Common Stock, Preferred Stock and Equity Plans

The Company is authorized to issue 300,000,000 shares of common stock. Holders of common stock are entitled to one vote per share. Holders of common stock are entitled to receive dividends, if and when declared by the Company’s Board of Directors, and to share ratably in the Company’s assets legally available for distribution to the Company’s shareholders in the event of liquidation. Holders of common stock have no preemptive, subscription, redemption or conversion rights. The holders of common stock do not have cumulative voting rights.

The Company is authorized to issue 1,000,000 shares of preferred stock in one or more series and to fix the powers, designations, preferences and relative participating, option or other rights thereof, including dividend rights, conversion rights, voting rights, redemption terms, liquidation preferences and the number of shares constituting any series, without any further vote or action by the Company's shareholders. As of December 31, 2012 and 2011, the Company had no shares of preferred stock issued or outstanding.

Stock and Option Plans

The purpose of each of the Company’s stock and option plans is to attract, retain and motivate its employees, consultants and directors. Awards granted under these plans can be incentive stock options (“ISOs”), nonstatutory stock options (“NSOs”), restricted stock (“RSs”), restricted stock units (“RSUs”) or other equity-based awards, as specified in the individual plans.

Shares issued under all of the Company’s plans are funded through the issuance of new shares. The following table contains information about the Company’s equity plans:



			As of December 31, 2012
Title of Plan	Group Eligible	Type of Award Granted	Awards Outstanding	Additional Awards Authorized for Grant
2006 Stock and Option Plan	Employees, Non-employee Directors and Consultants	NSO, ISO, RS and RSU	20,551,584	5,751,677
1996 Stock and Option Plan	Employees, Non-employee Directors, Advisors and Consultants	NSO, ISO and RS	1,524,010	—
Total			22,075,594	5,751,677

All options granted under the Company’s 2006 Stock and Option Plan (“2006 Plan”) and 1996 Stock and Option Plan were granted with an exercise price equal to the fair value of the underlying common stock on the date of grant. As of December 31, 2012, the only stock and option plan under which the Company makes new equity awards is the Company’s 2006 Plan. Under the 2006 Plan, no stock options can be awarded with an exercise price less than the fair market value on the date of grant. The Company’s shareholders approved increases in the number of shares authorized for issuance pursuant to the 2006 Plan of 3,000,000 shares and 12,000,000 shares, respectively, in 2012 and 2010.

During the three years ended December 31, 2012, grants to current employees and directors had a grant date that was the same as the date the award was approved by the Company’s Board of Directors. During the three years ended December 31, 2012, for grants to new employees and directors, the date of grant for awards was the employee’s first day of employment or the date the director was elected to the Company’s Board of Directors. All options awarded under the Company’s stock and option plans expire not more than ten years from the grant date.

During the three years ended December 31, 2012, all shares of outstanding restricted stock and restricted stock units have been granted at price equal to $0.01, the par value of the Company’s common stock. Vesting of options, restricted stock and restricted stock units generally is ratable over specified periods, usually four years, and is determined by the Company’s Board of Directors.

The following table summarizes information related to the outstanding and exercisable options during the year ended December 31, 2012:



	Stock Options		Weighted-average Exercise Price		Weighted-average Remaining Contractual Life	Aggregate Intrinsic Value
	(in thousands)		(per share)		(in years)	(in thousands)
Outstanding at December 31, 2011	20,923		$	34.23
Granted	6,043		43.80
Exercised	(5,856	)	29.51
Forfeited	(1,310	)	41.01
Expired	(74	)	39.47
Outstanding at December 31, 2012	19,726		$	38.09	7.15	$	107,016
Exercisable at December 31, 2012	10,849		$	34.54	5.93	$	84,297
Total exercisable or expected to vest at December 31, 2012	18,782		$	37.83	7.06	$	104,931

The aggregate intrinsic value in the table above represents the total pre-tax amount, net of exercise price, that would have been received by option holders if all option holders had exercised all options with an exercise price lower than the market price on December 31, 2012, which was $41.20 based on the average of the high and low price of the Company’s common stock on that date.

The total intrinsic value (the amount by which the fair market value exceeded the exercise price) of stock options exercised during 2012, 2011 and 2010 was $148.7 million, $90.5 million and $10.5 million, respectively. The total cash received by the Company as a result of employee stock option exercises during 2012, 2011 and 2010 was $172.8 million, $109.6 million and $22.2 million, respectively.

The following table summarizes information about stock options outstanding and exercisable at December 31, 2012:



	Options Outstanding				Options Exercisable
Range of Exercise Prices	Number Outstanding	Weighted-average Remaining Contractual Life	Weighted-average Exercise Price		Number Exercisable	Weighted-average Exercise Price
	(in thousands)	(in years)	(per share)		(in thousands)	(per share)
$ 9.07–$20.00	1,000	3.12	$	15.38	1,000	$	15.38
$20.01–$30.00	1,415	6.35	$	29.30	1,039	$	29.11
$30.01–$40.00	12,590	6.86	$	36.09	7,770	$	35.29
$40.01–$50.00	2,331	9.32	$	48.04	216	$	46.92
$50.01–$60.00	2,328	8.68	$	53.41	816	$	54.18
$60.01–$64.30	62	9.34	$	63.17	8	$	63.14

The following table summarizes the restricted stock activity of the Company during the year ended December 31, 2012:



	Restricted Stock		Weighted-average Grant-date Fair Value
	(in thousands)		(per share)
Unvested at December 31, 2011	2,100		$	37.13
Granted	1,428		45.46
Vested	(998	)	35.11
Cancelled	(260	)	40.09
Unvested at December 31, 2012	2,270		$	42.92

The total fair value of restricted stock that vested during 2012, 2011 and 2010 (measured on the date of vesting) was $41.1 million, $34.6 million and $20.1 million, respectively.

Employee Stock Purchase Plan

The Company has an employee stock purchase plan (the “ESPP”). The ESPP permits eligible employees to enroll in a twelve-month offering period comprising two six-month purchase periods. Participants may purchase shares of the Company’s common stock, through payroll deductions, at a price equal to 85% of the fair market value of the common stock on the first day of the applicable twelve-month offering period, or the last day of the applicable six-month purchase period, whichever is lower. Purchase dates under the ESPP occur on or about May 14 and November 14 of each year. In 2012, the Company's shareholders approved an increase in the number of shares of common stock authorized for issuance pursuant to the ESPP of 2,500,000. As of December 31, 2012, there were 2,280,000 shares of common stock authorized for issuance pursuant to the ESPP.

In 2012, the following shares were issued to employees under the ESPP:



	Year Ended December 31, 2012
	(in thousands, except per share amount)
Number of shares	702
Average price paid per share		$26.71