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55
value for the 373,000 stock options that were outstanding as of December 31, 2015 were $38.89 and $3.01, respectively. All
other awards granted under the Plan have exercise prices based on the fair market value of HSNi’s common stock at the date of
grant.
As of December 31, 2015, there was approximately $6.3 million of unrecognized compensation cost, net of estimated
forfeitures, related to stock options and SARs, which is currently expected to be recognized on a straight-line basis over a
weighted average period of approximately 1.3 years.
The following table summarizes the information about stock options and SARs outstanding and exercisable as of
December 31, 2015:
Outstanding Exercisable
Number
Outstanding at
December 31,
2015
Weighted
Average
Exercise Price
Weighted
Average
Remaining
Contractual
Term in Years
Number
Exercisable at
December 31,
2015
Weighted
Average
Exercise Price
$0.00 to $9.99 . . . . . . . . . . . . . . . . . . . 106,698 $ 4.92 3.0 106,698 $ 4.92
$10.00 to $19.99 . . . . . . . . . . . . . . . . . 68,851 15.59 2.9 68,851 15.59
$20.00 to $29.99 . . . . . . . . . . . . . . . . . 57,541 25.86 5.1 57,541 25.86
$30.00 to $39.99 . . . . . . . . . . . . . . . . . 450,822 37.52 3.2 450,822 37.52
$40.00 to $49.99 . . . . . . . . . . . . . . . . . 380,709 47.73 8.1 115,890 47.74
$50.00 to $59.99 . . . . . . . . . . . . . . . . . 287,182 51.56 7.2 179,744 51.57
$60.00 to $69.99 . . . . . . . . . . . . . . . . . 459,170 65.24 9.1 — —
1,810,973 979,546
Performance-Based Awards
During the third quarter of 2013, HSNi granted approximately 116,000 MSUs (after giving effect to the anti-dilution
provisions of the Plan related to the special cash dividend) to its Chief Executive Officer. The MSUs vest over performance
periods of 3 years and 5 years (50% for each period). Payout percentages range between 0% and 200% of the target award
depending on the awards' market condition, the future price of HSNi's stock at the end of each performance period as compared
to HSNi's stock price at the date of grant (as defined in the MSU agreement). The fair value of the MSUs was $8.3 million, or
an average of $82.67 per unit, and is recognized on a graded-vested basis over the performance periods. The fair value was
measured on the grant date by applying a Monte Carlo simulation pricing model which estimates the potential outcome of
reaching the market condition based on simulated future stock prices. The weighted average assumptions used in the valuation
of the MSUs were the following: volatility factor of 39.7%, risk-free interest rate of 1.00%, expected term of 4.0 years and
dividend yield of 1.1%.
During the years ended December 31, 2015, 2014 and 2013, HSNi granted performance-based cash awards to certain
executive employees (“Performance Cash”). Performance Cash vests over a three year performance period. Payout
percentages range between 0% and 200% of the target award based on the award’s market condition, HSNi’s Total Shareholder
Return relative to a peer group at the end of the performance period. Performance Cash is accounted for as a liability-based
award as it will be settled in cash. For the years ended December 31, 2015, 2014 and 2013, HSNi granted Performance Cash
with an aggregate target value of $5.2 million, $4.4 million and $2.7 million, respectively, with a grant date fair value of $4.9
million, $3.8 million and $2.6 million, respectively. Fair value is measured using a Monte-Carlo simulation and is remeasured
at the end of each reporting period. As of December 31, 2015, 2014 and 2013, a liability of $2.3 million, $4.4 million and $1.6
million, respectively, 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. All shares purchased under the ESPP must be held for a period of 6 months.