SEC Filings

10-K
AVEXIS, INC. filed this Form 10-K on 02/28/2018
Entire Document
 

Stock‑Based Compensation

We account for stock‑based compensation awards in accordance with FASB ASC Topic 718, Compensation—Stock Compensation, or ASC 718. ASC 718 requires all stock‑based payments to employees, including grants of employee stock options, to be recognized in the statement of operations based on their fair values. Our stock‑based compensation awards have historically consisted of stock options, restricted stock units and shares of restricted stock. In addition, certain other equity transactions involving our directors and executive officers have had a compensatory element, which we also account for as stock‑based awards.

Our stock‑based awards are subject to service and performance‑based vesting conditions. Compensation expense related to awards to employees with only service‑based vesting conditions is recognized on a straight‑line basis over the requisite service vesting portion of the award as if the award was, in substance, multiple awards, or the Graded Vesting Attribution Method, based on the estimated grant date fair value for each separately vesting tranche. Compensation expense related to awards to non‑employees with only service‑based vesting conditions is recognized based on the then‑current fair value at each financial reporting date prior to the measurement date over the associated service period of the award, using the Graded Vesting Attribution Method.

Compensation expense related to awards to employees with only performance‑based vesting conditions is recognized based on the estimated grant date fair value of the award over the requisite service period using the Graded Vesting Attribution Method to the extent achievement of the performance condition is probable. Compensation expense related to awards to non‑employees with only performance‑based vesting conditions is recognized based on the then‑current fair value at each financial reporting date prior to the measurement date over the requisite service period using the Graded Vesting Attribution Method to the extent achievement of the performance condition is probable.

We calculate the fair value of stock options using the Black‑Scholes option‑pricing model. The Black‑Scholes option‑pricing model requires the use of subjective assumptions, including the expected volatility of our common stock, the assumed dividend yield, the expected term of our stock options and the risk‑free interest rate for a period that approximates the expected term of our stock options. Additionally, for grants prior to our initial public offering, we also estimated the fair value of the underlying common stock on the date of grant. In applying these assumptions, we considered the following factors:

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We do not have sufficient history to estimate the volatility of our common stock. We calculate expected volatility based on reported data for selected similar publicly traded companies for which the historical information is available. We plan to continue to use the guideline peer group volatility information until the historical volatility of our common stock is sufficient to measure expected volatility for future option grants;

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The assumed dividend yield of zero is based on our expectation of not paying dividends for the foreseeable future;

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Our estimates of expected term used in the Black‑Scholes option pricing model were based on the estimated time from the grant date to the date of exercise;

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We determine the risk‑free interest rate by reference to implied yields available from U.S. Treasury securities with a remaining term equal to the expected life assumed at the date of grant; and

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We estimate forfeitures based on our historical analysis of actual stock option forfeitures. To date, we have had minimal forfeitures, accordingly, we have assumed no forfeiture rate.

Stock‑based awards issued to non‑employees, consisting of stock warrants and restricted common shares, are accounted for using the fair value method in accordance with ASC 505‑50, Equity‑Based Payments to Non‑Employees. These stock warrants and restricted common shares have been granted in exchange for consulting services to be rendered, and vest according to certain service or performance conditions. In accordance with authoritative guidance, the

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