Washington Post 2015 Annual Report Download - page 118

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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, 2015, there were 87,019 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 2015 and 2014, grants were issued which vest over six
years.
Activity related to options outstanding for the year ended December 31, 2015 was as follows:
Number
of Shares
Average
Option Price
Beginning of year ............................... 151,694 $682.68
Granted ....................................... 5,000 871.86
Exercised ...................................... (25,925) 421.72
Expired or forfeited .............................. (750) 376.79
Outstanding before spin-off of Cable ONE ......... 130,019 743.75
Outstanding after spin-off of Cable ONE(1) ......... 200,895 $481.34
Granted ....................................... 24,742 866.58
Exercised ...................................... (14,602) 278.54
Expired or forfeited .............................. (19,313) 426.80
End of Year ................................... 191,722 552.00
(1) Adjusted due to the anti-dilution provision added as a result of the spin-off of Cable ONE.
In connection with the spin-off of Cable ONE, the Company modified outstanding stock options to add an
antidilution provision. This resulted in an incremental stock compensation expense of $23.5 million, of which
$18.8 million related to fully vested stock options was recognized as a one-time expense in the third quarter of
2015, with the remaining $4.7 million to be recognized over the remaining service periods of the unvested stock
options through the end of 2018. The $18.8 million expense is included in the Company’s corporate office
segment results and in selling, general and administrative in the Consolidated Statements of Operations.
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 Statements of Operations in 2013.
Of the shares covered by options outstanding at the end of 2015, 101,826 are now exercisable; 17,772 will
become exercisable in 2016; 17,000 will become exercisable in 2017; 17,000 will become exercisable in 2018;
17,000 will become exercisable in 2019; 17,000 will become exercisable in 2020; and 4,124 will become
exercisable in 2021. For 2015, 2014 and 2013, the Company recorded expense of $22.9 million, $2.7 million and
$3.5 million related to stock options, respectively.
103 GRAHAM HOLDINGS COMPANY