COMPENSATION ARRANGEMENTS

12 Months Ended

Dec. 31, 2019

Share-based Payment Arrangement [Abstract]

Groupon, Inc. Stock Plans

In January 2008, we adopted the 2008 Stock Option Plan, as amended (the "2008 Plan"), under which options for up to 64,618,500 shares of common stock were authorized to be issued to employees, consultants and directors. The 2008 Plan was frozen in December 2010. In April 2010, we established the Groupon, Inc. 2010 Stock Plan, as amended in April 2011 (the "2010 Plan"), under which options and restricted stock units ("RSUs") for up to 20,000,000 shares of common stock were authorized for future issuance to employees, consultants and directors. No new awards may be granted under the 2010 Plan following our initial public offering in November 2011. In August 2011, we established the Groupon, Inc. 2011 Stock Plan (the "2011 Plan"), as amended in November 2013, May 2014, June 2016 and April 2019, under which options, RSUs and performance stock units for up to 187,500,000 shares of common stock were authorized for future issuance to employees, consultants and directors.

The Groupon, Inc. Stock Plans described above (the "Plans") are administered by the Compensation Committee of the Board (the "Compensation Committee"). As of December 31, 2019, 71,617,500 shares of common stock were available for future issuance under the Plans.

The stock-based compensation expense related to stock awards issued under the Plans and acquisition-related awards are presented within the following line items of the consolidated statements of operations for the years ended December 31, 2019, 2018 and 2017 (in thousands):



	Year Ended December 31,
	2019		2018		2017
Cost of revenue	$	1,482	$	1,485	$	2,658
Marketing	5,809		6,948		7,949
Selling, general and administrative	74,324		56,288		70,343
Restructuring charges	—		—		849
Other income (expense), net	—		100		245
Total stock-based compensation expense	$	81,615	$	64,821	$	82,044

We capitalized $7.1 million, $7.4 million and $6.2 million of stock-based compensation for the years ended December 31, 2019, 2018 and 2017, in connection with internally-developed software and cloud computing arrangements. We recognized stock-based compensation from discontinued operations of $0.2 million for the year ended December 31, 2017.

Employee Stock Purchase Plan

The Groupon, Inc. 2012 Employee Stock Purchase Plan, as amended, authorizes us to grant up to 20,000,000 shares of common stock under that plan. For the years ended December 31, 2019, 2018 and 2017, 1,486,006, 1,621,061 and 1,879,656 shares of common stock were issued under the ESPP.

Restricted Stock Units

The restricted stock units granted under the Plans generally have vesting periods between one and four years and are amortized on a straight-line basis over their requisite service period.

The table below summarizes restricted stock unit activity under the Plans for the year ended December 31, 2019:



	Restricted Stock Units			Weighted- Average Grant Date Fair Value (per share)
Unvested at December 31, 2018	$	26,623,432		$	4.47
Granted	28,922,775			3.44
Vested	(13,641,439		)	4.23
Forfeited	(11,364,476		)	4.10
Unvested at December 31, 2019	$	30,540,292		$	3.74

The weighted-average grant date fair value of restricted stock units granted in 2018 and 2017 was $4.59 and $4.10. The fair value of restricted stock units that vested during each of the three years ended December 31, 2019, 2018 and 2017 was $43.8 million, $64.1 million and $67.0 million. As of December 31, 2019, $85.3 million of unrecognized compensation costs related to unvested employee restricted stock units are expected to be recognized over a remaining weighted-average period of 1.61 years.

Performance Share Units

We grant performance share units under the Plans that vest in shares of our common stock upon the achievement of financial and operational targets specified in the respective award agreement ("Performance Share Units"). For the year ended December 31, 2019, we granted performance share units that will vest if our average daily closing stock price is equal to or greater than $6.00 per share over a period of 30 consecutive trading days prior to December 31, 2022 or if a change in control occurs during the performance period at the specified stock price (and on a proportional basis for a change in control price between the grant date price and the specified stock price) ("Market-based Performance Share Units"). We determined these awards are subject to a market condition, and therefore we used a Monte Carlo simulation to calculate the grant date fair value of the awards and the related derived service period over which we will recognize the expense. The key inputs used in the Monte Carlo simulation were the risk-free rate, our volatility of 49.8% and our cost of equity of 12.8%.

All of our performance share awards are subject to both continued employment through the performance period dictated by the award and certification by the Compensation Committee that the specified performance conditions have been achieved.

The table below summarizes Performance Share Unit activity under the Plans for the year ended December 31, 2019:



	Performance Share Units		Weighted-Average Grant Date Fair Value (per unit)		Market-based Performance Share Units		Weighted-Average Grant Date Fair Value (per unit)
Unvested at December 31, 2018	3,431,918		$	4.90	—		$	—
Granted	4,640,467		3.89		8,486,708		3.03
Vested	(777,573	)	4.88		—		—
Forfeited	(3,217,736	)	4.65		(1,666,667	)	3.03
Unvested at December 31, 2019	4,077,076		$	3.99	6,820,041		$	3.03

Maximum shares issuable upon vesting at December 31, 2019	3,898,508				6,820,041

As of December 31, 2019, $5.6 million of unrecognized compensation costs related to unvested performance share units are expected to be recognized over a remaining weighted-average period of 2.26 years and $3.1 million of unrecognized compensation costs related to unvested market-based performance share units are expected to be recognized over a remaining weighted-average period of 0.16 years.

Restricted Stock Awards

We previously granted restricted stock awards in connection with business combinations. Compensation expense on those awards was recognized on a straight-line basis over the requisite service periods of the awards. During the year ended December 31, 2017, 1.2 million restricted shares with a fair value of 5.2 million vested. There were no restricted shares outstanding as of December 31, 2017. No Restricted stock awards were granted, vested or forfeited in the years ended December 31, 2019 and 2018.

Stock Options

The exercise price of stock options granted is equal to the fair value of the underlying stock on the date of grant. The contractual term for stock options expires ten years from the grant date. Stock options generally vested over a three- or four-year period, with 25% of the awards vesting after one year and the remainder of the awards vesting on a monthly or quarterly basis thereafter.

The table below summarizes the stock option activity for the year ended December 31, 2019:



	Options			Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Term (in years)	Aggregate Intrinsic Value (in thousands) ⁽¹⁾
Outstanding and exercisable at December 31, 2018	$	212,787		$	1.80	1.37	$	298
Exercised	(74,875		)	0.96
Forfeited	(3,250		)	1.68
Outstanding and exercisable at December 31, 2019	$	134,662		$	1.95	0.67	$	74

(1)

The aggregate intrinsic value of options outstanding and exercisable represents the total pretax intrinsic value (the difference between the fair value of our stock on the last day of each period and the exercise price, multiplied by the number of options where the fair value exceeds the exercise price) that would have been received by the option holders had all option holders exercised their options as of December 31, 2019 and 2018, respectively.

We did not grant any stock options during the years ended December 31, 2019, 2018 and 2017. The total intrinsic value of options that were exercised during the years ended December 31, 2019, 2018 and 2017 was $0.1 million, $3.2 million and $4.0 million.