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Table of Contents
The following table summarizes the information about stock options and SARs outstanding and exercisable as of December 31, 2012:
Performance-Based Awards
During the first quarter of 2010, HSNi implemented a performance-based equity compensation program for certain key members of
Cornerstone’s management. The amount payable was based on the extent to which certain pre-established performance goals for Cornerstone
were achieved during the three-year
period ending December 31, 2012. The amount earned pursuant to the award was measured at the end of the
requisite service period and will be settled in shares of HSNi common stock in the first quarter of 2013. These equity awards were accounted for
as liabilities which were remeasured each reporting period based on the probability of achievement of the performance conditions. As of
December 31, 2012, a liability of approximately $16.8 million was recorded for these awards.
Employee Stock Purchase Plan
The HSN, Inc. 2010 Employee Stock Purchase Plan (“ESPP”) was approved May 2010 and 750,000 shares of HSNi common stock were
reserved for issuance under the ESPP. The ESPP permits employees to purchase shares of HSNi’s common stock during semi-annual purchase
periods. Under the terms of the ESPP, eligible employees accumulate funds through payroll deductions and purchase shares at a price equal to
the lesser of 85%
of the fair market value of the common stock at the grant date or purchase date, provided the resulting purchase price cannot be
less than 75% of the fair market value at the end of the purchase period. All shares purchased under the ESPP must be held for a period of 6
months.
For the years ended December 31, 2012 and 2011, HSNi granted approximately 50,000 and 57,000 options, respectively, under the ESPP.
The fair value of each option granted under the ESPP is determined on the grant date using the Black-Scholes option pricing model. The
following are the weighted average assumptions used in the valuation of the ESPP options for the years ended December 31, 2012 and 2011:
For the years ended December 31, 2012 and 2011, approximately $0.5 million of expense was included in the consolidated statements of
operations. For the years ended December 31, 2012 and 2011, HSNi received cash proceeds from the participating employees of approximately
$1.6 million and $1.4 million , respectively.
Restricted Common Equity in Cornerstone Brands
In connection with the acquisition of Cornerstone Brands by IAC in 2005 certain members of Cornerstone Brand’s management were
granted restricted common equity in Cornerstone Brands. These awards were granted on April 1, 2005 and were initially measured at fair value,
which was amortized to expense over the vesting period. These awards vested ratably over 4 years , or earlier based upon the occurrence of
certain prescribed events. The awards vest in non-voting restricted common shares of Cornerstone Brands.
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Outstanding Exercisable
Number
Outstanding at
December 31,
2012
Weighted
Average
Exercise Price
Weighted
Average
Remaining
Contractual
Term in Years
Number
Exercisable at
December 31,
2012
Weighted
Average
Exercise Price
$0.00 to $9.99
177,102
$
5.51
5.8
177,102
$
5.51
$10.00 to $19.99
556,708
16.95
5.3
513,927
16.70
$20.00 to $29.99
685,488
24.91
7.4
350,388
23.29
$30.00 to $39.99
986,840
34.94
6.0
629,425
34.51
$40.00 to $44.99
370,555
44.71
5.6
370,555
44.71
2,776,693
2,041,397
Year Ended December 31,
2012 2011
Volatility factor
41.7
%
56.6
%
Risk-free interest rate
0.09
%
0.15
%
Expected term
0.5
0.5
Dividend yield
1.3
%
0.0
%