2/24/2018 S-1 Table of Contents each Co­Founder Grant was estimated to be $7.07 per share. The weighted­average derived service period of each Co­Founder Grant was estimated to be 5.2 years, and ranged from 2.9 ­ 6.9 years. The Company will recognize aggregate stock­based compensation expense of $156.2 million over the derived service period of each tranche using the accelerated attribution method as long as the co­founders satisfy their service­based vesting conditions. If the Stock Price Targets are met sooner than the derived service period, the Company will adjust its stock­based compensation to reflect the cumulative expense associated with the vested awards. The Company will recognize expense if the requisite service is provided, regardless of whether the market conditions are achieved. Award modifications During the year ended December 31, 2016, the Company’s Board of Directors voted to approve the exchange of stock options previously granted to an executive officer under the Plan for one­tier RSUs. In total, options to purchase 6.5 million shares of common stock were exchanged for 3.3 million RSUs. Total compensation expense for the modified awards is $37.7 million, of which $18.8 million in stock­based compensation expense was recognized on the date of exchange representing the portion that vested immediately. Out of the total $37.7 million in stock­based compensation expense, $8.9 million was incremental to what would have been recognized related to the original stock option award. The Company will recognize approximately $2.4 million in stock­based compensation expense per quarter related to these awards. As of December 31, 2017, the total unamortized expense relating to these awards was $2.4 million. Additionally, during the year ended December 31, 2016, the Board of Directors voted to approve a continuation of vesting upon change in employment status clause for an executive officer who had previously provided services to the Company. Under this clause, 0.6 million RSUs previously granted to the former executive officer will continue to vest for a pre­determined period of time. The continuation of vesting was accounted for as a modification of the terms of the original award. As a result, the Company recognized an incremental $4.2 million of stock­based compensation expense. An additional $1.5 million of stock­based compensation expense may be recognized in future periods for the former executive officers’ two­tier RSUs if the initial qualifying liquidity event defined under the award agreement occurs. During the year ended December 31, 2017, the Company’s Board of Directors voted to approve a modification of vesting schedules for certain unvested one­tier and two­tier RSUs to align the vesting schedules for all RSUs to vest once per quarter. As a result of this modification, the Company’s unamortized stock­based compensation expense related to one­tier RSUs increased by $3.2 million, which will be recognized over a weighted­average period of 2.8 years if and when the awards vest. The total unamortized stock­based compensation expense related to two­tier RSUs decreased by $9.5 million. The unamortized amount will be recognized over a period of 0.9 years if and when the awards vest. F­29 https://www.sec.gov/Archives/edgar/data/1467623/000119312518055809/d451946ds1.htm 219/235