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Stock-Based Compensation | 12 Months Ended
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Dec. 31, 2023
Share-Based Payment Arrangement [Abstract] |
Stock-Based Compensation | Stock-Based Compensation Stock-Based Compensation Expense The following table summarizes total stock-based compensation expense (in millions):
| Year Ended December 31,
| 2021 | 2022 | 2023
Operations and support | $ | 49 |  | $ | 63 |  | $ | 68 |
Product development | 545 |  | 548 |  | 694 |
Sales and marketing | 100 |  | 114 |  | 130 |
General and administrative | 205 |  | 205 |  | 228 |
Stock-based compensation expense | $ | 899 |  | $ | 930 |  | $ | 1,120 |
The Company recognized an income tax benefit of $36 million, $19 million and $435 million in the consolidated statements of operations for stock-based compensation arrangements in the years ended December 31, 2021, 2022 and 2023, respectively. The income tax benefit related to stock-based compensation expense was $227 million for the year ended December 31, 2023. There were no income tax benefits related to stock-based compensation expense for the years ended December 31, 2021 and 2022. 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 was 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, 2021, a total of 98,093 shares of the Company’s Class A common stock were issuable upon exercise of outstanding options under the Assumed Equity Incentive Plan, with weighted-average exercise price of $22.67 per share. In addition, as of December 31, 2021, a total of 3,512 RSUs were issued and outstanding under the Assumed Equity Incentive 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, 62.1 million 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 371.2 million 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,
| 2021 | 2022 | 2023
Expected term (years) | 8.0 | 6.1 | 1.4 - 6.1
Risk-free interest rate | 1.1% - 1.5% | 0.3% - 2.2% | 3.6% - 5.0%
Expected volatility | 44.2% - 44.9% | 48.6% - 58.4% | 51.3% - 54.4%
Expected dividend yield | — |  | — |  | — |
A summary of stock option and RSU activity under the Plans was as follows (in millions, 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, 2021 | 81 |  |  | 24 |  | $ | 19.69 |  |  | 37 |  | $ | 61.22 |
Granted | (13) |  |  | 1 |  | 161.70 |  |  | 12 |  | 135.09 |
Increase in shares available for grant | 32 |  |  | — |  | — |  |  | — |  | — |
Exercised/Vested | 5 |  |  | (3) |  | 14.32 |  |  | (12) |  | 83.12 |
Canceled | 3 |  |  | — |  | 95.93 |  |  | (3) |  | 101.58 |
Balances as of December 31, 2022 | 108 |  |  | 22 |  | 23.41 |  |  | 34 |  | 77.07 |
Granted | (13) |  |  | 1 |  | 115.15 |  |  | 12 |  | 122.84 |
Increase in shares available for grant | 32 |  |  | — |  | — |  |  | — |  | — |
Exercised/Vested | 5 |  |  | (16) |  | 5.37 |  |  | (14) |  | 93.25 |
Canceled | 2 |  |  | — |  | 98.60 |  |  | (2) |  | 120.36 |
Balances as of December 31, 2023 | 134 |  |  | 7 |  | $ | 71.76 |  |  | 30 |  | $ | 85.35 |
| Number of Shares | Weighted- Average Exercise Price | Weighted- Average Remaining Contractual Life (years) | Aggregate Intrinsic Value
Options outstanding as of December 31, 2022 | 22 |  | $ | 23.41 |  | 2.78 | $ | 1,432 |
Options exercisable as of December 31, 2022 | 20 |  | 17.01 |  | 2.27 | 1,380 |
Options outstanding as of December 31, 2023 | 7 |  | 71.76 |  | 5.77 | 500 |
Options exercisable as of December 31, 2023 | 6 |  | 60.89 |  | 5.11 | 448 |
In May 2023, 11.2 million stock options were exercised in cashless transactions pursuant to which the Company withheld and retired 5.7 million shares of common stock, valued at their fair market value on the exercise date, to cover the related $567 million of employee withholding tax and $36 million of exercise cost. During the years ended December 31, 2021, 2022 and 2023, the weighted-average fair value of stock options granted under the Plans was $96.50, $79.75 and $65.22 per share, respectively. During the years ended December 31, 2021, 2022 and 2023, the aggregate intrinsic value of stock options exercised was $2,825 million, $326 million and $1,620 million, respectively, and the total grant-date fair value of stock options that vested was $46 million, $45 million and $44 million, respectively. As of December 31, 2023, there was $87 million of total unrecognized compensation cost related to stock option awards granted under the Plans. The unrecognized cost as of December 31, 2023 is expected to be recognized over a weighted-average period of 2.5 years. Restricted Stock Awards The Company has granted RSAs 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. Unvested RSAs as of December 31, 2021, 2022 and 2023 was 0.6 million, 0.4 million and 0.8 million shares, respectively, with weighted-average grant-date fair value of $62.32, $62.33 and $100.04 per share, respectively. Activities related to the Company’s RSAs were not material for the years ended December 31, 2021, 2022 and 2023. 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. 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) 4.0 million 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 common stock 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 89.8 million shares may be issued under the ESPP. As of December 31, 2022 and 2023, the Company had reserved 8.9 million and 14.0 million shares 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. The Company recorded stock-based compensation expense related to the ESPP of $33 million and $29 million for the years ended December 31, 2022, and 2023, respectively. The following table summarizes transactions under the Company’s ESPP (in millions except per share amounts):
|  | Year Ended December 31,
|  | 2022 | 2023
Shares issued |  | 0.5 |  | 0.7 |
Weighted-average price per share |  | $ | 95.90 |  | $ | 88.81 |
Cash proceeds |  | $ | 48 |  | $ | 64 |

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