Dish Network 2003 Annual Report Download - page 101

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ECHOSTAR COMMUNICATIONS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – Continued
F–34
8. Stock Compensation Plans
Stock Incentive Plan
We have adopted stock incentive plans to provide incentive to attract and retain officers, directors and key
employees. We currently have 80.0 million shares of our class A common stock reserved for granting awards under
our 1995 Stock Incentive Plan and an additional 80.0 million shares of our class A common stock for granting
awards under our 1999 Stock Incentive Plan. In general, stock options granted through December 31, 2003 have
included exercise prices not less than the fair market value of our class A common stock at the date of grant, and
vest, as determined by our Board of Directors, generally at the rate of 20% per year.
During 1999, we adopted an incentive plan under our 1995 Stock Incentive Plan, which provided certain key
employees a contingent incentive including stock options and cash. The payment of these incentives was contingent
upon the achievement of certain financial and other goals of EchoStar. We met certain of these goals during 1999.
Accordingly, in 1999, we recorded approximately $178.8 million of deferred compensation related to post-grant
appreciation of options to purchase approximately 4.2 million shares. The related deferred compensation, net of
forfeitures, is being recognized over the five-year vesting period. During the year ended December 31, 2003, 2002
and 2001, we recognized expense of $3.5 million, $11.3 million and $20.2 million, respectively, under the 1999
incentive plan. The remaining deferred compensation of $1.2 million, which will be reduced by future forfeitures, if
any, will be recognized in 2004.
We report all non-cash compensation based on stock option appreciation as a single expense category in our
accompanying consolidated statements of operations and comprehensive income (loss). The following table
represents the other expense categories in our consolidated statements of operations and comprehensive income
(loss) that would be affected if non-cash, stock-based compensation was allocated to the same expense categories as
the base compensation for key employees who participate in the 1999 incentive plan.
For the Years Ended December 31,
2003 2002 2001
(In thousands)
Subscriber-related............................................................ 34$ 729$ 1,767$
Satellite and transmission................................................ 359 (7) 1,115
General and administrative.............................................. 3,151 10,557 17,291
Total non-cash, stock-based compensation.................. 3,544$ 11,279$ 20,173$
Options to purchase an additional 8.0 million shares are outstanding as of December 31, 2003 and were granted
with exercise prices equal to the fair market value of the underlying shares on the date they were issued during
1999, 2000 and 2001 pursuant to a long term incentive plan under our 1995 Stock Incentive Plan. The weighted-
average exercise price of these options is $9.05. Vesting of these options is contingent upon meeting certain longer-
term goals which have not yet been achieved. Consequently, no compensation was recorded during the years ended
December 31, 2003, 2002 and 2001 related to these long-term options. We will record the related compensation at
the achievement of the performance goals, if ever. Such compensation, if recorded, would likely result in material
non-cash, stock-based compensation expense in our consolidated statements of operations and comprehensive
income (loss).