% after the first year of service and ratably each month over the remaining 36-month period contingent on
continued employment with the Company on each vesting date. RSUs generally vest 25% after the first year following the vesting commencement date,
which is the first day of the fiscal quarter closest to the date of grant, and then vest ratably each quarter over the remaining 12-quarter period contingent on
continued employment with the Company on each vesting date.
The fair value of each option award is estimated on the date of grant using the Black-Scholes option-pricing model using the inputs below. Prior to the IPO,
the Company utilized equity valuations based on comparable publicly-traded companies, discounted free cash flows, an analysis of the Company's enterprise
value and any other factors deemed relevant in estimating the fair value of its common stock. Subsequent to the IPO, the Company has used the closing price
of its common stock on
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