Envestnet, Inc. Quarterly report pursuant to Section 13 or 15(d)

Quarterly report pursuant to Section 13 or 15(d)

Stock-Based Compensation

Stock-Based Compensation

9 Months Ended

Sep. 30, 2015

12.Stock-Based Compensation

The Company has stock options and restricted stock units outstanding under the 2004 Stock Incentive Plan (the “2004 Plan”), the 2010 Long-Term Incentive Plan (the “2010 Plan”) and the Envestnet, Inc. Management Incentive Plan for Envestnet | Tamarac Management Employees (the “2012 Plan”). On May 13, 2015, the shareholders approved the 2010 Long-Term Incentive Plan as Amended. The amendment increased the number of common shares of the Company reserved for delivery under the 2010 Plan by 2,700,000 shares. As of September 30, 2015, the maximum number of common shares of the Company available for future issuance under the Company’s plans is 3,025,081.

Employee stock-based compensation expense under the Company’s plans was as follows:


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2015		2014		2015		2014
Employee stock-based compensation expense	$	3,408	$	2,676	$	10,157	$	8,443
Tax effect on employee stock-based compensation expense		(1,363)		(1,070)		(4,063)		(3,377)
Net effect on income	$	2,045	$	1,606	$	6,094	$	5,066

Stock Options

The following weighted average assumptions were used to value options granted during the periods indicated:


	Three Months Ended					Nine Months Ended
	September 30,					September 30,
	2015		2014			2015			2014
Grant date fair value of options		—	$	16.80		$	20.90		$	16.81
Volatility		—		33.7	%		37.2	%		37.3	%
Risk-free interest rate		—		2.0	%		1.7	%		1.9	%
Dividend yield		—		—	%		—	%		—	%
Expected term (in years)		—		6.0			6.0			6.0

The following table summarizes option activity under the Company’s plans:


				Weighted-Average
		Weighted-		Remaining
		Average		Contractual Life	Aggregate
	Options	Exercise Price		(Years)	Intrinsic Value
Outstanding as of December 31, 2014	4,265,337	$	10.73	4.7	$	163,830
Granted	148,677		54.02
Exercised	(415,512)		8.93
Forfeited	(9,941)		24.94
Outstanding as of March 31, 2015	3,988,561		12.50	4.8		173,837
Granted	123,410		52.67
Exercised	(271,004)		8.12
Forfeited	(28,403)		46.07
Outstanding as of June 30, 2015	3,812,564		13.86	4.8		105,196
Granted	—		—
Exercised	(249,970)		6.15
Forfeited	(2,403)		47.33
Outstanding as of September 30, 2015	3,560,191		14.38	4.8		64,068
Options exercisable	3,234,095		11.53	4.4		63,173

Exercise prices of stock options outstanding as of September 30, 2015 range from $0.11 to $55.29. At September 30, 2015, there was $4,208 of unrecognized stock-based compensation expense related to unvested stock options, which the Company expects to recognize over a weighted-average period of 2.1 years.

Restricted Stock Units

Periodically, the Company grants restricted stock unit awards to employees that vest one-third on each of the first three anniversaries of the grant date. The following is a summary of the activity for unvested restricted stock unit awards granted under the Company’s plans:


		Weighted-
		Average Grant
	Number of	Date Fair Value
	Shares	per Share
Outstanding as of December 31, 2014	1,098,674	$	33.72
Granted	207,531		53.89
Vested	(358,166)		20.44
Expired/cancelled	—		—
Forfeited	(6,628)		33.53
Outstanding as of March 31, 2015	941,411		38.61
Granted	—		—
Vested	—		—
Forfeited	(5,869)		45.98
Outstanding as of June 30, 2015	935,542		43.18
Granted	2,000		45.21
Vested	(17,126)		30.29
Forfeited	(2,414)		44.84
Outstanding as of September 30, 2015	918,002		43.42

At September 30, 2015, there was $17,012 of unrecognized stock-based compensation expense related to unvested restricted stock unit awards, which the Company expects to recognize over a weighted-average period of 2.0 years. At September 30, 2015, there was an additional $1,146 of potential unrecognized stock-based compensation expense related to unvested restricted stock unit awards granted under the 2012 Plan that vests based upon Tamarac meeting certain performance conditions and then a subsequent two-year service condition, which the Company expects to recognize over the remaining estimated vesting period of 1.5 years.