Stockholders' Equity

12 Months Ended

Dec. 31, 2020

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 Plan

On June 4, 2020, the Company's stockholders approved the 2020 Stock Plan, which was adopted by the Company's Board of Directors on March 4, 2020 subject to stockholder approval. The 2020 Stock Plan is the successor to the 2011 Stock Plan. The 2020 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. The 2020 Stock Plan authorized 17,500,000 new shares to be available for award grants. As of the date the 2020 Stock Plan was adopted by the Company's Board of Directors, 5,530,106 shares were available to be granted under the 2011 Stock Plan. These shares are available for award grants under the 2020 Stock Plan.

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

	Shares Available for Grant	Options Outstanding
		Number of Shares	Weighted- Average Exercise Price (per Share)
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
New Shares Authorized	17,500,000	—	—
Granted	(1,909,476)	1,909,476	432.34
Exercised	—	(4,088,612)	58.35
Expired	—	(3,380)	27.54
Balances as of December 31, 2020	21,702,085	18,676,810	$	170.23
Vested and exercisable at December 31, 2020		18,676,810	$	170.23

The aggregate intrinsic value of the Company's outstanding stock options as of December 31, 2020 was $6,922 million and represents the total pretax intrinsic value (the difference between the Company’s closing stock price on the last trading day of 2020 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 2020. 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, 2020, 2019 and 2018 was $1,596 million, $666 million and $863 million, respectively. The weighted-average remaining contractual term of the Company's outstanding stock options as of December 31, 2020 included in the table above was 5.55 years.

Cash received from option exercises for the years ended December 31, 2020, 2019 and 2018 was $235 million, $72 million and $125 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,
	2020			2019			2018
Dividend yield	—		%	—		%	—		%
Expected volatility	37% - 45%			37% - 41%			40% - 42%
Risk-free interest rate	0.67% - 1.71%			1.74% - 2.74%			2.61% - 3.09%
Suboptimal exercise factor	3.34 - 3.67			3.07 - 3.23			2.80 - 3.01
Valuation data:
Weighted-average fair value (per share)	$	217.42		$	156.60		$	157.19
Total stock-based compensation expense (in thousands)	415,180			405,376			320,657
Total income tax impact on provision (in thousands)	91,718			90,856			67,575

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.