The Company’s 2014 Equity Incentive Plan (EIP) provides for granting awards, including RSUs, PBRSUs and stock options to employees, officers and directors. In addition, the Company offers a retirement plan to eligible employees.



December 31,	2019	2018
Unvested RSUs, PBRSUs and stock options outstanding	12,323,868	12,047,376
Available for future RSU, PBRSU and stock option grants	12,861,058	10,387,200
Available for ESPP	3,123,203	2,307,400
Total reserved for future issuance⁽¹⁾	28,308,129	24,741,976



Year Ended December 31,	2019		2018		2017
RSUs and PBRSUs	$	70,772	$	66,005	$	54,116
Stock options	2,383		7,387		15,103
ESPP	484		1,695		1,605
Stock issued related to acquisition	—		—		159
Total stock-based compensation expense	$	73,639	$	75,087	$	70,983



Year Ended December 31,	2019		2018		2017
Sales and marketing	$	6,095	$	7,362	$	7,654
Origination and servicing	3,155		4,322		4,804
Engineering and product development	19,860		20,478		22,047
Other general and administrative	44,529		42,925		36,478
Total stock-based compensation expense	$	73,639	$	75,087	$	70,983

The Company capitalized $6.3 million, $9.1 million and $9.2 million of stock-based compensation expense associated with developing software for internal use during the years ended December 31, 2019, 2018 and 2017, respectively.

In 2016, the board of directors approved incentive retention awards to certain members of the executive management team and other key personnel. These incentive awards consisted of an aggregate of $16.3 million of RSUs and $18.6 million of cash. These incentive retention awards were recognized as compensation expense ratably through May 2017.



	Number of Units ⁽¹⁾		Weighted- Average Grant Date Fair Value ⁽¹⁾
Unvested at December 31, 2018	8,639,802		$	20.23
Granted	7,531,283		$	15.23
Vested	(3,545,198	)	$	20.43
Forfeited/expired	(3,028,483	)	$	18.49
Unvested at December 31, 2019	9,597,404		$	16.78

As of December 31, 2019, there was $151.0 million of unrecognized compensation cost related to unvested RSUs, which is expected to be recognized over the next 2.8 years.

PBRSUs are equity awards that are earned, and eligible for time-based vesting, based upon the achievement of certain pre-established performance metrics over a specific performance period. Depending on the level of achievement of the pre-established performance targets, the PBRSUs earned and eligible for time-based vesting can range from 0% to 200% of the target amount. PBRSUs granted under the Company’s EIP generally have a one-year performance period with the earned shares, if any, vesting over an additional approximately two-year period. Over the performance period, the number of PBRSUs that may be earned and the related stock-based compensation expense that is recognized is adjusted upward or downward based upon the probability of achieving the pre-established performance metrics.

During the first quarter of 2019, the Company expanded the use of its PBRSU program to nearly all of the executive team. The following table summarizes the activities for the Company’s PBRSUs during the year ended December 31, 2019:



	Number of Units ⁽¹⁾		Weighted- Average Grant Date Fair Value ⁽¹⁾
Unvested at December 31, 2018	254,643		$	18.54
Granted	373,810		$	16.42
Vested	(97,776	)	$	18.91
Forfeited/expired ⁽²⁾	(59,088	)	$	17.32
Unvested at December 31, 2019	471,589		$	16.94

For the years ended December 31, 2019, 2018 and 2017, the Company recognized $3.9 million, $2.8 million and $1.0 million in stock-based compensation expense related to these PBRSUs, respectively.

As of December 31, 2019, there was $3.3 million of unrecognized compensation cost related to unvested PBRSUs, which is expected to be recognized over the next 1.7 years.



	Number of Options ⁽¹⁾		Weighted-Average Exercise Price Per Share ⁽¹⁾		Weighted-Average Remaining Contractual Life (in years)	Aggregate Intrinsic Value ⁽²⁾ (in thousands)
Outstanding at December 31, 2018	3,152,929		$	25.80
Granted	—		$	—
Exercised	(470,666	)	$	1.85
Forfeited/Expired	(427,375	)	$	33.74
Outstanding at December 31, 2019	2,254,888		$	29.27	4.2	$	5,528
Exercisable at December 31, 2019	2,193,730		$	29.16	4.1	$	5,528

The aggregate intrinsic value of options exercised was $5.9 million, $1.9 million and $27.0 million for the years ended December 31, 2019, 2018 and 2017, respectively. The total fair value of stock options vested for the years ended December 31, 2019, 2018 and 2017 was $2.8 million, $9.8 million and $19.6 million, respectively.

As of December 31, 2019, the total unrecognized compensation cost related to outstanding stock options was $0.8 million, which is expected to be recognized over the next 0.5 years.

The Company’s employee stock purchase plan (ESPP) became effective on December 11, 2014. The Company’s ESPP allowed eligible employees to purchase shares of the Company’s common stock at a discount through payroll deductions, subject to plan limitations. Payroll deductions were accumulated during six-month offering periods. The purchase price for each share of common stock was 85% of the lower of the fair market value of the common stock on the first business day of the offering period or on the last business day of the offering period. In connection with the Company’s cost structure simplification efforts, future purchases through the Company’s ESPP were suspended effective upon the completion of the most recent offering period on May 10, 2019.

The Company’s employees purchased 163,970, 361,840 and 261,907 shares of common stock under the ESPP during the years ended December 31, 2019, 2018 and 2017, respectively. As of December 31, 2019, 2018 and 2017, a total of 3,123,203, 2,307,400 and 1,739,199 shares remain reserved for future issuance, respectively.

The fair value of stock purchase rights granted to employees under the ESPP was measured on the grant date using the Black-Scholes option pricing model. The compensation expense related to ESPP purchase rights was recognized on a straight-line basis over the six-month requisite service period. We used the following assumptions in estimating the fair value of the grants under the ESPP, which were derived using the same methodology applied to stock option assumptions:



Year Ended December 31,	2018		2017
Expected dividend yield	—		—
Weighted-average assumed stock price volatility	54.6	%	45.1	%
Weighted-average risk-free interest rate	2.29	%	1.21	%
Weighted-average expected life (in years)	0.50		0.50

For the years ended December 31, 2018 and 2017, the dates of the assumptions were May 11, 2018 and November 11, 2018 and May 11, 2017 and November 11, 2017, respectively. There were no dates of assumption under the ESPP in 2019.

Upon completing 90 days of service, employees may participate in the Company’s qualified retirement plan that is governed by section 401(k) of the IRS Code. Participants may elect to contribute a portion of their annual compensation up to the maximum limit allowed by federal tax law. In the first quarter of 2016, the Company approved an employer match of up to 4% of an employee’s eligible compensation with a maximum annual match of $5,000 per employee. The total expense for the employer match for the years ended December 31, 2019, 2018 and 2017 was $4.5 million, $5.0 million and $4.4 million, respectively.

As part of the Springstone acquisition in 2014, the sellers received shares of the Company’s Series F convertible preferred stock having an aggregate value of $25.0 million (Share Consideration). $22.1 million of the Share Consideration was subject to certain vesting and forfeiture conditions over a three-year period for key continuing employees. This was accounted for as a compensation agreement and expensed over the three-year vesting period. In conjunction with the conversion of preferred stock upon the IPO, these preferred shares were converted into common shares.