Option Grant and Exercise Terms
Table of Contents
Stock-Based Compensation
Stock options granted are exercisable for the full ten year contractual term regardless of employment status. The following table summarizes the
assumptions used to value option grants using the lattice-binomial model and the valuation data:
Dividend yield
Expected volatility
Risk-free interest rate
Suboptimal exercise factor
Valuation data:
Weighted-average fair value (per share)
Total stock-based compensation expense (in thousands)
Total income tax impact on provision (in thousands)
2021
Year Ended December 31,
2020
2019
%
%
%
34% -41%
1.08% - 1.62%
3.81 -3.98
37% -45%
0.67% 1.71%
3.34 3.67
37% -41%
1.74% -2.74%
3.07-3.23
$
259.01
$
403,220
89,642
217.42
415,180
$
156.60
405,376
91,718
90,856
The Company considers several factors in determining the suboptimal exercise factor, including the historical and estimated option exercise behavior.
The Company calculates expected volatility based solely on implied volatility. The Company believes that implied volatility of publicly traded options in
its common stock is more reflective of market conditions, and given consistently high trade volumes of the options, can reasonably be expected to be a better
indicator of expected volatility than historical volatility of its common stock.
In valuing shares issued under the Company's employee stock option plans, the Company bases the risk-free interest rate on U.S. Treasury zero-coupon
issues with terms similar to the contractual term of the options. The Company does not anticipate paying any cash dividends in the foreseeable future and
therefore uses an expected dividend yield of zero in the option valuation model. The Company does not use a post-vesting termination rate as options are fully
vested upon grant date.
Stock Repurchases
In March 2021, the Company's Board of Directors authorized the repurchase of up to $5 billion of its common stock, with no expiration date. Stock
repurchases may be effected through open market repurchases in compliance with Rule 10b-18 under the Exchange Act, including through the use of trading
plans intended to qualify under Rule 10b5-1 under the Exchange Act, privately-negotiated transactions, accelerated stock repurchase plans, block purchases, or
other similar purchase techniques and in such amounts as management deems appropriate. The Company is not obligated to repurchase any specific number of
shares, and the timing and actual number of shares repurchased will depend on a variety of factors, including the Company's stock price, general economic,
business and market conditions, and alternative investment opportunities. The Company may discontinue any repurchases of its common stock at any time
without prior notice. During the twelve months ended December 31, 2021, the Company repurchased 1,182,410 shares, for an aggregate amount of
$600 million. As of December 31, 2021, $4.4 billion remain available for repurchases. Shares repurchased by the Company are accounted for when the
transaction is settled. As of December 31, 2021, there were no unsettled share repurchases. Direct costs incurred to acquire the shares are included in the total
cost of the shares.
10.
Income Taxes
Income before provision for income taxes was as follows:
United States
Foreign
Income before income taxes
57
2021
Year Ended December 31,
2020
2019
(in thousands)
$
$
5,365,547 $
474,556
5,840,103 $
2,789,064
410,285
3,199,349
$
$
1,719,326
342,905
2,062,231View entire presentation