Â鶹×îгöÆ·

Quarterly report pursuant to Section 13 or 15(d)

Stock-Based Compensation

v2.4.0.6
Stock-Based Compensation
 3 Months Ended
Mar. 31, 2013
Share-based Compensation [Abstract] Ìý
Stock-Based Compensation
Stock-Based Compensation
Prior to the Split-Off, Â鶹×îгöÆ· Interactive granted, and Â鶹×îгöÆ· has since granted, to certain of its directors, employees and employees of its subsidiaries options and stock appreciation rights ("SARs") to purchase shares of its common stock (collectively, "Awards"). The Company measures the cost of employee services received in exchange for an Award of equity instruments (such as stock options and restricted stock) based on the grant-date fair value 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 an Award of liability instruments (such as SARs that will be settled in cash) based on the current fair value of the Award, and remeasures the fair value of the Award at each reporting date.
In connection with the Spin-Off in January 2013, all outstanding Awards with respect to Â鶹×îгöÆ· Capital common stock ("Â鶹×îгöÆ· Capital Award") were adjusted pursuant to the anti-dilution provisions of the incentive plans under which the equity awards were granted, such that a holder of a Â鶹×îгöÆ· Capital Award received (other than those held by Starz employees, as discussed below):
i.
an adjustment to the exercise price or base price, as applicable, and number of shares relating to the Â鶹×îгöÆ· Capital Award (as so adjusted, a "Â鶹×îгöÆ· Award") and
ii.
an equity award relating to shares of Starz common stock (a "Starz Award").
The exercise prices and number of shares subject to the Â鶹×îгöÆ· Award and the Starz Award were determined based on 1) the exercise prices and number of shares subject to the Â鶹×îгöÆ· Capital Award, 2) the pre-distribution trading price of Â鶹×îгöÆ· Capital common stock and 3) the post-distribution trading prices of Â鶹×îгöÆ· common stock and Starz common stock, such that (other than those held by Starz employees, as discussed below) all of the pre-distribution intrinsic value of the Â鶹×îгöÆ· Capital Award was allocated between the Â鶹×îгöÆ· Award and the Starz Award for the Company's corporate employees and directors. For employees of Starz, LLC, the pre-distribution intrinsic value of the vested Â鶹×îгöÆ· Capital Award was allocated between a vested Â鶹×îгöÆ· Award and a vested Starz Award, while the pre-distribution intrinsic value of the unvested Â鶹×îгöÆ· Capital Award was maintained solely within an unvested Starz Award.
Following the Spin-Off, employees of Â鶹×îгöÆ· and Starz hold Awards in both Â鶹×îгöÆ· common stock and Starz common stock. The compensation expense relating to the employees of Â鶹×îгöÆ· is recorded at Â鶹×îгöÆ· and the compensation expense relating to employees of Starz is recorded at Starz.
Included in the accompanying condensed consolidated statements of operations are the following amounts of stock-based compensation, a portion of which relates to SIRIUS XM as discussed below:
Ìý
Three months ended March 31,
Ìý
2013
Ìý
2012
Ìý
(amounts in millions)
Cost of subscriber services:
Ìý
Ìý
Ìý
Revenue share and royalties
$
3

Ìý
—

Programming and content
1

Ìý
—

ÌýCustomer service and billing
1

Ìý
—

Other operating expense
3

Ìý
—

Selling, general and administrative
33

Ìý
6

Ìý
$
41

Ìý
6


In the three months ended MarchÌý31, 2013, the Company did not grant any options to purchase shares of SeriesÌýA common stock.
Â鶹×îгöÆ· Interactive previously calculated, and Â鶹×îгöÆ· calculates, the grant-date fair value for all of its equity classified awards and the subsequent remeasurement of its liability classified awards using the Black-Scholes Model. Â鶹×îгöÆ· estimates the expected term of the Awards based on historical exercise and forfeiture data. The volatility used in the calculation for Awards is based on the historical volatility of Â鶹×îгöÆ· common stock and the implied volatility of publicly traded Â鶹×îгöÆ· options. Â鶹×îгöÆ· uses a zero dividend rate and the risk-free rate for Treasury Bonds with a term similar to that of the subject Awards.
Â鶹×îгöƷ—Outstanding Awards
The following table presents the number and weighted average exercise price ("WAEP") of Awards to purchase Â鶹×îгöÆ· common stock granted to certain officers, employees and directors of the Company and certain Awards of employees of Starz.
Ìý
SeriesÌýA
Ìý
Â鶹×îгöÆ·
Ìý
WAEP
Ìý
numbers of Awards in thousands
Outstanding at JanuaryÌý1, 2013
5,219

Ìý
$
98.77

Granted
—

Ìý
$
—

Exercised
(40
)
Ìý
$
69.72

Forfeited/Cancelled/Exchanged
(4
)
Ìý
$
69.06

Spin-Off adjustment
(1,195
)
Ìý
$
83.25

Outstanding at March 31, 2013
3,980

Ìý
$
90.69

Exercisable at March 31, 2013
1,528

Ìý
$
84.93


The following table provides additional information about outstanding Awards to purchase Â鶹×îгöÆ· common stock at MarchÌý31, 2013.
Ìý
No. of
outstanding
Awards
(000's)
Ìý
WAEP of
outstanding
Awards
Ìý
Weighted
average
remaining
life
Ìý
Aggregate
intrinsic
value
(000's)
Ìý
No. of
exercisable
Awards
(000's)
Ìý
WAEP of
exercisable
Awards
Ìý
Weighted
average
remaining
life
Ìý
Aggregate
intrinsic
value
(000's)
Series A Â鶹×îгöÆ·
3,980

Ìý
$
90.69

Ìý
6.1 years
Ìý
$
83,325

Ìý
1,528

Ìý
$
84.93

Ìý
5.5 years
Ìý
$
40,803


As of MarchÌý31, 2013, the total unrecognized compensation cost related to unvested Â鶹×îгöÆ· Awards was approximately $99 million, including compensation associated with the option exchange. Such amount will be recognized in the Company's consolidated statements of operations over a weighted average period of approximately 1.9Ìýyears.
As of MarchÌý31, 2013, Â鶹×îгöÆ· reserved 4.0 million Series A common stock for issuance under exercise privileges of outstanding stock Awards.
SIRIUS XM - Stock-based Compensation
During the three months ended March 31, 2013, SIRIUS XM did not grant any stock options. As of March 31, 2013, SIRIUS XM has approximately 265 million options outstanding of which approximately 90 million are exercisable, each with a weighted-average exercise price per share of $1.95 and $2.57, respectively. The stock-based compensation related to SIRIUS XM stock options was $26 million for the three months ended March 31, 2013. As of March 31, 2013, the total unrecognized compensation cost related to unvested SIRIUS XM stock options was $310 million. The SIRIUS XM unrecognized compensation cost will be recognized in the Company's consolidated statements of operations over a weighted average period of approximately 3 years.