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Stockholders’ Equity (Deficit) | 12 Months Ended
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Dec. 31, 2021
Share-based Payment Arrangement [Abstract] |
Stockholders' Equity (Deficit) | Stockholders’ Equity (Deficit) Common Stock The Company’s Restated Certificate of Incorporation authorizes the Company to issue 2,000,000,000 shares of Class A common stock and 710,000,000 shares of Class B common stock. Both classes of common stock have a par value of $0.0001 per share. Class A common stock is entitled to one vote per share and Class B common stock is entitled to 20 votes per share. A share of Class B common stock is convertible into a share of Class A common stock voluntarily at any time by the holder, and will convert automatically into a share of Class A common stock upon the earlier of (a) the date and time, or the occurrence of an event, specified by vote or written consent of the holders of at least 80% of the outstanding shares of Class B common stock at the time of such vote or consent, voting as a separate series, and (b) the 20-year anniversary of the closing of the IPO. In addition, with certain exceptions as further described in the Company's Restated Certificate of Incorporation, transfers of Class B common stock will result in the conversion of such share of Class B common stock into a share of Class A common stock. Under the Company’s Restated Certificate of Incorporation, the Company was also authorized to issue 2,000,000,000 shares of Class C common stock and 26,000,000 shares of Class H common stock. Each share of Class C common stock is entitled to no votes and will not be convertible into any other shares of the Company’s capital stock. Each share of Class H common stock is entitled to no votes and will convert into a share of Class A common stock on a share-for-share basis upon the sale of such share of Class H common stock to any person or entity that is not the Company’s subsidiary. Class A Common Stock Warrants As described above in Note 10, Debt, in connection with the Second Lien Loan entered into in April 2020, the Company issued warrants to purchase 7,934,794 shares of Class A common stock with an initial exercise price of $28.355 per share, subject to adjustment upon the occurrence of certain specified events, to the Second Lien Loan lenders. Class B Common Stock Warrants In connection with the closing of the Series E redeemable convertible preferred stock financing in 2015, the Company issued warrants exercisable for up to 429,672 shares of Class B common stock. The amount exercisable was based on specific financial milestones achieved during 2018 and 2019. Due to the nature of the terms of the warrants, the warrants qualified as a liability-classified derivative. The warrants were valued as of the issuance date using a Monte Carlo simulation model with varying assumptions including booking projections and probability of achievement. The warrants were marked to market at each reporting period with changes in fair value recorded in sales and marketing expense, given that the warrants are dependent on selling related activities. For the year ended December 31, 2019, the change in the fair value of the warrant liability was not material. Based on the milestones achieved, as of December 31, 2019, the warrants were exercisable for 237,756 shares of Class B common stock and on December 31, 2019, the fair value of the derivative warrant liability of $14.1 million was reclassified from liability to equity as it met the requirements for permanent equity classification. During the year ended December 31, 2020, the warrants were exercised by the respective holders. In addition, in connection with the execution of a prior loan agreement, the Company issued a warrant for 150,000 shares of Class B common stock, exercisable any time through June 2019. In June 2019, the warrant was net exercised for a total of 144,986 shares of Class B common stock. Equity Incentive Plans 2018 Equity Incentive Plan In 2018, the Company adopted the 2018 Equity Incentive Plan (the “2018 Plan”) to replace the 2008 Equity Incentive Plan (the “2008 Plan”). A total of 50.0 million shares of Class B common stock were reserved for issuance under the 2018 Plan and the 13.2 million shares remaining for issuance under the 2008 Plan were added to the number of shares available under the 2018 Plan. The expiration of the 2008 Plan had no impact on the terms of outstanding awards under that plan. All unvested equity canceled under the 2008 Plan were added to the 2018 Plan and made available for future issuance. Assumed Equity Incentive Plan In connection with the acquisition of HotelTonight, the Company assumed stock options and RSUs under HotelTonight’s equity incentive plan (the “Assumed Equity Incentive Plan”). As of December 31, 2020 and 2021, a total of 150,816 and 98,093 shares of the Company’s Class A common stock, respectively, were issuable upon exercise of outstanding options under this assumed plan. The weighted-average exercise price of these outstanding stock options was $22.61 per share and $22.67 per share as of December 31, 2020 and 2021. In addition, as of December 31, 2020 and 2021, a total of 12,550 and 3,512 RSUs, respectively, were issued and outstanding under this assumed plan. No additional stock options or RSUs may be granted under the Assumed Equity Incentive Plan. 2020 Incentive Award Plan In 2020, the Company adopted the 2020 Incentive Award Plan (the “2020 Plan,” and together with the 2008 Plan, 2018 Plan, and the Assumed Equity Incentive Plan, the “Plans”). Under the 2020 Plan, 62,069,613 shares of Class A common stock were initially reserved for issuance. The number of shares initially reserved for issuance pursuant to awards under the 2020 Plan will be increased by (i) the number of shares subject to awards outstanding under the 2008 Plan, Assumed Equity Incentive Plan, and 2018 Plan as of the effective date of the 2020 Plan that subsequently terminate, are exchanged for cash, surrendered or repurchased, or are tendered or withheld to satisfy any exercise price or tax withholding obligations and (ii) an annual increase on the first day of each year beginning in 2022 and ending in 2030, equal to the lesser of (A) 5% of the shares of all series of the Company’s common stock outstanding on the last day of the immediately preceding year and (B) such smaller number of shares of stock as determined by the Company’s board of directors; provided, however, that no more than 371,212,920 shares of stock may be issued upon the exercise of incentive stock options. Stock Option and Restricted Stock Unit Activity The fair value of each stock option award is estimated on the date of grant using the Black-Scholes option-pricing model using the range of assumptions in the following table:
| Year Ended December 31,
| 2019 | 2020 | 2021
Expected dividend yield | — |  | — |  | — |
Volatility | 41.8% - 44.3% | 39.1% - 43.6% | 44.2% - 44.9%
Expected term (years) | 5.0 - 8.0 | 5.1 - 8.0 | 8.0
Risk-free interest rate | 1.5% - 2.5% | 0.5% - 1.5% | 1.1% - 1.5%
A summary of option and RSU activity under the Plans was as follows (in thousands, except per share amounts):
|  |  | Outstanding Stock Options |  | Outstanding Restricted Stock Units
| Shares Available for Grant |  | Number of Shares | Weighted- Average Exercise Price |  | Number of Shares | Weighted- Average Grant Date Fair Value
Balances as of December 31, 2019 | 25,344 |  |  | 46,512 |  | $ | 10.08 |  |  | 76,136 |  | $ | 45.69 |
Granted(1) | (45,368) |  |  | 4,638 |  | 39.38 |  |  | 40,730 |  | 30.13 |
Increase in shares available for grant(2) | 66,942 |  |  | — |  | — |  |  | — |  | — |
Shares withheld for taxes | 24,296 |  |  | — |  | — |  |  | — |  | — |
Exercised/Vested | — |  |  | (7,496) |  | 2.01 |  |  | (56,070) |  | 37.79 |
Canceled(3) | 15,206 |  |  | (2,233) |  | 53.32 |  |  | (13,042) |  | 51.86 |
Balances as of December 31, 2020 | 86,420 |  |  | 41,421 |  | 12.48 |  |  | 47,754 |  | 40.01 |
Granted(1) | (9,591) |  |  | 715 |  | 191.08 |  |  | 8,876 |  | 181.15 |
Shares withheld for taxes | 464 |  |  | — |  | — |  |  | (464) |  | 66.99 |
Exercised/Vested | — |  |  | (17,707) |  | 7.77 |  |  | (15,612) |  | 57.05 |
Canceled(3) | 4,072 |  |  | (307) |  | 56.69 |  |  | (3,765) |  | 64.32 |
Balances as of December 31, 2021 | 81,365 |  |  | 24,122 |  | 19.69 |  |  | 36,789 |  | 61.22 |
(1) There were no options or RSUs that were granted from the Assumed Equity Incentive Plan for the years ended December 31, 2020 and 2021. (2) Includes 62,069,613 shares of the Company’s Class A common stock initially reserved for issuance under the 2020 Incentive Award Plan. (3) The outstanding options and RSUs include cancellations of 55,158 and 2,158 options and 14,178 and 530 RSUs in 2020 and 2021, respectively, from the Assumed Equity Incentive Plan that are no longer available for future grants.
| Number of Shares (in thousands) | Weighted- Average Exercise Price | Weighted- Average Remaining Contractual Life (years) | Aggregate Intrinsic Value
Options outstanding as of December 31, 2020 | 41,421 |  | $ | 12.48 |  | 3.91 | $ | 5,563,735 |
Options exercisable as of December 31, 2020 | 36,682 |  | 8.63 |  | 3.21 | 5,068,315 |
Options outstanding as of December 31, 2021 | 24,122 |  | 19.69 |  | 3.66 | 3,555,384 |
Options exercisable as of December 31, 2021 | 20,909 |  | 13.28 |  | 2.90 | 3,206,548 |
During the years ended December 31, 2019, 2020 and 2021, the weighted-average fair value of stock options granted under the Plans was $33.46, $15.42, and $96.50 per share, respectively. During the years ended December 31, 2019, 2020 and 2021, the aggregate intrinsic value of stock options exercised was $50.4 million, $476.0 million, and $2,824.9 million, respectively, and the total grant-date fair value of stock options that vested was $44.6 million, $44.4 million, and $45.9 million, respectively. As of December 31, 2021, there was $85.7 million, of total unrecognized compensation cost related to stock option awards granted under the Plans. The unrecognized cost as of December 31, 2021 is expected to be recognized over a weighted-average period of 2.67 years. Nonemployee Stock Options For stock options granted to nonemployees, the Company uses the Black-Scholes option-pricing model to determine the fair value on the date of grant. Total nonemployee stock compensation recognized for the years ended December 31, 2019, 2020 and 2021 was not material. Common Shares Issued for Conversion of Convertible Note In connection with its Luxury Retreats acquisition, the Company entered into an unsecured convertible promissory note with a stockholder of Luxury Retreats. The note converted into 1,236,788 unvested shares of the Company’s Class A common stock on May 15, 2017. The fair value of the shares issued upon conversion of the note was $64.9 million and was recognized as compensation expense within product development expenses over the four-year vesting period. The Company recognized compensation expense, in product development within the consolidated statements of operations, of $19.6 million and $34.5 million for the years ended December 31, 2018 and 2019, respectively. Restricted Stock Units RSUs are measured at the fair market value of the underlying stock at the grant date and the expense is recognized over the requisite service period. The service-based vesting condition for these awards is generally satisfied over four years. Historically, substantially all of the Company’s RSUs vested upon the satisfaction of both a service-based vesting condition and liquidity-event performance-based requirement. The liquidity-based vesting condition was satisfied upon (i) an initial public offering or (ii) change in control of the Company as defined in the Company’s equity incentive plans. The RSUs vested on the first date upon which both the service- based besting condition and liquidity-event performance-based requirements were satisfied. The liquidity-event performance-based vesting condition was deemed satisfied upon the IPO and the Company delivered one share of common stock for each vested RSU on the settlement date. Restricted Common Stock The Company has granted restricted common stock to certain continuing employees, primarily in connection with acquisitions. Vesting of this stock is primarily dependent on a service-based vesting condition that generally becomes satisfied over a period of four years. The Company has the right to repurchase or cancel shares for which the vesting condition is not satisfied. The following table summarizes the activity related to the Company’s restricted common stock (in thousands, except for per share amounts):
| Number of Shares | Weighted-Average Grant-Date Fair Value Per Share
Unvested restricted common stock as of December 31, 2019 | 996 |  | $ | 62.26 |
Issued | — |  | — |
Vested | (278) |  | 62.12 |
Unvested restricted common stock as of December 31, 2020 | 718 |  | 62.33 |
Issued | — |  | — |
Vested | (86) |  | 62.41 |
Unvested restricted common stock as of December 31, 2021 | 632 |  | 62.32 |
Stock-Based Compensation The following table summarizes total stock-based compensation expense (in thousands):
| Year Ended December 31,
| 2019 | 2020 | 2021
Operations and support | $ | 817 |  | $ | 143,997 |  | $ | 48,473 |
Product development | 56,632 |  | 1,878,793 |  | 545,113 |
Sales and marketing | 23,919 |  | 435,272 |  | 99,969 |
General and administrative | 16,179 |  | 544,086 |  | 205,292 |
Restructuring charges | — |  | (200) |  | (17) |
Stock-based compensation expense | $ | 97,547 |  | $ | 3,001,948 |  | $ | 898,830 |
Prior to December 9, 2020, no stock-based compensation expense had been recognized for certain awards with a liquidity-event performance-based vesting condition based on the occurrence of a qualifying event, as such qualifying event was not probable. Upon the Company's initial public offering, the liquidity event performance-based condition was met and $2.8 billion of stock-based compensation expense was recognized related to these awards. The Company recognized an income tax benefit of $9.8 million, $39.9 million, and $35.6 million in the consolidated statements of operations for stock-based compensation arrangements in the years ended December 31, 2019, 2020, and 2021, respectively. 2020 Employee Stock Purchase Plan In December 2020, the Company’s board of directors adopted the ESPP. The maximum number of shares of Class A common stock authorized for sale under the ESPP is equal to the sum of (i) 4,000,000 shares of Class A common stock and (ii) an annual increase on the first day of each year beginning in 2022 and ending in 2030, equal to the lesser of (a) 1% of shares of Class A common stock (on an as converted basis) on the last day immediately preceding year and (b) such number of shares of common stock as determined by the board of directors; provided, however, that no more than 89,785,394 shares may be issued under the ESPP. As of December 31, 2021, 3.0 million shares were reserved for future issuance under the ESPP. The Company estimates the fair value of shares to be issued under the ESPP based on a combination of options valued using the Black-Scholes option-pricing model. For the year ended December 31, 2021, the Company recorded stock-based compensation expense related to the ESPP of $105.9 million. During the year ended December 31, 2021, 0.9 million shares of common stock were purchased under the ESPP at a weighted-average price of $59.11 per share, resulting in net cash proceeds of $50.6 million.

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- Definition The entire disclosure for shareholders' equity and share-based payment arrangement. Includes, but is not limited to, disclosure of policy and terms of share-based payment arrangement, deferred compensation arrangement, and employee stock purchase plan (ESPP). + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 505 -URI http://asc.fasb.org/topic&trid=2208762 Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 718 -URI http://asc.fasb.org/topic&trid=2228938 + Details
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