Time Warner Cable 2011 Annual Report Download - page 106

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TIME WARNER CABLE INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
2011, 2010 and 2009, the Company made cash payments of $14 million, $6 million and $1 million, respectively, against the
Special Dividend retained distribution liability, which are included in other financing activities in the consolidated statement
of cash flows. Of the remaining $23 million Special Dividend retained distribution liability as of December 31, 2011, $13
million is classified in other current liabilities in the consolidated balance sheet.
Prior to March 2007, Time Warner granted options to purchase Time Warner common stock and shares of Time Warner
common stock under its equity plans (collectively, the “Time Warner Equity Awards”) to employees of TWC, but has not
done so since that date. In addition, employees of Time Warner who became employed by TWC prior to the Separation
retained their Time Warner Equity Awards pursuant to their terms and TWC recorded equity-based compensation expense
from the date of transfer through the end of the applicable vesting period.
Under the terms of Time Warner’s equity plans and related award agreements, as a result of the Separation, TWC
employees who held Time Warner Equity Awards were treated as if their employment with Time Warner had been
terminated without cause at the time of the Separation. This treatment resulted in the forfeiture of unvested stock options and
shortened exercise periods for vested stock options and pro rata vesting of the next installment of (and forfeiture of the
remainder of) the RSUs for those TWC employees who did not satisfy retirement-treatment eligibility provisions in the Time
Warner equity plans and related award agreements. During the second quarter of 2009, TWC granted stock options and RSUs
to its employees to offset these forfeitures and/or reduced values (the “Separation-related ‘make-up’ equity awards”). The
vesting and expiration dates of such awards were based on the terms of the related Time Warner award and were expensed
over a period of approximately one year beginning in the second quarter of 2009. During the years ended December 31, 2010
and 2009, TWC recognized compensation expense for Separation-related “make-up” equity awards of $5 million and $9
million, respectively. The number of outstanding Time Warner Equity Awards that remained outstanding after the Separation
and the exercise prices of those Awards that were stock options were adjusted pursuant to their terms to retain their fair value
in connection with the Spin-Off Dividend, the 1-for-3 reverse stock split implemented by Time Warner on March 27, 2009
and Time Warner’s distribution to its shareholders of all of the shares of AOL Inc. stock that it owned on December 9, 2009.
These adjustments were made pursuant to existing antidilution provisions in Time Warner’s equity plans and, therefore, did
not result in the recognition of incremental compensation expense for the Company.
Restricted Stock Units
The following table summarizes information about unvested RSUs for the year ended December 31, 2011:
Number
of
Units
Weighted-
Average
Grant Date
Value
(in millions)
Unvested as of December 31, 2010 ................................................ 5.313 $ 51.82
Granted ..................................................................... 1.477 72.09
Vested ...................................................................... (1.182) 67.85
Forfeited .................................................................... (0.293) 54.63
Unvested as of December 31, 2011 ................................................ 5.315 53.74
For the year ended December 31, 2011, TWC granted 1.477 million RSUs at a weighted-average grant date fair value of
$72.09 per RSU, including 158,000 PBUs at a weighted-average grant date fair value of $72.05 per PBU. For the year ended
December 31, 2010, TWC granted 1.941 million RSUs at a weighted-average grant date fair value of $45.19 per RSU. For
the year ended December 31, 2009, TWC granted 2.645 million RSUs at a weighted-average grant date fair value of $38.80
per RSU, including 1.285 million granted at a weighted-average grant date fair value of $53.01 per RSU, 1.305 million
granted as Special Dividend retained distributions at a weighted-average grant date fair value of $24.99 per RSU and 55,000
granted as Separation-related “make-up” equity awards at a weighted-average grant date fair value of $33.80 per RSU. No
PBUs were granted in 2010 or 2009.
As of December 31, 2011, the intrinsic value of unvested RSUs was $338 million. Total unrecognized compensation
cost related to unvested RSUs as of December 31, 2011, without taking into account expected forfeitures, is $124 million and
is expected to be recognized over a weighted-average period of 2.55 years. The fair value of RSUs that vested during the year
was $103 million in 2011, $49 million in 2010 and $6 million in 2009.
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