America Online 2014 Annual Report Download - page 116

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AOL INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
offering period. The Company has accounted for the ESPP as compensatory given the presence of a look-back
feature, a 15% stock purchase discount from market price which is significant and incremental, and the fact that
plan terms are not available to all common stock holders. A maximum of 9.0 million shares is available for
issuance pursuant to the ESPP as of December 31, 2014.
2014 Acquisitions of Gravity, Convertro and Vidible
In connection with the acquisitions of Gravity, Convertro and Vidible, the Company converted and issued
replacement awards to the employees of the acquired companies. The Company issued restricted stock awards
with an aggregate fair value of $5.7 million to replace unvested in-the-money options held by these employees.
Of the total fair value of the stock awards issued, $1.5 million was related to pre-acquisition service and was
recognized as purchase consideration. The remaining $4.2 million fair value is being recognized as equity-based
compensation expense over the remaining requisite service periods. An additional $5.9 million of fair value of
unvested AOL restricted stock issued to employees in connection with these acquisitions is being recognized as
equity-based compensation expense over the remaining award service periods. See “Note 4” for additional
information on the acquisitions of and the related stock conversions.
2013 Acquisition of Adap.tv
In connection with the acquisition of Adap.tv in September 2013, the Company replaced unvested in-the-
money options held by Adap.tv employees under the Adap.tv Plan with approximately 1.1 million shares of
unvested AOL restricted stock with a fair value of $35.6 million in aggregate. Of the converted options, $24.8
million is expected to be recognized as equity-based compensation expense over the remaining award vesting
periods. In addition, the Company also issued to Adap.tv employees approximately 0.3 million shares of
unvested AOL restricted stock awards (“RSAs”) with a fair value of $10.5 million in aggregate. The fair value of
the restricted awards is expected to be recognized as equity-based compensation expense over the remaining
portion of the original 3 to 4 years vesting period for each respective award. See “Note 4” for additional
information on the acquisition of Adap.tv and the related stock conversion.
Equity-Based Compensation Expense
Compensation expense recognized by AOL related to its equity-based compensation plans is as follows (in
millions):
Years Ended December 31,
2014 2013 2012
Stock options ......................................................... $ 9.0 $ 11.2 $ 17.7
Restricted stock, RSUs and PSUs ......................................... 59.4 33.7 21.6
Employee Stock Purchase Program ........................................ 2.3 2.1 0.2
Total equity-based compensation expense ................................... $ 70.7 $ 47.0 $ 39.5
Tax benefit recognized .................................................. $ 27.6 $ 18.3 $ 15.5
100