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Indemnifications
In the normal course of business, to facilitate transactions of services and products, we have agreed to indemnify certain parties
with respect to certain matters. We have agreed to hold certain parties harmless against losses arising from a breach of representations
or covenants, or out of intellectual property infringement or other claims made by third parties. These agreements may limit the time
within which an indemnification claim can be made and the amount of the claim. In addition, we have entered into indemnification
agreements with our officers, directors, and certain employees, and our certificate of incorporation and bylaws contain similar
indemnification obligations.
It is not possible to determine the maximum potential amount under these indemnification agreements due to the limited history
of prior indemnification claims and the unique facts and circumstances involved in each particular agreement. Historically, payments
made by us under these agreements have not had a material impact on our consolidated financial position, results of operations or cash
flows. In our opinion, as of December 31, 2013, there was not at least a reasonable possibility we had incurred a material loss with respect
to indemnification of such parties. We have not recorded any liability for costs related to indemnification through December 31, 2013.
Note 11. Stockholders' Equity
Initial Public Offering
In May 2012, we completed our IPO in which we issued and sold 180,000,000 shares of Class A common stock at a public
offering price of $38.00 per share and the selling stockholders sold 241,233,615 shares of Class A common stock. We did not receive
any proceeds from the sale of shares by the selling stockholders. The total net proceeds received from the IPO were $6.76 billion after
deducting underwriting discounts and commissions of $75 million and other offering expenses of approximately $7 million.
Follow-on Offering
In December 2013, we completed a follow-on offering in which we issued and sold 27,004,761 shares of Class A common
stock at a public offering price of $55.05 per share and the selling stockholders sold 42,995,239 shares of Class A common stock. We
did not receive any proceeds from the sale of shares by the selling stockholders. The total net proceeds received from the follow-on
offering were $1.48 billion after deducting underwriting discounts and commissions of $7 million and other offering expenses of
approximately $1 million.
Common Stock
Our certificate of incorporation authorizes the issuance of Class A common stock and Class B common stock. As of
December 31, 2013, we are authorized to issue 5,000,000,000 shares of Class A common stock and 4,141,000,000 shares of Class B
common stock, each with a par value of $0.000006 per share. Holders of our Class A common stock and Class B common stock are
entitled to dividends when, as and if, declared by our board of directors, subject to the rights of the holders of all classes of stock
outstanding having priority rights to dividends. As of December 31, 2013, we did not declare any dividends and our credit facility
contains restrictions on our ability to pay dividends. The holder of each share of Class A common stock is entitled to one vote, while
the holder of each share of Class B common stock is entitled to ten votes. Shares of our Class B common stock are convertible into
an equivalent number of shares of our Class A common stock and generally convert into shares of our Class A common stock upon
transfer. Class A common stock and Class B common stock are referred to as common stock throughout the notes to these financial
statements, unless otherwise noted.
As of December 31, 2013, there were 1,969,996,533 shares and 576,587,559 shares of Class A common stock and Class B
common stock, respectively, issued and outstanding.
Share-based Compensation Plans
We maintain three share-based employee compensation plans: the 2012 Plan, the 2005 Stock Plan and the 2005 Officers' Stock
Plan (collectively, Stock Plans). Our 2012 Plan serves as the successor to our 2005 Stock Plan and provides for the issuance of incentive
and nonstatutory stock options, restricted stock awards, stock appreciation rights, RSUs, performance shares and stock bonuses to
qualified employees, directors and consultants. Outstanding awards under the 2005 Stock Plan continue to be subject to the terms and
conditions of the 2005 Stock Plan.
We have initially reserved 25,000,000 shares of our Class A common stock for issuance under our 2012 Plan. The number of
shares reserved for issuance under our 2012 Plan will increase automatically on the first day of January of each of 2013 through 2022
by a number of shares of Class A common stock equal to the lesser of (i) 2.5% of the total outstanding shares of our common stock
as of the immediately preceding December 31st or (ii) a number of shares determined by the board of directors. Our board of directors
elected not to increase the number of shares reserved for issuance in 2013. In addition, shares available for grant under the 2005 Stock
Plan, which were reserved but not issued or subject to outstanding awards under the 2005 Stock Plan as of the effective date of our
IPO, were added to the reserves of the 2012 Plan and shares that are withheld in connection with the net settlement of RSUs are also