Home Shopping Network 2015 Annual Report Download - page 55

53
Second Amended and Restated 2008 Stock and Annual Incentive Plan
The Second Amended and Restated 2008 Stock and Annual Incentive Plan, as amended (the “Plan”), authorizes the
issuance of 8.0 million shares (8.8 million shares after giving effect to the anti-dilution provisions of the Plan related to the
special cash dividend) of HSNi common stock for new awards granted by HSNi. The purpose of the Plan is to assist HSNi in
attracting, retaining and motivating officers, employees, directors and consultants, and to provide HSNi with the ability to
provide incentives more directly linked to the profitability of HSNi’s business and increases in shareholder value.
In connection with the special cash dividend of $10.00 per common share paid on February 19, 2015, and as required by
the anti-dilution provisions of the Plan, adjustments were made to outstanding equity awards as of the ex-dividend date to
preserve their value following the dividend, as follows: (i) the number of shares subject to outstanding restricted stock units
was increased as a result of the reinvestment of the dividend; and (ii) the exercise prices of outstanding stock options and stock
appreciation rights and the grant date fair value of market stock units were reduced and the number of shares subject to such
awards was increased. These adjustments did not result in additional stock-based compensation expense as the fair value of the
outstanding awards did not change. As further required by the Plan, the maximum number of shares issuable under the Plan
was also proportionally adjusted, which resulted in approximately 0.8 million additional shares available to be issued. As of
December 31, 2015, after adjustment for the special cash dividend, there were approximately 2.8 million shares of common
stock available for grants under the Plan.
HSNi can grant restricted stock, restricted stock units ("RSUs"), market stock units ("MSUs"), 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 $16.7 million, $12.7 million and $14.4 million for the years ended December 31,
2015, 2014 and 2013, 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 and dividend equivalents, as of December 31, 2015 and changes during
the year ended December 31, 2015 is as follows:
Number of
RSUs
Weighted
Average Grant
Date Fair Value
Nonvested at January 1, 2015 (including 18,302 outstanding dividend equivalents) . . . . . . . . . . . . . . . . . . . . . . . . . . 619,881 $ 48.88
Granted. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 235,207 65.89
Additional units granted related to dividend equivalents due to special dividend and quarterly dividends . . . . . . . . . 106,593 —
Vested. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (211,248) 37.52
Forfeited. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (75,539) 57.59
Nonvested at December 31, 2015 (including 83,132 outstanding dividend equivalents) . . . . . . . . . . . . . . . . . . . . . . . 674,894 57.92
The weighted average per share fair value of RSUs granted during the years ended December 31, 2015, 2014 and 2013
based on market prices of HSNi’s common stock on the grant date was $65.89, $55.06 and $58.83, respectively.
The total fair value of RSUs that vested during the years ended December 31, 2015, 2014 and 2013 and settled in HSNi
common stock was $12.0 million, $10.9 million and $36.2 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 $5.4
million, $4.2 million and $12.5 million for the years ended December 31, 2015, 2014 and 2013, respectively.
As of December 31, 2015, there was approximately $16.0 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 2.2 years.