Quarterly report pursuant to Section 13 or 15(d)

Stock-Based Awards (Note)

v2.4.0.8
Stock-Based Awards (Note)
 9 Months Ended
Sep. 30, 2014
Share-based Compensation [Abstract]  
Stock-Based Awards
STOCK-BASED AWARDS
Stock-based compensation expense is included in the following line items in the accompanying consolidated statements of operations (in thousands):

 
Three Months Ended September 30,
 
Nine Months Ended September 30,
2014
 
2013
2014
 
2013
Selling and marketing
$
1,135

 
$
818

 
$
3,424

 
$
2,674

General and administrative
2,746

 
2,206

 
8,267

 
7,605

Stock-based compensation expense before income taxes
3,881

 
3,024

 
11,691

 
10,279

Income tax benefit
(1,401
)
 
(1,108
)
 
(4,224
)
 
(3,697
)
Stock-based compensation expense after income taxes
$
2,480

 
$
1,916

 
$
7,467

 
$
6,582

 
 
 
 
 
 
 
 

 
As of September 30, 2014, there was approximately $26.2 million of unrecognized compensation cost, net of estimated forfeitures, related to all equity-based awards which is currently expected to be recognized on a straight-line basis over a weighted average period of approximately 2.3 years.
The Second Amended and Restated 2008 Stock and Annual Incentive Plan, as amended (the “Plan”), authorizes the issuance of 8.0 million shares of HSNi common stock for new awards granted by HSNi. The purpose of the Plan is to assist HSNi in attracting, retaining and motivating officers, employees, directors and consultants, and to provide HSNi with the ability to provide incentives more directly linked to the profitability of HSNi’s business and increases in shareholder value. As of September 30, 2014, there were approximately 2.5 million shares of common stock available for grants under the Plan.
HSNi can grant restricted stock, restricted stock units ("RSUs"), stock options, stock appreciation rights (“SARs”), dividend equivalents and other stock-based awards under the Plan. Stock-based awards have a maximum term of 10 years. The exercise price of options and SARs granted under the Plan is required to be at, or above, the fair market value of HSNi’s stock on the date of grant. RSUs have rights to receive dividend equivalents that vest at the same time as the underlying RSUs once the requisite service has been rendered. HSNi elects to issue shares of its common stock for RSU vestings and SAR exercises net of the employees’ minimum tax withholding obligation. The payments made by HSNi to the taxing authorities for these taxes for the nine months ended September 30, 2014 and 2013 were $10.2 million and $13.9 million, respectively.
A summary of the stock-based awards granted during the nine months ended September 30, 2014 is as follows:
 
Nine Months Ended September 30, 2014
 
Number of Awards Granted

Weighted Average per Share Fair Value
Stock appreciation rights
423,579


$15.24
Restricted stock units
234,039


$55.14
Employee stock purchase plan options
43,646


$12.67

The fair values of the options granted under the HSN, Inc. 2010 Employee Stock Purchase Plan and the SARs are estimated on the grant date using the Black-Scholes option pricing model. The weighted average assumptions used in the valuation of each for the nine months ended September 30, 2014 are as follows: 
 
 
Nine Months Ended September 30, 2014
 
 
Black-Scholes
 
 
Stock Appreciation Rights
 
Employee Stock Purchase Plan Options
Volatility factor
 
36.4
%
 
22.0
%
Risk-free interest rate
 
1.55
%
 
0.07
%
Expected term
 
4.7

 
0.5

Dividend yield
 
1.8
%
 
1.7
%