LinkedIn 2014 Annual Report Download - page 115

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RSU Activity
A summary of RSU activity in 2014, is as follows:
Weighted-
Average
Number of Grant Date
Shares Fair Value
Unvested—December 31, 2013 .................................. 4,048,089 $144.53
Assumed from acquisitions ..................................... 5,582 175.34
Granted ................................................... 3,411,742 195.36
Released .................................................. (1,628,389) 147.29
Canceled .................................................. (696,397) 149.08
Unvested—December 31, 2014 .................................. 5,140,627 $176.78
The intrinsic value of RSUs released was approximately $317.7 million, $238.8 million and
$29.8 million for the years ended December 31, 2014, 2013 and 2012, respectively. The total intrinsic
value of unvested RSUs as of December 31, 2014 was $1,180.9 million. The total RSUs expected to
vest as of December 31, 2014 was 4,562,072 shares with an intrinsic value of $1,047.9 million. As of
December 31, 2014, total unrecognized compensation cost, adjusted for estimated forfeitures, related
to RSUs was approximately $743.6 million, which is expected to be recognized over the next
2.82 years.
Restricted Stock
In connection with certain acquisitions, the Company has granted 202,454 shares of restricted
stock. As of December 31, 2014, the total unrecognized compensation cost related to restricted stock
was approximately $47.5 million, which is expected to be recognized over the next 1.57 years.
Stock-Based Compensation Expense
The fair value of options granted to employees is estimated on the grant date using the Black-
Scholes option valuation model. This valuation model for stock-based compensation expense requires
the Company to make assumptions and judgments about the variables used in the calculation,
including the expected term, the volatility of the Company’s common stock, a risk-free interest rate, and
expected dividends. Beginning in 2014, the Company transitioned from using the simplified method for
calculating the expected term of options as described in the SEC’s Staff Accounting Bulletin No. 107,
Share-Based Payment, because it believes there is sufficient historical information to derive a
reasonable estimate. The calculation considers a combination of historical and estimated future
exercise behavior. The volatility for stock options is based on an average of the historical volatilities of
the common stock of several entities with characteristics similar to those of the Company. The volatility
for ESPP is based on the historical volatility of the Company’s common stock. The risk-free rate is
based on the U.S. Treasury yield curve in effect at the time of grant for periods corresponding with the
expected life of the option. The Company uses an expected dividend yield of zero as it does not
anticipate paying any dividends in the foreseeable future. The Company also estimates forfeitures of
unvested stock options based on the Company’s historical experience. To the extent actual forfeitures
differ from the estimates, the difference will be recorded as a cumulative adjustment in the period
estimates are revised. Compensation cost is not recorded for options that do not vest.
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