Dish Network 2011 Annual Report Download - page 135

DISH NETWORK CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued
F-41
During December 2009, we paid a dividend in cash of $2.00 per share on our outstanding Class A and Class B common
stock to shareholders of record on November 20, 2009. In light of such dividend, during February 2010, the exercise
price of 20.6 million stock options, affecting approximately 700 employees, was reduced by $2.00 per share (the “2009
Stock Option Adjustment”). Except as noted below, all information discussed below reflects the 2009 Stock Option
Adjustment.
On January 1, 2008, we completed the distribution of our technology and set-top box business and certain infrastructure
assets (the “Spin-off”) into a separate publicly-traded company, EchoStar Corporation (“EchoStar”). DISH Network
and EchoStar operate as separate publicly-traded companies, and neither entity has any ownership interest in the other.
However, a substantial majority of the voting power of the shares of both companies is owned beneficially by Charles
W. Ergen, our Chairman, or by certain trusts established by Mr. Ergen for the benefit of his family.
In connection with the Spin-off, as permitted by 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.
As of December 31, 2011, the following stock awards were outstanding:
Stock Awards Outstanding
Stock
Options
Restricted
Stock
Units
Stock
Options
Restricted
Stock
Units
Held by DISH Network employees.......... 18,630,441 1,189,709 762,094 54,286
Held by EchoStar employees................... 2,705,718 94,999 N/A N/A
Total......................................................... 21,336,159 1,284,708 762,094 54,286
As of December 31, 2011
EchoStar AwardsDISH Network Awards
We are responsible for fulfilling all stock awards related to DISH Network common stock and EchoStar is responsible
for fulfilling all stock awards related to EchoStar common stock, regardless of whether such stock awards are held by
our or EchoStar’s employees. Notwithstanding the foregoing, our stock-based compensation expense, resulting from
stock awards outstanding at the Spin-off date, is based on the stock awards held by our employees regardless of whether
such stock awards were issued by DISH Network or EchoStar. Accordingly, stock-based compensation that we expense
with respect to EchoStar stock awards is included in “Additional paid-in capital” on our Consolidated Balance Sheets.