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STOCK-BASED COMPENSATION | 12 Months Ended
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Dec. 31, 2021
Share-based Payment Arrangement [Abstract] |
STOCK-BASED COMPENSATION | NOTE 11—STOCK-BASED COMPENSATION The Company currently has three active stock and annual incentive plans; two Former Match Group plans were assumed as part of the Separation (the 2015 and 2017 plans) and another plan was approved by shareholders on June 25, 2020 (the 2020 plan). The 2015 and 2017 plans cover stock options to acquire shares of Match Group common stock, RSUs, and stock settled stock appreciation rights denominated in the equity of certain of our subsidiaries, in each case with respect to awards previously granted by Former Match Group prior to the Separation, as well as provide for the future grant of equity awards by the Company. The 2015 and 2017 plans authorize the Company to grant awards to its employees, officers, directors and consultants. At December 31, 2021, there were 32.6 million shares available for the future grant of equity awards under the 2015 and 2017 plans collectively. The 2020 plan covers options previously granted by Former IAC that converted into Match Group options as a result of the Separation; no additional grants can be made from this plan. The 2015 and 2017 plans have a stated term of ten years and provide that the exercise price of stock options granted will not be less than the market price of the Company’s common stock on the grant date. Neither plan specifies grant dates or vesting schedules of awards as those determinations have been delegated to the Compensation and Human Resources Committee of Match Group’s Board of Directors (the “Committee”). Each grant agreement reflects the vesting schedule for that particular grant as determined by the Committee. Stock options outstanding will generally vest in four equal annual installments over a four-year period. RSUs outstanding generally vest over a three- or four-year period. Market-based awards outstanding generally vest over a two- to four-year period. Stock-based compensation expense recognized in the consolidated statement of operations includes expense related to the Company’s stock options and RSUs, market-based RSUs and PSUs for which vesting is considered probable, and equity instruments denominated in shares of subsidiaries. The amount of stock-based compensation expense recognized is net of estimated forfeitures, as the expense recorded is based on awards that are ultimately expected to vest. The forfeiture rate is estimated at the grant date based on historical experience and revised, if necessary, in subsequent periods if actual forfeitures differ from the estimated rate. At December 31, 2021, there is $270.9 million of unrecognized compensation cost, net of estimated forfeitures, related to all outstanding equity-based awards, which is expected to be recognized over a weighted average period of approximately 2.4 years. The total income tax benefit recognized in the accompanying consolidated statement of operations for the years ended December 31, 2021, 2020 and 2019 related to all stock-based compensation is $95.1 million, $136.6 million and $110.4 million, respectively. The aggregate income tax benefit recognized related to the exercise of stock options for the years ended December 31, 2021, 2020, and 2019 is $53.8 million, $105.5 million, and $73.4 million, respectively. As the Company is currently in a NOL position there will be some delay in the timing of the realization of cash benefit of income tax deductions related to stock-based compensation because it will be dependent upon the amount and timing of future taxable income and the timing of estimated income tax payments. Stock Options Stock options outstanding at December 31, 2021 and changes during the year ended December 31, 2021 are as follows:
| December 31, 2021
| Shares |  | Weighted Average Exercise Price |  | Weighted Average Remaining Contractual Term (In Years) |  | Aggregate Intrinsic Value
| (Shares and intrinsic value in thousands)
Outstanding at January 1, 2021 | 7,425 |  |  | $ | 19.48 |  |  |  |  |
Converted sub-equity options | 3 |  |  | 37.49 |  |  |  |  |
Increase due to acquisition | 267 |  |  | 30.30 |  |  |  |  |
Exercised | (2,926) |  |  | 18.52 |  |  |  |  |
Forfeited | (280) |  |  | 23.06 |  |  |  |  |
Expired | (21) |  |  | 12.55 |  |  |  |  |
Outstanding at December 31, 2021 | 4,468 |  |  | $ | 20.58 |  |  | 4.9 |  | $ | 498,936 |
Options exercisable | 4,193 |  |  | $ | 19.85 |  |  | 4.7 |  | $ | 471,347 |
______________________ The aggregate intrinsic value in the table above represents the difference between Match Group’s closing stock price on the last trading day of 2021 and the exercise price, multiplied by the number of in-the-money options that would have been exercised had option holders exercised their options on December 31, 2021. The total intrinsic value of stock options exercised during the year ended December 31, 2021 is $406.1 million. The total intrinsic value of stock options exercised during the period from the Separation on July 1, 2020 to December 31, 2020 is $737.9 million. The following table summarizes the information about stock options outstanding and exercisable at December 31, 2021:
| Options Outstanding |  | Options Exercisable
Range of Exercise Prices | Outstanding at December 31, 2021 |  | Weighted- Average Remaining Contractual Life in Years |  | Weighted-Average Exercise Price |  | Exercisable at December 31, 2021 |  | Weighted- Average Remaining Contractual Life in Years |  | Weighted-Average Exercise Price
| (Shares in thousands)
$0.01 to $10.00 | 671 |  |  | 4.6 |  | $ | 7.92 |  |  | 631 |  |  | 4.3 |  | $ | 8.38 |
$10.01 to $20.00 | 1,545 |  |  | 4.4 |  | 14.78 |  |  | 1,544 |  |  | 4.4 |  | 14.78 |
$20.01 to $30.00 | 1,794 |  |  | 4.9 |  | 24.62 |  |  | 1,698 |  |  | 4.9 |  | 24.37 |
$30.01 to $40.00 | 152 |  |  | 6.1 |  | 35.58 |  |  | 147 |  |  | 6.1 |  | 35.76 |
$40.01 to $50.00 | 306 |  |  | 7.6 |  | 46.49 |  |  | 173 |  |  | 6.2 |  | 49.12 |
| 4,468 |  |  | 4.9 |  | $ | 20.58 |  |  | 4,193 |  |  | 4.7 |  | $ | 19.85 |
Cash received from Match Group stock option exercises for the years ended December 31, 2021 and 2020 was $58.4 million and $155.4 million, respectively. No cash was received from stock option exercises for the year ended December 31, 2019. Restricted Stock Units, Performance-Based Stock Units, and Market-Based Awards RSUs, PSUs, and market-based awards are awards in the form of phantom shares or units denominated in a hypothetical equivalent number of shares of Match Group common stock and with the value of each RSU and PSU equal to the fair value of Match Group common stock at the date of grant. For market-based awards, the grant date fair value was estimated using a lattice model that incorporates a Monte Carlo simulation of the valuation of a wholly-owned business. Each RSU, PSU, and market-based award grant is subject to service-based vesting, where a specific period of continued employment must pass before an award vests. PSUs also include performance-based vesting conditions, where certain performance targets set at the time of grant must be achieved before an award vests. The number of market-based awards that ultimately vest is based on a valuation of a wholly-owned business. For RSU grants, the expense is measured at the grant date as the fair value of Match Group common stock and expensed as stock-based compensation over the vesting term. For PSU grants, the expense is measured at the grant date as the fair value of Match Group common stock and expensed as stock-based compensation over the vesting term if the performance targets are considered probable of being achieved. Unvested RSUs, PSUs, and market-based awards outstanding at December 31, 2021 and changes during the year ended December 31, 2021 are as follows:
| RSUs |  | PSUs |  | Market-based awards
| Number of shares |  | Weighted Average Grant Date Fair Value |  | Number of shares(a) |  | Weighted Average Grant Date Fair Value |  | Number of shares(a) |  | Weighted Average Grant Date Fair Value
| (Shares in thousands)
Unvested at January 1, 2021 | 3,299 |  |  | $ | 63.02 |  |  | 550 |  |  | $ | 74.59 |  |  | 714 |  |  | $ | 19.34 |
Granted | 1,452 |  |  | 157.61 |  |  | 212 |  |  | 159.23 |  |  | 803 |  |  | 159.67 |
Vested | (1,195) |  |  | 56.46 |  |  | — |  |  | — |  |  | (559) |  |  | 19.81 |
Forfeited | (436) |  |  | 93.27 |  |  | (221) |  |  | 97.42 |  |  | (146) |  |  | 148.66 |
Expired | — |  |  | — |  |  | — |  |  | — |  |  | (30) |  |  | 20.84 |
Unvested at December 31, 2021 | 3,120 |  |  | $ | 105.33 |  |  | 541 |  |  | $ | 98.41 |  |  | 782 |  |  | $ | 138.95 |
______________________ (a)Represents the maximum shares issuable. The weighted average fair value of RSUs and PSUs granted during the years ended December 31, 2021 and 2020, based on market prices of Match Group’s common stock on the grant date, was $157.81 and $104.74, respectively. The total fair value of RSUs that vested during the years ended December 31, 2021 and 2020 was $67.5 million and $14.8 million, respectively. No PSUs vested during the years ended December 31, 2021 and 2020. There were 0.8 million market-based awards granted during the year ended December 31, 2021. The vesting of the awards granted in the current period are dependent upon the Company’s total shareholder return relative to the Nasdaq 100 Total Return Index over the performance period. There were no market-based awards granted during the year ended December 31, 2020. The total fair value of market-based awards that vested during the years ended December 31, 2021 and 2020 was $11.1 million and $2.5 million, respectively. Equity Instruments Denominated in Shares of Certain Subsidiaries The Company has granted stock settled stock appreciation rights denominated in the equity of certain non-publicly traded subsidiaries to employees and management of those subsidiaries. These equity awards vest over a specified period of time or upon the occurrence of certain specified events. The value of the stock settled stock appreciation rights is based on the equity value of these subsidiaries. Accordingly, these awards only have value to the extent the relevant business appreciates in value above the initial value utilized to determine the exercise price. These awards can have significant value in the event of significant appreciation. The fair value of the common stock of these subsidiaries is generally determined through a third-party valuation pursuant to the terms of the respective subsidiary equity plan. These equity awards are settled on a net basis, with the award holder entitled to receive a payment in shares of Match Group common stock with a total value equal to the intrinsic value of the award at exercise. The number of shares of Match Group common stock ultimately needed to settle these awards may vary significantly from the estimated number below as a result of movements in our stock price and/or a determination of fair value of the relevant subsidiary that differs from our estimate. The expense associated with these equity awards is initially measured at fair value at the grant date and is expensed as stock-based compensation over the vesting term. At December 31, 2021, the number of shares of Match Group common stock that would be required to settle these awards at estimated fair values, including vested and unvested awards, net of an assumed 50% withholding tax, is 1.0 million shares. The withholding taxes, which would be paid by the Company on behalf of the employees at exercise, required to settle the vested and unvested awards at estimated fair values on December 31, 2021 is $126.9 million assuming a 50% withholding tax rate. The corresponding number of shares and withholding tax amount as of December 31, 2020 were 0.3 million shares and $39.6 million. Employee Stock Purchase Plan The Match Group, Inc. 2021 Global Employee Stock Purchase Plan (the "ESPP") was approved by the Company’s shareholders on June 15, 2021. Under the ESPP, eligible employees may purchase the Company’s common stock at a 15% discount of the stock price at the lower of the market price of our common stock on the date of commencement of the applicable offering period or on the last day of each six-month purchase period, subject to certain purchase limits. Under the ESPP, employees purchased less than 0.1 million shares at an average price per share of $126.16 during the year ended December 31, 2021. At December 31, 2021, there were 3.0 million shares available for future issuance under the ESPP. At December 31, 2021, there is $3.0 million of unrecognized compensation cost, net of estimated forfeitures, related to the ESPP, which is expected to be recognized over a weighted average period of approximately 0.6 years. Capitalization of Stock-Based Compensation For the years ended December 31, 2021 and 2020, $6.4 million and $5.1 million, respectively, of stock-based compensation was capitalized related to internal use software development. No amounts were capitalized for the year ended December 31, 2019. Modifications of awards During the years ended December 31, 2021, 2020 and 2019, the Company modified certain equity awards and recognized modification charges in continuing operations of $10.2 million, $21.2 million and $7.1 million, respectively.

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