Stock-Based Compensation

In March 2014, the Company's board of directors approved the 2014 Equity Incentive Plan, or 2014 Plan, under which stock options, stock appreciation rights, restricted stock, restricted stock units, performance shares and units and other cash-based or stock-based awards may be granted to employees, consultants and directors. Shares of common stock that are issued and available for issuance under the 2014 Plan consist of authorized, but unissued or reacquired shares of common stock or any combination thereof.

As of December 31, 2017, a total of 7,297 shares had been reserved for issuance under the 2014 Plan. The 2014 Plan contains a provision that automatically increases the shares available for issuance under the plan on January 1 of each year subsequent to the 2014 Plan's adoption through 2024, by an amount equal to the smaller of (a) 4.5% of the number of shares of common stock issued and outstanding on the immediately preceding December 31, or (b) an amount determined by the Company's board of directors. On January 1, 2018, 1,889 shares were added to the 2014 Plan in accordance with the annual automatic increase provision of the 2014 Plan. In addition, the 2014 Plan reserve is automatically increased to include any shares issuable upon expiration or termination of options granted under the Company's 2007 Stock Plan, or 2007 Plan, for options that expire or terminate without having been exercised. For the nine months ended September 30, 2018, no shares have been transferred to the 2014 Plan from the 2007 Plan, and as of September 30, 2018 a total of 9,186 shares were allocated for issuance under the 2014 Plan. As of September 30, 2018, options to purchase a total of 2,706 shares of common stock have been granted under the 2014 Plan, 3,358 shares have been reserved under the 2014 Plan for the vesting of restricted stock units and market stock units, 537 shares have been returned to the 2014 Plan as a result of termination of options that expired or terminated without having been exercised and restricted stock awards that terminated prior to the awards vesting, and 3,659 shares of common stock remain available for future issuance under the 2014 Plan.

In July 2007, the Company adopted the 2007 Plan under which options or stock purchase rights may be granted to employees, consultants and directors. Upon the completion of the Company's initial public offering, or IPO, in March 2014, the board of directors terminated the 2007 Plan in connection with the IPO and all shares that were available for future issuance under the 2007 Plan at such time were transferred to the 2014 Plan. The 2007 Plan will continue to govern the terms and conditions of all outstanding equity awards granted under the 2007 Plan. As of September 30, 2018, no shares remain available for future issuance under the 2007 Plan. Shares of common stock that are issued and were available for issuance under the 2007 Plan consist of authorized, but unissued or reacquired shares of common stock or any combination thereof.

Stock Options

Stock option activity during the nine months ended September 30, 2018 was as follows:



	Number of Options		Weighted Average Exercise Price
Balance as of January 1, 2018	3,692		$	17.63
Granted	12		47.00
Exercised	(890	)	12.31
Forfeited	(7	)	22.90
Balance as of September 30, 2018	2,807		$	19.43

Restricted Stock Units

Restricted stock unit activity during the nine months ended September 30, 2018 was as follows:



	Number of Shares		Weighted Average Grant Date Fair Value
Nonvested as of January 1, 2018	1,680		$	32.65
Granted	690		56.74
Vested	(486	)	31.66
Forfeited	(91	)	34.92
Nonvested as of September 30, 2018	1,793		$	42.07

Market Stock Units

In the first quarter of 2018, the Company began granting market stock units to certain executives under the 2014 Plan. The market stock units are performance-based awards that vest based upon the Company's relative stockholder return. The actual number of market stock units that will be eligible to vest is based on the total stockholder return of the Company relative to the total stockholder return of the Index over the three-year performance period. Up to one-third of the target shares of our common stock subject to each market stock unit award are eligible to be earned after the first and second years of the performance period and up to 200% of the full target number of shares subject to each market stock unit award are eligible to be earned after the completion of the three-year performance period (less any shares earned for years one and two) based on the average price of the Company's common stock relative to the Index during the performance period.

Market stock unit activity during the nine months ended September 30, 2018 was as follows:



	Number of Shares	Weighted Average Grant Date Fair Value
Nonvested as of January 1, 2018	—	$	—
Granted	242	21.89
Vested	—	—
Forfeited	—	—
Nonvested as of September 30, 2018	242	$	21.89

The Company estimates the fair value of market stock units on the date of grant using a Monte Carlo simulation model. The determination of fair value of the market stock units is affected by the Company's and peer firms' stock prices and a number of assumptions including the expected volatilities of the Company's and peer firms' stock and the Index, and its risk-free interest rate. The Company's expected volatility at the date of grant was based on the historical volatilities of its stock and peer firms' stocks and the Index over the performance period. The Company did not estimate a dividend rate or a forfeiture rate for the market stock units due to the limited size, the vesting period and nature of the grantee population and the lack of history of granting this type of award.

Significant assumptions used in the Monte Carlo simulation model for the market stock units granted during the nine months ended September 30, 2018 are as follows:



		As of September 30, 2018
Volatility		36.5 - 36.6%
Risk-free interest rate		2.4 - 2.7%
Dividend yield		—
Longest remaining performance period (in years)		3