Quarterly report pursuant to Section 13 or 15(d)

Stock-Based Compensation

v2.4.0.6
Stock-Based Compensation
 9 Months Ended
Sep. 30, 2012
Share-based Compensation [Abstract]  
Stock-Based Compensation
Stock-Based Compensation
The Company has granted to certain of its directors, employees and employees of its subsidiaries stock appreciation rights ("SARs"), restricted stock grants and options to purchase shares of Liberty common stock (collectively, "Awards"). The Company measures the cost of employee services received in exchange for an equity classified Award (such as stock options and restricted stock grants) based on the grant-date fair value of the Award, and recognizes that cost over the period during which the employee is required to provide service (usually the vesting period of the Award). The Company measures the cost of employee services received in exchange for a liability classified Award (such as stock appreciation rights that will be settled in cash) based on the current fair value of the Award, and remeasures the fair value of the Award at each reporting date.
Included in selling, general and administrative expenses in the accompanying condensed consolidated statements of operations are the following amounts of stock-based compensation (amounts in millions):
Three months ended:
 
September 30, 2012
$
18

September 30, 2011
$
2

Nine months ended:
 

September 30, 2012
$
53

September 30, 2011
$
32


During the nine months ended September 30, 2012, Liberty granted, primarily to QVC employees, 2.7 million options to purchase shares of Series A Liberty Interactive common stock. Such options had a weighted average grant-date fair value of $8.38 per share and vest semi-annually over the 4 year vesting period.
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. The volatility used in the calculation for Awards is based on the historical volatility of Liberty's stock 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.
Liberty—Outstanding Awards
The following tables present the number and weighted average exercise price ("WAEP") of the Awards to purchase Liberty Interactive and Liberty Ventures common stock granted to certain officers, employees and directors of the Company. In connection with the recapitalization, in August 2012, all outstanding option awards and SARs with respect to the then-existing Series A and Series B Liberty Interactive common stock (each an "original Liberty Interactive award") were adjusted pursuant to the anti-dilution provisions of the incentive plans under which the equity awards were granted, such that a holder of an original Liberty Interactive award received (i) an adjustment to the exercise price or base price, as applicable, and number of shares relating to the original Liberty Interactive award (as so adjusted, an "adjusted Liberty Interactive award") and (ii) an equity award relating to shares of the corresponding series of Liberty Ventures common stock (a "new Liberty Ventures award"). The exercise prices and number of shares subject to the new Liberty Ventures award and the adjusted Liberty Interactive award were determined based on 1) the exercises prices and number of shares subject to the original Liberty Interactive award, 2) the distribution ratio of 0.05, 3) the pre-distribution trading price of the Liberty Interactive common stock and 4) the post-distribution trading prices of the Liberty Interactive common stock and Liberty Ventures common stock, such that the pre-distribution intrinsic value of the original Liberty Interactive award was allocated between the new Liberty Ventures award and the adjusted Liberty Interactive award for the Company's corporate employees and directors. For employees of subsidiaries attributed to the Liberty Interactive Group, the pre-distribution intrinsic value of the original Liberty Interactive award was maintained solely within the adjusted Liberty Interactive award.
 
Liberty Interactive
 
Series A (000's)
 
WAEP
 
Series B (000's)
 
WAEP
Outstanding at January 1, 2012
45,223

 
$
12.06

 
450

 
$
19.74

Granted
2,717

 
$
18.63

 
—

 
$
—

Exercised
(5,634
)
 
$
8.18

 
—

 
$
—

Forfeited/Cancelled
(279
)
 
$
16.59

 
—

 
$
—

Liberty Ventures Adjustment
413

 
$
8.39

 
(18
)
 
$
17.92

Outstanding at September 30, 2012
42,440

 
$
11.71

 
432

 
$
17.92

Exercisable at September 30, 2012
15,394

 
$
11.76

 
432

 
$
17.92


 
Liberty Ventures
 
Series A (000's)
 
WAEP
 
Series B (000's)
 
WAEP
Outstanding at January 1, 2012
—

 
$
—

 
—

 
$
—

Granted
—

 
$
—

 
—

 
$
—

Exercised
(48
)
 
$
18.95

 
—

 
$
—

Forfeited/Cancelled
—

 
$
—

 
—

 
$
—

Liberty Ventures Adjustment
1,588

 
$
30.69

 
22

 
$
46.69

Outstanding at September 30, 2012
1,540

 
$
31.06

 
22

 
$
46.69

Exercisable at September 30, 2012
519

 
$
33.74

 
22

 
$
46.69



The following table provides additional information about outstanding Awards to purchase Liberty common stock at September 30, 2012.
 
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
42,440

 
$
11.71

 
5.1 years
 
$
294,820

 
15,394

 
$
11.76

 
2.8 years
 
$
110,418

Series B Liberty Interactive
432

 
$
17.92

 
2.7 years
 
$
225

 
432

 
$
17.92

 
2.7 years
 
$
225

Series A Liberty Ventures
1,540

 
$
31.06

 
4.6 years
 
$
29,338

 
519

 
$
33.74

 
2.1 years
 
$
8,974

Series B Liberty Ventures
22

 
$
46.69

 
2.7 years
 
$
58

 
22

 
$
46.69

 
2.7 years
 
$
58


As of September 30, 2012, the total unrecognized compensation cost related to unvested Liberty outstanding equity Awards was approximately $97 million. Such amount will be recognized in the Company's consolidated statements of operations over a weighted average period of approximately 2.6 years.