Dish Network 2008 Annual Report Download - page 122

DISH NETWORK CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued
F-40
14. Stock-Based Compensation
We account for our stock-based compensation in accordance with Statement of Financial Accounting
Standards No. 123R (As Amended), “Share-Based Payment” (“SFAS 123R”), which (i) revises Statement
of Financial Accounting Standards No. 123, “Accounting and Disclosure of Stock-Based Compensation,”
(“SFAS 123”) to eliminate both the disclosure only provisions of that statement and the alternative to
follow the intrinsic value method of accounting under Accounting Principles Board Opinion No. 25,
“Accounting for Stock Issued to Employees” (“APB 25”) and related interpretations, and (ii) requires the
cost resulting from all share-based payment transactions with employees be recognized in the results of
operations over the period during which an employee provides the requisite service in exchange for the
award and establishes fair value as the measurement basis of the cost of such transactions.
Stock Incentive Plans
In connection with the Spin-off, as provided in our existing stock incentive plans and consistent with the
Spin-off exchange ratio, each DISH Network stock option was converted into two stock options as follows:
x an adjusted DISH Network stock option for the same number of shares that were
exercisable under the original DISH Network stock option, with an exercise price equal
to the exercise price of the original DISH Network stock option multiplied by 0.831219.
x a new EchoStar stock option for one-fifth of the number of shares that were exercisable
under the original DISH Network stock option, with an exercise price equal to the
exercise price of the original DISH Network stock option multiplied by 0.843907.
Similarly, each holder of DISH Network restricted stock units retained his or her DISH Network restricted
stock units and received one EchoStar restricted stock unit for every five DISH Network restricted stock
units that they held.
Consequently, the fair value of the DISH Network stock award and the new EchoStar stock award
immediately following the Spin-off was equivalent to the fair value of such stock award immediately prior
to the Spin-off.
We maintain stock incentive plans to attract and retain officers, directors and key employees. Awards
under these plans include both performance and non-performance based equity incentives. As of
December 31, 2008, we had outstanding under these plans stock options to acquire 21.8 million shares of
our Class A common stock and 1.5 million restricted stock awards. Stock options granted through
December 31, 2008 were granted with exercise prices equal to or greater than the market value of our Class
A common stock at the date of grant and with a maximum term of ten years. While historically we have
issued stock options subject to vesting, typically at the rate of 20% per year, some stock options have been
granted with immediate vesting and other stock options vest only upon the achievement of certain
company-wide objectives. As of December 31, 2008, we had 57.5 million shares of our Class A common
stock available for future grant under our stock incentive plans.
As of December 31, 2008, the following stock incentive awards were outstanding:
Stock Incentive Awards Outstanding
Stock
Options
Restricted
Stock
Units
Stock
Options
Restricted
Stock
Units
Held by DISH Network employees.......... 18,267,950 517,735 1,722,714 85,866
Held by EchoStar employees................... 3,567,737 934,999 N/A N/A
Total......................................................... 21,835,687 1,452,734 1,722,714 85,866
As of December 31, 2008
EchoStar AwardsDISH Network Awards