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Table of Contents
HSN, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
holder of the RSU is based upon the market value of HSNi’
s stock when the RSUs vest. Compensation expense for RSUs granted under the Plan
is measured at the grant date as the fair market value of HSNi’s common stock and expensed ratably over the vesting term. Compensation
expense for RSUs granted prior to the spin-off was measured as the fair value of IAC common stock on the original grant date plus any
additional fair value measured at the spin-off date as a result of the modifications discussed previously. The RSUs are generally subject to
service-based vesting over a three to five year term. HSNi’s Board of Directors were granted approximately 41,000 and 118,000 RSUs during
the years ended December 31, 2010 and 2009, respectively, which have graded vesting over a two-year period.
A summary of the status of the nonvested RSUs, including the Adjusted Awards and awards granted under the Plan, as of December 31,
2010 and changes during the year ended December 31, 2010 is as follows:
The weighted average fair value of RSUs granted during the years ended December 31, 2010, 2009 and 2008 based on market prices of
HSNi’s common stock on the grant date was $23.50, $5.19 and $5.53, respectively.
The total intrinsic value of RSUs held by employees of all five Spincos that vested during the years ended December 31, 2010, 2009 and
2008 and settled in HSNi common stock was $10.4 million, $3.0 million and $0, respectively. HSNi realizes a tax benefit for RSUs held by its
employees in the year in which the award vests. The tax benefit realized by HSNi related to RSUs was approximately $3.6 million and $0.9
million for the years ended December 31, 2010 and 2009, respectively.
As of December 31, 2010, there was approximately $12.3 million of unrecognized compensation cost, net of estimated forfeitures, related
to RSUs, which is currently expected to be recognized on a straight-line basis over a weighted average period of approximately 1.9 years.
Stock Options and SARs
SARs are similar to traditional stock options, except, upon exercise, holders of SARs will only receive a value equal to the spread between
the current market price per share of the common stock and the exercise price. The SARs granted by HSNi may be settled in cash or common
stock of HSNi, in the sole discretion of HSNi. All SARs exercised by employees of HSNi have been settled in stock. For all SARs currently
outstanding, HSNi intends to settle these awards in stock upon exercise. The exercise price for awards granted under the Plan is required to be
priced at, or above, the fair market value of HSNi’s stock at the date of grant. For stock options granted prior to the spin-off, the exercise price
was based on the fair market value of IAC’s stock at the date of grant and then adjusted based on the relative market capitalizations of IAC and
HSNi following the spin-off. Awards typically vest periodically over a three or four year term.
61
Number of
shares
Weighted
Average Grant
Date Fair Value
Nonvested at 1/1/10
2,163,689
$
10.25
Granted
667,499
23.50
Vested
(439,612
)
23.69
Forfeited
(246,443
)
8.91
Nonvested at 12/31/10 (1)
2,145,133
12.80
(1)
Approximately 24,426 of the nonvested awards outstanding as of December 31, 2010 were held by employees of the other Spincos.