STOCK-BASED COMPENSATION (Tables)

12 Months Ended

Dec. 31, 2017

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Schedule of non-cash compensation expense related to equity awards

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,
	2017		2016		2015
Cost of revenue	$	175	$	129	$	95
Selling and marketing expense	3,973		2,722		1,597
General and administrative expense	16,874		4,699		5,120
Product development	2,339		2,097		1,558
Restructuring and severance	—		—		138
Total non-cash compensation	$	23,361	$	9,647	$	8,508

Summary of changes in outstanding stock options

A summary of the changes in outstanding stock options with performance conditions 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, 2016	—	$	—
Granted	37,877	308.90
Exercised	—	—
Forfeited	—	—
Expired	—	—
Outstanding at December 31, 2017	37,877	$	308.90	9.95	$	1,195
Options exercisable	—	$	—	0.00	$	—

(a)

The aggregate intrinsic value represents the total pre-tax intrinsic value (the difference between the Company's closing stock price of $340.45 on the last trading day of 2017 and the exercise price, multiplied by the number of shares covered by in-the-money options) that would have been received by the option holder had the option holder exercised these options on December 31, 2017. The intrinsic value changes based on the market value of the Company's common stock.

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, 2016	1,991,802		$	21.23
Granted	112,059		207.79
Exercised	(219,094	)	31.29
Forfeited	(21,028	)	70.90
Expired	—		—
Outstanding at December 31, 2017	1,863,739		$	30.70	4.46	$	577,295
Options exercisable	1,036,757		$	11.56	2.34	$	340,976

(a)

A summary of changes in outstanding stock options with market conditions is as follows:



	Number of Options with Market Conditions	Weighted Average Exercise Price		Weighted Average Remaining Contractual Term	Aggregate Intrinsic Value^(a)
		(per option)		(in years)	(in thousands)
Outstanding at December 31, 2016	—	$	—
Granted^(b)	402,694	183.80
Exercised	—	—
Forfeited	—	—
Expired	—	—
Outstanding at December 31, 2017	402,694	183.80		9.57	$	63,082
Options exercisable	—	$	—	0.00	$	—

(a)


(b)	During 2017, the Company granted stock options with a grant date fair value per share of $142.45, calculated using the Monte Carlo simulation model, which have a vesting date of September 30, 2022.

Summary of stock option valuation assumptions

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,
	2017	2016	2015
Expected term ⁽¹⁾	5.00 - 7.00 years	5.22 - 6.38 years	5.21 - 6.23 years
Expected dividend ⁽²⁾	—	—	—
Expected volatility ⁽³⁾	51% - 52%	48% - 53%	38% - 48%
Risk-free interest rate ⁽⁴⁾	1.74% - 2.24%	1.10% - 2.18%	1.65% - 2.01%


(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, 2017, 2016 and 2015, 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.


(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.

For purposes of determining stock-based compensation expense, the grant date fair value per share of the stock options was estimated using the Monte Carlo simulation model, which requires the use of various key assumptions. The assumptions used are as follows:



Expected term ⁽¹⁾	7.50 years
Expected dividend ⁽²⁾	—
Expected volatility ⁽³⁾	50%
Risk-free interest rate ⁽⁴⁾	2.12%


(1)	The expected term of stock options with a market condition granted was calculated using the midpoint between the weighted average time of vesting and the end of the contractual term.


(2)	For all stock options with a market condition granted in 2017, 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.


(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.



Expected term ⁽¹⁾	5.5 - 6.00 years
Expected dividend ⁽²⁾	—
Expected volatility ⁽³⁾	51%
Risk-free interest rate ⁽⁴⁾	2.16% - 2.23%


(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 year ended December 31, 2017, 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.


(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.

Schedule of changes in outstanding non-vested RSUs, restricted stock and RSUs with performance conditions

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, 2016	14,464		$	25.14
Granted	—		—
Vested	(14,464	)	25.14
Forfeited	—		—
Nonvested at December 31, 2017	—		$	—

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, 2016	152,374		$	65.64
Granted ^(a)	94,783		152.45
Vested	(78,631	)	57.92
Forfeited	(15,697	)	82.99
Nonvested at December 31, 2017	152,829		$	121.68


(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 grant.

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



	RSUs with Performance Conditions
	Number of Units		Weighted Average Grant Date Fair Value
			(per unit)
Nonvested at December 31, 2016	44,509		$	88.28
Granted ^(a)	80,880		186.85
Vested	(1,931	)	96.46
Forfeited	(12,253	)	83.60
Nonvested at December 31, 2017	111,205		$	160.34


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