Quarterly report pursuant to Section 13 or 15(d)

Benefit Plans

v2.4.0.8
Benefit Plans
 9 Months Ended
Sep. 30, 2013
Compensation and Retirement Disclosure [Abstract]  
Benefit Plans
Benefit Plans

We recognized share-based payment expense of $19,762 and $17,492 for the three months ended September 30, 2013 and 2012, respectively, and $49,774 and $46,361 for the nine months ended September 30, 2013 and 2012, 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 September 30, 2013, approximately 85,319,000 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 Three Months Ended September 30,
 
For the Nine Months Ended September 30,
 
2013
 
2012
 
2013
 
2012
Risk-free interest rate
1.5%
 
0.8%
 
1.4%
 
0.8%
Expected life of options — years
4.73
 
5.06
 
4.72
 
5.13
Expected stock price volatility
47%
 
49%
 
48%
 
53%
Expected dividend yield
0%
 
0%
 
0%
 
0%


There were no options granted to third parties during the three and nine months ended September 30, 2013 and 2012. 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.

The following table summarizes stock option activity under our share-based plans for the nine months ended September 30, 2013 (options in thousands):
 
Options
 
Weighted-
Average
Exercise
Price (1)
 
Weighted-Average
Remaining
Contractual Term
(Years)
 
Aggregate
Intrinsic
Value
Outstanding as of December 31, 2012
274,512

 
$
1.92

 
 
 
 
Granted
54,368

 
$
3.58

 
 
 
 
Exercised
(47,311
)
 
$
1.41

 
 
 
 
Forfeited, cancelled or expired
(4,934
)
 
$
1.74

 
 
 
 
Outstanding as of September 30, 2013
276,635

 
$
2.34

 
7.24
 
$
455,071

Exercisable as of September 30, 2013
120,836

 
$
2.21

 
5.46
 
$
232,449


(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 28, 2012 special cash dividend.

The weighted average grant date fair value of options granted during the nine months ended September 30, 2013 and 2012 was $1.48 and $1.08, respectively. The total intrinsic value of stock options exercised during the nine months ended September 30, 2013 and 2012 was $104,785 and $237,521, respectively. Beginning in July 2013, we transitioned to a net-settlement method from a cashless option exercise method for stock options. During the three months ended September 30, 2013, the approximate number of shares which were issued in the market as a result of stock option exercises was 27,313,000.

We recognized share-based payment expense associated with stock options of $18,860 and $16,660 for the three months ended September 30, 2013 and 2012, respectively, and $48,661 and $43,350 for the nine months ended September 30, 2013 and 2012, respectively.

The following table summarizes the restricted stock unit activity under our share-based plans for the nine months ended September 30, 2013 (shares in thousands):
 
Shares
 
Grant Date Fair Value
Nonvested as of December 31, 2012
429

 
$
3.25

Granted
6,475

 
$
3.58

Vested
(192
)
 
$
3.27

Forfeited
(37
)
 
$
3.61

Nonvested as of September 30, 2013
6,675

 
$
3.56



The weighted average grant date fair value of restricted stock units granted during the nine months ended September 30, 2013 was $3.58. The total intrinsic value of restricted stock units that vested during the nine months ended September 30, 2013 was $605. There were no restricted stock units granted to third parties during the three and nine months ended September 30, 2013 and 2012.

We recognized share-based payment expense associated with restricted stock units of $902 and $1,113 during the three and nine months ended September 30, 2013, respectively.

Total unrecognized compensation costs related to unvested share-based payment awards for stock options, restricted stock units and shares granted to employees and members of our board of directors at September 30, 2013 and December 31, 2012, net of estimated forfeitures, were $178,345 and $129,010, respectively. The total unrecognized compensation costs at September 30, 2013 are expected to be recognized over a weighted-average period of 3 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 cash which is used to purchase shares of our common stock on the open market. During the three and nine months ended September 30, 2013, we contributed approximately $944 and $3,331, respectively, to the Sirius XM Plan in fulfillment of our matching obligation. During the three and nine months ended September 30, 2012, employer 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 for the three and nine months ended September 30, 2012 was $832 and $3,011, respectively.