XML 34 R22.htm IDEA: XBRL DOCUMENT
v3.20.2

Share-Based Awards | 9 Months Ended
--- | ---
Sep. 30, 2020
Share-based Payment Arrangement [Abstract] |
Share-Based Awards | Share-Based Awards Zillow Group, Inc. 2020 Incentive Plan On June 9, 2020, the Zillow Group, Inc. 2020 Incentive Plan (the “2020 Plan”) became effective, which replaces the Zillow Group, Inc. Amended and Restated 2011 Incentive Plan (the “2011 Plan”). 12,400,000 shares of Class C capital stock are authorized and available for issuance under the 2020 Plan. In addition, shares previously available for new grants under the 2011 Plan as of June 9, 2020 and shares subject to outstanding awards under the 2011 Plan as of June 9, 2020 that on or after that date cease to be subject to such awards (other than by reason of exercise or settlement of the awards in vested or nonforfeitable shares) are also available for issuance under the 2020 Plan. The number of shares authorized under the 2020 Plan will be increased on the first day of each calendar year, beginning January 1, 2021 and ending on (and including) January 1, 2030, by an amount equal to the lesser of (a) 5% of our outstanding Class A common stock, Class B common stock and Class C capital stock on a fully diluted basis as of the end of the immediately preceding calendar year and (b) a number of shares determined by our board of directors. The 2020 Plan is administered by the compensation committee of the board of directors. Under the terms of the 2020 Plan, the compensation committee may grant equity awards, including incentive stock options, nonqualified stock options, restricted stock, restricted stock units, restricted units, stock appreciation rights, performance shares or performance units to employees, officers, directors, consultants, agents, advisors and independent contractors of Zillow Group and its subsidiaries. The board of directors has also authorized certain senior executive officers to grant equity awards under the 2020 Plan, within limits prescribed by our board of directors. The 2020 Plan provides that in the event of a stock dividend, stock split or similar event, the maximum number and kind of securities available for issuance under the plan will be proportionally adjusted. Options under the 2020 Plan are granted with an exercise price per share not less than 100% of the fair market value of our Class C capital stock on the grant date, with the exception of substituted option awards granted in connection with acquisitions, and are exercisable at such times and under such conditions as determined by the compensation committee. Any portion of an option that is not vested and exercisable on the date of a participant’s termination of service expires on such date. Employees generally forfeit their rights to exercise vested options three months following their termination of employment or 12 months following termination by reason of death, disability or retirement. Options granted under the 2020 Plan expire no later than ten years from the grant date and typically vest either 25% after 12 months and quarterly thereafter over the next three years or quarterly over a period of four years. Restricted stock units granted under the 2020 Plan typically vest either 25% after 12 months and quarterly thereafter over the next three years or quarterly over a period of four years. Any portion of a restricted stock unit that is not vested on the date of a participant’s termination of service expires on such date. Options and restricted stock units that remain outstanding under the 2011 Plan have vesting and exercisability terms consistent with those described above for awards granted under the 2020 Plan. Option Awards The following table summarizes option award activity for the nine months ended September 30, 2020:
| Number of Shares Subject to Existing Options |  | Weighted- Average Exercise Price Per Share |  | Weighted- Average Remaining Contractual Life (Years) |  | Aggregate Intrinsic Value (in thousands)
Outstanding at January 1, 2020 | 29,634,296 |  |  | $ | 35.95 |  |  | 6.28 |  | $ | 331,107 |
Granted | 5,037,920 |  |  | 50.76 |  |  |  |  |
Exercised | (11,779,104) |  |  | 31.52 |  |  |  |  |
Forfeited or cancelled | (916,931) |  |  | 42.00 |  |  |  |  |
Outstanding at September 30, 2020 | 21,976,181 |  |  | 41.47 |  |  | 7.16 |  | 1,321,219 |
Vested and exercisable at September 30, 2020 | 10,490,317 |  |  | 37.59 |  |  | 5.56 |  | 671,352 |
The fair value of options granted is estimated at the date of grant using the Black-Scholes-Merton option-pricing model, assuming no dividends and with the following assumptions for the periods presented:
| Three Months Ended September 30, |  | Nine Months Ended September 30,
| 2020 |  | 2019 |  | 2020 |  | 2019
Expected volatility | 52% |  | 45% |  | 45%-52% |  | 45%-47%
Expected dividend yield | — |  | — |  | — |  | —
Risk-free interest rate | 0.22% |  | 1.61% |  | 0.22%-0.93% |  | 1.61%-2.53%
Weighted-average expected life | 4.50 years |  | 5.00 years |  | 4.50-5.50 years |  | 4.75-5.25 years
Weighted-average fair value of options granted | $37.09 |  | $14.15 |  | $21.35 |  | $16.55
As of September 30, 2020, there was a total of $199.4 million in unrecognized compensation cost related to unvested stock options. Restricted Stock Units The following table summarizes activity for restricted stock units for the nine months ended September 30, 2020:
| Restricted Stock Units |  | Weighted- Average Grant- Date Fair Value
Unvested outstanding at January 1, 2020 | 7,052,767 |  |  | $ | 40.01 |
Granted | 3,958,518 |  |  | 52.15 |
Vested | (2,191,719) |  |  | 41.17 |
Forfeited | (726,398) |  |  | 41.93 |
Unvested outstanding at September 30, 2020 | 8,093,168 |  |  | 45.46 |
As of September 30, 2020, there was a total of $341.0 million in unrecognized compensation cost related to unvested restricted stock units. Share-Based Compensation Expense The following table presents the effects of share-based compensation expense in our condensed consolidated statements of operations during the periods presented (in thousands, unaudited):
| Three Months Ended September 30, |  | Nine Months Ended September 30,
| 2020 |  | 2019 |  | 2020 |  | 2019
Cost of revenue | $ | 1,617 |  |  | $ | 1,062 |  |  | $ | 3,909 |  |  | $ | 2,878 |
Sales and marketing | 8,631 |  |  | 6,588 |  |  | 24,740 |  |  | 19,039 |
Technology and development | 19,793 |  |  | 18,034 |  |  | 60,376 |  |  | 51,942 |
General and administrative | 18,918 |  |  | 16,444 |  |  | 56,080 |  |  | 78,025 |
Total | $ | 48,959 |  |  | $ | 42,128 |  |  | $ | 145,105 |  |  | $ | 151,884 |
On February 21, 2019, Zillow Group announced the appointment of Richard N. Barton as Zillow Group’s Chief Executive Officer, effective February 21, 2019. Mr. Barton succeeded Spencer Rascoff, who served as Zillow Group’s Chief Executive Officer since 2010. In connection with Mr. Rascoff’s resignation as Chief Executive Officer, Zillow Group entered into an Executive Departure Agreement and Release (the “Agreement”) with Mr. Rascoff. Pursuant to the Agreement, Mr. Rascoff received, among other things, a change in the exercise period of his vested stock options outstanding as well as accelerated vesting of outstanding stock options, which have been accounted for as equity modifications. We recorded $26.4 million of share-based compensation expense associated with the modifications during the nine months ended September 30, 2019. For additional details, see Note 18 in the Notes to Consolidated Financial Statements included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2019.

X
- Definition The entire disclosure for share-based payment arrangement. + References Reference 1: 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
Name: | us-gaap_DisclosureOfCompensationRelatedCostsShareBasedPaymentsTextBlock
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration

X
- References No definition available. + Details
Name: | us-gaap_DisclosureOfCompensationRelatedCostsSharebasedPaymentsAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration