Stockholders' Equity

12 Months Ended

Dec. 31, 2019

Stockholders' Equity Note [Abstract]

Stockholders' Equity

Stockholders’ Equity

Voting Rights

The holders of each share of common stock shall be entitled to one vote per share on all matters to be voted upon by the Company’s stockholders.

Stock Option Plans

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.

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

	Shares Available for Grant		Options Outstanding				Weighted- Average Remaining Contractual Term (in Years)	Aggregate Intrinsic Value (in Thousands)
			Number of Shares		Weighted- Average Exercise Price (per Share)
Balances as of December 31, 2016	13,289,953		22,437,347		$	44.83
Granted	(2,550,038	)	2,550,038		159.56
Exercised	—		(3,338,474	)	26.79
Expired	—		(1,561	)	3.25
Balances as of December 31, 2017	10,739,915		21,647,350		$	61.13
Granted	(2,039,974	)	2,039,974		311.66
Exercised	—		(3,205,911	)	38.66
Expired	—		(2,135	)	$	4.60
Balances as of December 31, 2018	8,699,941		20,479,278		$	89.61
Granted	(2,588,380	)	2,588,380		320.66
Exercised	—		(2,208,052	)	32.88
Expired	—		(280	)	6.74
Balances as of December 31, 2019	6,111,561		20,859,326		$	124.28	5.57	$	4,230,013
Vested and exercisable at December 31, 2019			20,859,326		$	124.28	5.57	$	4,230,013

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 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 2019. This amount changes based on the fair market value of the Company’s common stock. Total intrinsic value of options exercised for the years ended December 31, 2019, 2018 and 2017 was $666 million, $863 million and $464 million, respectively.

Cash received from option exercises for the years ended December 31, 2019, 2018 and 2017 was $72 million, $125 million and $88 million, respectively.

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:

	Year Ended December 31,
	2019			2018			2017
Dividend yield	—		%	—		%	—		%
Expected volatility	37% - 41%			40% - 42%			34% - 37%
Risk-free interest rate	1.74% - 2.74%			2.61% - 3.09%			2.24% - 2.45%
Suboptimal exercise factor	3.07 - 3.23			2.80 - 3.01			2.48 - 2.63
Valuation data:
Weighted-average fair value (per share)	$	156.60		$	157.19		$	71.45
Total stock-based compensation expense (in thousands)	405,376			320,657			182,209
Total income tax impact on provision (in thousands)	90,856			67,575			61,842

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.

Accumulated Other Comprehensive Loss

The following table summarizes the changes in accumulated balances of other comprehensive loss, net of tax:

	Foreign currency
	(in thousands)
Balances as of December 31, 2017	$	(20,557	)
Other comprehensive income before reclassifications	975
Net decrease in accumulated other comprehensive loss	975
Balances as of December 31, 2018	$	(19,582	)
Other comprehensive loss before reclassifications	(3,939		)
Net increase in accumulated other comprehensive loss	(3,939		)
Balances as of December 31, 2019	$	(23,521	)