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Stock-Based Compensation
 9 Months Ended
Sep. 30, 2017
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]  
Stock-Based Compensation
Stock-Based Compensation
In order to attract and retain employees, non-employee directors, consultants, and other persons associated with us, we may grant qualified and nonqualified stock options, stock appreciation rights, restricted stock, restricted stock units (“RSUs”), performance shares and performance units under the LKQ Corporation 1998 Equity Incentive Plan (the “Equity Incentive Plan”). We have granted RSUs, stock options, and restricted stock under the Equity Incentive Plan. We expect to issue new shares of common stock to cover past and future equity grants.
RSUs
RSUs vest over periods of up to five years, subject to a continued service condition. Currently outstanding RSUs contain either a time-based vesting condition or a combination of a performance-based vesting condition and a time-based vesting condition, in which case, both conditions must be met before any RSUs vest. For the RSUs containing a performance-based vesting condition, the Company must report positive diluted earnings per share, subject to certain adjustments, during any fiscal year period within five years following the grant date. Each RSU converts into one share of LKQ common stock on the applicable vesting date. The grant date fair value of RSUs is based on the market price of LKQ stock on the grant date.
The fair value of RSUs that vested during the nine months ended September 30, 2017 was $27 million.
The following table summarizes activity related to our RSUs under the Equity Incentive Plan for the nine months ended September 30, 2017:
 
Number
Outstanding
 
Weighted
Average
Grant Date
Fair Value
 
Weighted Average Remaining Contractual Term
(in years)
 
Aggregate Intrinsic Value
   (in thousands) (1)
Unvested as of January 1, 2017
1,873,737

 
$
27.58

 
 
 
 
Granted
743,926

 
$
31.77

 
 
 
 
Vested
(858,470
)
 
$
26.85

 
 
 
 
Forfeited / Canceled
(146,769
)
 
$
31.15

 
 
 
 
Unvested as of September 30, 2017
1,612,424

 
$
29.58

 
 
 
 
Expected to vest after September 30, 2017
1,555,391

 
$
29.56

 
2.7
 
$
55,979

(1)
The aggregate intrinsic value of unvested and expected to vest RSUs represents the total pretax intrinsic value (the fair value of the Company's stock on the last day of each period multiplied by the number of units) that would have been received by the holders had all RSUs vested. This amount changes based on the market price of the Company’s common stock.
Stock Options
Stock options vest over periods of up to five years, subject to a continued service condition. Stock options expire either six or ten years from the date they are granted. No options were granted during the nine months ended September 30, 2017. The total grant-date fair value of options that vested during the nine months ended September 30, 2017 was $1 million.
The following table summarizes activity related to our stock options under the Equity Incentive Plan for the nine months ended September 30, 2017:
 
Number
Outstanding
 
Weighted
Average Exercise Price
 
Weighted Average Remaining Contractual Term
(in years)
 
Aggregate Intrinsic Value
   (in thousands) (1)
Balance as of January 1, 2017
2,623,217

 
$
9.19

 
 
 
 
Exercised
(772,157
)
 
$
8.61

 
 
 
$
18,256

Forfeited / Canceled
(15,800
)
 
$
24.12

 
 
 
 
Balance as of September 30, 2017
1,835,260

 
$
9.31

 
1.8
 
$
48,969

Exercisable as of September 30, 2017
1,835,260

 
$
9.31

 
1.8
 
$
48,969

Exercisable as of September 30, 2017 and expected to vest thereafter
1,835,260

 
$
9.31

 
1.8
 
$
48,969

(1)
The aggregate intrinsic value of outstanding, exercisable and expected to vest options represents the total pretax intrinsic value (the difference between the fair value of the Company's stock on the last day of each period and the exercise price, multiplied by the number of options where the fair value exceeds the exercise price) that would have been received by the option holders had all option holders exercised their options as of the last day of the period indicated. This amount changes based on the market price of the Company’s common stock.
The following table summarizes the components of pre-tax stock-based compensation expense for our continuing operations (in thousands):
 
Three Months Ended
 
Nine Months Ended
 
September 30,
 
September 30,
 
2017
 
2016
 
2017
 
2016
RSUs
$
5,139

 
$
5,546

 
$
17,576

 
$
16,871

Stock options
—

 
46

 
6

 
112

Total stock-based compensation expense
$
5,139

 
$
5,592

 
$
17,582

 
$
16,983


As of September 30, 2017, unrecognized compensation expense related to unvested RSUs is $37 million. Stock-based compensation expense related to these awards will be different to the extent that forfeitures are realized.