Quarterly report pursuant to Section 13 or 15(d)

Stock Compensation

v3.5.0.2
Stock Compensation
 9 Months Ended
Sep. 30, 2016
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]  
Stock Compensation
Stock Compensation
        
Pursuant to the Starz 2016 Omnibus 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.

Stock compensation expense, by expense category, consisted of the following (in millions):
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
2016
 
2015
 
2016
 
2015
Programming
$
0.4

 
$
0.6

 
$
1.7

 
$
1.9

Operating
0.2

 
—

 
0.4

 
0.2

Selling, general and administrative
7.5

 
7.5

 
21.6

 
22.4

 
$
8.1

 
$
8.1

 
$
23.7

 
$
24.5



As of September 30, 2016, the total unrecognized compensation cost related to unvested stock options, restricted shares and restricted stock units was approximately $40.9 million. Such amount will be recognized in Starz’s condensed consolidated statements of operations over a weighted average period of approximately 2.13 years.

The number and weighted average exercise price (“WAEP”) of stock options to purchase Starz common stock were as follows:
 
Options
 
WAEP
Outstanding at December 31, 2015
13,187,542

 
$
18.97

Granted
138,298

 
$
30.98

Exercised
(1,385,008
)
 
$
15.05

Forfeited
(483,923
)
 
$
29.63

Expired/canceled
(56,451
)
 
$
32.87

Outstanding at September 30, 2016
11,400,458

 
$
19.07

 
 
 
 
Exercisable at September 30, 2016
7,727,463

 
$
16.29



At September 30, 2016, the weighted-average remaining contractual term of outstanding options was 4.46 years and exercisable options was 3.78 years. At September 30, 2016, the aggregate intrinsic value of outstanding options and exercisable options was $141.4 million and $115.7 million, respectively. The aggregate intrinsic value of options exercised was $21.7 million and $70.9 million for the nine months ended September 30, 2016 and 2015, respectively.

The number and weighted average grant-date fair value of restricted share grants were as follows:
 
Restricted Shares
 
Weighted
Average Grant-Date Fair Value
Outstanding at December 31, 2015
769,947

 
$
29.22

Granted
199,155

 
$
28.77

Vested
(59,420
)
 
$
21.28

Forfeited
(128,705
)
 
$
28.25

Outstanding at September 30, 2016
780,977

 
$
29.87


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 nine months ended September 30, 2016 and 2015 was $1.7 million, and $2.5 million, respectively.

As of September 30, 2016, the outstanding number of three-year performance based restricted stock units representing the threshold, target and maximum payout levels were 48,197 units, 96,394 units and 192,788 units, respectively (which are not reflected in the table above). During the nine months ended September 30, 2016, 5,338 units, 10,676 units and 21,352 units, at the threshold, target and maximum payout levels, respectively, were forfeited.

During the second and third quarters of 2016, Starz granted restricted stock units to certain employees. Subject to certain conditions specified in the award agreements, restricted stock units will vest based upon the actual, cumulative Starz Networks’ revenue achieved during the two-year performance period beginning on January 1, 2016 and ending on December 31, 2017 (“Two Year Performance Period”), exceeding a target cumulative Starz Networks’ revenue during the Two Year Performance Period specified by the Starz compensation committee. Potential vesting of the restricted stock units ranges from no units at the target level to 80,235 maximum units if 105%, or higher, of the target two-year performance of Starz Networks’ revenue is achieved (which are not reflected in the table above). During the nine months ended September 30, 2016, 8,548 units at the maximum payout levels were forfeited.

At September 30, 2016, 1.6 million outstanding stock options were held by employees of Starz’s related party Liberty Media.