Annual report pursuant to Section 13 and 15(d)

Benefit Plans

v2.4.0.6
Benefit Plans
 12 Months Ended
Dec. 31, 2012
Compensation and Retirement Disclosure [Abstract]  
Benefit Plans
Benefit Plans

We recognized share-based payment expense of $63,822, $51,622 and $54,585 for the years ended December 31, 2012, 2011 and 2010, respectively.

2009 Long-Term Stock Incentive Plan
In May 2009, our stockholders approved the Sirius XM Radio Inc. 2009 Long-Term Stock Incentive Plan (the “2009 Plan”). Employees, consultants and members of our board of directors are eligible to receive awards under the 2009 Plan. The 2009 Plan provides for the grant of stock options, restricted stock, restricted stock units and other stock-based awards that the compensation committee of our board of directors may deem appropriate. Vesting and other terms of stock-based awards are set forth in the agreements with the individuals receiving the awards. Stock-based awards granted under the 2009 Plan are generally subject to a vesting requirement. Stock-based awards generally expire ten years from the date of grant. Each restricted stock unit entitles the holder to receive one share of common stock upon vesting. As of December 31, 2012, approximately 143,243,000 shares of common stock were available for future grants under the 2009 Plan.

Other Plans
We maintain four other share-based benefit plans — the XM 2007 Stock Incentive Plan, the Amended and Restated Sirius Satellite Radio 2003 Long-Term Stock Incentive Plan, the XM 1998 Shares Award Plan and the XM Talent Option Plan. 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 Years Ended December 31,
 
2012
 
2011
 
2010
Risk-free interest rate
0.8%
 
1.1%
 
1.7%
Expected life of options — years
5.06
 
5.27
 
5.28
Expected stock price volatility
49%
 
68%
 
85%
Expected dividend yield
0%
 
0%
 
0%


We do not intend to pay regular dividends on our common stock. Accordingly, the dividend yield percentage used in the Black-Scholes-Merton option value is set to zero for all periods.

There were no options granted to third parties, other than non-employee members of our board of directors, during the years ended December 31, 2012, 2011 and 2010.

The following table summarizes stock option activity under our share-based payment plans for the years ended December 31, 2012, 2011 and 2010 (options in thousands):
 
Options
 
Weighted-
Average
Exercise
Price (1)
 
Weighted-Average
Remaining
Contractual Term
(Years)
 
Aggregate
Intrinsic
Value
Outstanding as of January 1, 2010
364,792

 
$
1.44

 
 
 
 
Granted
71,179

 
$
0.97

 
 
 
 
Exercised
(19,360
)
 
$
0.56

 
 
 
 
Forfeited, cancelled or expired
(14,741
)
 
$
3.58

 
 
 
 
Outstanding as of December 31, 2010
401,870

 
$
1.32

 
 
 
 
Granted
77,450

 
$
1.80

 
 
 
 
Exercised
(13,300
)
 
$
0.87

 
 
 
 
Forfeited, cancelled or expired
(26,440
)
 
$
4.15

 
 
 
 
Outstanding as of December 31, 2011
439,580

 
$
1.25

 
 
 
 
Granted
58,626

 
$
2.53

 
 
 
 
Exercised
(214,199
)
 
$
0.59

 
 
 
 
Forfeited, cancelled or expired
(9,495
)
 
$
3.09

 
 
 
 
Outstanding as of December 31, 2012
274,512

 
$
1.92

 
7.29
 
$
320,751

Exercisable as of December 31, 2012
93,822

 
$
2.53

 
5.19
 
$
89,517


(1)
The weighted-average exercise price for options outstanding and exercisable as of December 31, 2012 in the table above have been adjusted to reflect the reduction to the exercise price related to the December 28, 2012 special cash dividend.

The weighted average grant date fair value of options granted during the years ended December 31, 2012, 2011 and 2010 was $1.09, $1.04 and $0.67, respectively. The total intrinsic value of stock options exercised during the years ended December 31, 2012, 2011 and 2010 was $399,794, $13,408 and $13,261, respectively.

On December 5, 2012, we declared a special cash dividend of $0.05 per share on our outstanding common stock and preferred stock, on an as-converted basis, to stockholders of record as of the close of business on December 18, 2012. The dividend was paid in cash on December 28, 2012. The compensation committee of our board of directors, which administers our stock incentive plans, adjusted the exercise price of stock options issued under the plans by decreasing the exercise price by $0.05 per share. The stock options outstanding as of December 18, 2012 were adjusted on December 28, 2012. This adjustment did not result in any additional incremental share-based payment expense being recognized.

We recognized share-based payment expense associated with stock options of $60,299, $48,038 and $44,833 for the years ended December 31, 2012, 2011 and 2010, respectively.

The following table summarizes the nonvested restricted stock and restricted stock unit activity under our share-based payment plans for the years ended December 31, 2012, 2011 and 2010 (shares in thousands):
 
Shares
 
Grant Date Fair Value
Nonvested as of January 1, 2010
6,919

 
$
2.65

Granted
—

 
$
—

Vested restricted stock awards
(4,039
)
 
$
2.85

Vested restricted stock units
(192
)
 
$
2.92

Forfeited
(291
)
 
$
2.72

Nonvested as of December 31, 2010
2,397

 
$
2.57

Granted
—

 
$
—

Vested restricted stock awards
(1,854
)
 
$
3.30

Vested restricted stock units
(101
)
 
$
3.08

Forfeited
(21
)
 
$
3.05

Nonvested as of December 31, 2011
421

 
$
1.46

Granted
8

 
$
—

Vested restricted stock awards
—

 
$
—

Vested restricted stock units
—

 
$
—

Forfeited
—

 
$
—

Nonvested as of December 31, 2012
429

 
$
1.46



The total intrinsic value of restricted stock and restricted stock units that vested during the years ended December 31, 2012, 2011 and 2010 was $0, $3,178 and $3,927, respectively.

We recognized share-based payment expense associated with restricted stock units and shares of restricted stock of $0, $543 and $7,397 for the years ended December 31, 2012, 2011 and 2010, respectively.

No restricted stock units were granted during 2011 or 2010. In connection with the special cash dividend paid in December 2012, we granted 8,000 incremental restricted stock units to prevent the economic dilution of the holders of our restricted stock units. This grant did not result in any additional incremental share-based payment expense being recognized.
 
Total unrecognized compensation costs related to unvested share-based payment awards for stock options and restricted stock units and shares granted to employees and members of our board of directors at December 31, 2012 and December 31, 2011, net of estimated forfeitures, was $129,010 and $129,983, respectively. The total unrecognized compensation costs at December 31, 2012 are expected to be recognized over a weighted-average period of three years.

401(k) Savings Plan

We sponsor the Sirius XM Radio 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, up to 6% of an employee’s pre-tax salary. For the years ended December 31, 2012, 2011 and 2010, these matching contributions were made in the form of shares of our common stock. 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. Share-based payment expense resulting from the matching contribution to the Sirius XM Plan was $3,523, $3,041 and $2,356 for the years ended December 31, 2012, 2011 and 2010, respectively.

We may also elect to contribute to the profit sharing portion of the Sirius XM Plan based upon the total eligible compensation of eligible participants. These additional contributions are determined by the compensation committee of our board of directors. We did not contribute to the profit sharing portion of the Sirius XM Plan in 2012, 2011 or 2010.