(7) Stock-Based Compensation

Included in the accompanying condensed consolidated statements of operations are the following amounts of stock-based compensation, a portion of which relates to Expedia for the three months ended March 31, 2017 and 2016:


	Three months ended
	March 31,
	2017		2016
	amounts in millions
Operating costs and expenses:
Operating expense	$	5	—
Selling and marketing		18	—
Technology and content		22	—
General and administrative		32	(1)
	$	77	(1)

Expedia Holdings Incentive Plan

The Company has granted to certain of its directors and employees RSUs and options to purchase shares of Expedia Holdings common stock (“Awards”). The Company measures the cost of employee services received in exchange for an equity classified Award based on the grant-date fair value (“GDFV”) of the Award, and recognizes that cost over the period during which the employee is required to provide service (usually the vesting period of the Award).

The Company has calculated the GDFV for all of its equity classified Awards using the Black-Scholes-Merton Model. The Company estimates the expected term of the Awards based on historical exercise and forfeiture data. Since Expedia Holdings common stock has not traded on the stock market for a significant length of time, the volatility used in the calculation for Awards is based on the historical volatility of Liberty Ventures common stock and the implied volatility of publicly traded Liberty Ventures options. The Company uses a zero dividend rate and the risk-free rate for Treasury Bonds with a term similar to that of the subject options.

There were no options to purchase shares of Series A or Series B common stock granted during the three months ended March 31, 2017.

Expedia Holdings – Outstanding Awards

The following table presents the number and weighted average exercise price (“WAEP”) of Awards to purchase Expedia Holdings common stock granted to certain officers, employees and directors of the Company, as well as the weighted average remaining life and aggregate intrinsic value of the Awards.


				Weighted
				average		Aggregate
				remaining		intrinsic
	Series A	WAEP		contractual life		value
	(in thousands)					(in millions)
Outstanding at January 1, 2017	1,317	$	24.46
Granted	—	$	—
Exercised	(210)	$	18.44
Forfeited/Cancelled	(7)	$	40.51
Outstanding at March 31, 2017	1,100	$	25.51	3.3	years	$	22
Exercisable at March 31, 2017	839	$	20.74	2.5	years	$	21


				Weighted
				average		Aggregate
				remaining		intrinsic
	Series B	WAEP		contractual life		value
	(in thousands)					(in millions)
Outstanding at January 1, 2017	659	$	38.48
Granted	—	$	—
Exercised	—	$	—
Forfeited/Cancelled	—	$	—
Outstanding at March 31, 2017	659	$	38.48	4.9	years	$	2
Exercisable at March 31, 2017	123	$	40.46	5.7	years	$	—

As of March 31, 2017, the total unrecognized compensation cost related to unvested Awards was approximately $49 thousand. Such amount will be recognized in the Company's consolidated statements of operations over a weighted average period of approximately one year.

As of March 31, 2017, the Company reserved 1.8 million shares of Series A and Series B common stock for issuance under exercise privileges of outstanding stock Awards.

Expedia - Stock-based Compensation

Pursuant to the Amended and Restated Expedia, Inc. 2005 Stock and Annual Incentive Plan, Expedia may grant restricted stock, restricted stock awards, RSUs, stock options and other stock-based awards to its directors, officers, employees and consultants. Expedia issues new shares to satisfy the exercise or release of stock-based awards.

Expedia’s annual employee stock-based award grants typically occur during the first quarter of each year and generally vest over four years. In 2017, Expedia introduced an equity choice program for annual awards that allows for the choice of stock options or RSUs, with certain limitations. During the three months ended March 31, 2017, Expedia granted approximately 3 million stock options and 1 million RSUs. The fair value of the stock options granted during the three months ended March 31, 2017 was estimated at the date of grant using appropriate valuation techniques, including the Black-Scholes and Monte Carlo option-pricing models.

As of March 31, 2017, Expedia had stock-based awards outstanding representing approximately 23 million shares of its common stock outstanding, consisting of options to purchase approximately 20 million shares of Expedia’s common stock with a weighted average exercise price of $90.01 and a weighted average remaining life of approximately 4.9 years and approximately 2 million RSUs.

The stock-based compensation recognized by Expedia Holdings related to Expedia stock options and restricted stock awards was $78 million for the three months ended March 31, 2017.

Vitalize Stock Appreciation Rights

There were no stock appreciation rights ("SARs") granted during the three months ended March 31, 2017 under Vitalize’s stock appreciation rights plan. As of March 31, 2017, the total unrecognized compensation cost related to 416 thousand unvested Vitalize SARs was approximately $2 million and will be recognized over a weighted average period of approximately 1.7 years. Accrued stock compensation was approximately $2 million at March 31, 2017.

Included in General and administrative expenses in the accompanying condensed consolidated statements of operations is a benefit from stock-based compensation of approximately $1 million for each of the three months ended March 31, 2017 and 2016, which relates to Vitalize. The benefit recognized during the three months ended March 31, 2017 and 2016 was primarily due to forfeitures and changes in the per unit valuation of outstanding stock appreciation rights.