Expedia 2013 Annual Report Download - page 109

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Modification of Stock-Based Awards. In connection with the spin-off, existing Expedia stock-based awards,
which included RSUs, stock options and warrants, were primarily converted as follows:
• each vested stock option to purchase shares of Expedia common stock converted into an option to
purchase shares of Expedia common stock and an option to purchase shares of TripAdvisor common
stock,
• each unvested stock option to purchase shares of Expedia common stock converted into a stock option
to purchase shares of common stock of the applicable company for which the employee was employed
following the spin-off,
• all RSUs converted into RSUs of the applicable company for which the employee was employed
following the spin-off, and
• each vested and unvested warrant converted into a warrant to purchase shares of Expedia common
stock and a warrant to purchase shares of TripAdvisor common stock.
The adjustments made in 2011 to the number of shares subject to each option and the option exercise prices
were based on the relative market capitalization of Expedia and TripAdvisor as of the date of the spin-off. These
modifications resulted in a one-time expense of $11 million in 2011 due to the modification of vested stock
options that remain unexercised at the date of the spin-off.
The following table presents a summary of our stock option activity:
Options(1)
Weighted Average
Exercise Price(1)
Remaining
Contractual Life
Aggregate
Intrinsic Value
(In thousands) (In years) (In thousands)
Balance as of January 1, 2011 9,103 $35.90
Granted 3,725 43.19
Exercised (1,176) 24.16
Cancelled (1,030) 32.48
Adjustments due to the spin-off(2) 4,288
Exercised — post spin-off (112) 14.13
Balance as of December 31, 2011(3) 14,798 17.96
Granted 5,586 36.36
Exercised (3,582) 13.31
Cancelled (1,566) 23.47
Balance as of December 31, 2012 15,236 25.24
Granted 4,016 65.29
Exercised (2,730) 18.10
Cancelled (1,095) 37.87
Balance as of December 31, 2013 15,427 36.03 4.4 $518,726
Exercisable as of December 31, 2013 5,625 23.78 2.8 258,071
Vested and expected to vest after
December 31, 2013 11,992 35.84 4.7 405,560
(1) Reflects the one-for-two reverse stock split on December 20, 2011.
(2) Reflects the equitable adjustment to the exercise prices and number of outstanding stock options necessary
to maintain the intrinsic value of those awards immediately prior to and following the spin-off.
(3) Outstanding options as of December 31, 2011 represent options outstanding after giving effect to the one-
for-two reverse stock split and spin-off adjustments made in order to maintain the intrinsic value of those
awards immediately prior to and immediately following the transaction.
F-27