Washington Post 2014 Annual Report Download - page 92

ownership if the conditions are not met. At December 31, 2014,
there were 37,825 shares reserved for issuance under this incentive
compensation plan, which were all subject to awards outstanding.
In 2012, the Company adopted a new incentive compensation plan (the
2012 Plan), which, among other provisions, authorizes the awarding of
Class B common stock to key employees in the form of stock awards,
stock options and other awards involving the actual transfer of shares. All
stock awards, stock options and other awards involving the actual
transfer of shares issued subsequent to the adoption of this plan are
covered under this new incentive compensation plan. Stock awards
made under the 2012 Plan are primarily subject to the general restriction
that stock awarded to a participant will be forfeited and revert to
Company ownership if the participant’s employment terminates before the
end of a specified period of service to the Company. Some of the
awards are also subject to performance conditions and will be forfeited
and revert to Company ownership if the conditions are not met. At
December 31, 2014, there were 460,726 shares reserved for issuance
under the 2012 incentive compensation plan. Of this number, 149,286
shares were subject to stock awards and stock options outstanding and
311,440 shares were available for future awards.
Activity related to stock awards under these incentive compensation plans
wasasfollows:
Year Ended December 31
2014 2013 2012
Number
of
Shares
Average
Grant-
Date
Fair
Value
Number
of
Shares
Average
Grant-
Date
Fair Value
Number
of
Shares
Average
Grant-
Date
Fair Value
Beginning of year,
unvested ... 114,479 $424.65 207,917 $350.21 77,319 $424.45
Awarded..... 21,114 683.44 70,165 562.29 145,348 321.56
Vested....... (11,098) 523.95 (71,585) 515.09 (7,134) 499.06
Forfeited ..... (7,384) 396.91 (92,018) 300.86 (7,616) 417.79
End of Year,
Unvested ... 117,111 463.64 114,479 424.65 207,917 350.21
In connection with the sale of the Publishing Subsidiaries in 2013, the
Company modified the terms of 86,824 share awards affecting 102
employees. The modification resulted in the acceleration of the vesting
period for 45,374 share awards, the elimination of a market condition
and vesting terms of 15,000 share awards, and the forfeiture of 26,450
share awards; the effect of which are reflected in the above activity. The
Company also offered some employees with 26,124 share awards the
option to settle their awards in cash resulting in a modification of these
awards from equity awards to liability awards. The Company paid
employees $13.1 million for the settlement of these liability awards. The
Company recorded incremental stock compensation expense, net of
forfeitures, amounting to $19.9 million, which is included in income from
discontinued operations, net of tax, in the consolidated statement of
operations for 2013.
For the share awards outstanding at December 31, 2014, the afore-
mentioned restriction will lapse in 2015 for 31,825 shares, in 2016 for
20,425 shares, in 2017 for 46,996 shares and in 2018 for
17,865 shares. Also, in early 2015, the Company issued stock awards
of 23,475 shares. Stock-based compensation costs resulting from
Company stock awards were $15.4 million, $35.2 million and $11.4
million in 2014, 2013 and 2012, respectively.
As of December 31, 2014, there was $26.0 million of total
unrecognized compensation expense related to these awards. That
cost is expected to be recognized on a straight-line basis over a
weighted average period of 1.6 years.
Stock Options. The Company’s 2003 employee stock option plan
reserves 1,900,000 shares of the Company’s Class B common
stock for options to be granted under the plan. The purchase price of
the shares covered by an option cannot be less than the fair value on
the grant date. Options generally vest over four years and have a
maximum term of ten years. At December 31, 2014, there were
81,694 shares reserved for issuance under this stock option plan,
which were all subject to options outstanding.
Stock options granted under the 2012 Plan cannot be less than the fair
value on the grant date, generally vest over four years and have a
maximum term of ten years. In 2014, a grant was issued which vests
over six years.
Activity related to options outstanding was as follows:
Year Ended December 31
2014 2013 2012
Number
of
Shares
Average
Option
Price
Number
of
Shares
Average
Option
Price
Number
of
Shares
Average
Option
Price
Beginning
of year . . 121,694 $ 469.76 125,694 $478.32 129,044 $494.95
Granted . . . 55,000 1,070.43 15,000 373.03 7,500 378.00
Exercised . . (19,125) 409.44 (14,500) 391.83 — —
Expired or
forfeited . . (5,875) 791.81 (4,500) 637.53 (10,850) 605.82
End of Year 151,694 682.68 121,694 469.76 125,694 478.32
In connection with the sale of the Publishing Subsidiaries in 2013, the
Company modified the terms of 4,500 stock options affecting six
employees. The modification resulted in the acceleration of the vesting
period for 4,250 stock options and the forfeiture of 250 stock options.
The Company recorded incremental stock option expense amounting to
$0.8 million, which is included in income from discontinued operations,
net of tax, in the consolidated statement of operations in 2013.
Of the shares covered by options outstanding at the end of 2014,
70,194 are now exercisable; 27,208 will become exercisable in
2015; 14,708 will become exercisable in 2016; 13,334 will become
exercisable in 2017; 9,583 will become exercisable in 2018; 8,333
will become exercisable in 2019; and 8,334 will become exercisable
in 2020. For 2014, 2013 and 2012, the Company recorded expense
of $2.7 million, $3.5 million and $2.9 million related to stock options,
respectively. Information related to stock options outstanding and
exercisable at December 31, 2014, is as follows:
Options Outstanding Options Exercisable
Range of
Exercise
Prices
Shares
Outstanding
at
12/31/2014
Weighted
Average
Remaining
Contractual
Life (years)
Weighted
Average
Exercise
Price
Shares
Exercisable
at
12/31/2014
Weighted
Average
Remaining
Contractual
Life (years)
Weighted
Average
Exercise
Price
$369–396 32,000 6.8 $ 383.37 18,000 5.8 $390.58
419–439 10,694 4.5 423.05 10,694 4.5 423.05
503 50,000 6.2 502.58 37,500 6.2 502.58
652–663 7,000 7.4 659.65 2,000 3.4 651.91
730 2,000 1.9 729.67 2,000 1.9 729.67
1,111 50,000 9.8 1,111.20 — — —
151,694 7.4 682.68 70,194 5.6 427.47
76 GRAHAM HOLDINGS COMPANY