HERON THERAPEUTICS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Employee Stock Purchase Plan
In 1997, our stockholders
approved our Employee Stock Purchase Plan (ESPP). In December 2007, May 2009, June 2011, May 2014, May 2015, June 2016 and June 2017, our stockholders authorized increases in the number of shares reserved for issuance under the ESPP by
5,000, 10,000, 25,000, 25,000, 100,000, 100,000 and 200,000 shares, respectively, for a total of 475,000 shares reserved at December 31, 2017. Under the terms of the ESPP, employees can elect to have up to a maximum of 10% of their base
earnings withheld to purchase our common stock. The purchase price of the stock is 85% of the lower of the closing prices for our common stock on: (i) the first trading day in the enrollment period, as defined in the ESPP, in which the purchase
is made, or (ii) the purchase date. The length of the enrollment period is six months. Enrollment dates are the first business day of May and November. In 2017, 48% of eligible employees participated in the ESPP. Under the ESPP, we issued
77,283, 54,932, and 30,361 shares in 2017, 2016 and 2015, respectively. The weighted-average exercise price per share of the purchase rights exercised during 2017, 2016 and 2015 was $12.80, $14.03 and $8.46, respectively. As of
December 31, 2017, 207,683 shares of common stock have been issued under the ESPP and 267,317 shares of common stock are available for future issuance.
Stock Option Plans
We currently have one stock option plan from which we can grant options and restricted
stock awards to employees, officers, directors and consultants. In December 2007, the stockholders approved our 2007 Equity Incentive Plan (2007 Plan) at which time a maximum of 150,000 shares of common stock were available for grant. In
May 2010, June 2011, May 2014, May 2015, June 2016 and June 2017, our stockholders approved amendments to our 2007 Plan to increase the maximum number of shares of common stock available for grant by 100,000, 4,500,000, 1,750,000, 4,300,000,
3,000,000 and 5,000,000 shares of common stock, respectively, resulting in an aggregate of 18,800,000 shares of common stock authorized for issuance as of December 31, 2017. At December 31, 2017, there were 4,685,432 shares available for
future grant under the 2007 Plan. Any shares that are issuable on exercise of options granted that expire, are cancelled or that we receive pursuant to a net exercise of options are available for future grant and issuance.
We also granted stock options and restricted stock awards under the 2002 Stock Incentive Plan (2002 Plan) in prior years. The remaining shares
available to be granted under the 2002 Plan expired in February 2012.
In 2014, 2013 and 2012, we granted options to certain employees outside of our
stockholder approved stock option plans. All options to purchase our common stock were granted with an exercise price that equals fair market value of the underlying common stock on the grant dates and expire no later than ten years from the date of
grant. The options are exercisable in accordance with vesting schedules that generally provide for them to be fully vested and exercisable four years after the date of grant, provided, however, that we have also issued stock options awards that are
subject to performance vesting requirements. All stock option grants issued outside of our stockholder approved plans have been registered on Form S-8 with the SEC.