Stockholders’ Equity

Stock Option Plan

In June 2011, the Company adopted the 2011 Stock Plan. The 2011 Stock Plan provides for the grant of incentive stock options to employees and for the grant of non-statutory stock options, stock appreciation rights, restricted stock and restricted stock units to employees, directors and consultants. As of March 31, 2019, approximately 8 million shares were reserved for future grants under the 2011 Stock Plan.

A summary of the activities related to the Company’s stock option plans is as follows:



			Options Outstanding
	Shares Available for Grant		Number of Shares		Weighted- Average Exercise Price (per share)		Weighted-Average Remaining Contractual Term (in years)	Aggregate Intrinsic Value (in thousands)
Balances as of December 31, 2018	8,699,941		20,479,278		$	89.61
Granted	(619,636	)	619,636		319.43
Exercised	—		(593,294	)	38.07
Expired	—		(21	)	4.27
Balances as of March 31, 2019	8,080,305		20,505,599		$	98.04	5.68	$	5,312,077
Vested and exercisable as of March 31, 2019			20,505,599		$	98.04	5.68	$	5,312,077

The aggregate intrinsic value in the table above represents the total pretax intrinsic value (the difference between the Company’s closing stock price on the last trading day of the first quarter of 2019 and the exercise price, multiplied by the number of in-the-money options) that would have been received by the option holders had all option holders exercised their options on the last trading day of the first quarter of 2019. This amount changes based on the fair market value of the Company’s common stock.

A summary of the amounts related to option exercises, is as follows:



	Three Months Ended
	March 31, 2019		March 31, 2018
	(in thousands)
Total intrinsic value of options exercised	$	180,842	$	277,910
Cash received from options exercised	22,972		56,335

Stock-based Compensation

Stock options granted are exercisable for the full ten year contractual term regardless of employment status. The following table summarizes the assumptions used to value option grants using the lattice-binomial model and the valuation data:



	Three Months Ended
	March 31, 2019			March 31, 2018
Dividend yield	—		%	—		%
Expected volatility	41		%	40		%
Risk-free interest rate	2.74		%	2.61		%
Suboptimal exercise factor	3.07			2.80
Weighted-average fair value (per share)	$	163		$	124
Total stock-based compensation expense (in thousands)	$	101,200		$	68,395
Total income tax impact on provision (in thousands)	$	21,628		$	14,691

The Company considers several factors in determining the suboptimal exercise factor, including the historical and estimated option exercise behavior.

The Company calculates expected volatility based solely on implied volatility. The Company believes that implied volatility of publicly traded options in its common stock is more reflective of market conditions, and given consistently high trade volumes of the options, can reasonably be expected to be a better indicator of expected volatility than historical volatility of its common stock.

In valuing shares issued under the Company’s employee stock option plans, the Company bases the risk-free interest rate on U.S. Treasury zero-coupon issues with terms similar to the contractual term of the options. The Company does not anticipate paying any cash dividends in the foreseeable future and therefore uses an expected dividend yield of zero in the option valuation model. The Company does not use a post-vesting termination rate as options are fully vested upon grant date.