Stock Compensation |
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Dec. 31, 2015 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Stock Compensation and Long Term Incentive Plan |
Stock Compensation
Pursuant to the Starz 2011 Incentive Plan, the compensation committee of the board of directors may grant eligible employees stock options, stock appreciation rights, restricted shares and restricted stock units made in respect of a maximum of 29.2 million shares of Starz common stock. Stock options generally vest over 4 years and have a term of 7-10 years. Restricted shares generally vest over 1-4 years. Restricted stock units generally vest over 3 years. Starz issues new shares upon exercise of equity awards. Pursuant to the Starz 2011 Nonemployee Director Incentive Plan, the board of directors may grant eligible nonemployee directors stock options, stock appreciation rights, restricted shares and restricted stock units made in respect of a maximum of 1.4 million shares of Starz common stock.
Stock compensation expense, by expense category, consisted of the following (in millions):
As of December 31, 2015, total unrecognized compensation cost related to unvested stock options, restricted shares and restricted stock units was approximately $57.8 million. Such amount will be recognized in Starz’s consolidated statements of operations over a weighted average period of 2.52 years.
Awards granted in 2015, 2014 and 2013 were as follows:
Starz calculated the grant-date fair value for stock options using the Black-Scholes Model. The expected term was estimated using a simplified method as Starz does not have a sufficient amount of historical exercise or forfeiture data due to the LMC Spin-Off in January 2013. The simplified method assumes that the employee would exercise stock options evenly over the vesting period and through the contract term. The 2015 expected volatility was calculated using Starz’s historical and implied volatility and comparable peer company historical and implied volatility, while the 2014 and 2013 expected volatility was calculated using comparable peer company historical and implied volatility because Starz lacked historical volatility equal to the expected term due to the LMC Spin-Off in January 2013. Starz used a zero dividend rate as Starz has not historically declared dividends and used risk-free rates which were derived from U.S. Treasury Bonds with a term similar to that of the subject options. The assumptions used were as follows:
The number and weighted average exercise price (“WAEP”) of stock options to purchase Starz common stock were as follows:
At December 31, 2015, the weighted average remaining contractual term of outstanding options was 5.1 years and exercisable options was 4.5 years. At December 31, 2015, the aggregate intrinsic value of outstanding options was $191.7 million and the aggregate intrinsic value of exercisable options was $146.4 million. The aggregate intrinsic value of options exercised was $80.0 million, $55.8 million and $16.1 million for the years ended December 31, 2015, 2014 and 2013, respectively.
The number and weighted average grant date fair value of restricted share grants were as follows:
The grant date fair value was based on the market value of the shares on the date of grant. The aggregate fair value of all restricted shares that vested during the years ended December 31, 2015, 2014 and 2013 was $8.2 million, $12.4 million and $8.8 million, respectively.
In 2015, Starz granted certain employees restricted stock units that will vest based upon the actual, cumulative Adjusted OIBDA (as defined in Note 13) achieved by Starz during a three year performance period beginning on January 1, 2015 and ending on December 31, 2017 (“Performance Period”), compared to a target cumulative Adjusted OIBDA during the Performance Period specified by the Starz compensation committee. Potential vesting of the restricted stock units ranges from a threshold of 50% of the target award if Starz’s actual three-year cumulative Adjusted OIBDA equals 90% of the targeted amount, to a maximum of 200% of the target award if Starz’s actual three-year cumulative Adjusted OIBDA equals or exceeds 120% of the targeted amount. Results between threshold, target and maximum will be interpolated on a straight line basis. Each restricted stock unit provides the right to receive, in those specified circumstances, one share of Starz Series A common stock. Based upon the target for the Performance Period, the number of restricted stock units representing the threshold, target and maximum were 53,535 units, 107,070 units and 214,140 units, respectively (which are not reflected in the table above).
At December 31, 2015, 2.0 million of outstanding stock options and 0.1 million restricted shares were held by Liberty Media employees as a result of the LMC Spin-Off.
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