Annual report pursuant to Section 13 and 15(d)

Benefits Plans

v2.4.0.6
Benefits Plans
 12 Months Ended
Dec. 31, 2011
Benefits Plans [Abstract]  
Benefits Plans

(15)    Benefits Plans

We recognized share-based payment expense of $51,622, $54,585, and $65,607 for the years ended December 31, 2011, 2010 and 2009, respectively. We did not realize any income tax benefits from share-based benefits plans during the years ended December 31, 2011, 2010 and 2009 as a result of the full valuation allowance that is maintained for substantially all net deferred tax assets.

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, 2011, approximately 197,606,000 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. Outstanding awards under these plans continue to vest.

 

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,		  
    2011     2010     2009  

Risk-free interest rate

     1.1 %      1.7 %      2.5 % 

Expected life of options — years

     5.27       5.28       4.68  

Expected stock price volatility

     68 %      85 %      88 % 

Expected dividend yield

     0 %      0 %      0 % 

The following table summarizes the range of assumptions used to compute the fair value of options granted to third parties, other than non-employee members of our board of directors:

 

 

     
    For the Year Ended
December 31,
    2009

Risk-free interest rate

   0.67-2.69%

Expected life — years

   2.33-6.19

Expected stock price volatility

   83-130%

Expected dividend yield

   0%

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

In 2011, we estimated fair value of awards granted using the hybrid approach for volatility, which weights observable historical volatility and implied volatility of qualifying actively traded options on our common stock. In 2010 and 2009, due to the lack of qualifying actively traded options on our common stock, we utilized a 100% weighting to observable historical volatility.

 

The following table summarizes stock option activity under our share-based payment plans for the years ended December 31, 2011, 2010 and 2009 (shares in thousands):

 

 

                                 
    Shares     Weighted-
Average
Exercise
Price 		    Weighted-Average
Remaining
Contractual Term
(Years)		     Aggregate
Intrinsic
Value		  

Outstanding, January 1, 2009

     165,436     $ 4.42                  

Granted

     265,761     $ 0.53                  

Exercised

     —     $ —                  

Forfeited, cancelled or expired

     (66,405 )    $ 5.21                  
   

 

 

                          

Outstanding, December 31, 2009

     364,792     $ 1.44                  
   

 

 

                          

Granted

     71,179     $ 0.97                  

Exercised

     (19,360 )    $ 0.56                  

Forfeited, cancelled or expired

     (14,741 )    $ 3.58                  
   

 

 

                          

Outstanding, 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, December 31, 2011

     439,580     $ 1.25       6.33     $ 378,274  
   

 

 

                          

Exercisable, December 31, 2011

     179,851     $ 1.59       4.92     $ 158,550  
   

 

 

                          

The weighted average grant date fair value of options granted during the years ended December 31, 2011, 2010 and 2009 was $1.04, $0.67 and $0.36, respectively. The total intrinsic value of stock options exercised during the years ended December 31, 2011, 2010 and 2009 was $13,408, $13,261 and $0, respectively.

We recognized share-based payment expense associated with stock options of $48,038, $44,833 and $46,080 for the years ended December 31, 2011, 2010 and 2009, 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, 2011, 2010 and 2009 (shares in thousands):

 

 

                 
    Shares     Weighted-Average
Grant Date Fair
Value		  

Nonvested, January 1, 2009

     19,931     $ 2.84  

Granted

     84,851     $ 0.37  

Vested restricted stock awards

     (8,476 )    $ 2.98  

Vested restricted stock units

     (87,036 )    $ 0.46  

Forfeited

     (2,351 )    $ 1.92  
   

 

 

          

Nonvested, December 31, 2009

     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, 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, December 31, 2011

     421     $ 1.46  
   

 

 

          

The weighted average grant date fair value of restricted stock units granted during the year ended December 31, 2009 was $0.37. No restricted stock units were granted during 2011 or 2010. The total intrinsic value of restricted stock and restricted stock units that vested during the years ended December 31, 2011, 2010 and 2009 was $3,178, $3,927 and $45,827, respectively.

We recognized share-based payment expense associated with restricted stock units and shares of restricted stock of $543, $7,397 and $16,632 for the years ended December 31, 2011, 2010 and 2009, respectively.

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, 2011 and 2010, net of estimated forfeitures, was $129,983 and $108,170, respectively. The total unrecognized compensation costs at December 31, 2011 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, in the form of shares of common stock. Employer matching contributions under the Sirius XM Plan vest at a rate of 33 1/3 % 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 $3,041, $2,356 and $2,895 for the years ended December 31, 2011, 2010 and 2009, 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 in the form of shares of common stock are determined by the compensation committee of our board of directors. Employees are only eligible to receive profit-sharing contributions during any year in which they are employed on the last day of the year. We did not contribute to the profit sharing portion of the Sirius XM Plan in 2011, 2010 or 2009.