Quarterly report pursuant to Section 13 or 15(d)

Stock-Based Awards (Note)

v3.5.0.2
Stock-Based Awards (Note)
 6 Months Ended
Jun. 30, 2016
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 June 30,
 
Six Months Ended June 30,
2016
 
2015
2016
 
2015
Selling and marketing
$
1,702

 
$
1,598

 
$
3,510

 
$
3,152

General and administrative
3,382

 
3,170

 
6,950

 
6,272

Stock-based compensation expense before income taxes
5,084

 
4,768

 
10,460

 
9,424

Income tax benefit
(1,765
)
 
(1,707
)
 
(3,641
)
 
(3,358
)
Stock-based compensation expense after income taxes
$
3,319

 
$
3,061

 
$
6,819

 
$
6,066

 
 
 
 
 
 
 
 

 
As of June 30, 2016, there was approximately $31.6 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 2.0 years.

The Second Amended and Restated 2008 Stock and Annual Incentive Plan, as amended (the “Plan”), authorizes the issuance of 8.0 million shares (8.8 million shares after giving effect to the anti-dilution provisions of the Plan related to the special cash dividend paid in February 2015) 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 June 30, 2016, there were approximately 1.6 million shares of common stock available for grants under the Plan.
During the first quarter of 2016, HSNi granted approximately 92,000 performance share units ("PSUs") to certain executive employees. PSUs vest after a three year performance period. PSUs have rights to receive dividend equivalents that vest concurrently with the underlying PSUs once the requisite service has been rendered. Vesting percentages range between 0% and 200% of the target award based on HSNi's Total Shareholder Return relative to a peer group at the end of the performance period. The compensation expense for these PSUs is based on the fair value of the awards measured at the grant date and is expensed ratably over the vesting term.
A summary of the stock-based awards granted during the six months ended June 30, 2016 is as follows:
 
Six Months Ended June 30, 2016
 
Number of Awards Granted

Weighted Average per Share Fair Value
Stock appreciation rights
928,990

 
$7.31
Restricted stock units
258,676

 
$45.54
Performance share units
92,290

 
$54.06
Employee stock purchase plan options
29,965

 
$12.18
Dividend equivalents due to quarterly dividend
9,394

 
-

The fair values of the options granted under the HSN, Inc. 2010 Employee Stock Purchase Plan and the stock appreciation rights are estimated on the grant date using the Black-Scholes option pricing model. The fair value of PSUs is estimated on the grant date using a Monte-Carlo simulation pricing model which estimates the potential outcome of reaching the market condition based on simulated future stock prices. The weighted average assumptions used in the valuation of each for the six months ended June 30, 2016 are as follows: 
 
 
Six Months Ended June 30, 2016
 
 
Stock Appreciation Rights
 
Employee Stock Purchase Plan Options
 
Performance Share Units
Volatility factor
 
26.3
%
 
34.4
%
 
25.2
%
Risk-free interest rate
 
1.23
%
 
0.49
%
 
0.89
%
Expected term
 
4.5

 
0.5

 
2.9

Dividend yield
 
3.1
%
 
2.8
%
 
0.0
%