Annual report pursuant to Section 13 and 15(d)

Stock-Based Compensation

v2.4.0.6
Stock-Based Compensation
 12 Months Ended
Dec. 31, 2011
Share-based Compensation [Abstract]  
Stock-Based Compensation
Stock-Based Compensation
Liberty - Incentive Plans
 Pursuant to the Liberty Interactive Corporation 2000 Incentive Plan, as amended from time to time (the "2000 Plan"), the Company has granted to certain of its employees stock options and SARs (collectively, "Awards") to purchase shares of Series A and Series B Liberty Interactive common stock. The 2000 Plan provides for Awards to be issued in respect of a maximum of 28.1 million shares of Liberty common stock. On May 1, 2007, stockholders of the Company approved the Liberty Interactive Corporation 2007 Incentive Plan, as amended from time to time (the "2007 Plan"). The 2007 Plan provides for Awards to be made in respect of a maximum of 38.2 million shares of Liberty common stock. Additionally, on June 24, 2010, stockholders of the Company approved the Liberty Interactive Corporation 2010 Incentive Plan, as amended from time to time (the "2010 Plan"). The 2010 Plan provides for Awards to be made in respect of a maximum of 40.9 million shares of Liberty common stock. Awards generally vest over 4-5 years and have a term of 7-10 years. Liberty issues new shares upon exercise of equity awards.
 Pursuant to the Liberty Interactive Corporation 2002 Nonemployee Director Incentive Plan, as amended from time to time (the "2002 NDIP") and the Liberty Interactive Corporation 2011 Nonemployee Director Incentive Plan, as amended from time to time (the "2011 NDIP"), the Liberty Board of Directors has the full power and authority to grant eligible nonemployee directors stock options, SARs, stock options with tandem SARs, and restricted stock.
Liberty - Grants
During the year ended December 31, 2011, Liberty granted, primarily to QVC employees, 6.2 million options to purchase shares of Series A Liberty Interactive common stock. Such options had a weighted average grant-date fair value of $7.32 per share. Of these grants, 3.8 million options were granted to the CEO of QVC; of those 3.8 million options, one half vest December 15, 2014 and the other half vest on December 15, 2015. The remainder of the options granted primarily vest semi-annually over the 4 year vesting period.
During the years ended December 31, 2010 and 2009 the Company granted, approximately 10.6 million and 17.5 million options to purchase shares of Series A Liberty Interactive common stock, respectively. Such options had a weighted average grant-date fair value of $7.11 and $3.57 per share, respectively.
The Company has calculated the grant-date fair value for all of its equity classified awards and any subsequent remeasurement of its liability classified awards using the Black-Scholes Model. The Company estimates the expected term of the Awards based on historical exercise and forfeiture data. For grants made in 2011, 2010 and 2009, the range of expected terms was 5.7 to 6.0 years. The volatility used in the calculation for Awards is based on the historical volatility of Liberty's stocks and the implied volatility of publicly traded Liberty options. The Company uses a zero dividend rate and the risk-free rate for Treasury Bonds with a term similar to that of the subject options.
The following presents the range of volatilities used by Liberty in the Black-Scholes Model for the 2011, 2010 and 2009 Liberty Interactive grants.
 
 
Volatility
2011
 
44.8
%
-
47.5
%
2010
 
44.8
%
-
46.4
%
2009
 
36.0
%
-
46.4
%

Liberty - Outstanding Awards
The following table presents the number and weighted average exercise price ("WAEP") of the Awards to purchase Liberty common stock granted to certain officers, employees and directors of the Company.
 
Liberty Interactive
 
Series A (000's)
 
WAEP
 
Series B (000's)
 
WAEP
 
Number of Options in thousands
Outstanding at January 1, 2011
47,583

 
$
12.10

 
7,491

 
$
23.41

Granted
6,158

 
$
15.96

 
—

 
$
—

Exercised
(2,805
)
 
$
4.79

 
—

 
$
—

Forfeited/Cancelled/Exchanged
(5,713
)
 
$
20.25

 
(7,041
)
 
$
23.64

Outstanding at December 31, 2011
45,223

 
$
12.06

 
450

 
$
19.74

Exercisable at December 31, 2011
16,155

 
$
12.96

 
450

 
$
19.74


The following table provides additional information about outstanding Awards to purchase Liberty common stock at December 31, 2011.
 
No. of
outstanding
Awards (000's)
 
WAEP of
outstanding
Awards
 
Weighted
average
remaining
life
 
Aggregate
intrinsic
value
(000's)
 
No. of
exercisable
Awards
(000's)
 
WAEP of
exercisable
Awards
 
Weighted
average
remaining
life
 
Aggregate
intrinsic
value
(000's)
Series A Liberty Interactive
45,223

 
$
12.06

 
5.2
 years
 
$
214,557

 
16,155

 
$
12.96

 
3.1
 years
 
$
78,879

Series B Liberty Interactive
450

 
$
19.74

 
3.4
 years
 
$
—

 
450

 
$
19.74

 
3.4
 years
 
$
—


As of December 31, 2011, the total unrecognized compensation cost related to unvested Liberty equity Awards was approximately $109 million. Such amount will be recognized in the Company's consolidated statements of operations over a weighted average period of approximately 2.1 years.

Liberty - Exercises

The aggregate intrinsic value of all options exercised during the years ended December 31, 2011, 2010 and 2009 was $33 million, $23 million and $2 million, respectively.

Liberty - Restricted Stock

The Company had approximately 2.1 million shares of unvested restricted Liberty Interactive common stock held by certain directors, officers and employees of the Company, with a weighted average grant date fair value of $11.31 per share, as of December 31, 2011.
The aggregate fair value of all restricted shares of Liberty Interactive common stock that vested during the years ended December 31, 2011, 2010 and 2009 was $14 million, $10 million and $3 million, respectively.
Other

Certain of the Company's other subsidiaries have stock based compensation plans under which employees and non-employees are granted options or similar stock based awards. Awards made under these plans vest and become exercisable over various terms. The awards and compensation recorded, if any, under these plans is not significant to Liberty.