Stock-Based Plans

9 Months Ended

Sep. 30, 2014

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Stock-Based Plans

Stock-Based Plans

Stock Option Activity

The following table summarizes stock option activity for the nine months ended September 30, 2014:  

	Options
	(In millions)
Outstanding as of January 1, 2014	14
Granted and assumed	2
Exercised	(4	)
Forfeited/expired/canceled	(1	)
Outstanding as of September 30, 2014	11

The weighted average exercise price of stock options granted during the period was $55.60 per share and the related weighted average grant date fair value was $13.75 per share.

Restricted Stock Unit Activity

The following table summarizes restricted stock unit ("RSU") activity for the nine months ended September 30, 2014:  

	Units
	(In millions)
Outstanding as of January 1, 2014	34
Awarded and assumed	17
Vested	(12	)
Forfeited	(4	)
Outstanding as of September 30, 2014	35

The weighted average grant date fair value for RSUs awarded during the period was $55.31 per share.

Stock-Based Compensation Expense

The impact on our results of operations of recording stock-based compensation expense for the three and nine months ended September 30, 2014 and 2013 was as follows:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2014		2013		2014		2013
	(In millions)
Cost of net revenues	$	19	$	9	$	56	$	45
Sales and marketing	46		38		133		112
Product development	57		42		167		120
General and administrative	51		51		132		135
Total stock-based compensation expense	$	173	$	140	$	488	$	412
Capitalized in product development	$	5	$	4	$	13	$	11

Stock Option Valuation Assumptions

We calculated the fair value of each stock option award on the date of grant using the Black-Scholes option pricing model. The following weighted average assumptions were used for the three and nine months ended September 30, 2014 and 2013:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2014		2013		2014		2013
Risk-free interest rate	1.27	%	0.77	%	1.19	%	0.62	%
Expected life (in years)	3.9		3.9		4.1		4.1
Dividend yield	—	%	—	%	—	%	—	%
Expected volatility	27	%	32	%	29	%	34	%

Our computation of expected volatility is based on a combination of historical and market-based implied volatility from traded options on our common stock. Our computation of expected life is based on historical experience of similar awards, giving consideration to the contractual terms of the stock-based awards, vesting schedules and expectations of future employee behavior. The interest rate for periods within the contractual life of the award is based on the U.S. Treasury yield curve in effect at the time of grant.