EMPLOYEE BENEFITS (Tables)

12 Months Ended

Dec. 31, 2013

Schedule of Stock Based Compensation Activity

The Company’s 1995 Stock Plan, the Directors’ Plan, other stock-based awards assumed through acquisitions, and the Tumblr equity holdback are collectively referred to as the “Plans.” Stock option activity under the Plans for the year ended December 31, 2013 is summarized as follows (in thousands, except years and per share amounts):


	Shares			Weighted Average Exercise Price per Share		Weighted Average Remaining Contractual Life (in years)		Aggregate Intrinsic Value
Outstanding at December 31, 2012		38,092		$	21.42		4.19	$	78,387
Options granted		51		$	29.32
Options assumed in acquisitions		1,121		$	7.39
Options exercised⁽¹⁾		(13,707	)	$	20.32
Options cancelled/forfeited		(1,198	)	$	15.13
Options expired		(3,391	)	$	29.73

Outstanding at December 31, 2013		20,968		$	20.43		4.20	$	428,414

Vested and expected to vest at December 31, 2013⁽²⁾		19,701		$	20.13		4.09	$	400,054

Exercisable at December 31, 2013		10,696		$	22.24		2.64	$	194,676

⁽¹⁾	The Company issued new shares to satisfy stock option exercises.

⁽²⁾	The expected to vest options are the result of applying the pre-vesting forfeiture rate assumptions to total outstanding options.

Schedule of Assumptions used to Calculate Fair Value of Options Granted and Shares Purchased in Employee Stock Purchase Plan

The fair value of option grants is determined using the Black-Scholes option pricing model with the following weighted average assumptions:


	Stock Options									Purchase Plan⁽⁵⁾
	Years Ended December 31,									Years Ended December 31,
	2011			2012			2013			2011			2012			2013
Expected dividend yield⁽¹⁾		0.0	%		0.0	%		0	%		0.0	%		0.0	%		0	%
Risk-free interest rate⁽²⁾		1.3	%		0.6	%		0.7	%		0.4	%		0.4	%		0.1	%
Expected volatility⁽³⁾		36.9	%		31.9	%		33.3	%		35.6	%		33.7	%		31.7	%
Expected life (in years)⁽⁴⁾		4.03			4.02			3.60			1.04			1.21			0.25

⁽¹⁾	The Company currently has no history or expectation of paying cash dividends on its common stock in the near future.

⁽²⁾	The risk-free interest rate is based on the U.S. Treasury yield for a term consistent with the expected term of the awards in effect at the time of grant.

⁽³⁾	The Company estimates the volatility of its common stock at the date of grant based on the implied volatility of publicly traded options on its common stock, with a term of one year or greater.

⁽⁴⁾

The expected life of stock options granted under the Plans is based on historical exercise patterns, which the Company believes are representative of future behavior. New grants issued by the Company had an expected life of 4.25 years in 2011, 4.00 years in 2012, and 2.58 years in 2013. Options assumed in acquisitions had expected lives of less than 4 years.

⁽⁵⁾

Assumptions for the Employee Stock Purchase Plan relate to the annual average of the enrollment periods. During the year ended December 31, 2012, enrollment was permitted in May and November of each year. Beginning in 2013, enrollment was permitted in February, May, August, and November of each year.

Schedule of Restricted Stock Awards and Restricted Stock Units Activity

Restricted stock awards activity under the Plans for the year ended December 31, 2013 is summarized as follows (in thousands, except per share amounts):


	Shares			Weighted Average Grant Date Fair Value Per Share
Awarded and unvested at December 31, 2012		33,801		$	17.63
Granted(*)		34,835		$	25.55
Assumed in acquisitions		2,364		$	26.24
Vested		(14,187	)	$	15.49
Forfeited		(7,229	)	$	17.74

Awarded and unvested at December 31, 2013		49,584		$	24.20

(*)	Includes the maximum number of shares issuable under the Company’s performance-based restricted stock unit awards