TiVo 2015 Annual Report Download - page 98

Table of Contents
Effect of the 2020 Convertible Notes and related transactions on Diluted EPS
In periods when the Company reports income from continuing operations, the potential dilutive effect of additional shares that may be issued on
conversion of the 2020 Convertible Notes are included in the calculation of Diluted EPS under the treasury stock method when the price of the Company
’ s
common stock exceeds the conversion price. The 2020 Convertible Notes will have no impact on Diluted EPS until the price of the Company's common stock
exceeds the conversion price of $28.9044 per share because the principal of the 2020 Convertible Notes is required to be settled in cash. Based on the
closing price of the Company's common stock of $16.66 per share on December 31, 2015 , the if - converted value of the 2020 Convertible Notes was less than
the outstanding principal.
Under the treasury stock method, the 2020 Convertible Notes would be dilutive if the Company ’ s common stock closes at or above $28.9044 per
share. However, on conversion, no economic dilution is expected from the 2020 Convertible Notes as exercise of the call options is expected to eliminate any
potential dilution from the 2020 Convertible Notes that would have otherwise occurred when the price of the Company
’ s common stock exceeds the
conversion price. The call options are always excluded from the calculation of Diluted EPS as they would be anti - dilutive under the treasury stock method.
The warrants have an effect on Diluted EPS when the Company
’ s share price exceeds the warrant ’ s strike price of $40.1450 per share. As the price
of the Company ’ s common stock increases above the warrant strike price, additional dilution would occur.
Share Repurchase Program
During the years ended December 31, 2015, 2014 and 2013, the Company repurchased 9.5 million , 8.3 million and 9.1 million shares of its common
stock for $150.2 million , $196.5 million and $182.1 million , respectively.
The Company issues restricted stock units as part of its equity incentive plans described in Note 12. For the majority of restricted stock units,
beginning in the fourth quarter of 2015, shares are withheld to satisfy required withholding taxes at the vesting date. Shares withheld to satisfy required
withholding taxes in connection with the vesting of restricted stock units are treated as common stock repurchases in the Consolidated Financial
Statements because they reduce the number of shares that would have been issued on vesting. However, these withheld shares are not considered
common stock repurchases under the Company's authorized share repurchase plan. During the year ended
December 31, 2015 , the Company withheld 15.0
thousand shares of common stock to satisfy $ 0.1 million of required withholding taxes.
On April 29, 2015, the Board of Directors authorized the repurchase of up to $125.0 million shares of the Company's common stock. The April 2015
authorization included amounts which were outstanding under previously authorized share repurchase programs. As of December 31, 2015 , the Company
had $50.5 million of stock repurchase authorization remaining.
(12) Equity - based Compensation
Stock Option Plan
The Company grants equity
- based compensation awards from its 2008 Equity Incentive Plan (the “ 2008 Plan ” ). As of December 31, 2015 , the
Company had
23.4 million shares reserved and 7.8 million shares available for issuance under the 2008 Plan. The 2008 Plan permits the grant of stock
options, restricted stock, restricted stock units and similar types of equity awards to employees, officers, directors and consultants of the Company. Stock
options generally have vesting periods of four years where one quarter of the grant vests at the end of the first year, and the remainder vests monthly
thereafter. Stock options generally have a contractual term of seven years. Restricted stock is considered outstanding at the time of the grant as holders are
entitled to voting rights. Awards of restricted stock and restricted stock units (collectively, "restricted awards") are generally subject to a four year graded
vesting period.
In March 2015, the Compensation Committee of the Board of Directors approved a grant of performance - based restricted stock units to certain
senior officers of the Company for the 2015 to 2017 performance period. Vesting in the March 2015 award is subject to either performance conditions (i.e.,
achieving minimum defined levels of Company financial results) or a market condition (i.e., achieving a minimum relative Total Shareholder Return) as well
as a three year service period which ends March 1, 2018. The number of shares to be issued on vesting could be up to
200% of the target number of
performance - based restricted stock units granted depending on the level of achievement.
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