(3)        Stock-Based Compensation

The Company has granted to certain of its directors, employees and employees of its subsidiaries options and stock appreciation rights ("SARs") to purchase shares of Liberty common stock (collectively, "Awards").  The Company measures the cost of employee services received in exchange for an Award of equity instruments (such as stock options and restricted stock) 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 an Award of liability instruments (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):

In March 2011, Liberty granted, to QVC employees, 5.7 million options to purchase shares of Series A Liberty Interactive common stock.  Such options had a weighted average grant-date fair value of $7.33 per share.  Of these grants, 3.8 million options were granted to the CEO of QVC; of those 3.8 million options, one half vest December 15, 2014 and the other half vest on December 15, 2015.  The remainder of the options granted vest semi-annually over the 4 year vesting period.

In the six months ended June 30, 2011, Liberty granted, primarily to Starz employees, 484,000 options to purchase shares of Series A Liberty Starz common stock.  Such options had a weighted average grant-date fair value of $21.40 per share.  These options vest quarterly 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 stocks 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 table presents the number and weighted average exercise price (''WAEP'') of options and SARs to purchase Liberty common stock granted to certain officers, employees and directors of the Company. 

The following table provides additional information about outstanding options to purchase Liberty common stock at June 30, 2011.

As of June 30, 2011, the total unrecognized compensation cost related to unvested Liberty equity awards was approximately $200 million.  Such amount will be recognized in the Company's consolidated statements of operations over a weighted average period of approximately 2.8 years.