Annual report pursuant to Section 13 and 15(d)

Benefit Plans

v2.4.0.8
Benefit Plans
 12 Months Ended
Dec. 31, 2013
Compensation and Retirement Disclosure [Abstract]  
Benefit Plans
Benefit Plans

We recognized share-based payment expense of $68,876, $63,822 and $51,622 for the years ended December 31, 2013, 2012 and 2011, 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 awards, 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, 2013, approximately 82,806,000 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 and all outstanding awards are fully vested.

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,
 
2013
 
2012
 
2011
Risk-free interest rate
1.4%
 
0.8%
 
1.1%
Expected life of options — years
4.73
 
5.06
 
5.27
Expected stock price volatility
47%
 
49%
 
68%
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 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, 2013, 2012 and 2011.

The following table summarizes stock option activity under our share-based plans for the years ended December 31, 2013, 2012 and 2011 (options in thousands):
 
Options
 
Weighted-
Average
Exercise
Price (1)
 
Weighted-Average
Remaining
Contractual Term
(Years)
 
Aggregate
Intrinsic
Value
Outstanding at the beginning of January 1, 2011
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

 
 
 
 
Granted
57,228

 
$
3.59

 
 
 
 
Exercised
(61,056
)
 
$
1.31

 
 
 
 
Forfeited, cancelled or expired
(6,445
)
 
$
2.02

 
 
 
 
Outstanding as of December 31, 2013
264,239

 
$
2.42

 
7.12
 
$
327,398

Exercisable as of December 31, 2013
114,278

 
$
2.26

 
5.29
 
$
179,549


(1)
The weighted-average exercise price for options outstanding as of December 28, 2012 were adjusted in 2012 to reflect the reduction to the exercise price related to the December 2012 special cash dividend.

The weighted average grant date fair value of options granted during the years ended December 31, 2013, 2012 and 2011 was $1.48, $1.09 and $1.04, respectively. The total intrinsic value of stock options exercised during the years ended December 31, 2013, 2012 and 2011 was $142,491, $399,794 and $13,408, respectively. In July 2013, we transitioned to a net-settlement method from a cashless option exercise method for stock options. During the year ended December 31, 2013, the number of shares which were issued in the market as a result of stock option exercises was 32,649,857.

We recognized share-based payment expense associated with stock options of $66,231, $60,299 and $48,038 for the years ended December 31, 2013, 2012 and 2011, respectively.

The following table summarizes the nonvested restricted stock award and restricted stock unit activity under our share-based plans for the years ended December 31, 2013, 2012 and 2011 (shares in thousands):
 
Shares
 
Grant Date Fair Value
Nonvested as of January 1, 2011
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

 
$
3.25

Granted
6,873

 
$
3.59

Vested restricted stock units
(192
)
 
$
3.27

Forfeited
(126
)
 
$
3.61

Nonvested as of December 31, 2013
6,984

 
$
3.58



The total intrinsic value of restricted stock and restricted stock units that vested during the years ended December 31, 2013, 2012 and 2011 was $605, $0 and $3,178, respectively. The weighted average grant date fair value of restricted stock units granted during the year ended December 31, 2013 was $3.59.

We recognized share-based payment expense associated with restricted stock awards and restricted stock units of $2,645, $0 and $543 during the years ended December 31, 2013, 2012 and 2011, respectively.

No restricted stock awards or restricted stock units were granted in 2011. 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 in 2012. There were no restricted stock units granted to third parties during the years ended December 31, 2013, 2012 and 2011.

Total unrecognized compensation costs related to unvested share-based payment awards for stock options, restricted stock awards, restricted stock units and shares granted to employees and members of our board of directors at December 31, 2013 and 2012, net of estimated forfeitures, were $164,292 and $129,010, respectively. The total unrecognized compensation costs at December 31, 2013 are expected to be recognized over a weighted-average period of 3 years.

401(k) Savings Plan
We sponsor the Sirius XM Holdings 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, up to 6% of an employee’s pre-tax salary, in cash which is used to purchase shares of our common stock on the open market. 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. During the year ended December 31, 2013 we contributed $4,181 to the Sirius XM Plan in fulfillment of our matching obligation. During the years ended December 31, 2012 and 2011, employer matching contributions were made in the form of shares of our common stock, resulting in share-based payment expense of $3,523 and $3,041, respectively.