Equity Incentive Plans

12 Months Ended

Dec. 31, 2020

Share-based Payment Arrangement [Abstract]

Amended and Restated 2012 Stock Plan

Following the adoption of the 2019 Omnibus Incentive Plan in September 2019, any awards outstanding under the Amended and Restated 2012 Stock Plan continue to be governed by their existing terms but no further awards may be granted under the Amended and Restated 2012 Stock Plan. As of December 31, 2020, the number of shares of Class A common stock issuable under the Amended and Restated 2012 Stock Plan which includes shares issuable upon the exercise of outstanding awards was 9,601,093.

2019 Omnibus Incentive Plan

The Omnibus Incentive Plan allows for the issuance of incentive stock options (“ISOs”), non-statutory stock options (“NSOs”) or restricted shares. ISOs may be granted only to the Company’s employees (including officers and directors who are also considered employees). NSOs and restricted shares may be granted to the Company’s employees and service providers. As of December 31, 2020, the number of shares of Class A common stock available for issuance under the 2019 Omnibus Incentive Plan was 3,083,698 shares issuable in connection with outstanding awards and 8,267,389 shares reserved for issuance in connection with grants of future awards.

The number of shares of Class A common stock reserved for issuance under the 2019 Omnibus Incentive Plan at the time the 2019 Omnibus Incentive Plan was adopted in 2019 was 11,000,000. The Omnibus Incentive Plan provides that the total number of shares of the Company’s Class A common stock that may be issued under the Omnibus Incentive Plan, including options authorized and options outstanding, is 11,000,000 (such share limit as increased from time to time, the “Absolute Share Limit”). However, the Absolute Share Limit shall be increased on the first day of each calendar year commencing on January 1, 2021 and ending on January 1, 2029 in an amount equal to the lesser of (i) 5% of the total number of shares of common stock outstanding on the last day of the immediately preceding fiscal year and (ii) such number of shares of the Company’s Class A common stock as determined by the Company’s board of directors. However, if on January 1 of a calendar year, the Company’s board of directors has not either confirmed the 5% increase described in clause (i) or approved a lesser number of shares of the Company’s Class A common stock for such calendar year, then the Company’s board of directors will be deemed to have waived the automatic increase, and no such increase will occur for such calendar year. Of the Absolute Share Limit, no more than 11,000,000 shares of Class A common stock may be issued in the aggregate pursuant to the exercise of incentive stock options granted under the Omnibus Incentive Plan.

Options under the Omnibus Incentive Plan have a contractual term of 10 years. The exercise price of an ISO and NSO shall not be less than 100% of the fair market value of the shares on the date of grant.

A summary of the Company’s stock option activity under the Plans is as follows:


	Outstanding Options	Weighted- Average Exercise Price		Weighted- Average Remaining Terms (Years)	Aggregate Intrinsic Value
Balance as of December 31, 2019	15,918,243	$	6.82	7.9	$	1,105,222,370
Granted	1,774,994	78.63
Exercised	(5,455,470)	3.07
Cancelled	(376,923)	20.25
Balance as of December 31, 2020	11,860,844	$	18.86	7.6	$	1,455,758,971


	Outstanding Options	Weighted- Average Exercise Price		Weighted- Average Remaining Terms (Years)	Aggregate Intrinsic Value
Vested and exercisable as of December 31, 2020	5,783,451	$	7.91	6.9	$	773,189,330
Unvested and exercisable as of December 31, 2020	549,689	$	7.98	7.7	$	73,450,934

The weighted-average grant date fair value of options granted during the years ended December 31, 2020, 2019, and 2018 was $45.02, $13.20, and $2.04 per share, respectively. The total intrinsic value of stock options exercised was $466.1 million, $30.5 million and $3.3 million during the years ended December 31, 2020, 2019, and 2018, respectively. As of December 31, 2020, the total unrecognized stock-based compensation related to stock options was $160.3 million, which will be recognized over a weighted-average period of approximately 3 years.

Early Exercise of Options

Stock options granted under the 2012 Stock Plan provide certain employee and director option holders the right to exercise unvested options in exchange for restricted shares of Class A common stock which are subject to repurchase by the Company at the original issuance price in the event the optionee’s employment is terminated either voluntarily or involuntarily prior to the applicable vesting date. The consideration received for the early exercised options is recorded as a liability on the consolidated balance sheets and reclassified to stockholders’ deficit as the shares vest. As of December 31, 2020 and 2019, the total repurchase liability related to the unvested early exercised options was $247,000 and $494,000, respectively, which is included in other current and noncurrent liabilities on the consolidated balance sheets. A summary of these restricted shares issued under the Amended and Restated 2012 Stock Plan is as follows:


	Number of Shares	Weighted- Average Exercise Price
Outstanding and unvested as of December 31, 2019	138,250	$	3.57

Vested	(69,500)	3.55
Outstanding and unvested as of December 31, 2020	68,750	$	3.59

Stock Option Valuation Assumptions

The fair value of each employee option grant was estimated on the date of grant using the Black-Scholes option pricing model and the following assumptions for the periods indicated:

Year Ended December 31,

2020

2019

2018

Expected volatility

60% – 71%

40% – 53%

45% – 46%

Risk-free interest rate

0.3% – 1.7%

1.5% – 2.5%

2.7% – 3.1%

Expected term

5.3 –6.9 years

5.0 –6.9 years

5.3 – 6.5 years

Expected dividend

—%

Restricted Stock Units

The Company began granting restricted stock unit awards (“RSUs”) to employees and other service providers during 2020. RSU activity for the year ended December 31, 2020 is as follows:


	Restricted Stock Units	Weighted-Average Grant Date Fair Value (per share)
Balance as of December 31, 2019	—	$	—
Granted	963,054	78.94
Vested	(123,734)	66.92
Cancelled	(15,373)	66.71
Outstanding as of December 31, 2020	823,947	$	80.97

2019 Employee Stock Purchase Plan

In July 2019, the Company’s board of directors adopted the 10x Genomics, Inc. 2019 Employee Stock Purchase Plan (the “ESPP”), which was subsequently approved by the Company’s stockholders. The ESPP went into effect on September 11, 2019. Subject to any limitations contained therein, the ESPP allows eligible employees to contribute, through payroll deductions, up to 15% of their eligible compensation to purchase the Company’s Class A common stock at a discounted price per share. The ESPP generally provides for consecutive, overlapping 6-month offering periods. Unless otherwise determined by the administrator of the ESPP, a participant may not sell, transfer or otherwise dispose of any shares of the Company’s Class A common stock purchased under the ESPP for 12 months following the applicable exercise date.

During the year ended December 31, 2020, 163,727 shares of Class A common stock were issued under the ESPP. No shares of Class A common stock were issued under the ESPP during 2019. The ESPP provides that the maximum number of shares of the Company’s Class A common stock made available for sale thereunder will be 2,000,000, which number will be automatically increased on the first day of each calendar year commencing on January 1, 2021 and ending on January 1, 2029 in an amount equal to the lesser of (i) 1% of the total number of shares of common stock outstanding on the last day of the immediately preceding fiscal year and (ii) such number of shares of the Company’s Class A common stock as determined by the Company’s board of directors. However, if on January 1 of a calendar year the Company’s board of directors has not either confirmed the 1% described in clause (i) or approved a lesser number of shares of the Company’s Class A common stock for such calendar year, the Company’s board of directors will be deemed to have waived the automatic increase and no such increase will occur for such calendar year. The maximum number of shares available under the ESPP (and any share limitations thereunder, as applicable) will automatically be adjusted upon certain changes to the Company’s capital structure.

For the year ended December 31, 2020, the weighted average grant date fair value of the ESPP shares purchased, using the Black-Scholes option pricing model, was $16.61.

The following assumptions were used in estimating the fair values of shares under the ESPP:


	Year Ended December 31,
	2020	2019
Expected volatility	45% - 70%	52%
Risk-free interest rate	0.12% - 0.15%	1.85%
Expected term (in years)	0.5 - 1.0	0.7 years
Expected dividend	—%	—%

As of December 31, 2020, the total unrecognized stock-based compensation related to the ESPP was $0.9 million, which will be recognized over a weighted-average period of approximately 0.5 years.

Stock-based Compensation

The Company recorded stock-based compensation expense in the consolidated statement of operations for the periods presented as follows (in thousands):


	Year Ended December 31,
	2020		2019		2018
Cost of revenue	$	1,551	$	325	$	85
Research and development	19,623		5,721		1,030
Selling, general and administrative	27,452		7,287		1,543
Total stock-based compensation expense	$	48,626	$	13,333	$	2,658