Dish Network 2012 Annual Report Download - page 79

DISH NETWORK CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued
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.
Exercise prices for stock options outstanding and exercisable as of December 31, 2012 are as follows:
Number
Outstanding
as of
December 31,
2012
Weighted-
Average
Remaining
Contractual
Life
Weighted-
Average
Exercise
Price
Number
Exercisable
as of
December 31,
2012
Weighted-
Average
Remaining
Contractual
Life
Weighted-
Average
Exercise
Price
-$ - 10.00$ 3,309,021 4.77 7.08$ 1,730,371 4.84 7.04$
10.01$ - 15.00$ 422,001 5.62 12.25$ 84,001 5.98 12.17$
15.01$ - 20.00$ 3,305,285 6.13 17.00$ 987,184 3.72 18.32$
20.01$ - 25.00$ 6,022,513 3.27 21.31$ 2,106,113 2.65 21.78$
25.01$ - 30.00$ 2,369,600 7.88 28.49$ 679,100 6.45 28.26$
30.01$ - 35.00$ 934,450 6.56 32.45$ 422,950 4.33 32.25$
35.01$ - 40.00$ 37,000 9.69 36.38$ 2,000 4.25 36.10$
-$ - 40.00$ 16,399,870 5.08 19.04$ 6,011,719 4.05 18.31$
Options Outstanding Options Exercisable
Stock Award Activity
Our stock option activity was as follows:
Options
Wei
g
hted-
Average
Exercise
Price Options
Wei
g
hted-
Average
Exercise
Price Options
Wei
g
hted-
Average
Exercise
Price
Total options outstanding, beginning of period (1)........................ 21,336,159 20.53$ 21,918,500 18.62$ 21,861,691 21.71$
Granted........................................................................................... 591,500 32.25$ 3,246,000 28.55$ 2,450,500 18.34$
Exercised........................................................................................ (4,940,393) 18.46$ (2,347,341) 15.73$ (448,729) 9.23$
Forfeited and cancelled.................................................................. (587,396) 20.44$ (1,481,000) 17.44$ (1,944,962) 22.26$
Total options outstanding, end of period........................................ 16,399,870 19.04$ 21,336,159 20.53$ 21,918,500 18.62$
Performance based options outstanding, end of period (2)............ 7,929,250 18.85$ 9,549,375 19.20$ 10,978,750 15.98$
Exercisable at end of period........................................................... 6,011,719 18.31$ 8,389,683 21.70$ 7,590,264 22.83$
2012 2011 2010
For the Years Ended December 31,
(1) The beginning of period weighted-average exercise price for the year ended December 31, 2012 of $20.53 does
not reflect the 2011 Stock Option Adjustment, which occurred subsequent to December 31, 2011. The
beginning of period weighted-average exercise price for the year ended December 31, 2010 of $21.71 does not
reflect the 2009 Stock Option Adjustment, which occurred subsequent to December 31, 2009.
(2) These stock options are included in the caption “Total options outstanding, end of period.” See discussion of
the 2005 LTIP, 2008 LTIP and other employee performance awards below.
F-48
DISH NETWORK CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued
We realized tax benefits from stock awards exercised during the years ended December 31, 2012, 2011 and 2010 as
follows:
2012 2011 2010
Tax benefit from stock awards exercised................. $ 23,378 $ 9,911 $ 1,665
(In thousands)
For the Years Ended December 31,
Based on the closing market price of our Class A common stock on December 31, 2012, the aggregate intrinsic value of
our stock options was as follows:
Options
Outstanding
Options
Exercisable
Aggregate intrinsic value........ 284,630$ 108,769$
As of December 31, 2012
(In thousands)
Our restricted stock unit activity was as follows:
Restricted
Stock
Units
Wei
g
hted-
Average
Grant Date
Fair Value
Restricted
Stock
Units
Wei
g
hted-
Average
Gr ant Da t e
Fair Value
Restricted
Stock
Units
Wei
g
hted-
Average
Grant Date
Fair Value
Total restricted stock units outstanding, beginning of period............. 1,284,708 23.25$ 1,564,332 23.00$ 1,246,284 25.93$
Granted............................................................................................... - -$ 300,000 30.67$ 600,000 18.15$
Vested................................................................................................ (24,795) 22.94$ (70,830) 27.15$ (69,875) 31.36$
Forfeited and cancelled...................................................................... (74,833) 27.33$ (508,794) 27.32$ (212,077) 23.77$
Total restricted stock units outstanding, end of period....................... 1,185,080 22.99$ 1,284,708 23.25$ 1,564,332 23.00$
Restricted Performance Units outstanding, end of period (1)............ 1,185,080 22.99$ 1,284,708 23.25$ 1,494,457 22.61$
2012 2011 2010
For the Years Ended December 31,
(1) These Restricted Performance Units are included in the caption “Total restricted stock units outstanding, end of
period.” See discussion of the 2005 LTIP, 2008 LTIP and other employee performance awards below.
Long-Term Performance-Based Plans
2005 LTIP. During 2005, we adopted a long-term, performance-based stock incentive plan (the “2005 LTIP”).
The 2005 LTIP provides stock options and restricted stock units, either alone or in combination, which vest over
seven years at the rate of 10% per year during the first four years, and at the rate of 20% per year thereafter.
Exercise of the stock awards is subject to the foregoing vesting schedule and a performance condition that a
company-specific subscriber goal is achieved by March 31, 2015.
Contingent compensation related to the 2005 LTIP will not be recorded in our financial statements unless and until
management concludes achievement of the performance condition is probable. Given the competitive nature of our
business, small variations in subscriber churn, gross new subscriber activation rates and certain other factors can
significantly impact subscriber growth. Consequently, while it was determined that achievement of the goal was not
probable as of December 31, 2012, that assessment could change in the future.
F-49