Green Dot 2013 Annual Report Download - page 81

GREEN DOT CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)
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Note 10—Employee Stock-Based Compensation (continued)
We reserved 2,000,000 shares and 200,000 shares of our Class A common stock for issuance under our 2010
Equity Incentive Plan and 2010 Employee Stock Purchase Plan, respectively. The number of shares reserved for
issuance under our 2010 Equity Incentive Plan and our 2010 Employee Stock Purchase Plan automatically increase
on the first day of January of each of 2011 through 2014 and 2011 through 2018, respectively, by up to a number of
shares equal to 3% of the total outstanding shares our Class A common stock as of the immediately preceding December
31st. Our board of directors or its compensation committee may reduce the amount of the annual increase under the
2010 Equity Incentive Plan or 2010 Employee Stock Purchase Plan in any particular year. Options granted under the
2010 Equity Incentive Plan generally vest over four years and expire five or ten years from the date of grant.
Stock-based compensation for the years ended December 31, 2013, 2012, and 2011 includes expense related to
awards of stock options and restricted stock units and purchases under the 2010 Employee Stock Purchase Plan.
Total stock-based compensation expense and the related income tax benefit are as follows:
Year Ended December 31,
2013 2012 2011
(In thousands)
Total stock-based compensation expense $14,703 $12,734 $9,524
Related income tax benefit 1,410 1,465 1,890
Options and restricted stock units granted on or after July 21, 2010 are issued under the 2010 Equity Incentive
Plan and options granted prior to July 21, 2010 were issued under the 2001 Stock Plan, the predecessor to our 2010
Equity Incentive Plan. We have reserved shares of our Class A common stock common stock for issuance under the
2010 Equity Incentive Plan.
The following table summarizes stock options and restricted stock units granted:
Year Ended December 31,
2013 2012 2011
(In thousands, except per share data)
Stock options granted 2,236 2,247 889
Weighted-average exercise price $18.88 $19.35 $38.70
Weighted-average grant-date fair value $7.20 $8.92 $18.62
Restricted stock units granted 1,272 613 111
Weighted-average grant-date fair value $22.16 $14.14 $33.46
We estimated the fair value of each stock option grant on the date of grant using the following weighted-average
assumptions:
Year Ended December 31,
2013 2012 2011
Risk-free interest rate 1.2% 1.0% 2.1%
Expected term (life) of options (in years) 5.86 6.07 6.06
Expected dividends —— —
Expected volatility 43.4%47.5%48.3%
Determining the fair value of stock-based awards at their respective grant dates requires considerable judgment,
including estimating expected volatility and expected term (life). We based our expected volatility on the historical
volatility of comparable public companies over the option’s expected term. We calculated our expected term based on
the simplified method, which is the mid-point between the weighted-average graded-vesting term and the contractual
term. The simplified method was chosen as a means to determine expected term as we have limited historical option
exercise experience as a public company. We derived the risk-free rate from the average yield for the five-and seven-
year zero-coupon U.S. Treasury Strips. We estimate forfeitures at the grant date based on our historical forfeiture rate
and revise the estimate, if necessary, in subsequent periods if actual forfeitures differ from those estimates.