STOCK-BASED COMPENSATION

The Company currently has one active plan, the Fourth Amended and Restated LendingTree 2008 Stock and Annual Incentive Plan (the "Equity Award Plan"), under which future awards may be granted, which currently covers outstanding stock options to acquire shares of the Company's common stock, restricted stock and RSUs, and provides for the future grants of these and other equity awards. Under the Equity Award Plan, the Company is authorized to grant stock options, restricted stock, RSUs and other equity-based awards for up to 4.35 million shares of LendingTree common stock to employees, non-employee consultants, officers and directors. This Equity Award Plan also governs certain equity awards of IAC that were converted into equity awards of LendingTree in connection with the spin-off.

The Equity Award Plan has a stated term of ten years and provides that the exercise price of stock options granted will not be less than the market price of the common stock on the grant date. The Equity Award Plan itself does not specify grant dates or vesting schedules, as those determinations are delegated to the Compensation Committee of the board of directors. Each grant agreement reflects the vesting schedule for that particular grant, as determined by the Compensation Committee. The Compensation Committee has the authority to modify the vesting provisions of an award.

Non-cash compensation related to equity awards is included in the following line items in the accompanying consolidated statements of operations and comprehensive income (in thousands):



	Year Ended December 31,
	2015		2014		2013
Cost of revenue	$	95	$	32	$	13
Selling and marketing expense	1,597		901		931
General and administrative expense	5,120		5,148		3,841
Product development	1,558		1,196		842
Restructuring and severance	138		169		—
Total non-cash compensation	$	8,508	$	7,446	$	5,627

For the year ended December 31, 2015, the Company recognized $3.0 million of income tax benefit related to non-cash compensation. For the years ended December 31, 2014 and 2013, the Company recognized no income tax benefit related to non-cash compensation due to its net operating losses and valuation allowance. As of December 31, 2015, there was approximately $8.2 million, $7.5 million and $1.0 million of unrecognized compensation cost, net of estimated forfeitures, related to stock options, RSUs and restricted stock, respectively. These costs are expected to be recognized over a weighted-average period of approximately 2.0 years for stock options, 2.0 years for RSUs and 1.0 year for restricted stock.

Stock Options

A summary of the changes in outstanding stock options is as follows:



	Number of Options		Weighted Average Exercise Price		Weighted Average Remaining Contractual Term	Aggregate Intrinsic Value^(a)
			(per option)		(in years)	(in thousands)
Outstanding at December 31, 2014	2,136,679		$	18.16
Granted	46,406		68.62
Exercised	(136,125	)	17.61
Forfeited	(127,439	)	26.84
Expired	(1,339	)	7.88
Outstanding at December 31, 2015	1,918,182		$	18.85	5.92	$	135,324
Options exercisable	932,941		$	8.51	3.44	$	75,350

(a)

The aggregate intrinsic value represents the total pre-tax intrinsic value (the difference between the Company's closing stock price of $89.28 on the last trading day of 2015 and the exercise price, multiplied by the number of shares covered by in-the-money options) that would have been received by the option holders had all option holders exercised their options on December 31, 2015. The intrinsic value changes based on the market value of the Company's common stock.

Upon exercise, the intrinsic value represents the pre-tax difference between the Company's closing stock price on the exercise date and the exercise price, multiplied by the number of stock options exercised. During the years ended December 31, 2015, 2014 and 2013, the total intrinsic value of stock options that were exercised was $5.9 million, $0.2 million and $0.4 million, respectively. Cash received from stock option exercises and the related actual tax benefit realized were $2.4 million and $0.3 million, respectively, for the year ended December 31, 2015.

During the years ended December 31, 2015 and 2014, the Company granted stock options with a weighted average grant date fair value per share of $27.60 and $11.22, respectively, of which the vesting periods include (a) three years from the grant date, (b) 25% and 75% over a period of 2.5 years and 3.5 years, respectively, (c) 25% and 75% over a period of 1.67 years and 2.67 years, respectively, (d) six months from the grant date, (e) one year from the grant date and (f) two years from the grant date.

For purposes of determining stock-based compensation expense, the weighted average grant date fair value per share of the stock options was estimated using the Black-Scholes option pricing model, which requires the use of various key assumptions. The weighted average assumptions used are as follows:



	Year Ended December 31,
	2015	2014
Expected term ⁽¹⁾	5.21 - 6.23 years	5.75 - 6.63 years
Expected dividend ⁽²⁾	—	—
Expected volatility ⁽³⁾	38% - 48%	36% - 64%
Risk-free interest rate ⁽⁴⁾	1.65% - 2.01%	1.81% - 2.13%


(1)	The expected term of stock options granted was calculated using the 'Simplified Method', which utilizes the midpoint between the weighted average time of vesting and the end of the contractual term. This method was utilized for the stock options due to a lack of historical exercise behavior by the Company's employees.


(2)	For all stock options granted during the years ended December 31, 2015 and 2014, no dividends are expected to be paid over the contractual term of the stock options, resulting in a zero expected dividend rate.


(3)	The expected volatility rate is based on the historical volatility of the Company's common stock or a blended rate which includes the historical volatility of the Company's common stock and that of a peer group.


(4)	The risk-free interest rate is specific to the date of grant. The risk-free interest rate is based on U.S. Treasury yields for notes with comparable expected terms as the awards, in effect at the grant date.

As of December 31, 2015, the non-vested options are expected to vest over a weighted-average period of approximately 2.0 years. During the years ended December 31, 2015, 2014 and 2013, the total fair value of options vested was $0.8 million, $0.4 million and $3.2 million, respectively.

Restricted Stock Units

A summary of the changes in outstanding nonvested RSUs is as follows:



	RSUs
	Number of Units		Weighted Average Grant Date Fair Value
			(per unit)
Nonvested at December 31, 2014	351,801		$	22.83
Granted ^(a)	101,955		69.35
Vested	(187,052	)	20.83
Forfeited	(29,327	)	32.92
Nonvested at December 31, 2015	237,377		$	43.13


(a)	The grant date fair value per share of the RSUs is calculated as the closing market price of LendingTree's common stock at the time of the grant.

The total fair value of RSUs that vested during the years ended December 31, 2015, 2014 and 2013 was $11.0 million, $11.0 million and $7.5 million, respectively.

Restricted Stock

A summary of the changes in outstanding nonvested restricted stock is as follows:



	Restricted Stock
	Number of Shares		Weighted Average Grant Date Fair Value
			(per share)
Nonvested at December 31, 2014	123,057		$	23.41
Granted ^(a)	—		—
Vested	(54,295	)	23.18
Forfeited	—		—
Nonvested at December 31, 2015	68,762		$	23.60


(a)	The grant date fair value per share of the restricted stock is calculated as the closing market price of LendingTree's common stock at the time of grant.

The total fair value of restricted stock that vested during the years ended December 31, 2015, 2014 and 2013 was $4.1 million, $1.5 million and $3.2 million, respectively.