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Stock-Based Compensation
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Jun. 30, 2014
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| Share-based Compensation [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Stock-Based Compensation |
Stock-Based Compensation
Liberty grants, 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 services (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.
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:
During the six months ended June 30, 2014, the Company granted approximately one thousand options to purchase shares of Series A Liberty common stock at a weighted average grant-date fair value of $38.86 per share. These options vest quarterly over a 4 year vesting period.
Liberty 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. Liberty 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 Liberty common stock and the implied volatility of publicly traded Liberty options. Liberty uses a zero dividend rate and the risk-free rate for Treasury Bonds with a term similar to that of the subject Awards.
Liberty—Outstanding Awards
The following table presents the number and weighted average exercise price ("WAEP") of Awards to purchase Liberty common stock granted to certain officers, employees and directors of the Company and certain Awards of employees of Starz.
On July 23, 2014 a dividend of Series C common stock was distributed and adjustments to the options outstanding were required to reflect the changes to the capital structure of the Company. For every Series A Award held, two Series C Awards were issued with an exercise price equal to one third the exercise price of the outstanding award. Additionally, the exercise price of the outstanding Series A Awards was adjusted to one third the exercise price associated with such Award. The change to outstanding Awards did not change the aggregate intrinsic value associated with the Awards outstanding just prior to the distribution and the Awards outstanding immediately following the distribution.
As of June 30, 2014, the total unrecognized compensation cost related to unvested Liberty Awards was approximately $43 million, including compensation associated with the option exchange that occurred in December 2012. Such amount will be recognized in the Company's consolidated statements of operations over a weighted average period of approximately 1.6 years.
As of June 30, 2014, Liberty reserved 3.5 million shares of Series A common stock for issuance under exercise privileges of outstanding stock Awards.
SIRIUS XM - Stock-based Compensation
During the six months ended June 30, 2014, SIRIUS XM granted stock options and restricted stock units to its employees and members of its board of directors. As of June 30, 2014, SIRIUS XM has approximately 252 million options outstanding of which approximately 104 million are exercisable, each with a weighted-average exercise price per share of $2.44 and $2.15, respectively. The aggregate intrinsic value of SIRIUS XM options outstanding and exercisable as of June 30, 2014 is $300 million and $169 million, respectively. The stock-based compensation related to SIRIUS XM stock options was $35 million and $33 million for the three months ended June 30, 2014 and 2013, respectively, and $71 million and $59 million for the six months ended June 30, 2014 and 2013, respectively. As of June 30, 2014, the total unrecognized compensation cost related to unvested SIRIUS XM stock options was $239 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 2.2 years.
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