Stockholders' Equity

Follow-on Offering

In December 2013, we completed a follow-on offering in which we issued and sold 27 million shares of Class A common stock at a public offering price of $55.05 per share and the selling stockholders sold 43 million shares of Class A common stock. We did not receive any proceeds from the sale of shares by the selling stockholders. The total net proceeds received from the follow-on offering were $1.48 billion after deducting underwriting discounts and commissions of $7 million and other offering expenses of approximately $1 million.

Common Stock

Our certificate of incorporation authorizes the issuance of Class A common stock and Class B common stock. As of December 31, 2015, we are authorized to issue 5,000 million shares of Class A common stock and 4,141 million shares of Class B common stock, each with a par value of $0.000006 per share. Holders of our Class A common stock and Class B common stock are entitled to dividends when, as and if, declared by our board of directors, subject to the rights of the holders of all classes of stock outstanding having priority rights to dividends. As of December 31, 2015, we did not declare any dividends and our credit facility contains restrictions on our ability to pay dividends. The holder of each share of Class A common stock is entitled to one vote, while the holder of each share of Class B common stock is entitled to ten votes. Shares of our Class B common stock are convertible into an equivalent number of shares of our Class A common stock and generally convert into shares of our Class A common stock upon transfer. Class A common stock and Class B common stock are referred to as common stock throughout the notes to these financial statements, unless otherwise noted.

As of December 31, 2015, there were 2,293 million shares and 552 million shares of Class A common stock and Class B common stock, respectively, issued and outstanding.

Share-based Compensation Plans

We maintain two share-based employee compensation plans: the 2012 Equity Incentive Plan (2012 Plan) and the 2005 Stock Plan (collectively, Stock Plans). Our 2012 Plan serves as the successor to our 2005 Stock Plan and provides for the issuance of incentive and nonstatutory stock options, restricted stock awards, stock appreciation rights, RSUs, performance shares and stock bonuses to qualified employees, directors and consultants. Outstanding awards under the 2005 Stock Plan continue to be subject to the terms and conditions of the 2005 Stock Plan.

We initially reserved 25 million shares of our Class A common stock for issuance under our 2012 Plan. The number of shares reserved for issuance under our 2012 Plan increases automatically on the first day of January of each of 2013 through 2022 by a number of shares of Class A common stock equal to the lesser of (i) 2.5% of the total outstanding shares of our common stock as of the immediately preceding December 31st or (ii) a number of shares determined by the board of directors. Our board of directors elected not to increase the number of shares reserved for issuance in 2015 and 2014. In addition, shares available for grant under the 2005 Stock Plan, which were reserved but not issued, forfeited or repurchased at their original issue price, or subject to outstanding awards under the 2005 Stock Plan as of the effective date of our IPO, were added to the reserves of the 2012 Plan and shares that are withheld in connection with the net settlement of RSUs are also added to the reserves of the 2012 Plan. In January 2014, we began requiring that employees sell a portion of the shares that they receive upon the vesting of RSUs in order to cover any required withholding taxes, rather than our previous approach of net share settlement. The maximum term for stock options granted under the 2012 Plan may not exceed ten years from the date of grant. Our 2012 Plan will terminate ten years from the date of approval unless it is terminated earlier by our board of directors or a committee thereof.

In connection with an acquisition in 2014, we granted inducement awards covering an aggregate of 37 million RSUs earned over a service period of four years. These awards are excluded from the Stock Plans and are subject to the terms, restrictions, and conditions of separate non-plan RSU award agreements.

The following table summarizes the activities of stock option awards under the Stock Plans for the year ended December 31, 2015:



	Shares Subject to Options Outstanding
	Number of Shares		Weighted Average Exercise Price		Weighted Average Remaining Contractual Term	Aggregate Intrinsic Value⁽¹⁾
	(in thousands)				(in years)	(in millions)
Balance as of December 31, 2014	12,984		$	4.78
Stock options exercised	(4,541	)	0.48
Balance as of December 31, 2015	8,443		$	7.10	3.7	$	824
Stock options vested and expected to vest as of December 31, 2015	8,441		$	7.10	3.7	$	824
Stock options exercisable as of December 31, 2015	6,250		$	5.19	3.3	$	622


(1)	The aggregate intrinsic value is calculated as the difference between the exercise price of the underlying stock option awards and the official closing price of our Class A common stock, as reported on the NASDAQ Global Select Market, of $104.66 on December 31, 2015.

There were no options granted, forfeited, or canceled for the year ended December 31, 2015. The aggregate intrinsic value of the options exercised in the years ended December 31, 2015, 2014, and 2013 was $403 million, $624 million, and $4.58 billion, respectively. The total grant date fair value of stock options vested during the years ended December 31, 2015, 2014, and 2013 was $5 million, $7 million, and $7 million, respectively.

The following table summarizes additional information regarding outstanding and exercisable options under the Stock Plans at December 31, 2015:



	Options Outstanding				Options Exercisable
Exercise Price (Range)	Number of Shares	Weighted Average Remaining Contractual Term	Weighted Average Exercise Price		Number of Shares	Weighted Average Exercise Price
	(in thousands)	(in years)			(in thousands)
$0.10 - 0.18	446	0.6	$	0.11	446	$	0.11
0.29 - 0.33	1,182	1.5	0.32		1,182	0.32
1.85	968	3.0	1.85		968	1.85
2.95	1,147	3.6	2.95		1,147	2.95
10.39	3,500	4.6	10.39		2,334	10.39
15.00	1,200	4.8	15.00		173	15.00
	8,443	3.7	$	7.10	6,250	$	5.19

The following table summarizes the activities for our unvested RSUs for the year ended December 31, 2015:



	Unvested RSUs⁽¹⁾
	Number of Shares		Weighted Average Grant Date Fair Value
	(in thousands)
Unvested at December 31, 2014	138,055		$	55.89
Granted	31,507		82.15
Vested	(46,434	)	49.19
Forfeited	(6,719	)	51.19
Unvested at December 31, 2015	116,409		$	65.95


(1)	Unvested shares include inducement awards issued in connection with an acquisition in 2014 and are subject to the terms, restrictions, and conditions of separate non-plan RSU award agreements.

The fair value as of the respective vesting dates of RSUs that vested during the years ended December 31, 2015, 2014, and 2013 was $4.23 billion, $2.77 billion, and $1.55 billion, respectively.

As of December 31, 2015, there was $7.23 billion of unrecognized share-based compensation expense, of which $6.67 billion is related to RSUs and $559 million is related to restricted shares, shares with performance conditions related to our contingent consideration, and stock options. This unrecognized compensation expense is expected to be recognized over a weighted-average period of approximately three years.