Twenty-First Century Fox 2014 Annual Report Download - page 120

TWENTY-FIRST CENTURY FOX, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
114
not vote or provide voting instructions with respect to a portion of their shares of Class B Common Stock to the
extent that doing so would increase their percentage of voting power from what it was prior to the suspension of
voting rights. Currently, as a result of the suspension of voting rights, the aggregate percentage vote of the Murdoch
Family Interests is at 39.4% of the outstanding shares of Class B Common Stock not subject to the suspension of
voting rights, and the percentage vote may be adjusted as provided in the agreement with the Company.
Delisting from the Australian Securities Exchange
In March 2014, the Company received approval from its stockholders and subsequently the Australian
Securities Exchange (the “ASX”) for removal of its full foreign listing from the ASX. Delisting from the ASX
occurred on May 8, 2014 and, effective as of that date, all of Twenty-First Century Fox’s Class A Common Stock
and Class B Common Stock is listed solely on the NASDAQ Global Select Market (“NASDAQ”).
NOTE 14. EQUITY BASED COMPENSATION
2013 Long-Term Incentive Plan
In October 2013, the Company adopted the 2013 Long-Term Incentive Plan (the “2013 Plan”), under which
equity based compensation, including stock options, performance stock units (“PSUs”), restricted stock, restricted
stock units (“RSUs”) and other types of awards, may be granted. The Company’s employees and directors are
eligible to participate in the 2013 Plan. The Compensation Committee of the Board (the “Compensation
Committee”) determines the recipients, type of award to be granted and amounts of awards to be granted under the
2013 Plan. Stock options awarded under the 2013 Plan will be granted at exercise prices which are equal to or
exceed the market price at the date of grant. The 2013 Plan replaced the 2005 Long-Term Incentive Plan (the “2005
Plan”) (collectively the “Plans”) under which no additional stock options, PSUs, restricted stock or RSUs will be
granted. The maximum number of shares of Class A Common Stock that may be issued under the 2013 Plan is 87.5
million shares plus any residual shares remaining under the 2005 Plan. At June 30, 2014, the remaining number of
shares available for issuance under the 2013 Plan was approximately 87.4 million. The Company will issue new
shares of Class A Common Stock upon vesting of stock settled RSUs and PSUs. The Company currently has no
stock options outstanding.
The fair value of equity-based compensation under the 2013 Plan is calculated according to the type of award
issued. Cash settled awards are marked-to-market at each reporting period.
Performance Stock Units
PSUs are fair valued on the date of grant and expensed using a straight-line method as the awards cliff vest at
the end of the three-year performance period. The Company also estimates the number of shares expected to vest
which is based on management’s determination of the probable outcome of the performance condition, which
requires considerable judgment. The Company records a cumulative adjustment in periods that the Company’s
estimate of the number of shares expected to vest changes. Additionally, the Company ultimately adjusts the
expense recognized to reflect the actual vested shares following the resolution of the performance conditions. The
number of shares that will be issued upon vesting of PSUs can range from 0% to 200% (limited to 150% for certain
executives) of the target award, based on the Company’s three-year total shareholder return (“TSR”) as measured
against the three-year TSR of the companies that comprise the Standard and Poor’s 500 Index (excluding financial
and energy sector companies) and other performance measures. The fair value of the TSR condition is determined
using a Monte Carlo simulation model.
In fiscal 2014, 2013 and 2012, participants in the plan received a grant of PSUs that has a three-year
performance measurement period beginning in July 2013, 2012 and 2011, respectively. The awards are subject to
the achievement of one or more pre-established objective performance measures determined by the Compensation
Committee. The majority of the awards issued will be settled in shares of Class A Common Stock upon vesting and
are subject to the participants’ continued employment with the Company. Any person who holds PSUs shall have no
ownership interest in the shares of Class A Common Stock to which such PSUs relate until and unless shares of
Class A Common Stock are delivered to the holder. All shares of Class A Common Stock reserved for cancelled or