(12) Stock-Based Compensation

Included in the accompanying consolidated statements of operations are the following amounts of stock-based compensation for the years ended December 31, 2021, 2020 and 2019 (amounts in millions):

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Liberty Broadband - Incentive Plans

Liberty Broadband grants, to certain of its directors, employees and employees of its subsidiaries, restricted stock units (“RSUs”) and stock options to purchase shares of its common stock (collectively, "Awards"). The Company measures the cost of employee services received in exchange for an equity classified Award (such as stock options and restricted stock) based on the grant-date fair value (“GDFV”) of the Award, and recognizes that cost over the period during which the employee is required to provide service (usually the vesting period of the Award). The Company measures the cost of employee services received in exchange for a liability classified Award based on the current fair value of the Award, and re-measures the fair value of the Award at each reporting date.

Pursuant to the Liberty Broadband 2019 Omnibus Incentive Plan, as amended, the Company may grant Awards to be made in respect of a maximum of 6.0 million shares of Liberty Broadband common stock. In addition, and in connection with the Combination at the close of business on December 18, 2020 (the “Effective Date”), the number of shares of common stock of GCI Liberty that remained available for issuance immediately prior to the Effective Date of the Combination under the GCI Liberty, Inc. 2018 Omnibus Incentive Plan (“GCI Liberty 2018 Plan”), as amended, were converted to 3.7 million shares of Liberty Broadband common stock and are available for use provided that:

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Awards generally vest over 1-5 years and have a term of 7-10 years. Liberty Broadband issues new shares upon exercise of equity awards.

Liberty Broadband – Grants

During the years ended December 31, 2021, 2020 and 2019, Liberty Broadband granted 167 thousand, 389 thousand and 302 thousand options, respectively, to purchase shares of Series C Liberty Broadband common stock (“LBRDK”) to our CEO. Such options had a weighted average GDFV of $40.05, $38.23 and $31.12 per share, respectively, at the time they were granted and vested or will vest, as applicable, on December 31, 2021, December 31, 2024 and December 31, 2023, respectively. The 2020 and 2019 grants include two upfront option grants related to the CEO’s employment agreement. See discussion in note 1 regarding the compensation agreement with the Company’s CEO.

During the year ended December 31, 2020, Liberty Broadband granted 2 thousand time-based RSUs of LBRDK to our CEO. The RSUs had a GDFV of $120.71 per share and cliff vested on December 10, 2020.  This RSU grant was issued in lieu of our CEO receiving 50% of his remaining base salary for the last three quarters of calendar year 2020, and he waived his right to receive the other 50%, in each case, in light of the ongoing financial impact of COVID-19.

During the year ended December 31, 2019, Liberty Broadband granted 25 thousand performance-based RSUs of LBRDK to our CEO. The RSUs had a GDFV of $88.99 per share at the time they were granted and cliff vested one year from the month of grant, subject to satisfaction of certain performance objectives. Performance objectives, which are subjective, are considered in determining the timing and amount of compensation expense recognized. When the satisfaction of the performance objectives becomes probable, the Company records compensation expense. The probability of satisfying the performance objectives is assessed at the end of each reporting period.

During the years ended December 31, 2021, 2020 and 2019, Liberty Broadband granted to its employees 30 thousand, 151 thousand and 41 thousand options, respectively, to purchase shares of LBRDK. Such options had a weighted average GDFV of $40.61, $41.06 and $32.21 per share, respectively, and vest between two and five years.

During the years ended December 31, 2021, 2020 and 2019, Liberty Broadband granted 26 thousand, 15 thousand and 8 thousand options, respectively, to purchase shares of LBRDK to its non-employee directors with a weighted average GDFV of $41.71, $37.78 and $31.18 per share, respectively, which mainly cliff vest over a one year vesting period.

There were no options to purchase shares of Series A Liberty Broadband common stock (“LBRDA”) or Series B Liberty Broadband common stock (“LBRDB”) granted during 2021, 2020 or 2019.

The Company has calculated the GDFV for all of its equity classified awards and any subsequent re-measurement of its liability classified awards using the Black-Scholes Model. The Company estimates the expected term of the Awards based on historical exercise and forfeiture data. For grants made in 2021, 2020 and 2019, the range of expected terms was 5.1 to 6.3 years. The volatility used in the calculation for Awards is based on the historical volatility of Liberty Broadband common stock. For grants made in 2021, 2020 and 2019, the range of volatilities was 25.1% to 27.4%. The Company uses a zero dividend rate and the risk-free rate for Treasury Bonds with a term similar to that of the subject option.

In connection with the Combination, on the Effective Date:

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Liberty Broadband – Outstanding Awards

The following table presents the number and weighted average exercise price (“WAEP”) of Awards to purchase Liberty Broadband common stock granted to certain officers, employees and directors of the Company, as well as the weighted average remaining life and aggregate intrinsic value of the Awards.

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As of December 31, 2021, Liberty Broadband also had 1 thousand LBRDA options outstanding and exercisable at a WAEP of $35.81 and a weighted average remaining contractual life of 1.0 year.

During the year ended December 31, 2021, our CEO exercised 370 thousand LBRDB options at an exercise price of $97.21 per share. Immediately following this exercise, the resulting LBRDB shares were exchanged for the same number of LBRDK shares pursuant to the terms of a stipulation and order where Mr. Maffei agreed to exchange LBRDB shares for LBRDK shares following the exercise of certain stock options. As of December 31, 2021, Liberty Broadband had 352 thousand LBRDB options outstanding and exercisable at a WAEP of $96.35, a weighted average remaining contractual life of 2.2 years and aggregate intrinsic value of $23 million.

As of December 31, 2021, the total unrecognized compensation cost related to unvested Liberty Broadband Awards was approximately $51 million. Such amount will be recognized in the Company’s consolidated statements of operations over a weighted average period of approximately 1.5 years.

As of December 31, 2021, Liberty Broadband reserved 4 million shares of Series A, Series B and Series C common stock for issuance under exercise privileges of outstanding stock Awards.

Liberty Broadband – Exercises

The aggregate intrinsic value of all options exercised during the years ended December 31, 2021, 2020 and 2019 was $27 million, $1 million and $92 million, respectively.

Liberty Broadband – Restricted Stock and Restricted Stock Units

The aggregate fair value of all LBRDA, LBRDK and LBRDP RSAs and RSUs that vested during the years ended December 31, 2021, 2020 and 2019 was $28 million, $5 million and $3 million, respectively.

As of December 31, 2021, the Company had approximately 261 thousand unvested RSAs and RSUs of LBRDA, LBRDK and LBRDP held by certain directors, officers and employees of the Company with a weighted average GDFV of $150.51 per share.