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Stock-Based Plans
 9 Months Ended
Sep. 30, 2015
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]  
Stock-Based Plans
Stock-Based Plans

In connection with the Distribution, restricted and deferred stock awards and employee stock option awards were modified and converted into new equity awards using conversion ratios designed to preserve the value of these awards to the holders immediately prior to the Distribution. On July 17, 2015, employees holding stock options, restricted stock awards or units, deferred stock awards, and Employee Stock Purchase Plan (ESPP) awards denominated in pre-Distribution eBay stock received a number of otherwise-similar awards in post-Distribution eBay stock and/or PayPal stock based on the conversion ratios outlined for each group of employees in the Employee Matters Agreement. Adjustments to our outstanding stock based compensation awards, including ESPP awards, resulted in additional compensation expense of approximately $68 million to be recognized over the remaining vesting life of the underlying awards.

Stock Option Activity

The following table summarizes stock option activity for the nine months ended September 30, 2015:  
 
Options
 
(In millions)
Outstanding as of January 1, 2015
10

Granted and assumed
2

Exercised
(5
)
Forfeited/expired/canceled
(1
)
Adjustment due to the Distribution
2

Outstanding as of September 30, 2015
8



The weighted average exercise price of stock options granted during the period was $48.99 per share and the related weighted average grant date fair value was $13.58 per share.

Restricted Stock Unit Activity

The following table summarizes restricted stock unit ("RSU") activity for the nine months ended September 30, 2015:  
 
Units 
 
(In millions)
Outstanding as of January 1, 2015
36

Awarded and assumed
18

Vested
(12
)
Forfeited
(7
)
Adjustment due to the Distribution
10

Outstanding as of September 30, 2015
45



The weighted average grant date fair value for RSUs awarded during the period was $56.35 per share.

 Stock-Based Compensation Expense

The impact on our results of operations of recording stock-based compensation expense for the three and nine months ended September 30, 2015 and 2014 was as follows:
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
2015
 
2014
 
2015
 
2014
 
(In millions)
Cost of net revenues
$
10

 
$
8

 
$
28

 
$
23

Sales and marketing
28

 
24

 
75

 
71

Product development
29

 
30

 
83

 
90

General and administrative
26

 
24

 
115

 
67

Total stock-based compensation expense
$
93

 
$
86

 
$
301

 
$
251

Capitalized in product development
$
3

 
$
3

 
$
9

 
$
9



Stock Option Valuation Assumptions

We calculated the fair value of each stock option award on the date of grant using the Black-Scholes option pricing model. The following weighted average assumptions were used for the three and nine months ended September 30, 2015 and 2014:  
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
2015
 
2014
 
2015
 
2014
Risk-free interest rate
1.47
%
 
1.27
%
 
1.39
%
 
1.19
%
Expected life (in years)
4.4

 
3.9

 
4.1

 
4.1

Dividend yield
—
%
 
—
%
 
—
%
 
—
%
Expected volatility
26
%
 
27
%
 
27
%
 
29
%


Our computation of expected volatility is based on a combination of historical and market-based implied volatility from traded options on our common stock. Our computation of expected life is based on historical experience of similar awards, giving consideration to the contractual terms of the stock-based awards, vesting schedules and expectations of future employee behavior. The interest rate for periods within the contractual life of the award is based on the U.S. Treasury yield curve in effect at the time of grant.