Stockholders' Equity

9 Months Ended

Sep. 30, 2020

STOCKHOLDERS’ EQUITY

Stock Repurchase Activity

In February 2016, the Board of Directors authorized a program to repurchase up to $5.0 billion of our common stock, with no fixed expiration. There were no repurchases of common stock during the nine months ended September 30, 2019 or 2020.

Stock Award Activity

Common shares outstanding plus shares underlying outstanding stock awards totaled 512 million and 518 million as of December 31, 2019 and September 30, 2020. These totals include all vested and unvested stock awards outstanding, including those awards we estimate will be forfeited. Stock-based compensation expense is as follows (in millions):


	Three Months Ended September 30,				Nine Months Ended September 30,
	2019		2020		2019		2020
Cost of sales	$	39	$	75	$	106	$	193
Fulfillment	301		316		895		993
Technology and content	966		1,267		2,719		3,649
Marketing	298		446		813		1,233
General and administrative	175		184		491		578
Total stock-based compensation expense	$	1,779	$	2,288	$	5,024	$	6,646

The following table summarizes our restricted stock unit activity for the nine months ended September 30, 2020 (in millions):


	Number of Units	Weighted-Average Grant-Date Fair Value
Outstanding as of December 31, 2019	14.3	$	1,458
Units granted	7.1	2,281
Units vested	(4.0)	1,168
Units forfeited	(1.0)	1,571
Outstanding as of September 30, 2020	16.4	1,879

Scheduled vesting for outstanding restricted stock units as of September 30, 2020, is as follows (in millions):


	Three Months Ended December 31,	Year Ended December 31,
	2020	2021	2022	2023	2024	Thereafter	Total
Scheduled vesting—restricted stock units	1.8	5.7	5.4	2.4	0.9	0.2	16.4

As of September 30, 2020, there was 13.9 billion of net unrecognized compensation cost related to unvested stock-based compensation arrangements. This compensation is recognized on an accelerated basis with approximately half of the compensation expected to be expensed in the next twelve months, and has a remaining weighted-average recognition period of 1.2 years. The estimated forfeiture rate as of December 31, 2019 and September 30, 2020 was 27%. Changes in our estimates and assumptions relating to forfeitures may cause us to realize material changes in stock-based compensation expense in the future.

Changes in Stockholders’ Equity

The following table shows the changes in stockholders’ equity (in millions):


	Three Months Ended September 30,				Nine Months Ended September 30,
	2019		2020		2019		2020
Total beginning stockholders’ equity	$	53,061	$	73,728	$	43,549	$	62,060

Beginning and ending common stock	5		5		5		5

Beginning and ending treasury stock	(1,837)		(1,837)		(1,837)		(1,837)

Beginning additional paid-in capital	30,035		38,017		26,791		33,658
Stock-based compensation and issuance of employee benefit plan stock	1,782		2,290		5,026		6,649
Ending additional paid-in capital	31,817		40,307		31,817		40,307

Beginning accumulated other comprehensive income (loss)	(960)		(1,455)		(1,035)		(986)
Other comprehensive income (loss)	(469)		426		(394)		(43)
Ending accumulated other comprehensive income (loss)	(1,429)		(1,029)		(1,429)		(1,029)

Beginning retained earnings	25,818		38,998		19,625		31,220
Cumulative effect of changes in accounting principles (1)	—		—		7		—
Net income	2,134		6,331		8,320		14,109
Ending retained earnings	27,952		45,329		27,952		45,329

Total ending stockholders’ equity	$	56,508	$	82,775	$	56,508	$	82,775

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(1)We recorded cumulative effect adjustments related to the new lease standard in Q1 2019 and the new measurement of credit losses standard in Q1 2020.