Home Shopping Network 2012 Annual Report Download - page 58

Table of Contents
HSNi can grant restricted stock units ("RSUs"), stock options, stock appreciation rights (“SARs”), dividend equivalents and other stock-
based awards under the Plan. Stock-based awards have a maximum term of 10 years . The exercise price of options and SARs granted under the
Plan is required to be at, or above, the fair market value of HSNi’s stock on the date of grant. RSUs have rights to receive dividend equivalents
that vest at the same time the underlying RSUs vest once the requisite service has been rendered. HSNi elects to issue shares of its common
stock for RSU vestings and SAR exercises net of the employees’ minimum tax withholding obligation. The payments made by HSNi to the
taxing authorities for these taxes were $18.2 million , $11.4 million , and $2.8 million for the years ended December 31, 2012, 2011 and 2010,
respectively.
Restricted Stock Units
RSUs are awards that are denominated in a hypothetical equivalent number of shares of HSNi’
s common stock. At the time of grant, HSNi
determines if the RSUs will be settled in cash, stock or both. The value to the 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. The RSUs are generally subject to service-based vesting over a term of 3 years to 5
years
.
A summary of the status of the nonvested RSUs, as of December 31, 2012 and changes during the year ended December 31, 2012 is as
follows:
The weighted average per share fair value of RSUs granted during the years ended December 31, 2012, 2011 and 2010 based on market
prices of HSNi’s common stock on the grant date was $36.51 , $30.32 , and $23.50 , respectively.
The total fair value of RSUs held by employees of all five Spincos that vested during the years ended December 31, 2012, 2011 and 2010
and settled in HSNi common stock was $33.9 million , $21.9 million , and $10.4 million , 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 $10.9 million ,
$6.7 million , and $3.6 million for the years ended December 31, 2012, 2011 and 2010, respectively.
As of December 31, 2012, there was approximately $10.7 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 2.0 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. Awards typically vest ratably over a term of 3 years or 4 years .
51
Number of
RSUs
Weighted
Average Grant
Date Fair Value
Nonvested at 1/1/12
1,595,796
$
15.38
Granted
313,084
36.51
Vested
(882,056
)
8.51
Forfeited
(154,715
)
25.70
Nonvested at 12/31/12
872,109
28.02