Sirius XM Holdings Inc. Quarterly report pursuant to Section 13 or 15(d)

Quarterly report pursuant to Section 13 or 15(d)

Benefit Plans

Benefit Plans

6 Months Ended

Jun. 30, 2018

We recognized share-based payment expense of $36,215 and $30,251 for the three months ended June 30, 2018 and $70,448 and $59,697 for the six months ended June 30, 2018 and 2017, respectively.

2015 Long-Term Stock Incentive Plan

In May 2015, our stockholders approved the Sirius XM Holdings Inc. 2015 Long-Term Stock Incentive Plan (the “2015 Plan”). Employees, consultants and members of our board of directors are eligible to receive awards under the 2015 Plan. The 2015 Plan provides for the grant of stock options, restricted stock awards, restricted stock units and other stock-based awards that the compensation committee of our board of directors deems appropriate. Stock-based awards granted under the 2015 Plan are generally subject to a graded vesting requirement, which is generally three to four years from the grant date. Stock options generally expire ten years from the date of grant. Restricted stock units include performance-based restricted stock units (“PRSUs”), the vesting of which are subject to the achievement of performance goals and the employee's continued employment and generally cliff vest on the third anniversary of the grant date. Each restricted stock unit entitles the holder to receive one share of common stock upon vesting. As of June 30, 2018, 171,619 shares of common stock were available for future grants under the 2015 Plan.

Other Plans

We maintain three other share-based benefit plans — the Sirius XM Radio Inc. 2009 Long-Term Stock Incentive Plan, the XM 2007 Stock Incentive Plan and the Amended and Restated Sirius Satellite Radio 2003 Long-Term Stock Incentive Plan. Excluding dividend equivalent units granted as a result of a declared dividend, no further awards may be made under these plans.

The following table summarizes the weighted-average assumptions used to compute the fair value of options granted to employees and members of our board of directors:



	For the Three Months Ended June 30,		For the Six Months Ended June 30,
	2018	2017	2018	2017
Risk-free interest rate	2.6%	1.6%	2.5%	1.6%
Expected life of options — years	3.48	4.35	3.54	4.07
Expected stock price volatility	22%	26%	22%	26%
Expected dividend yield	0.6%	0.8%	0.7%	0.8%

There were no options granted to third parties during the three and six months ended June 30, 2018 and 2017.

The following table summarizes stock option activity under our share-based plans for the six months ended June 30, 2018:



	Options		Weighted- Average Exercise Price Per Share		Weighted- Average Remaining Contractual Term (Years)	Aggregate Intrinsic Value
Outstanding as of December 31, 2017	280,457		$	3.76
Granted	10,617		$	6.44
Exercised	(41,644	)	$	3.18
Forfeited, cancelled or expired	(1,926	)	$	4.48
Outstanding as of June 30, 2018	247,504		$	3.96	6.40	$	695,499
Exercisable as of June 30, 2018	115,544		$	3.40	5.30	$	389,015

The weighted average grant date fair value per share of stock options granted during the six months ended June 30, 2018 was $1.19. The total intrinsic value of stock options exercised during the six months ended June 30, 2018 and 2017 was $139,812 and $47,572, respectively. During the six months ended June 30, 2018 the number of net settled shares which were issued as a result of stock option exercises was 12,054.

We recognized share-based payment expense associated with stock options of $20,776 and $20,125 for the three months ended June 30, 2018 and 2017, respectively, and $40,435 and $39,637 for the six months ended June 30, 2018 and 2017, respectively.

The following table summarizes the restricted stock unit, including PRSU, activity under our share-based plans for the six months ended June 30, 2018:



	Shares		Grant Date Fair Value Per Share
Nonvested as of December 31, 2017	31,323		$	4.54
Granted	7,123		$	6.27
Vested	(3,518	)	$	3.92
Forfeited	(569	)	$	4.80
Nonvested as of June 30, 2018	34,359		$	4.93

The total intrinsic value of restricted stock units, including PRSUs, vesting during the six months ended June 30, 2018 and 2017 was $22,656 and $4,802, respectively. During the six months ended June 30, 2018, the number of net settled shares which were issued as a result of restricted stock units vesting totaled 1,821. During the six months ended June 30, 2018, we granted 3,768 PRSUs to certain employees. We believe it is probable that the performance target applicable to these PRSUs will be achieved.

In connection with the cash dividends paid during the six months ended June 30, 2018, we granted 126 restricted stock units, including PRSUs, in accordance with the terms of existing award agreements. These grants did not result in any additional incremental share-based payment expense being recognized during the six months ended June 30, 2018.

We recognized share-based payment expense associated with restricted stock units, including PRSUs, of $15,439 and $10,126 for the three months ended June 30, 2018 and 2017, respectively, and $30,013 and $20,060 for the six months ended June 30, 2018 and 2017, respectively.

Total unrecognized compensation costs related to unvested share-based payment awards for stock options and restricted stock units, including PRSUs, granted to employees, members of our board of directors and third parties at June 30, 2018 and December 31, 2017 was $251,588 and $241,521, respectively. The total unrecognized compensation costs at June 30, 2018 are expected to be recognized over a weighted-average period of 1.72 years.

401(k) Savings Plan

Sirius XM sponsors the Sirius XM Radio Inc. 401(k) Savings Plan (the “Sirius XM Plan”) for eligible employees. The Sirius XM Plan allows eligible employees to voluntarily contribute from 1% to 50% of their pre-tax eligible earnings, subject to certain defined limits. We match 50% of an employee’s voluntary contributions per pay period on the first 6% of an employee’s pre-tax salary up to a maximum of 3% of eligible compensation. We may also make additional discretionary matching, true-up matching and non-elective contributions to the Sirius XM Plan. Employer matching contributions under the Sirius XM Plan vest at a rate of 33.33% for each year of employment and are fully vested after three years of employment for all current and future contributions. Our cash employer matching contributions are not used to purchase shares of our common stock on the open market, unless the employee elects our common stock as their investment option for this contribution. We recognized $2,159 and $1,835 in expense during three months ended June 30, 2018 and 2017, respectively, and $4,028 and $3,517 in expense during the six months ended June 30, 2018 and 2017, respectively, in connection with the Sirius XM Plan.

Sirius XM Holdings Inc. Deferred Compensation Plan

In 2015, we adopted the Sirius XM Holdings Inc. Deferred Compensation Plan (the “DCP”). The DCP allows members of our board of directors and certain eligible employees to defer all or a portion of their base salary, cash incentive compensation and/or board of directors’ cash compensation, as applicable. Pursuant to the terms of the DCP, we may elect to make additional contributions beyond amounts deferred by participants, but we are under no obligation to do so. We have established a grantor (or “rabbi”) trust to facilitate the payment of our obligations under the DCP.

Contributions to the DCP, net of withdrawals, for the three months ended June 30, 2018 and 2017 were $307 and $334, respectively, and for the six months ended June 30, 2018 and 2017 were $7,138 and $7,355, respectively. As of June 30, 2018 and December 31, 2017, the fair value of the investments held in the trust were $22,375 and $14,641, respectively, which is included in Other long-term assets in our unaudited consolidated balance sheets and are classified as trading securities. Trading gains and losses associated with these investments are recorded in Other income within our unaudited consolidated statements of comprehensive income. The associated liability is recorded within Other long-term liabilities in our unaudited consolidated balance sheets, and any increase or decrease in the liability is recorded in General and administration expense within our unaudited consolidated statements of comprehensive income. For the three and six months ended June 30, 2018 and 2017, we recorded an immaterial amount of unrealized gains on investments held in the trust.