|6 Months Ended|
Jun. 30, 2017
(4) Stock-Based Compensation
Liberty 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:
During the six months ended June 30, 2017, and in connection with our CEO’s employment agreement, Liberty granted approximately 920 thousand, 149 thousand and 171 thousand options to purchase shares of Series C common stock of Liberty SiriusXM, Liberty Braves and Liberty Formula One, respectively, and 50 thousand RSUs of Series C Liberty 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, Liberty granted 2.0 million options to Formula 1 employees to purchase shares of Series C Liberty Formula One common stock. Such options had a weighted average GDFV of $8.16 per share and vest monthly over one year.
Additionally, Liberty granted to Liberty employees 148 thousand, 19 thousand and 77 thousand options to purchase shares of Series C common stock of Liberty SiriusXM, Liberty Braves and Liberty Formula One, respectively, during the six months ended June 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 any options to purchase Series A or Series B of Liberty SiriusXM, Liberty Braves or Liberty Formula One common stock during the six months ended June 30, 2017.
Liberty 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. 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.
The following tables present 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 Lions Gate Entertainment Corp. (formerly employees of Starz).
Liberty Formula One
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 2.1 years.
As of June 30, 2017, Liberty reserved 13.1 million, 1.4 million and 5.1 million shares of Series A and Series C common stock of Liberty SiriusXM, Liberty Braves and Liberty 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 ended June 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 ended June 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 2.2 years.
The entire disclosure for compensation-related costs for equity-based compensation, which may include disclosure of policies, compensation plan details, allocation of equity compensation, incentive distributions, equity-based arrangements to obtain goods and services, deferred compensation arrangements, employee stock ownership plan details and employee stock purchase plan details.
Reference 1: http://www.xbrl.org/2003/role/presentationRef