Dish Network 2008 Annual Report Download - page 124

DISH NETWORK CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued
F-42
Our restricted stock award activity (including performance and non-performance based stock options) for
the years ended December 31, 2008, 2007 and 2006 was as follows:
Restricted
Stock
Awards
Weighted-
Average
Grant Date
Fair Value
Restricted
Stock
Awards
Weighted-
Average
Grant Date
Fair Value (1)
Restricted
Stock
Awards
Weighted-
Average
Grant Date
Fair Value (1)
Total restricted stock awards outstanding, beginning of period......... 1,717,078 29.24$ 855,298 30.88$ 644,637 29.46$
Granted .............................................................................................. 88,322 11.09 1,039,580 37.94 331,329 33.27
Exercised ........................................................................................... (280,000) 30.77 (30,000) 31.16 (20,000) 30.16
Forfeited and cancelled...................................................................... (72,666) 29.33 (147,800) 30.44 (100,668) 29.83
Total restricted stock awards outstanding, end of period................... 1,452,734 27.87 1,717,078 35.18 855,298 30.88
Restricted performance units outstanding, end of period (2).............. 632,734 23.94 617,078 31.69 725,298 30.80
20072008 2006
(1) The weighted average grant date fair values for 2007 and 2006 reflect share prices before the Spin-off.
(2) These restricted performance units, which are included in the caption “Total restricted stock awards
outstanding, end of period,” were issued pursuant to two separate long-term, performance-based stock
incentive plans. Vesting of these restricted performance units is contingent upon meeting certain long-term
company goals. See discussion of the 2005 LTIP and 2008 LTIP below.
Long-Term Performance-Based Plans
1999 LTIP. In 1999, we adopted a long-term, performance-based stock incentive plan (the “1999 LTIP”)
within the terms of our 1995 Stock Incentive Plan. All stock options under the 1999 LTIP expired on
December 31, 2008 because we did not achieve the performance condition.
2005 LTIP. In 2005, we adopted a long-term, performance-based stock incentive plan (the “2005 LTIP”)
within the terms of our 1999 Stock Incentive Plan. The 2005 LTIP provides stock options and restricted
performance 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 options is
subject to a performance condition that a company-specific subscriber goal is achieved prior to 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 subscriber addition 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, 2008, that assessment could change at
any time.
In accordance with SFAS 123R, if all of the awards under the 2005 LTIP were vested and the goal had
been met or if we had determined that the goal was probable during the year ended December 31, 2008, we
would have recorded total non-cash, stock-based compensation expense for our employees as indicated in
the table below. If the goals are met and there are unvested stock options at that time, the vested amounts
would be expensed immediately on our Consolidated Statements of Operations and Comprehensive
Income (Loss), with the unvested portion recognized ratably over the remaining vesting period.