Facebook 2014 Annual Report Download - page 80

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,
2014
, 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, 2014 .
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, 2014
, 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, 2014
, 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, 2014 , there were 2,234,113,007 shares and 562,792,201
shares of Class A common stock and Class B common stock,
respectively, issued and outstanding.
Share-based Compensation Plans
We maintain two share-
based employee compensation plans: the 2012 Plan and the 2005 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 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
2014 and 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 added to the reserves of the 2012 Plan. In January 2014, we began requiring that employees sell a portion of the
shares that they receive upon the vesting of RSUs in order to cover any required withholding taxes, rather than our previous approach of net share
settlement. The maximum term for stock options granted under the 2012 Plan may not exceed ten years
from the date of grant. Our 2012 Plan will
terminate ten years from the date of approval unless it is terminated earlier by our compensation committee.
In connection with our acquisition of WhatsApp in October 2014, we granted inducement awards covering an aggregate of 37,475,271
RSUs to
the WhatsApp founders. These awards are excluded from the Stock Plans and are subject to the terms, restrictions, and conditions of a separate non-
plan
RSU award agreement. In addition, these awards are earned over a service period of four years.
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Note 11.
Stockholders' Equity