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, 2016

Compensation and Retirement Disclosure [Abstract]

We recognized share-based payment expense of $24,177 and $19,524 for the three months ended June 30, 2016 and 2015, respectively, and $47,870 and $38,941 for the six months ended June 30, 2016 and 2015, 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 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 2015 Plan are generally subject to a vesting requirement. Stock options 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 June 30, 2016, 230,845 shares of common stock were available for future grants under the 2015 Plan.

Other Plans

We maintain four other share-based benefit plans — the Sirius XM Radio Inc. 2009 Long-Term Stock Incentive Plan, the XM 2007 Stock Incentive Plan, the Amended and Restated Sirius Satellite Radio 2003 Long-Term Stock Incentive Plan and the XM 1998 Shares Award 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 Three Months Ended June 30,		For the Six Months Ended June 30,
	2016	2015	2016	2015
Risk-free interest rate	1.2%	1.3%	1.2%	1.3%
Expected life of options — years	3.79	3.83	3.78	3.83
Expected stock price volatility	24%	26%	24%	26%
Expected dividend yield	0%	0%	0%	0%

There were no options granted to third parties during the three and six months ended June 30, 2016 and 2015. Since we have not historically paid dividends on our common stock, the dividend yield used in the Black-Scholes-Merton option value was zero for all periods.

The following table summarizes stock option activity under our share-based plans for the six months ended June 30, 2016:



	Options		Weighted- Average Exercise Price Per Share		Weighted- Average Remaining Contractual Term (Years)	Aggregate Intrinsic Value
Outstanding as of December 31, 2015	338,481		$	3.29
Granted	16,007		$	3.87
Exercised	(6,694	)	$	1.97
Forfeited, cancelled or expired	(8,446	)	$	4.43
Outstanding as of June 30, 2016	339,348		$	3.32	7.26	$	216,996
Exercisable as of June 30, 2016	113,974		$	2.47	5.37	$	168,234

The weighted average grant date fair value per share of options granted during the six months ended June 30, 2016 was $0.78. The total intrinsic value of stock options exercised during the six months ended June 30, 2016 and 2015 was $12,942 and $39,795, respectively. During the six months ended June 30, 2016, the number of net settled shares which were issued as a result of stock option exercises was 2,020.

We recognized share-based payment expense associated with stock options of $18,987 and $16,553 for the three months ended June 30, 2016 and 2015, respectively, and $38,026 and $33,244 for the six months ended June 30, 2016 and 2015, respectively.

The following table summarizes the restricted stock unit and stock award activity under our share-based plans for the six months ended June 30, 2016:



	Shares		Grant Date Fair Value Per Share
Nonvested as of December 31, 2015	16,088		$	3.73
Granted	1,814		$	3.91
Vested	(193	)	$	3.91
Forfeited	(292	)	$	3.67
Nonvested as of June 30, 2016	17,417		$	3.74

The total intrinsic value of restricted stock units and stock awards vesting during the six months ended June 30, 2016 and 2015 was $765 and $300, respectively. During the six months ended June 30, 2016, the number of net settled shares which were issued as a result of restricted stock units and stock awards vesting was 125.

We recognized share-based payment expense associated with restricted stock units and stock awards of $5,190 and $2,971 during the three months ended June 30, 2016 and 2015, respectively, and $9,844 and $5,697 for the six months ended June 30, 2016 and 2015, respectively.

Total unrecognized compensation costs related to unvested share-based payment awards for stock options and restricted stock units granted to employees, members of our board of directors and third parties at June 30, 2016 and December 31, 2015, net of estimated forfeitures, were $211,320 and $261,628, respectively. The total unrecognized compensation costs at June 30, 2016 are expected to be recognized over a weighted-average period of 2.4 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 $1,526 and $1,513 in expense during the three months ended June 30, 2016 and 2015, respectively, and $3,217 and $4,540 in expense during six months ended June 30, 2016 and 2015, respectively.

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’ compensation, as applicable, each plan year starting in 2016. 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.

As of June 30, 2016, the fair value of the investments in the trust was $4,240, which is included in Other long-term assets in our unaudited consolidated balance sheets and is classified as trading securities. Trading gains and losses associated with the trust 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.