LinkedIn 2014 Annual Report Download - page 116

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The following table presents the weighted-average assumptions used to estimate the fair value of
options granted during the periods presented, excluding assumed acquisition-related stock options:
Year Ended
December 31,
2014 2013 2012
Volatility ..................................................... 45% 54% 54%
Expected dividend yield ..........................................———
Risk-free rate .................................................. 1.17% 1.15% 0.95%
Expected term (in years) .......................................... 4.07 6.27 6.08
The weighted-average grant date fair value of options granted, excluding assumed acquisition-
related stock options, was $76.39, $89.13 and $51.76, for the years ended December 31, 2014, 2013
and 2012, respectively. The weighted-average grant date fair value of assumed acquisition-related
stock options for the years ended December 31, 2014 and 2013 was $164.71 and $166.08,
respectively.
The following table presents the weighted-average assumptions used to estimate the fair value of
the ESPP during the periods presented:
Year Ended
December 31,
2014 2013 2012
Volatility ..................................................... 44% 42% 48%
Expected dividend yield ..........................................———
Risk-free rate .................................................. 0.06% 0.10% 0.14%
Expected term (in years) .......................................... 0.50 0.50 0.50
The following table presents the amount of stock-based compensation related to stock-based
awards to employees on the Company’s consolidated statements of operations during the periods
presented (in thousands):
Year Ended December 31,
2014 2013 2012
Cost of revenue ...................................... $ 28,617 $ 15,600 $ 6,416
Sales and marketing .................................. 60,166 36,187 17,726
Product development .................................. 154,856 98,861 46,026
General and administrative .............................. 75,494 43,267 16,151
Total stock-based compensation ........................ 319,133 193,915 86,319
Tax benefit from stock-based compensation .................. (90,542) (52,559) (20,395)
Total stock-based compensation, net of tax effect ............ $228,591 $141,356 $ 65,924
The Company capitalized $13.1 million, $9.2 million and $3.4 million of stock-based compensation
as website development costs for the years ended December 31, 2014, 2013 and 2012, respectively.
Management modified or accelerated the vesting terms for certain employee options, which resulted in
an additional $0.1 million, $1.3 million and $3.0 million of stock-based compensation expense for the
years ended December 31, 2014, 2013 and 2012, respectively.
13. Income Taxes
The Company accounts for income taxes in accordance with authoritative guidance, which requires
the use of the asset and liability method. Under this method, deferred income tax assets and liabilities
114