XML 38 R24.htm IDEA: XBRL DOCUMENT
v3.20.4

Stock Options and Employee Stock Purchase Plan | 12 Months Ended
--- | ---
Dec. 31, 2020
Share-based Payment Arrangement [Abstract] |
Stock Options and Employee Stock Purchase Plan | Stock Options and Employee Stock Purchase Plan J2 Global’s share-based compensation plans include the 2015 Stock Plan and the 2001 Employee Stock Purchase Plan. Each plan is described below. (a)The 2015 Stock Option Plan In May 2015, J2 Global’s Board of Directors adopted the J2 Global, Inc. 2015 Stock Option Plan (the “2015 Plan”). The 2015 Plan provides for the grant of incentive stock options, nonqualified stock options, stock appreciation rights, restricted stock, restricted stock units, performance shares, performance share units and other share-based awards. 4,200,000 shares of common stock are authorized to be used for 2015 Plan purposes. Options under the 2015 Plan may be granted at exercise prices determined by the Board of Directors, provided that the exercise prices shall not be less than the higher of the par value or 100% of the fair market value of J2 Global’s common stock subject to the option on the date the option is granted. At December 31, 2020, 2019 and 2018, options to purchase 175,601, 163,741 and 298,577 shares of common stock were exercisable under and outside of the 2015 Plan, at weighted average exercise prices of $60.35, $45.94, and $32.15, respectively. Stock options generally expire after 10 years and vest over a 5-year period. All stock option grants are approved by “outside directors” within the meaning of Internal Revenue Code Section 162(m). Stock Options Stock option activity for the years ended December 31, 2020, 2019 and 2018 is summarized as follows:
| Number of Shares |  | Weighted-Average Exercise Price |  | Weighted-Average Remaining Contractual Life (In Years) |  | Aggregate Intrinsic Value
Options outstanding at January 1, 2018 | 375,675 |  |  | $ | 31.30 |  |  |  |  |
Granted | 400,000 |  |  | 75.03 |  |  |  |  |
Exercised | (67,898) |  |  | 22.68 |  |  |  |  |
Canceled | — |  |  | — |  |  |  |  |
Options outstanding at December 31, 2018 | 707,777 |  |  | $ | 56.84 |  |  |  |  |
Granted | — |  |  | — |  |  |  |  |
Exercised | (189,436) |  |  | 32.39 |  |  |  |  |
Canceled | — |  |  | — |  |  |  |  |
Options outstanding at December 31, 2019 | 518,341 |  |  | $ | 65.77 |  |  |  |  |
Granted | — |  |  | — |  |  |  |  |
Exercised | (42,740) |  |  | 23.11 |  |  |  |  |
Canceled | — |  |  | — |  |  |  |  |
Options outstanding at December 31, 2020 | 475,601 |  |  | $ | 69.61 |  |  | 6.2 |  | $13,355,721
Exercisable at December 31, 2020 | 175,601 |  |  | $ | 60.35 |  |  | 4.7 |  | $6,557,721
Vested and expected to vest at December 31, 2020 | 393,281 |  |  | $ | 68.47 |  |  | 6.0 |  | $11,490,350
For the years ended December 31, 2020, 2019 and 2018, J2 Global granted zero, zero and 400,000 options, respectively, to purchase shares of common stock pursuant to the 2015 Plan. These stock options vest 20% per year and expire 10 years from the date of grant. The per share weighted-average grant-date fair values of stock options granted during the period ended December 31, 2018 was $19.39. The total intrinsic values of options exercised during the years ended December 31, 2020, 2019 and 2018 was $3.0 million, $10.4 million, and $3.8 million, respectively. The total fair value of options vested during the years ended December 31, 2020, 2019 and 2018 was $1.0 million, $1.0 million and $0.1 million, respectively. Cash received from options exercised under all share-based payment arrangements for the years ended December 31, 2020, 2019 and 2018 was $1.6 million, $5.3 million and $1.5 million, respectively. The actual tax benefit realized for the tax deductions from option exercises under the share-based payment arrangements totaled $0.7 million, $2.4 million and $0.9 million, respectively, for the years ended December 31, 2020, 2019 and 2018, respectively. The following table summarizes information concerning outstanding and exercisable options as of December 31, 2020:
|  | Options Outstanding |  | Exercisable Options
Range of Exercise Prices |  | Number Outstanding December 31, 2020 |  | Weighted Average Remaining Contractual Life |  | Weighted Average Exercise Price |  | Number Exercisable December 31, 2020 |  | Weighted Average Exercise Price
$29.34 |  | 45,351 |  |  | 0.36 years |  | $ | 29.34 |  |  | 45,351 |  |  | $ | 29.34 |
29.53 |  | 7,250 |  |  | 1.17 years |  | 29.53 |  |  | 7,250 |  |  | 29.53 |
67.35 |  | 23,000 |  |  | 4.35 years |  | 67.35 |  |  | 23,000 |  |  | 67.35 |
75.03 |  | 400,000 |  |  | 7.00 years |  | 75.03 |  |  | 100,000 |  |  | 75.03 |
$29.34 - $75.03 |  | 475,601 |  |  | 6.15 years |  | $ | 69.61 |  |  | 175,601 |  |  | $ | 60.35 |
As discussed in Note 14, “Stockholders’ Equity”, the Company provided holders of J2 Series B Stock an exchange right in which J2 Series B Stock may be exchanged for J2 common stock during specified exchange periods. At December 31, 2020, there were 2,019,350 additional shares underlying options, shares of restricted stock and other share-based awards available for grant under the 2015 Plan. The Company recognized $0.9 million, $0.9 million and $0.9 million of compensation expense related to stock options for the years ended December 31, 2020, 2019 and 2018, respectively. As of December 31, 2020, there was $5.8 million of total unrecognized compensation expense related to nonvested share-based compensation options granted under the 2015 Plan. That expense is expected to be recognized ratably over a weighted average period of 5.00 years (i.e., the remaining requisite service period). Fair Value Disclosure J2 Global uses the Black-Scholes option pricing model to calculate the fair value of each option grant. The expected volatility is based on historical volatility of the Company’s common stock. The Company estimates the expected term based upon the historical exercise behavior of its employees. The risk-free interest rate is based on U.S. Treasury zero-coupon issues with a term equal to the expected term of the option assumed at the date of grant. The Company uses an annualized dividend yield based upon the per share dividends declared by its Board of Directors. Estimated forfeiture rates were 13.0%, 13.9% and 11.8% as of December 31, 2020, 2019 and 2018, respectively. The weighted-average fair values of stock options granted have been estimated utilizing the following assumptions:
| Years ended December 31,
| 2020 |  | 2019 |  | 2018
Risk-free interest rate | —% |  | —% |  | 2.4%
Expected term (in years) | 0.0 |  | 0.0 |  | 6.7
Dividend yield | —% |  | —% |  | 2.2%
Expected volatility | —% |  | —% |  | 29.2%
Weighted average volatility | —% |  | —% |  | 29.2%
Restricted Stock and Restricted Stock Units J2 Global has awarded restricted stock and restricted stock units to its Board of Directors and senior staff pursuant to the 2015 Plan. Compensation expense resulting from restricted stock and restricted unit grants is measured at fair value on the date of grant and is recognized as share-based compensation expense over the applicable vesting period. Vesting periods are approximately one year for awards to members of the Company’s Board of Directors, five years for senior staff (excluding market-based awards discussed below) and eight years for the Chief Executive Officer. The Company granted 129,786, 117,566 and 376,799 shares of restricted stock and restricted units (excluding awards with market conditions below) during the years ended December 31, 2020, 2019 and 2018, respectively. On May 7, 2020, the Board of Directors approved the contract modification of an insignificant number of shares of restricted stock awards whereby selected participants waived their right to receive dividends with respect to outstanding and unvested restricted shares under their restricted stock agreements. There was no incremental compensation cost as a result of the modification. Restricted Stock - Awards with Market Conditions J2 Global has awarded certain key employees market-based restricted stock awards pursuant to the 2015 Plan. The market-based awards have vesting conditions that are based on specified stock price targets of the Company’s common stock. Market conditions were factored into the grant date fair value using a Monte Carlo valuation model, which utilized multiple input variables to determine the probability of the Company achieving the specified stock price targets with a 20-day and 30-day lookback (trading days). Stock-based compensation expense related to an award with a market condition will be recognized over the requisite service period using the graded-vesting method regardless of whether the market condition is satisfied, provided that the requisite service period has been completed. During the years ended December 31, 2020, 2019, and 2018 the Company awarded 82,112, 74,051, and 473,501 market-based restricted stock awards, respectively. The per share weighted average grant-date fair values of the market-based restricted stock awards granted during the years ended December 31, 2020, 2019 and 2018 were $70.99, $69.99 and $52.95, respectively. The weighted-average fair values of market-based restricted stock awards granted have been estimated utilizing the following assumptions:
| December 31, 2020 |  | December 31, 2019 |  | December 31, 2018
Underlying stock price at valuation date | $ | 91.17 |  |  | $ | 84.58 |  |  | $ | 82.11 |
Expected volatility | 27.0 | % |  | 28.3 | % |  | 28.4 | %
Risk-free interest rate | 0.7 | % |  | 2.5 | % |  | 2.9 | %
The Company recognized $21.2 million, $21.7 million and $26.4 million, respectively of compensation expense related to its restricted stock, restricted stock units, and market-based restricted stock. As of December 31, 2020, the Company had unrecognized share-based compensation cost of $38.6 million associated with these awards. This cost is expected to be recognized over a weighted-average period of 4.2 years for awards and 4.5 years for units. The total fair value of restricted stock and restricted stock units vested during the years ended December 31, 2020, 2019 and 2018 was $18.6 million, $12.7 million and $9.7 million, respectively. The actual tax benefit realized for the tax deductions from the vesting of restricted stock awards and units totaled $2.1 million, $2.4 million and $2.4 million, respectively, for the years ended December 31, 2020, 2019 and 2018. Share-based compensation is recognized on dividends paid related to nonvested restricted stock not expected to vest, which amounted to approximately zero, $0.1 million and $0.1 million for the years ended December 31, 2020, 2019, and 2018, respectively. Restricted stock award activity for the years ended December 31, 2020, 2019 and 2018 is set forth below:
| Shares |  | Weighted-Average Grant-Date Fair Value
Nonvested at January 1, 2018 | 605,566 |  |  | $ | 51.57 |
Granted | 830,256 |  |  | 63.55 |
Vested | (157,972) |  |  | 61.29 |
Canceled | (70,839) |  |  | 74.84 |
Nonvested at December 31, 2018 | 1,207,011 |  |  | $ | 64.82 |
Granted | 187,773 |  |  | 79.00 |
Vested | (172,884) |  |  | 73.65 |
Canceled | (116,841) |  |  | 72.58 |
Nonvested at December 31, 2019 | 1,105,059 |  |  | $ | 64.76 |
Granted | 1,268 |  |  | 98.63 |
Vested | (264,172) |  |  | 70.25 |
Canceled | (21,589) |  |  | 79.34 |
Nonvested at December 31, 2020 | 820,566 |  |  | $ | 62.66 |
Restricted stock unit activity for the years ended December 31, 2020, 2019 and 2018 is set forth below:
| Number of Shares |  | Weighted-Average Remaining Contractual Life (in Years) |  | Aggregate Intrinsic Value
Outstanding at January 1, 2018 | 38,400 |  |  |  |  |
Granted | 20,044 |  |  |  |  |
Vested | (11,540) |  |  |  |  |
Canceled | (5,673) |  |  |  |  |
Outstanding at December 31, 2018 | 41,231 |  |  |  |  |
Granted | 3,844 |  |  |  |  |
Vested | (12,343) |  |  |  |  |
Canceled | (11,858) |  |  |  |  |
Outstanding at December 31, 2019 | 20,874 |  |  |  |  |
Granted | 210,630 |  |  |  |  |
Vested | (9,029) |  |  |  |  |
Canceled | (12,691) |  |  |  |  |
Outstanding at December 31, 2020 | 209,784 |  |  | 3.5 |  | $ | 20,493,799 |
Vested and expected to vest at December 31, 2020 | 135,944 |  |  | 2.7 |  | $ | 13,280,344 |
Employee Stock Purchase Plan (“ESPP”) In May of 2001, J2 Global established the J2 Global, Inc. 2001 Employee Stock Purchase Plan, as amended (the “Purchase Plan”), which provides for the issuance of a maximum of 2,000,000 shares of common stock. Under the Purchase Plan, eligible employees can have up to 15% of their earnings withheld, up to certain maximums, to be used to purchase shares of J2 Global’s common stock at certain plan-defined dates. The price of the common stock purchased under the Purchase Plan for the offering periods is equal to 95% of the fair market value of the common stock at the end of the offering period. On February 2, 2018, the Company approved an amendment to the Company’s Amended and Restated 2001 Employee Stock Purchase Plan, to be effective May 1, 2018, such that (i) the purchase price for each offering period shall be 85% of the lesser of the fair market value of a share of common stock of the Company (a “Share”) on the beginning or the end of the offering period, rather than 95% of the fair market value of a Share at the end of the offering period, and (ii) each offering period will be six months, rather than three months. J2 Global performed an analysis of the Amendment terms and determined that a plan provision exists which allows for the more favorable of two exercise prices, commonly referred to as a “look-back” feature. The purchase price discount and the look-back feature cause the Purchase Plan to be compensatory and the Company to recognize compensation expense. The compensation cost is recognized on a straight-line basis over the requisite service period. The Company recognized $2.0 million, $1.3 million and $0.7 million of compensation expense related to the Purchase Plan for the years ended December 31, 2020, 2019 and 2018, respectively. The Company used the Black-Scholes option pricing model to calculate the estimated fair value of the purchase right issued under the ESPP. The expected volatility is based on historical volatility of the Company’s common stock. The risk-free interest rate is based on U.S. Treasury zero-coupon issues with a term equal to the expected term of the option assumed at the date of grant. The Company uses an annualized dividend yield based upon the per share dividends declared by its Board of Directors. Estimated forfeiture rates were 11.15%, 5.80% and 1.96% as of December 31, 2020, 2019, and 2018, respectively. During 2020, 2019 and 2018, 118,629, 66,413 and 33,262 shares, respectively were purchased under the Purchase Plan at price ranging from $61.51 to $62.82 per share during 2020. As of December 31, 2020, 1,404,939 shares were available under the Purchase Plan for future issuance.

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