Stock Based Awards and Other Equity Instruments (Tables)

3 Months Ended

Mar. 31, 2014

Amount of Stock-Based Compensation Expense Related to Stock-Based Awards, Primarily Stock Options and RSUs

The following table presents the amount of stock-based compensation expense related to stock-based awards, primarily stock options and RSUs, on our consolidated statements of operations during the periods presented:

	Three months ended
	March 31,
	2014			2013
	(in millions)
Selling and marketing	$	3		$	2
Technology and content		6			7
General and administrative		5			5
Total stock-based compensation		14			14
Income tax benefit from stock-based compensation		(5	)		(5	)
Total stock-based compensation, net of tax effect	$	9		$	9

Summary of Status and Activity for Stock Option Awards Relating to Common Stock

A summary of the status and activity for stock option awards relating to our common stock for the three months ended March 31, 2014, is presented below:

				Weighted		Weighted
				Average		Average
				Exercise		Remaining		Aggregate
	Options			Price Per		Contractual		Intrinsic
	Outstanding			Share		Life		Value
	(in thousands)					(in years)		(in millions)
Options outstanding at January 1, 2014		9,470		$	40.18
Granted		477			96.62
Exercised (1)		(599	)		34.63
Cancelled or expired		(78	)		44.98
Options outstanding at March 31, 2014		9,270		$	43.40		5.8	$	440
Exercisable as of March 31, 2014		4,184		$	31.54		3.5	$	247
Vested and expected to vest after March 31, 2014		8,516		$	42.57		5.5	$	411

(1) Inclusive of 309,602 options which were not converted into shares due to net share settlement in order to cover the aggregate exercise price and the minimum amount of required employee withholding taxes. Potential shares that had been convertible under stock options that were withheld under net share settlement remain in the authorized but unissued pool under the 2011 Incentive Plan and can be reissued by the Company. Total payments for the employees’ tax obligations to the taxing authorities due to net share settlements are reflected as a financing activity within the unaudited consolidated statements of cash flows.

Weighted-Average Assumptions of Estimated Fair Value of Stock Option Grants

The fair value of stock option grants under the 2011 Incentive Plan has been estimated at the date of grant using the Black–Scholes option pricing model with the following weighted average assumptions for the periods presented:

	Three months ended
	March 31,
	2014			2013
Risk free interest rate		1.97	%		1.07	%
Expected term (in years)		6.38			6.25
Expected volatility		48.09	%		51.72	%
Expected dividend yield	—  %			—  %

Summary of RSU Activity on Common Stock

The following table presents a summary of RSU activity on our common stock during the three months ended March 31, 2014:

				Weighted
				Average
				Grant-		Aggregate
	RSUs			Date Fair		Intrinsic
	Outstanding			Value Per Share		Value
	(in thousands)					(in millions)
Unvested RSUs outstanding as of January 1, 2014		1,135		$	49.64
Granted		460			96.34
Vested and released (1)		(227	)		43.61
Cancelled		(36	)		61.68
Unvested RSUs outstanding as of March 31, 2014		1,332		$	66.46	$	121

(1) Inclusive of 80,930 RSUs withheld to satisfy employee minimum tax withholding requirements due to net share settlement. Potential shares which had been convertible under RSUs that were withheld under net share settlement remain in the authorized but unissued pool under the 2011 Incentive Plan and can be reissued by the Company. Total payments for the employees’ tax obligations to the taxing authorities due to net share settlements are reflected as a financing activity within the unaudited consolidated statements of cash flows.

Summary of Unrecognized Stock-Based Compensation Expense, Net of Estimated Forfeitures and Weighted Average Period Remaining

A summary of our remaining unrecognized stock-based compensation expense, net of estimated forfeitures, and the weighted average remaining amortization period at March 31, 2014 related to our non-vested stock options and RSU awards is presented below (in millions):

	Stock
	Options		RSUs
Unrecognized compensation expense (net of forfeitures)	$	101	$	58
Weighted average period remaining (in years)		3.2		3.4