ҹѰ

Quarterly report pursuant to Section 13 or 15(d)

Stock-Based Compensation

v3.7.0.1
Stock-Based Compensation
 6 Months Ended
Jun. 30, 2017
Stock-Based Compensation
Stock-Based Compensation

(4)Stock-Based Compensation

ҹѰ grants, to certain of its directors, employees and employees of its subsidiaries, restricted stock, 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 remeasures the fair value of the Award at each reporting date.

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:

Three months ended

Six months ended

June 30,

June 30,

2017

2016

2017

2016

(amountsinmillions)

Cost of subscriber services:

Programming and content

$

7

4

14

8

Customer service and billing

1

1

2

2

Other

1

1

2

2

Other operating expense

3

3

7

6

Selling, general and administrative

41

25

72

50

$

53

34

97

68

During the six months ended June 30, 2017, and in connection with our CEO’s employment agreement, ҹѰ granted approximately920 thousand,149 thousand and 171 thousand options to purchase shares of Series C common stock of ҹѰ SiriusXM, ҹѰ Bravesand ҹѰ Formula One, respectively, and 50 thousand RSUs of Series C ҹѰ Formula One common stock,of which 29 thousand RSUs were performance-based. Such options had a weighted average GDFV of$8.50,$6.02 and $8.96 per share, respectively, and the RSUs had a GDFV of $33.92 per share. These options mainly vest on December 31, 2017, the time-based RSUs vested immediately upon grant, and the performance-based RSUs cliff vest in one year, subject to satisfaction of certain performance objectives. 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.

Also during the six months ended June 30, 2017, ҹѰ granted 2.0 million options to Formula 1 employees to purchase shares of Series C ҹѰ Formula One common stock.Such options had a weighted average GDFV of $8.16 per share and vest monthly over one year.

Additionally, ҹѰ granted to ҹѰ employees148thousand, 19 thousand and 77 thousand options to purchase shares of Series C common stock of ҹѰ SiriusXM, ҹѰ Braves and ҹѰ Formula One, respectively, during the six months endedJune 30, 2017. Such options had a weighted average GDFV of$9.64, $6.11 and $9.25 per share, respectively, and mainly vest semi-annually over four years.

The Company did not grant anyoptions to purchase SeriesA or SeriesB of ҹѰ SiriusXM, ҹѰ Braves or ҹѰ Formula One common stock during the six months endedJune 30, 2017.

ҹѰ calculates the GDFV for all of its equity classified awards and the subsequent remeasurement of its liability classified and certain performance-based awards using the Black-Scholes Model. ҹѰ 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 ҹѰ common stock and the implied volatility of publicly traded ҹѰ options. ҹѰ uses a zero dividend rate and the risk-free rate for Treasury Bonds with a term similar to that of the subject Awards.

ҹѰ—Outstanding Awards

The following tables present 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 and certain Awards of employees of Lions Gate Entertainment Corp. (formerly employees of Starz).

ҹѰ SiriusXM

SeriesA

SeriesC

Weighted

Aggregate

Weighted

Aggregate

average

intrinsic

average

intrinsic

ҹѰ

remaining

value

ҹѰ

remaining

value

Awards(000's)

WAEP

life

(millions)

Awards(000's)

WAEP

life

(millions)

Outstanding at January1, 2017

2,018

$

19.39

11,008

$

25.91

Granted

—

$

—

1,068

$

37.12

Exercised

(335)

$

17.62

(620)

$

17.42

Forfeited/Cancelled

—

$

—

(50)

$

32.58

Outstanding at June 30, 2017

1,683

$

19.74

2.5

years

$

37

11,406

$

27.39

4.5

years

$

163

Exercisable at June 30, 2017

1,665

$

19.68

2.4

years

$

37

5,085

$

23.52

3.5

years

$

92

ҹѰ Braves

SeriesA

SeriesC

Weighted

Aggregate

Weighted

Aggregate

average

intrinsic

average

intrinsic

ҹѰ

remaining

value

ҹѰ

remaining

value

Awards(000's)

WAEP

life

(millions)

Awards(000's)

WAEP

life

(millions)

Outstanding at January1, 2017

189

$

11.30

1,073

$

14.92

Granted

—

$

—

168

$

23.45

Exercised

(10)

$

8.83

(21)

$

8.95

Forfeited/Cancelled

—

$

—

(5)

$

18.84

Outstanding at June 30, 2017

179

$

11.43

2.5

years

$

2

1,215

$

16.18

4.6

years

$

9

Exercisable at June 30, 2017

178

$

11.41

2.5

years

$

2

544

$

13.74

3.6

years

$

6

ҹѰ Formula One

SeriesA

SeriesC

Weighted

Aggregate

Weighted

Aggregate

average

intrinsic

average

intrinsic

ҹѰ

remaining

value

ҹѰ

remaining

value

Awards(000's)

WAEP

life

(millions)

Awards(000's)

WAEP

life

(millions)

Outstanding at January1, 2017

455

$

11.55

2,611

$

15.18

Granted

—

$

—

2,263

$

33.98

Exercised

(53)

$

10.50

(145)

$

10.43

Forfeited/Cancelled

—

$

—

(12)

$

18.83

Outstanding at June 30, 2017

402

$

11.69

2.5

years

$

9

4,717

$

24.34

5.5

years

$

58

Exercisable at June 30, 2017

398

$

11.66

2.5

years

$

9

1,443

$

17.84

4.2

years

$

27

As of June 30, 2017, the total unrecognized compensation cost related to unvested Awards was approximately $43 million.Such amount will be recognized in the Company's condensed consolidated statements of operations over a weighted average period of approximately 2.1years.

As of June 30, 2017, ҹѰ reserved 13.1 million, 1.4 million and 5.1 million shares of Series A and Series C common stock of ҹѰ SiriusXM, ҹѰ Braves and ҹѰ Formula One, respectively, for issuance under exercise privileges of outstanding stock Awards.

SIRIUS XM - Stock-based Compensation

SIRIUS XM granted various types of stock awards to its employees and members of its board of directors during the six months endedJune 30, 2017. As of June 30, 2017, SIRIUS XM has approximately 311 million options outstanding of which approximately 22 million are exercisable, each with a weighted-average exercise price per share of $3.56 and $2.91, respectively. The aggregate intrinsic value of SIRIUS XM options outstanding and exercisable as of June 30, 2017 is $594 million and $291 million, respectively. In addition, as of June 30, 2017, SIRIUS XM has granted approximately 30 million nonvested restricted stock units with a grant date fair value per share of $4.07. The stock-based compensation expense related to SIRIUS XM was $30 million and $24 million for the three months endedJune 30, 2017 and 2016, respectively, and $59 million and $48 million for the six months ended June 30, 2017 and 2016, respectively. As of June 30, 2017, the total unrecognized compensation cost related to unvested SIRIUS XM stock options and restricted stock units was $231 million. The SIRIUS XM unrecognized compensation cost will be recognized in the Company's condensed consolidated statements of operations over a weighted average period of approximately 2.2years.