(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 and nine months ended September 30, 2017 and 2016:


	Three months ended			Nine months ended
	September 30,			September 30,
	2017		2016	2017	2016
	amounts in millions
Operating costs and expenses:
Operating expense	$	3	—	10	—
Selling and marketing		13	—	39	—
Technology and content		19	—	53	—
General and administrative		(60)	1	(10)	—
	$	(25)	1	92	—

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 and no exercise, forfeiture or cancellation activity for Series B common stock during the nine months ended September 30, 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	(298)	$	18.08
Forfeited/Cancelled	(8)	$	41.89
Outstanding at September 30, 2017	1,011	$	26.21	2.9	years	$	27
Exercisable at September 30, 2017	755	$	21.18	1.9	years	$	24

As of September 30, 2017, the total unrecognized compensation cost related to unvested Awards was approximately $12 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 September 30, 2017, the Company reserved 1.7 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 nine months ended September 30, 2017, Expedia granted approximately 3 million stock options and 1 million RSUs. The fair value of the stock options granted was estimated at the date of grant using appropriate valuation techniques, including the Black-Scholes and Monte Carlo option-pricing models. As of September 30, 2017, Expedia had stock-based awards outstanding representing approximately 19 million shares of its common stock, consisting of options to purchase approximately 16 million shares of its common stock with a weighted average exercise price of $93.89 and weighted average remaining life of 4.6 years and approximately 2 million RSUs.

During the third quarter of 2017, as a result of the recent departure of Expedia’s former CEO and the related forfeiture of certain of his stock-based awards, the Company reversed $88 million of previously recognized stock-based compensation within general and administrative expense.

The stock-based compensation recognized by Expedia Holdings related to Expedia stock options and restricted stock awards was a benefit of $25 million and expense of $95 million for the three and nine months ended September 30, 2017, respectively.