ҹѰ

Annual report pursuant to Section 13 and 15(d)

Stock-Based Compensation

v3.8.0.1
Stock-Based Compensation
 12 Months Ended
Dec. 31, 2017
Stock-Based Compensation
Stock-Based Compensation

(14)Stock-Based Compensation

ҹѰ—Incentive Plans

Pursuant to the ҹѰ 2017 Omnibus Incentive Plan (the “2017 Plan”), the company may grant Awards to purchase shares of SeriesA, SeriesB and SeriesC ҹѰ common stock. The 2017 Plan provides for Awards to be made in respect of a maximum of 50.0million shares of ҹѰ common stock. Awards generally vest over 4-5 years and have a term of 7-10 years. ҹѰ issues new shares upon exercise of equity 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 (“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).

In connection with the Recapitalization during 2016, all outstanding Awards with respect to ҹѰ common stock (“ҹѰ Awards”) 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 ҹѰ Award received new corresponding equity awards relating to shares of one or more series of ҹѰ SiriusXM common stock, ҹѰ Braves common stock and ҹѰ Formula One common stock (collectively, the “Adjusted ҹѰ Awards”).

All of the pre-Recapitalization value of the ҹѰ Awards was allocated among the Adjusted ҹѰ Awards.

ҹѰ—Grants of stock options

Awards granted in 2017, 2016 and 2015 are summarized as follows:

YearsendedDecember31,

2017

2016

2015

Options

Weighted

Options

Weighted

Options

Weighted

granted

average

granted

average

granted

average

(000's)

GDFV

(000's)

GDFV

(000's)

GDFV

SeriesC ҹѰ common stock, ҹѰ employees and directors (1)

NA

NA

10

$

8.33

2,056

$

13.62

SeriesC ҹѰ common stock, ҹѰ CEO (2)

NA

NA

775

$

8.91

420

$

12.15

SeriesC ҹѰ SiriusXM common stock, ҹѰ employees and directors (1)

263

$

10.39

415

$
7.50

NA

NA

SeriesC ҹѰ SiriusXM common stock, ҹѰ CEO (3)

920

$

8.50

NA

NA

NA

NA

SeriesC ҹѰ Formula One common stock, ҹѰ employees and directors (1)

153

$

9.42

101

$
4.89

NA

NA

SeriesC ҹѰ Formula One common stock, ҹѰ CEO (3)

171

$

8.96

NA

NA

NA

NA

SeriesC ҹѰ Formula One common stock, Formula 1 employees (4)

2,015

$

8.16

NA

NA

NA

NA

SeriesC ҹѰ Braves common stock, ҹѰ employees and directors (1)

35

$

6.14

41

$
3.79

NA

NA

SeriesC ҹѰ Braves common stock, ҹѰ CEO (3)

149

$

6.02

NA

NA

NA

NA

(1)

Mainly vests between three and five years for employees and in one year for directors.

(2)

Grant in 2016 cliff vested in December 2016; grant in 2015 cliff vested in March 2016. Grants were made in connection with the CEO’s employment agreement.

(3)

Grants in 2017 mainly cliff vested in December 2017.

(4)

Vest monthly over one year.

In addition to the stock option grants to the ҹѰ CEO, and in connection with his employment agreement, ҹѰ granted performance-based restricted stock units (“RSUs”). During the year ended December31, 2017, ҹѰ granted 50 thousand RSUs of SeriesC ҹѰ Formula One common stock with a GDFV of $33.92 per share. During the years ended December31, 2016 and 2015, ҹѰ granted 39 thousand RSUs and 34 thousand RSUs, respectively, of SeriesC ҹѰ common stock. Such RSUs had a GDFV of $37.76 per share and $38.20 per share, respectively. The 2017, 2016 and 2015 performance-based RSUs cliff vested in one year, subject to the satisfaction of certain performance objectives and based on an amount determined by the compensation committee. Performance objectives, which are subjective, are considered in determining the timing and amount of the compensation expense recognized. As the satisfaction of the performance objectives becomes probable, the Company records compensation expense. The value of the grant is remeasured at each reporting period.

The Company did not grant any options to purchase SeriesA or SeriesB of ҹѰ SiriusXM, ҹѰ Braves or ҹѰ Formula One common stock during the year ended December31, 2017.

The Company has calculated the GDFV for all of its equity 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 2017, 2016 and 2015, the range of expected terms was 3.5 to 6.7 years. The volatility used in the calculation for Awards is based on the historical volatility of ҹѰ’s stocks and the implied volatility of publicly traded ҹѰ options. The Company uses a zero dividend rate and the risk-free rate for Treasury Bonds with a term similar to that of the subject options.

The following table presents the volatilities used by the Company in the Black-Scholes Model for the 2017, 2016 and 2015 grants.

Volatility

2017 grants

ҹѰ options

22.6

%

-
29.8

%

2016 grants

ҹѰ options

22.6

%

-
26.8

%

2015 grants

ҹѰ options

24.7

%

-
36.7

%

ҹѰ—Outstanding Awards

The following table presents the number and weighted average exercise price (“WAEP”) of Awards to purchase ҹѰ 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.

ҹѰ SiriusXM

SeriesA

Weighted

Aggregate

average

intrinsic

ҹѰ

remaining

value

Awards(000's)

WAEP

life

(in millions)

Outstanding at January1, 2017

2,018

$

19.39

Granted

—

$

—

Exercised

(392)

$

17.74

Forfeited/Cancelled

—

$

—

Outstanding at December 31, 2017

1,626

$

19.78

2.0

years

$

32

Exercisable at December31, 2017

1,615

$

19.73

2.0

years

$

32

SeriesC

Weighted

Aggregate

average

intrinsic

ҹѰ

remaining

value

Awards(000's)

WAEP

life

(in millions)

Outstanding at January1, 2017

11,008

$

25.91

Granted

1,183

$

37.65

Exercised

(810)

$

18.14

Forfeited/Cancelled

(53)

$

32.74

Outstanding at December 31, 2017

11,328

$

27.66

4.1

years

$

136

Exercisable at December31, 2017

5,882

$

25.77

3.6

years

$

82

ҹѰ Formula One

SeriesA

Weighted

Aggregate

average

intrinsic

ҹѰ

remaining

value

Awards(000's)

WAEP

life

(in millions)

Outstanding at January1, 2017

455

$

11.55

Granted

—

$

—

Exercised

(55)

$

10.55

Forfeited/Cancelled

—

$

—

Outstanding at December 31, 2017

400

$

11.69

2.0

years

$

8

Exercisable at December31, 2017

397

$

11.66

2.0

years

$

8

SeriesC

Weighted

Aggregate

average

intrinsic

ҹѰ

remaining

value

Awards(000's)

WAEP

life

(in millions)

Outstanding at January1, 2017

2,611

$

15.18

Granted

2,339

$

34.04

Exercised

(177)

$

11.08

Forfeited/Cancelled

(13)

$

19.78

Outstanding at December 31, 2017

4,760

$

24.59

5.0

years

$

46

Exercisable at December31, 2017

2,380

$

24.42

4.7

years

$

23

ҹѰ Braves

SeriesA

Weighted

Aggregate

average

intrinsic

ҹѰ

remaining

value

Awards(000's)

WAEP

life

(in millions)

Outstanding at January1, 2017

189

$

11.30

Granted

—

$

—

Exercised

(10)

$

8.83

Forfeited/Cancelled

—

$

—

Outstanding at December 31, 2017

179

$

11.43

2.0

years

$

2

Exercisable at December31, 2017

178

$

11.41

2.0

years

$

2

SeriesC

Weighted

Aggregate

average

intrinsic

ҹѰ

remaining

value

Awards(000's)

WAEP

life

(in millions)

Outstanding at January1, 2017

1,073

$

14.92

Granted

184

$

23.37

Exercised

(21)

$

9.05

Forfeited/Cancelled

(5)

$

19.01

Outstanding at December 31, 2017

1,231

$

16.27

4.1

years

$

8

Exercisable at December31, 2017

686

$

15.71

3.7

years

$

5

There were no outstanding SeriesB options to purchase shares of SeriesB ҹѰ SiriusXM common stock, ҹѰ Formula One common stock or ҹѰ Braves common stock during 2017.

As of December31, 2017, the total unrecognized compensation cost related to unvested ҹѰ Awards was approximately $30million. Such amount will be recognized in the Company’s consolidated statements of operations over a weighted average period of approximately 1.7years.

As of December31, 2017, 13.0million, 5.2million and 1.4million shares of SeriesA and SeriesC ҹѰ SiriusXM, ҹѰ Formula One and ҹѰ Braves common stock, respectively, were reserved for issuance under exercise privileges of outstanding stock Awards.

ٲ̧

The aggregate intrinsic value of all options exercised during the years ended December31, 2017, 2016 and 2015 was $31million, $24million and $40million, respectively.

ҹѰ—Restricted Stock

The Company had approximately 229 thousand,137 thousand and 26 thousand unvested restricted shares of ҹѰ SiriusXM, ҹѰ Formula One, and ҹѰ Braves common stock, respectively, held by certain directors, officers and employees of the Company as of December31, 2017. These SeriesA and SeriesC unvested restricted shares of ҹѰ SiriusXM common stock, ҹѰ Formula One common stock and ҹѰ Braves common stock had a weighted average GDFV of $25.30,$28.43, and $17.04 per share, respectively.

The aggregate fair value of all restricted shares of ҹѰ common stock that vested during the years ended December31, 2017, 2016 and 2015 was $85million, $7million and $2million, respectively.

SIRIUSXM—Stock-based Compensation

During the year ended December31, 2017, SIRIUSXM granted stock options and restricted stock units (“RSUs”) to its employees and members of its board of directors. During the years ended December31, 2017 and 2016, SIRIUSXM also granted performance-based restricted stock units (“PRSUs”) to certain employees, the vesting of which is subject to the employee’s continuing employment and SIRIUSXM’s achievement of certain performance goals. The PRSUs awards cliff vest on the three-year anniversary of the grant date. SIRIUSXM also calculates the grant-date fair value for all of its equity classified awards and any subsequent remeasurement of its liability classified awards using the Black-Scholes Model. The weighted average volatility applied to the fair value determination of SIRIUSXM’s option grants during 2017, 2016 and 2015 was 24%, 22%and 29%, respectively. During the year ended December31, 2017, SIRIUSXM granted approximately 27.3million stock options with a weighted-average exercise price of $5.49 per share and a grant date fair value of $1.17 per share. As of December31, 2017, SIRIUSXM has approximately 280.5million options outstanding of which approximately 131million are exercisable, each with a weighted-average exercise price per share of $3.76 and $3.23, respectively. The aggregate intrinsic value of these outstanding and exercisable options was $454million and $279.1million, respectively. During the year ended December31, 2017, SIRIUSXM granted approximately 11.7million RSUs and PRSUs with a grant date fair value of $5.35 per share. The stock-based compensation related to SIRIUSXM stock options and restricted stock awards was $124million, $109million and $157million for the years ended December31, 2017, 2016, and 2015, respectively. As of December31, 2017, the total unrecognized compensation cost related to unvested SIRIUSXM stock options was $242million. The SIRIUSXM unrecognized compensation cost will be recognized in the Company’s consolidated statements of operations over a weighted average period of approximately 2.5 years.