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GROUPON, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
The fair value of stock options granted is estimated on the date of grant using the Black-Scholes-Merton option-
pricing model. Expected volatility is
based on historical volatilities for publicly-
traded options of comparable companies over the estimated expected life of the stock options. The expected term
represents the period of time the stock options are expected to be outstanding and is based on the “simplified method”. The Company used the “
simplified
method”
due to the lack of sufficient historical exercise data to provide a reasonable basis upon which to otherwise estimate the expected life of the stock
options. The risk-
free interest rate is based on yields on U.S. Treasury STRIPS with a maturity similar to the estimated expected life of the stock options. The
weighted1average assumptions for stock options granted during the years ended December 31, 2009, 2010 and 2011 are outlined in the following table:
Based on the above assumptions, the weighted-
average grant date fair value of stock options granted during the years ended December 31, 2009, 2010
and 2011 was $0.05, $0.73 and $6.00, respectively. The total fair value of options that vested during the years ended December 31, 2009, 2010 and 2011 was less
than $0.1 million, $0.3 million and $6.4 million, respectively. Additionally, the total intrinsic value of options that were exercised during the years ended
December 31, 2009, 2010 and 2011 was $0.5 million, $5.7 million and $56.9 million, respectively.
Restricted Stock Units
The restricted stock units granted under the Plans vest over a four-
year period, with 25% of the awards vesting after one year and the remaining awards
vesting on a monthly or quarterly basis thereafter. Restricted stock units are generally amortized on a straight-
line basis over the requisite service period, except
for the restricted stock units with performance conditions, which are amortized using the accelerated method. The fair value of restricted stock units that vested
during each of the years ended December 31, 2009, 2010 and 2011 was less than $0.1 million, less than $0.1 million and $12.4 million, respectively.
The table below summarizes activity regarding unvested restricted stock units under the Plans during the year ended December 31, 2011:
The weighted-average grant date fair value of restricted stock units granted in 2010 was $7.16. No such awards were granted in 2009.
Performance Stock Units
In May 2010, the Company issued performance stock units (“PSUs”)
under the terms of the agreement to acquire Mobly, Inc., a mobile technology
company. The Company agreed to issue up to 1,440,000 PSUs to the previous Mobly shareholders contingent on meeting certain performance-
based operational
objectives over the next three years. Upon being granted, the PSUs immediately vest as common stock. Through June 30, 2011, a total of 480,000 shares were
granted and 960,000 shares were still eligible to be granted in the future based on the performance criteria and discretion of the Board. The Company started
recording stock compensation expense at the service inception date, which began at the date of acquisition and preceded the grant date. Due
90
2009 2010 2011
Dividend yield — — —
Risk-free interest rate 2.82% 2.58% 1.79%
Expected term (in years) 6.84 6.13 4.47
Expected volatility 46% 46% 44%
Restricted Stock Units
Weighted- Average Grant Date Fair
Value (per share)
Unvested at December 31, 2010
3,576,600
$
7.16
Granted
11,626,145
$
13.47
Vested
(1,281,791
)
$
9.77
Forfeited
(1,976,110
)
$
11.94
Unvested at December 31, 2011
11,944,844
$
12.23