Dish Network 2011 Annual Report Download - page 140

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DISH NETWORK CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued
F-46
Stock-Based Compensation
During the year ended December 31, 2010, we incurred $3 million of additional non-cash, stock-based compensation
cost in connection with the 2009 Stock Option Adjustment discussed previously. This amount is included in the table
below. Total non-cash, stock-based compensation expense for all of our employees is shown in the following table for
the years ended December 31, 2011, 2010 and 2009 and was allocated to the same expense categories as the base
compensation for such employees:
2011 2010 2009
Subscriber-related................................................. 1,914$ 1,160$ 1,069$
General and administrative................................... 29,607 14,227 11,158
Total non-cash, stock-based compensation........... 31,521$ 15,387$ 12,227$
For the Years Ended December 31,
(In thousands)
As of December 31, 2011, our total unrecognized compensation cost related to our non-performance based unvested
stock awards was $25 million and includes compensation expense that we will recognize for EchoStar stock awards held
by our employees as a result of the Spin-off. This cost is based on an estimated future forfeiture rate of approximately
3.7% per year and will be recognized over a weighted-average period of approximately two years. Share-based
compensation expense is recognized based on stock awards ultimately expected to vest and is reduced for estimated
forfeitures. Forfeitures are estimated at the time of grant and revised, if necessary, in subsequent periods if actual
forfeitures differ from those estimates. Changes in the estimated forfeiture rate can have a significant effect on share-
based compensation expense since the effect of adjusting the rate is recognized in the period the forfeiture estimate is
changed.
Valuation
The fair value of each stock option for the years ended December 31, 2011, 2010 and 2009 was estimated at the date of
the grant using a Black-Scholes option valuation model with the following assumptions:
Stock Options 2011 2010 2009
Risk-free interest rate.......................................................... 0.36% - 3.18% 1.50% - 2.89% 1.70% - 3.19%
Volatility factor................................................................... 31.74% - 45.56% 33.33% - 38.63% 29.72% - 45.97%
Expected term of options in years....................................... 3.6 - 10.0 5.2 - 7.5 3.0 - 7.3
Weighted-average fair value of options granted................. $8.73 - $14.77 $6.83 - $8.14 $3.86 - $8.29
For the Years Ended December 31,
On December 2, 2009 and December 1, 2011, we paid a $2.00 cash dividend per share on our outstanding Class A and
Class B common stock. While we currently do not intend to declare additional dividends on our common stock, we may
elect to do so from time to time. Accordingly, the dividend yield percentage used in the Black-Scholes option valuation
model is set at zero for all periods. The Black-Scholes option valuation model was developed for use in estimating the
fair value of traded stock options which have no vesting restrictions and are fully transferable. Consequently, our
estimate of fair value may differ from other valuation models. Further, the Black-Scholes option valuation model
requires the input of highly subjective assumptions. Changes in the subjective input assumptions can materially affect
the fair value estimate.