AKAO 2017 Annual Report

128 10. Equity Incentive Plans 2014 Plan In February 2014, the Company’s stockholders approved the 2014 Equity Incentive Award Plan (the “2014 Plan”), which became effective as of March 11, 2014. Under the 2014 Plan, the Company may grant incentive stock options (“ISOs”), nonstatutory stock options, stock appreciation rights, restricted stock awards, restricted stock unit awards (“RSUs”) and other stock-based awards for the purchase of common stock. Effective January 1, 2017, the compensation committee of the board of directors approved an evergreen increase of 1,425,522 shares of common stock that may be granted in accordance with the terms of the 2014 Plan. As of December 31, 2017, 850,639 shares were available for future issuance under the 2014 Plan. Under the 2014 Plan, the terms of stock award agreements, including vesting requirements, are determined by the board of directors, subject to the provisions of the 2014 Plan. Options granted by the Company typically vest over a four year period and the exercise price may not be less than fair market value on the date of grant. Certain of the options are subject to acceleration of vesting in the event of certain change of control transactions. Options granted under the 2014 Plan expire no later than 10 years from the date of grant. 2014 Employment Commencement Incentive Plan In December 2014, the Company adopted a 2014 Employment Commencement Incentive Plan (the “Inducement Plan”). The Inducement Plan is designed to comply with the inducement exemption contained in Nasdaq’s Rule 5635(c)(4), which provides for the grant of non-qualified stock options, restricted stock units, restricted stock awards, performance awards, dividend equivalents, deferred stock awards, deferred stock units, stock payment and stock appreciation rights to a person not previously an employee or director of the Company, or following a bona fide period of non-employment, as an inducement material to the individual’s entering into employment with the Company. As of December 31, 2017, a total of 2,050,000 shares of common stock have been authorized under the Inducement Plan, including the additional 450,000 shares that became available resulting from an amendment adopted by the board of directors as of September 13, 2017. As of December 31, 2017, 116,439 shares were available for issuance under the Inducement Plan. 2014 Employee Stock Purchase Plan In February 2014, the Company’s stockholders approved the 2014 Employee Stock Purchase Plan (the “ESPP”), which became effective as of March 11, 2014. Effective January 1, 2017, the compensation committee of the board of directors approved an evergreen increase of 178,190 shares that may be granted in accordance with the terms of the ESPP. As of December 31, 2017, 411,716 shares of common stock have been issued to employees participating in the ESPP, and 274,951 shares were available for issuance under the ESPP. Amended and Restated 2003 Stock Plan The Company’s Amended and Restated 2003 Stock Plan, referred to herein as the 2003 Plan, provided for the granting of incentive and non-statutory stock options to employees, directors and consultants at the discretion of the board of directors. The Company granted options under its 2003 Plan until January 2014 when it was terminated as to future awards in March 2014, although it continues to govern the terms of options that remain outstanding under the 2003 Plan. Options granted under the 2003 Plan expire no later than 10 years from the date of grant. Options granted under the 2003 Plan vest over periods determined by the board of directors, generally over four years. The 2003 Plan allows for early exercise of certain options prior to vesting. Upon termination of employment, the unvested shares are subject to repurchase at the original exercise price. Stock options granted or modified after March 21, 2002, that are subsequently exercised for cash prior to vesting, are not deemed to be issued until those shares vest. As of December 31, 2017 and 2016 there were no shares subject to repurchase relating to the early exercise of options. In connection with the Board of Directors and stockholders’ approval of the 2014 Plan, all remaining shares available for future awards under the 2003 Plan were transferred to the 2014 Plan, and the 2003 Plan was terminated