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Share-based Compensation | 12 Months Ended
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Dec. 31, 2023
Share-Based Payment Arrangement [Abstract] |
Share-based Compensation | (11) Share-based Compensation Stock Incentive Plans On May 24, 2023, the Company’s stockholders approved the Company’s 2023 Equity Plan, which became effective as of such date. No awards may be granted under the 2023 Equity Plan more than 10 years after the 2023 Equity Plan’s effective date. No new awards will be granted under the Company’s 2013 Equity Plan, though awards previously granted under the 2013 Equity Plan remain outstanding in accordance with their terms. Under the Stock Incentive Plans, the Company’s employees, officers, directors, and other eligible participants may be (with respect to the 2023 Equity Plan) and have been (with respect to both the 2023 Equity Plan and the 2013 Equity Plan) awarded various types of share-based compensation, including options to purchase shares of the Company’s class A common stock, restricted stock units, and other stock-based awards. Additionally, under the 2023 Equity Plan, awards may be and have been granted that are subject to the achievement of one or more performance measures established by the Company’s Board of Directors or a duly authorized committee thereof. Any shares issued under the Stock Incentive Plans may consist in whole or in part of authorized but unissued shares or treasury shares. An aggregate of up to 1,932,703 shares of the Company’s class A common stock were initially authorized for issuance under the 2023 Equity Plan, comprised of (i) 200,000 shares of the Company’s class A common stock authorized under the 2023 Equity Plan and (ii) up to an aggregate of 1,732,703 shares of the Company’s class A common stock consisting of: (a) the shares of class A common stock reserved for issuance under the 2013 Equity Plan that remained available for grant as of May 23, 2023, and (b) shares of class A common stock subject to awards granted under the 2013 Equity Plan that were outstanding as of May 23, 2023 and which subsequently expire, terminate or are otherwise surrendered, cancelled or forfeited or repurchased by the Company at their original issuance price pursuant to a contractual repurchase right, including shares subject to awards granted under the 2013 Equity Plan that are delivered (either by actual delivery, attestation or net exercise) to the Company by a participant to (x) purchase shares upon the exercise of such award or (y) satisfy tax withholding obligations with respect to such awards, including shares retained from the award creating the tax obligation, subject, in the case of incentive stock options, to any limitations under the Internal Revenue Code of 1986, as amended. As of December 31, 2023, there were 238,593 shares of class A common stock reserved and available for future issuance under the 2023 Equity Plan. In determining related share-based compensation expense for any award under the Stock Incentive Plans, the Company has made an accounting policy election to account for forfeitures of awards as they occur and therefore share-based compensation expense presented below has not been adjusted for any estimated forfeitures. Stock option awards Stock options granted under the Stock Incentive Plans must have an exercise price equal to at least the fair market value of the Company’s class A common stock on the date of grant, become exercisable as established by the Board of Directors or the Compensation Committee, and expire no later than 10 years following the date of grant. The Company recognizes share-based compensation expense associated with such stock option awards on a straight-line basis over the award’s requisite service period (generally, the vesting period). With the exception of stock option awards to non-employee members of the Company’s Board of Directors under the 2023 Equity Plan, which vest in full after one year, the stock option awards granted to date vest in equal annual installments over an approximately four-year vesting period (unless accelerated in connection with a change in control event under specified conditions as set forth in the applicable option agreement or otherwise in accordance with provisions of the Stock Incentive Plans). Share-based compensation expense related to stock option awards is based on the fair value of the stock option awards on the date of grant, as estimated using the Black-Scholes valuation model. The Black-Scholes valuation model requires the input of certain management assumptions, including the expected term, expected stock price volatility, risk-free interest rate, and expected dividend yield. The Company estimates the term over which option holders are expected to hold their stock options by using the simplified method for “plain-vanilla” stock option awards because the Company’s stock option exercise history does not provide a reasonable basis to compute the expected term for stock options granted under the Stock Incentive Plans. During 2021, 2022 and 2023, as a result of the significant increase in the Company’s stock price volatility, the Company established estimates for the expected stock price volatility by calculating a blended rate from the historical stock price volatility of its class A common stock and the implied volatility of the Company’s traded financial instruments with similar terms to the respective award. For stock options granted prior to 2021, the Company relied exclusively on its historical stock price volatility using a simple average calculation method to estimate the expected stock price volatility over the expected term because the Company believed at the date of grant that future volatility was unlikely to differ from the past. The risk-free interest rate is based on U.S. Treasury securities with terms that approximate the expected term of the stock options. The expected dividend yield is zero, as the Company has not previously declared cash dividends and does not currently intend to declare cash dividends in the foreseeable future. These assumptions are based on management’s best judgment, and changes to these assumptions could materially affect the fair value estimates and amount of share-based compensation expense recognized. As of December 31, 2023, there were options to purchas e 1,293,627 s hares of class A common stock outstanding under the Stock Incentive Plans. The following table summarizes the Company’s stock option activity (in thousands, except per share data and years) for the periods indicated:
|  | Stock Options Outstanding |
|  |  |  |  | Weighted Average |  |  | Aggregate |  |  | Weighted Average |
|  |  |  |  | Exercise Price |  |  | Intrinsic |  |  | Remaining Contractual |
|  | Shares |  |  | Per Share |  |  | Value |  |  | Term (Years) |
Balance as of January 1, 2021 |  |  | 1,157 |  |  | $ | 139.48 |  |  |  |  |  |  |
Granted |  |  | 305 |  |  |  | 676.10 |  |  |  |  |  |  |
Exercised |  |  | (269 | ) |  |  | 151.19 |  |  | $ | 163,427 |  |  |  |
Forfeited/Expired |  |  | (26 | ) |  |  | 499.11 |  |  |  |  |  |  |
Balance as of December 31, 2021 |  |  | 1,167 |  |  |  | 268.74 |  |  |  |  |  |  |
Granted |  |  | 440 |  |  |  | 346.15 |  |  |  |  |  |  |
Exercised |  |  | (9 | ) |  |  | 137.51 |  |  | $ | 1,469 |  |  |  |
Forfeited/Expired |  |  | (21 | ) |  |  | 498.69 |  |  |  |  |  |  |
Balance as of December 31, 2022 |  |  | 1,577 |  |  |  | 288.30 |  |  |  |  |  |  |
Granted |  |  | 37 |  |  |  | 290.11 |  |  |  |  |  |  |
Exercised |  |  | (175 | ) |  |  | 173.83 |  |  | $ | 36,636 |  |  |  |
Forfeited/Expired |  |  | (145 | ) |  |  | 441.50 |  |  |  |  |  |  |
Balance as of December 31, 2023 |  |  | 1,294 |  |  | $ | 286.78 |  |  |  |  |  |  |
Exercisable as of December 31, 2023 |  |  | 859 |  |  | $ | 221.95 |  |  | $ | 357,749 |  |  |  | 3.4 |
Expected to vest as of December 31, 2023 |  |  | 435 |  |  | $ | 414.59 |  |  |  | 100,600 |  |  |  | 8.0 |
Total |  |  | 1,294 |  |  | $ | 286.78 |  |  | $ | 458,349 |  |  |  | 5.0 |
Stock options outstanding as of December 31, 2023 are comprised of the following range of exercise prices per share (in thousands, except per share data and years):
|  | Stock Options Outstanding at December 31, 2023 |
|  |  |  |  | Weighted Average |  |  | Weighted Average |
|  |  |  |  | Exercise Price |  |  | Remaining Contractual |
Range of Exercise Prices per Share |  | Shares |  |  | Per Share |  |  | Term (Years) |
$121.43 - $200.00 |  |  | 727 |  |  | $ | 135.79 |  |  |  | 2.7 |
$200.01 - $300.00 |  |  | 111 |  |  | $ | 251.58 |  |  |  | 8.9 |
$300.01 - $400.00 |  |  | 3 |  |  | $ | 301.63 |  |  |  | 9.4 |
$400.01 - $500.00 |  |  | 247 |  |  | $ | 410.26 |  |  |  | 8.1 |
$600.01 - $691.23 |  |  | 206 |  |  | $ | 691.23 |  |  |  | 7.1 |
Total |  |  | 1,294 |  |  | $ | 286.78 |  |  |  | 5.0 |
An aggregate of 260,625, 245,500, and 200,625 stock options with an aggregate grant date fair value of $51.6 million, $35.8 million, and $11.0 million vested during the years ended December 31, 2023, 2022, and 2021, respectively. The weighted average grant date fair value of stock option awards using the Black-Scholes valuation mod el was $194.94, $201.64, and $372.05 for each share subject to a stock option granted during the years ended December 31, 2023, 2022, and 2021, respectively, based on the following assumptions:
|  | Years Ended December 31,
|  | 2023 |  | 2022 |  | 2021
Expected term of options in years |  | 5.5 - 6.3 |  | 6.3 |  | 6.3
Expected volatility |  | 70.6% - 74.1% |  | 58.4% - 75.5% |  | 56.8% - 59.0%
Risk-free interest rate |  | 3.7% - 4.4% |  | 1.9% - 3.9% |  | 0.8% - 1.1%
Expected dividend yield |  | 0.0% |  | 0.0% |  | 0.0%
The Company recognized approximately $44.8 million, $48.3 million, and $32.0 million in share-based compensation expense for the years ended December 31, 2023, 2022, and 2021, respectively, from stock options granted under the Stock Incentive Plans. As of December 31, 2023, there was approximately $70.8 million of total unrecognized share-based compensation expense related to unvested stock options, which the Company expects to recognize over a weighted average vesting period of approximatel y 2.0 years. Share-settled restricted stock units Share-settled restricted stock units granted under the Stock Incentive Plans entitle recipients to receive a number of shares of the Company’s class A common stock over a vesting period, as specified in the applicable restricted stock unit agreement. Although the Company may in its sole discretion elect to pay fully or partially in cash in lieu of settling solely in shares, it does not currently intend to do so. Share-based compensation expense related to share-settled restricted stock units is based on the fair value of the Company’s class A common stock on the date of grant. The Company recognizes share-based compensation expense associated with such share-settled restricted stock unit awards on a straight-line basis over the award’s requisite service period (generally, the vesting period). With the exception of share-settled restricted stock unit awards to non-employee members of the Company’s Board of Directors, which vest in full after one year, the share-settled restricted stock unit awards granted to date vest in equal annual installments over a four-year period (unless accelerated in connection with a change in control event under specified conditions as set forth in the applicable restricted stock unit agreement or otherwise in accordance with provisions of the Stock Incentive Plan or applicable restricted stock unit agreement). Upon vesting of the share-settled restricted stock units, the Company covers the minimum tax withholding obligation in most jurisdictions by withholding shares with equivalent value based on the closing stock price on the vesting date. For these jurisdictions, the Company then pays the withholding tax obligation to the appropriate taxing authorities which is reflected as a financing activity on the Consolidated Statements of Cash Flows. As of December 31, 2023, there we re 185,153 share-settled restricted stock units outstanding under the Stock Incentive Plans. The following table summarizes the Company’s share-settled restricted stock unit activity (in thousands) for the periods indicated:
|  | Share-Settled Restricted Stock Units Outstanding |
|  |  |  |  | Aggregate |
|  | Units |  |  | Intrinsic Value |
Balance as of January 1, 2021 |  |  | 74 |  |  |  |
Granted |  |  | 58 |  |  |  |
Vested |  |  | (17 | ) |  | $ | 13,803 |
Forfeited |  |  | (10 | ) |  |  |
Balance as of December 31, 2021 |  |  | 105 |  |  |  |
Granted |  |  | 60 |  |  |  |
Vested |  |  | (28 | ) |  | $ | 6,604 |
Forfeited |  |  | (17 | ) |  |  |
Balance as of December 31, 2022 |  |  | 120 |  |  |  |
Granted |  |  | 123 |  |  |  |
Vested |  |  | (37 | ) |  | $ | 14,817 |
Forfeited |  |  | (21 | ) |  |  |
Balance as of December 31, 2023 |  |  | 185 |  |  |  |
Expected to vest as of December 31, 2023 |  |  | 185 |  |  | $ | 116,946 |
During the year ended December 31, 2023, 36,502 share-settled restricted stock units having an aggregate grant date fair value of $13.5 million vested, and 10,440 shares were withheld to satisfy tax obligations, resulting in 26,062 issued shares. During the year ended December 31, 2022, 28,180 share-settled restricted stock units having an aggregate grant date fair value of $12.3 million vested, and 9,467 shares were withheld to satisfy tax obligations, resulting in 18,713 issued shares. During the year ended December 31, 2021, 17,004 share-settled restricted stock units having an aggregate grant date fair value of $3.3 million vested, and 5,857 shares were withheld to satisfy tax obligations, resulting in 11,147 issued shares. The weighted average grant date fair value of share-settled restricted stock units granted during the years ended December 31, 2023, 2022, and 2021 was $292.83, $246.17 and $736.46, respectively, based on the fair value of the Company’s class A common stock. The Company recognized approximately $17.4 million, $13.4 million, and $8.0 million in share-based compensation expense for the years ended December 31, 2023, 2022, and 2021, respectively, from share-settled restricted stock units granted under the Stock Incentive Plans. As of December 31, 2023, there was approximately $49.4 million of total unrecognized share-based compensation expense related to unvested share-settled restricted stock units, which the Company expects to recognize over a weighted average vesting period of approximatel y 2.8 years. Share-settled performance stock units During the second quarter of 2023, the Company granted performance stock units under the 2023 Equity Plan. Performance stock units entitle recipients to receive a number of shares of the Company’s class A common stock at a specified date in the future based on achievement of one or more performance measures, as specified in the applicable performance stock unit agreement. Although the Company may in its sole discretion elect to pay fully or partially in cash in lieu of settling solely in shares, it does not currently intend to do so. The vesting of each performance stock unit granted is subject to the Company’s achievement of a relative total shareholder return (“TSR”) performance goal over a three-year performance period with the number of performance stock units granted representing the number of performance stock units that would vest based on target performance. As more fully specified in the applicable grant agreements, the number of performance stock units that will vest will be based on the percentile ranking of the Company’s TSR over the three-year performance period as compared to the TSR of the members of the Nasdaq Composite Index over the same period (the “TSR Goal”), with the payout factor ranging from 0% to 200% of the number of performance stock units granted. The performance stock units, to the extent vested, will vest on the date the Compensation Committee of the Company’s Board of Directors certifies the level of achievement of the TSR Goal. Vesting of the performance stock units is also generally subject to the provision of service through the vesting date of the award (unless accelerated in connection with a termination following a change in control event as set forth in the applicable performance stock unit agreement or otherwise in accordance with provisions of the 2023 Equity Plan or applicable performance stock unit agreement). The TSR Goal is considered a “market condition” under ASC 718, Compensation—Stock Compensation. The Company uses a Monte Carlo simulation model to determine the grant date fair value of performance awards with a market condition. The Monte Carlo simulation takes into consideration the assumptions noted below, in addition to the probability that the market condition will be achieved based on predicted stock price paths compared to peer companies in the Nasdaq Composite Index. The Company did not grant any performance awards prior to 2023. The weighted average grant date fair value of performance stock units using the Monte-Carlo simulation model was $486.18 for each performance stock unit granted during the year ended December 31, 2023 based on the following assumptions:
|  | Year ending December 31, |
|  | 2023 |
Expected term of awards in years |  |  | 3.0 |
Expected volatility |  |  | 95.6 | %
Risk-free interest rate |  |  | 4.1 | %
Expected dividend yield |  |  | 0.0 | %
Since the Company accounts for forfeitures as they occur, as long as the performance stock unit recipient provides service to the Company during the requisite service period, share-based compensation expense associated with the grant date fair value of the performance stock units is recognized ratably over the performance period, regardless of the Company’s actual level of achievement against the TSR Goal. As of December 31, 2023, there were 25,375 performance stock units outstanding under the 2023 Equity Plan. The following table summarizes the Company’s performance stock unit activity (in thousands) for the period indicated:
|  | Share-Settled Performance Stock Units Outstanding |
|  |  |  |  | Aggregate |
|  | Units |  |  | Intrinsic Value |
Balance as of January 1, 2023 |  |  | 0 |  |  |  |
Granted |  |  | 27 |  |  |  |
Vested |  |  | 0 |  |  | $ | 0 |
Forfeited |  |  | (2 | ) |  |  |
Balance as of December 31, 2023 |  |  | 25 |  |  |  |
Expected to vest as of December 31, 2023 |  |  | 25 |  |  | $ | 32,055 |
No performance stock units vested during the year ended December 31, 2023. For the year ended December 31, 2023, the Company recognized approximately $2.3 million in share-based compensation expense from performance stock units granted under the 2023 Equity Plan. As of December 31, 2023, there was approximately $10.0 million of total unrecognized share-based compensation expense related to unvested performance stock units, which the Company expects to recognize over a weighted average vesting period of approximately 2.5 years. Other stock-based awards and cash-settled restricted stock units During 2021, the Company granted 9,000 “other stock-based awards” under the 2013 Equity Plan. Other stock-based awards were no t granted in 2023 or 2022. As of December 31, 2023, there were a total of 10,250 other stock-based awards outstanding under the 2013 Equity Plan. These other stock-based awards are similar to stock options, except these awards are settled in cash only and not in shares of the Company’s class A common stock. During 2021, the Company granted 900 cash-settled restricted stock units under the 2013 Equity Plan. Cash-settled restricted stock units were no t granted in 2023 or 2022. As of December 31, 2023, there were a total o f 250 cash-settled restricted stock units outstanding under the 2013 Equity Plan. These cash-settled restricted stock units are similar to the Company’s share-settled restricted stock units, except they are settled in cash only and not in shares of the Company’s class A common stock. Both the other stock-based awards and the cash-settled restricted stock units are classified as liabilities in the Company’s Consolidated Balance Sheets due to the required cash settlement feature and the fair value of the awards is remeasured each quarterly reporting period. The Company recognized approximately $3.2 million and $1.4 million, respectively, in share-based compensation expense from other stock-based awards and cash-settled restricted stock units for the years ended December 31, 2023 and 2021. During the year ended December 31, 2022, the Company recognized a reduction of approximately $0.5 million in share-based compensation expense from other stock-based awards and cash-settled restricted stock units. As of December 31, 2023, there was approximately $1.2 million of total unrecognized share-based compensation expense related to other stock-based awards and cash-settled restricted stock units, which the Company expects to recognize over a weighted average vesting period of approximately 1.1 years, subject to additional fair value adjustments through the earlier of settlement or expiration. 2021 ESPP In 2021, the Company adopted, and the Company’s stockholders approved, the 2021 ESPP. The purpose of the 2021 ESPP is to provide eligible employees of the Company and certain of its subsidiaries with opportunities to purchase shares of the Company’s class A common stock, commencing at such time and on such dates as the Board of Directors of the Company shall determine. The first offering period under the 2021 ESPP commenced on February 16, 2021 and ended on August 15, 2021. After this first offering period, the Board of Directors of the Company determined to provide subsequent 6-month offering periods commencing on each March 1 and September 1 for the remaining term of the 2021 ESPP. An aggregate of 100,000 shares of the Company’s class A common stock has been authorized for issuance under the 2021 ESPP. During the years ended December 31, 2023, 2022, and 2021, 19,856 shares,15,925 shares, and 4,612 shares, respectively, of class A common stock were issued in connection with the 2021 ESPP. As of December 31, 2023, 59,607 shares of the Company’s class A common stock remained available for issuance under the 2021 ESPP. Unless otherwise determined by the Board of Directors, shares are purchased at a price equal to 85% of the lesser of the closing price of the Company’s class A common stock on the first or last business day of the offering period, respectively. Share-based compensation expense is based on the grant date fair value, which consists of the intrinsic value of the 15% discounted share purchase rights and the fair value of the look-back provision using the Black-Scholes valuation model, recognized on a straight-line basis over the offering period. The grant date is the offering period commencement date. During the years ended December 31, 2023, 2022, and 2021, the Company recognized approximately $1.9 million, $2.4 million and $2.6 million, respectively, in share-based compensation expense related to the 2021 ESPP. As of December 31, 2023, there was approximately $0.3 million of total unrecognized share-based compensation expense related to the 2021 ESPP, which the Company expects to recognize over a period of approximately 0.2 years. Tax Benefits Related to Equity Plans The following table summarizes the tax (benefit) expense related to the Company’s equity plans (in thousands) for the periods indicated:
|  | Years Ended December 31, |
|  | 2023 |  |  | 2022 |  |  | 2021 |
Tax (benefit) expense related to: |  |  |  |  |  |  |  |  |
Share-based compensation expense |  | $ | (12,874 | ) |  | $ | (12,155 | ) |  | $ | (8,260 | )
Exercises of stock options and vesting of share-settled restricted stock units |  |  | (3,367 | ) |  |  | 1,370 |  |  |  | (37,664 | )
Total tax benefit related to the Company's equity plans |  | $ | (16,241 | ) |  | $ | (10,785 | ) |  | $ | (45,924 | )

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