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IAC/INTERACTIVECORP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
non-cash compensation over the vesting term. For PSU grants, the expense is measured at the grant date as the fair value of IAC common stock
and expensed as non-cash compensation over the vesting term if the performance targets are considered probable of being achieved.
Nonvested RSUs and PSUs outstanding at December 31, 2013 and changes during the year ended December 31, 2013 are as follows:
_______________________________________________________________________________
The weighted average fair value of RSUs and PSUs granted during the years ended December 31, 2013 , 2012 and 2011 based on market
prices of IAC's common stock on the grant date was $42.32 , $46.24 and $32.41
, respectively. The total fair value of RSUs and PSUs that vested
during the years ended December 31, 2013 , 2012 and 2011 was $14.5 million , $139.0 million and $33.2 million , respectively.
Equity Instruments Denominated in the Shares of Certain Subsidiaries
IAC has granted phantom equity units and stock options in various operating subsidiaries to certain members of the subsidiaries'
management. These equity awards vest over a period of years or upon the occurrence of certain prescribed events. In some cases, IAC has taken
a preferred interest in the subsidiary with a face value equal to the subsidiary's acquisition price or, when funding a start-up business, its
investment cost, or a certain other fixed amount. In some cases, these preferred interests accrete with paid-in-kind dividends at a prescribed rate
of return. The value of the phantom equity units and stock options is tied to the value of the common stock of the entity, with the equity awards
management receives as a whole generally representing a small minority of the total common stock outstanding. Accordingly, these interests
only have value to the extent the relevant business appreciates in value above the preferred interest (including the accretion of dividends), our
investment cost or other fixed amount or, in the case of stock options, the initial value utilized to determine the exercise price. These interests
can have significant value in the event of significant appreciation. The interests are ultimately settled in IAC common stock or cash at the option
of IAC, with fair market value generally determined by negotiation or arbitration, at various dates through 2019. The expense associated with
these equity awards is initially measured at fair value at the grant date and is expensed as non-cash compensation over the vesting term. The
aggregate number of IAC common shares that would be required to settle these interests at current estimated fair values, including vested and
unvested interests, at December 31, 2013 is 1.8 million shares, which is included in the calculation of diluted earnings per share if the effect is
dilutive. The comparable amount at December 31, 2012 is 2.0 million shares.
NOTE 15—SEGMENT INFORMATION
The overall concept that IAC employs in determining its operating segments is to present the financial information in a manner consistent
the businesses with regards to the types of services or products offered or the target market. Operating segments are combined for reporting
purposes if they meet certain aggregation criteria, which principally relate to the similarity of their economic characteristics or, in the case of the
"Other" reportable segment, do not meet the quantitative thresholds that require presentation as separate operating segments.
76
RSUs
PSUs
Number
of shares
Weighted
Average
Grant Date
Fair Value
Number
of shares
(a)
Weighted
Average
Grant Date
Fair Value
(Shares in thousands)
Nonvested at January 1, 2013
370
$
39.94
1,270
$
29.39
Granted
552
42.32
—
—
Vested
(230
)
33.50
(53
)
29.39
Forfeited
—
—
(
895
)
28.71
Nonvested at December 31, 2013
692
$
43.50
322
$
31.27
(a) Included in the table are PSUs which vest at the end of two or three years in varying amounts depending upon certain performance conditions. The PSU table above
includes these awards at their maximum potential payout.