NOTE 8 — STOCKHOLDERS’ EQUITY

(a) Stock Purchase Rights

All shares of the Company’s common stock, if issued prior to the termination by the Company of its rights agreement, dated as of December 4, 2006, include stock purchase rights. The rights are exercisable only if a person or group acquires twenty percent or more of the Company’s common stock or announces a tender or exchange offer which would result in ownership of twenty percent or more of the Company’s common stock. Following the acquisition of twenty percent or more of the Company’s common stock, the holders of the rights, other than the acquiring person or group, may purchase Medivation common stock at half of its fair market value. In the event of a merger or other acquisition of the Company, the holders of the rights, other than the acquiring person or group, may purchase shares of the acquiring entity at half of their fair market value. The rights were not exercisable at March 31, 2013.

(b) Medivation Equity Incentive Plan

The Medivation Equity Incentive Plan, which is stockholder-approved, provides for the issuance of options and other stock-based awards, including restricted stock units, performance share awards and stock appreciation rights. The Medivation Equity Incentive Plan is administered by the Board, or a committee appointed by the Board, which determines recipients and types of awards to be granted, including the number of shares subject to the awards, the exercise price and the vesting schedule. The vesting of all outstanding awards under the Medivation Equity Incentive Plan, including all outstanding options, restricted stock units, performance share awards and stock appreciation rights will accelerate, and all such share awards will become immediately exercisable, upon a “change of control” of Medivation, as defined in the Medivation Equity Incentive Plan.

On July 13, 2012, the Company’s stockholders approved an amendment and restatement of the Medivation Equity Incentive Plan to increase the aggregate number of shares of common stock authorized for issuance under the Medivation Equity Incentive Plan from 7,500,000 to 9,300,000. As a result of the two-for-one forward stock split described previously, the number of shares of common stock authorized for issuance under the Medivation Equity Incentive Plan was increased to 18,600,000 effective September 21, 2012. As a result of the stock split, the number of shares of the Company’s common stock issuable upon exercise of outstanding stock options and vesting of other stock-based awards was proportionally increased, and the exercise price per share thereof was proportionally decreased, in accordance with the terms of the Medivation Equity Incentive Plan.

Stock Options

The following table summarizes stock option activity for the three months ended March 31, 2013:


	Number of Options			Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (in years)		Aggregate Intrinsic Value ⁽¹⁾
Outstanding at December 31, 2012		7,038,291		$	18.90
Granted		37,200		$	52.46
Exercised		(177,815	)	$	10.25
Forfeited		—			—

Outstanding at March 31, 2013		6,897,676		$	19.31		7.09	$	195.7

Vested and exercisable at March 31, 2013		3,908,361		$	11.12		5.86	$	139.3

⁽¹⁾

The aggregate intrinsic value is calculated as the pre-tax difference between the weighted average exercise price of the underlying awards and the closing price per share of $46.76 of the Company’s common stock on March 28, 2013. The calculation excludes any awards with an exercise price higher than the closing price of the Company’s common stock on March 28, 2013. The amounts are presented in millions.

The weighted-average grant-date fair value per share of options granted during the three months ended March 31, 2013 was $30.13.

Restricted Stock Units

The following table summarizes restricted stock unit activity for the three months ended March 31, 2013:


	Number of Shares		Weighted- Average Grant-Date Fair Value
Unvested at December 31, 2012		373,625	$	39.06
Granted		9,600	$	53.66
Vested		—		—
Forfeited		—		—

Unvested at March 31, 2013		383,225	$	39.43

Stock Appreciation Rights

The Company granted stock appreciation rights to certain employees pursuant to the terms of the Medivation Equity Incentive Plan. Stock appreciation rights give the holder the right, upon exercise, to receive the difference between the market price per share of the Company’s common stock at the time of exercise and the exercise price of the stock appreciation right. The exercise price of the stock appreciation right is equal to the market price of the Company’s common stock at the date of the grant. Initially, the stock appreciation rights were only settlable in cash. On July 13, 2012, upon approval of an increase in the number of shares of common stock available for issuance under the Medivation Equity Incentive Plan by the Company’s stockholders, the stock appreciation rights were converted to stock-settled awards.

The following table summarizes stock appreciation rights activity for the three months ended March 31, 2013:


	Number of Rights			Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (in years)		Aggregate Intrinsic Value ⁽¹⁾
Outstanding at December 31, 2012		883,600		$	23.91
Granted		—			—
Exercised		(9,508	)	$	23.20
Forfeited		—			—

Outstanding at March 31, 2013		874,092		$	23.92		8.73	$	20.0

Vested and exercisable at March 31, 2013		259,144		$	23.96		8.72	$	5.9

⁽¹⁾

The weighted-average grant-date fair value per share of stock appreciation rights granted during the three months ended March 31, 2012 was $14.33. The weighted-average remeasurement-date fair value per share of cash-settled stock appreciation rights remeasured at March 31, 2012 and later converted to stock-settled stock appreciation rights during 2012 was $26.23. No stock appreciation rights were granted or remeasured during the three months ended March 31, 2013.

Performance Share Awards

There were no outstanding performance share awards under the Medivation Equity Incentive Plan at either March 31, 2013 or December 31, 2012.

Warrants

At March 31, 2013, warrants to purchase an aggregate of 45,808 shares of Medivation common stock at a weighted-average exercise price of $3.46 per share were outstanding. These outstanding warrants expire between 2014 and 2017.

Stock-Based Compensation

The Company estimated the fair value of stock options and stock appreciation rights using the Black-Scholes valuation model, which requires the use of subjective assumptions related to the estimated stock price volatility, estimated term, estimated dividend yield and risk-free interest rate. The Black-Scholes assumptions used for stock options and stock appreciations rights granted and/or remeasured were as follows:


	Three Months Ended March 31,
	2013			2012
Risk-free interest rate		0.93-0.94	%		0.99-1.18	%
Estimated term (in years)		5.24			5.48
Estimated volatility		68	%		73	%
Estimated dividend yield		—			—

Stock-based compensation expense was as follows:


	Three Months Ended March 31,
	2013		2012
Stock-based compensation expense recognized as:
R&D	$	3,818	$	2,437
SG&A		4,478		1,899

Total	$	8,296	$	4,336

Unrecognized stock-based compensation expense totaled $73.4 million at March 31, 2013 and is expected to be recognized over a weighted-average period of 2.9 years.