Share-Based Payments

In December 2013, the Company's 2014 Stock Incentive Plan (the "2014 Plan") was adopted by the Board of Directors and approved by the Company's stockholders in January 2014. Pursuant to the terms of the plan, the number of shares authorized for issuance automatically increases on the first day of each fiscal year. On January 1, 2016 and 2015, the number of shares reserved for issuance under the 2014 Plan increased by 786,431 and 722,331 shares, respectively. As of March 31, 2016 the total number of shares of common stock available for issuance under the 2014 Plan was 567,289.

The Company also maintains the Eleven Biotherapeutics, Inc. 2009 Stock Incentive Plan (the "2009 Plan"), as amended and restated. In February 2014, the Company ceased granting stock incentive awards under the 2009 Plan.

Stock-Based Compensation Expense

Stock-based compensation expense by award type was as follows (in thousands):



	Three Months Ended March 31,
	2016		2015
Stock options	$	435	$	637
Restricted stock	54		27
Restricted stock units	92		—
Employee stock purchase plan	5		—
	$	586	$	664

At March 31, 2016, there was $3.7 million of total unrecognized compensation expense, net of estimated forfeitures, related to non-vested stock options, unvested restricted stock, restricted stock units (each with service-based vesting provisions), and shares issued pursuant to the Company's 2014 Employee Stock Purchase Plan (the "ESPP"). This unrecognized compensation expense is expected to be recognized over a weighted-average period of 2.08 years.

The Company has granted stock options to the founders and officers of the Company, which contain both performance-based and service-based vesting criteria. Milestone events are specific to the Company’s corporate goals, including but not limited to certain preclinical and clinical development milestones related to the Company’s product candidates. Stock-based compensation expense associated with these performance-based stock options is recognized if the performance condition is considered probable of achievement using management’s best estimates. There was no expense recorded for performance-based vesting awards during the three months ended March 31, 2016 and 2015. The remaining milestones were not deemed to be probable of achievement as of March 31, 2016. As of March 31, 2016, unrecognized compensation expense related to performance based awards was $42,000.

Stock Options

A summary of the stock option activity is presented below:



	Shares		Weighted-Average Exercise Price
Outstanding at December 31, 2015	1,803,574		$	6.28
Granted	916,776		0.28
Exercised	(118,110	)	0.06
Cancelled or forfeited	(181,436	)	2.85
Outstanding at March 31, 2016	2,420,804		$	4.57
Exercisable at March 31, 2016	860,693		$	5.88
Vested and expected to vest at March 31, 2016⁽¹⁾	2,012,694		$	5.14


(1)	Represents the number of vested options, plus the number of unvested options expected to vest.

Restricted Stock

From time to time, upon approval by the Board of Directors, certain employees, directors and advisors have been granted restricted shares of common stock. A summary of the unvested restricted stock is presented below:



	Restricted Stock		Weighted-Average Grant Date Fair Value
Unvested at December 31, 2015	41,657		$	11.05
Granted	—		—
Vested	(6,217	)	8.88
Unvested at March 31, 2016	35,440		$	11.43

Restricted Stock Units

From time to time, upon approval by the Board of Directors, certain employees have been granted restricted stock units. A summary of the restricted stock units is presented below:



	Restricted Stock Units		Weighted-Average Grant Date Fair Value
Unvested at December 31, 2015	150,932		$	2.85
Granted	—		—
Vested	(3,334	)	4.09
Unvested at March 31, 2016	147,598		$	2.82

Employee Stock Purchase Plan

On January 21, 2014, the Company’s board of directors adopted its 2014 ESPP, which was subsequently approved by its stockholders and became effective upon the closing of the Company’s IPO on February 6, 2014. The 2014 ESPP authorizes the initial issuance of up to a total of 157,480 shares of the Company’s common stock to participating employees. The first offering period under the 2014 ESPP opened on September 15, 2015 and closed on March 14, 2016. On March 14, 2016, the Company issued and sold 20,760 shares of its common stock pursuant to the 2014 ESPP at a purchase price of $0.31 per share. The second offering period under the 2014 opened on March 15, 2016.