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

9 Months Ended

Sep. 30, 2021

We recognized share-based payment expense of $51 and $58 for the three months ended September 30, 2021 and 2020, respectively, and $149 and $165 for the nine months ended September 30, 2021 and 2020, 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 September 30, 2021, 128 shares of common stock were available for future grants under the 2015 Plan.

In February 2021, the Compensation Committee of our Board of Directors approved a modification to the design of our long-term equity compensation program for our senior management. The Compensation Committee intends to award equity-based compensation to our senior management in the form of: 25% stock options, which awards will vest in installments on the first three anniversaries of the date of grant; 25% restricted stock units, which awards will vest in installments on the first three anniversaries of the date of grant; 25% PRSUs, which will cliff vest on the third anniversary of the date of grant after a two-year performance period if the free cash flow target established by the Compensation Committee is achieved; and 25% PRSUs, which will cliff vest after a three-year performance period based on the performance of our common stock relative to the companies included in the S&P 500 Index. We refer to this performance measure as a relative “TSR” or “total stockholder return” metric. PRSUs based on the relative total stockholder return metric will only vest if our performance achieves at least the 25th percentile, with a target payout requiring performance at the 50th percentile. The settlement of PRSUs earned in respect of the applicable three-year performance period will be generally subject to the executive’s continued employment with us through the date the total stockholder return performance is certified by the Compensation Committee.

In connection with our February 2019 acquisition of Pandora, we assumed all shares available for issuance (including any shares that later become available for issuance in accordance with the terms of the applicable plans) under each of the 2014 Stock Incentive Plan of AdsWizz Inc., the Pandora Media, Inc. 2011 Equity Incentive Plan, the Pandora Media, Inc. 2004 Stock Plan and the TheSavageBeast.com, Inc. 2000 Stock Incentive Plan, which were previously approved by stockholders of Pandora or the applicable adopting entity. All shares available under these stock plans became additional shares available for grant pursuant to the terms of the 2015 Plan (as adjusted, to the extent appropriate, to reflect the application of the exchange ratio). Subject to certain limitations set forth in the 2015 Plan, such shares may be used for awards under the 2015 Plan.

Other Plans

We maintain six share-based benefit plans in addition to the 2015 Plan — the Sirius XM Radio Inc. 2009 Long-Term Stock Incentive Plan, the Amended and Restated Sirius Satellite Radio 2003 Long-Term Stock Incentive Plan, the 2014 Stock Incentive Plan of AdsWizz Inc., the Pandora Media, Inc. 2011 Equity Incentive Plan, the Pandora Media, Inc. 2004 Stock Plan and the TheSavageBeast.com, Inc. 2000 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, members of our board of directors and non-employees:


	For the Three Months Ended September 30,		For the Nine Months Ended September 30,
	2021	2020	2021	2020
Risk-free interest rate	0.5%	0.2%	0.6%	1.3%
Expected life of options — years	3.83	3.79	6.06	3.82
Expected stock price volatility	32%	34%	33%	25%
Expected dividend yield	0.9%	0.9%	1.0%	0.7%

The following table summarizes stock option activity under our share-based plans for the nine months ended September 30, 2021:


	Options	Weighted-Average Exercise Price Per Share		Weighted-Average Remaining Contractual Term (Years)	Aggregate Intrinsic Value









Outstanding as of December 31, 2020	184	$	4.73
Granted	54	$	6.14
Exercised	(63)	$	3.96
Forfeited, cancelled or expired	(5)	$	6.72
Outstanding as of September 30, 2021	170	$	5.40	5.85	$	144
Exercisable as of September 30, 2021	99	$	4.80	4.79	$	142

The weighted average grant date fair value per stock option granted during the nine months ended September 30, 2021 was $1.77. The total intrinsic value of stock options exercised during the nine months ended September 30, 2021 and 2020 was $149 and $53, respectively. During the nine months ended September 30, 2021, the number of net settled shares issued as a result of stock option exercises was 20.

We recognized share-based payment expense associated with stock options of $10 and $11 for the three months ended September 30, 2021 and 2020, respectively, and $32 and $34 for the nine months ended September 30, 2021 and 2020, respectively.

The following table summarizes the restricted stock unit, including PRSU, activity under our share-based plans for the nine months ended September 30, 2021:


	Shares	Grant Date Fair Value Per Share









Nonvested as of December 31, 2020	75	$	6.06
Granted	39	$	6.35
Vested	(24)	$	6.02
Forfeited	(8)	$	6.09
Nonvested as of September 30, 2021	82	$	6.21

The total intrinsic value of restricted stock units, including PRSUs, vesting during the nine months ended September 30, 2021 and 2020 was $154 and $168, respectively. During the nine months ended September 30, 2021, the number of net settled shares issued as a result of restricted stock units vesting totaled 15. During the nine months ended September 30, 2021, we granted 7 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 nine months ended September 30, 2021, we granted less than 1 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 nine months ended September 30, 2021.

We recognized share-based payment expense associated with restricted stock units, including PRSUs, of $41 and $47 for the three months ended September 30, 2021 and 2020, respectively, and $117 and $131 for the nine months ended September 30, 2021 and 2020, 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 September 30, 2021 and December 31, 2020 was $513 and $385, respectively. The total unrecognized compensation costs at September 30, 2021 are expected to be recognized over a weighted-average period of 2.6 years.

401(k) Savings Plans

Sirius XM Radio Inc. 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. In October 2020, the Pandora Media, LLC 401(k) Profit Sharing Plan and Trust merged with the Sirius XM Plan.

We recognized expenses of $4 for each of the three months ended September 30, 2021 and 2020, and $17 and $12 for the nine months ended September 30, 2021 and 2020, respectively, in connection with the Sirius XM and Pandora Plans.

Sirius XM Holdings Inc. Deferred Compensation Plan

The Sirius XM Holdings Inc. Deferred Compensation Plan (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, were less than $1 and $1 for the three months ended September 30, 2021 and 2020, respectively, and $3 and $8 for the nine months ended September 30, 2021 and 2020, respectively. As of September 30, 2021 and December 31, 2020, the fair value of the investments held in the trust were $53 and $46, respectively, which is included in Other long-term assets in our unaudited consolidated balance sheets and classified as trading securities. Trading gains and losses associated with these investments are recorded in Other (expense) 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 administrative expense within our unaudited consolidated statements of comprehensive income. We recorded (losses) gains on investments held in the trust of less than $(1) and $2 for the three months ended September 30, 2021 and 2020, respectively, and $4 and $1 for the nine months ended September 30, 2021 and 2020, respectively.