Stockholders' Equity

3 Months Ended

Mar. 31, 2015

Equity [Abstract]

Stockholders' Equity

Stockholders’ Equity

Stock Split Effected In Form of Stock Dividend

In January 2014, our board of directors approved the distribution of shares of Class C capital stock as a dividend to our holders of Class A and Class B common stock (the Stock Split). The Stock Split had a record date of March 27, 2014 and a payment date of April 2, 2014. 

In accordance with a settlement of litigation involving the authorization to distribute Class C capital stock, at the close of trading on April 2, 2015, the last trading day of the 365 day period following the first date the Class C shares traded on NASDAQ (Lookback Period), we determined that a payment (the Adjustment Payment) in the amount of $522 million was due. The amount of the Adjustment Payment was based on the percentage difference that developed between the volume-weighted average price of Class A and Class C shares during the Lookback Period, as supplied by NASDAQ Data-on-Demand, and was payable to holders of Class C capital stock as of the end of the Lookback Period in cash, Class A common stock, Class C capital stock, or a combination thereof, at the discretion of our board of directors. On April 22, 2015, our board of directors approved the Adjustment Payment to be paid on or about May 4, 2015 in shares of Class C capital stock, and cash in lieu of any fractional shares of Class C capital stock.

In the quarter ending June 30, 2015, the Adjustment Payment will be allocated to the numerator for calculating net income per share of Class C capital stock from net income available to shareholders and any remaining undistributed earnings will be allocated on a pro rata basis to Class A and Class B common stock and Class C capital stock based on the number of shares used in the per share computation for each class of stock. The dilutive impact of the Adjustment Payment is included in the weighted-average effect of dilutive securities for Class C capital stock in the three months ended March 31, 2015.

Stock-Based Award Activities

The following table summarizes the activities for our stock options for the three months ended March 31, 2015:

	Options Outstanding
	Number of Shares		Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Term (in years)	Aggregate Intrinsic Value (in millions) (1)
	(unaudited)
Balance as of December 31, 2014	7,240,419		$	215.56
Granted	0		N/A
Exercised	(619,179	)	$	179.33
Forfeited/canceled	(4,153	)	$	312.03
Balance as of March 31, 2015	6,617,087		$	218.88	4.2	$	2,200
Exercisable as of March 31, 2015	5,681,295		$	203.22	3.8	$	1,978
Exercisable as of March 31, 2015 and expected to vest thereafter (2)	5,901,780		$	217.40	4.2	$	2,176

⁽¹⁾  The aggregate intrinsic value is calculated as the difference between the exercise price of the underlying awards and the closing stock price of $554.70 and $548.00 for our Class A common stock and Class C capital stock, respectively, on March 31, 2015.

⁽²⁾  Options expected to vest reflect an estimated forfeiture rate.

As of March 31, 2015, there was $38 million of unrecognized compensation cost related to outstanding Google employee stock options. This amount is expected to be recognized over a weighted-average period of 1.1 years. To the extent the actual forfeiture rate is different from what we have estimated, stock-based compensation expense related to these awards will be different from our expectations.

The following table summarizes the activities for our unvested restricted stock units (RSUs) for the three months ended March 31, 2015:

	Unvested Restricted Stock Units
	Number of Shares		Weighted- Average Grant-Date Fair Value
	(unaudited)
Unvested as of December 31, 2014	24,619,549		$	487.80
Granted	1,233,138		$	527.84
Vested	(2,617,997	)	$	434.04
Forfeited/canceled	(378,918	)	$	479.95
Unvested as of March 31, 2015	22,855,772		$	496.25
Expected to vest after March 31, 2015 (1)	20,385,063		$	496.25

⁽¹⁾  RSUs expected to vest reflect an estimated forfeiture rate.

As of March 31, 2015, there was $9.1 billion of unrecognized compensation cost related to unvested Google employee RSUs. This amount is expected to be recognized over a weighted-average period of 2.7 years. To the extent the actual forfeiture rate is different from what we have estimated, stock-based compensation expense related to these awards will be different from our expectations.