Quarterly report pursuant to Section 13 or 15(d)

Stock-Based Compensation

v2.4.0.6
Stock-Based Compensation
 6 Months Ended
Jun. 30, 2012
Share-based Compensation [Abstract]  
Stock-Based Compensation
Stock-Based Compensation
The Company has granted to certain of its directors, employees and employees of its subsidiaries stock appreciation rights ("SARs"), restricted stock grants and options to purchase shares of Liberty common stock (collectively, "Awards"). The Company measures the cost of employee services received in exchange for an equity classified Award (such as stock options and restricted stock grants) 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 a liability classified Award (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):
Three months ended:
 
June 30, 2012
$
18

June 30, 2011
$
14

Six months ended:
 

June 30, 2012
$
35

June 30, 2011
$
30


During the six months ended June 30, 2012, Liberty granted, primarily to QVC employees, 2.7 million options to purchase shares of Series A Liberty Interactive common stock. Such options had a weighted average grant-date fair value of $8.38 per share and vest semi-annually 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 stock 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 the Awards to purchase Liberty Interactive common stock granted to certain officers, employees and directors of the Company.
 
Liberty Interactive
 
Series A (000's)
 
WAEP
 
Series B (000's)
 
WAEP
Outstanding at January 1, 2012
45,223

 
$
12.06

 
450

 
$
19.74

Granted
2,717

 
$
18.63

 
—

 
$
—

Exercised
(2,412
)
 
$
6.98

 
—

 
$
—

Forfeited/Cancelled/Exchanged
(243
)
 
$
16.39

 
—

 
$
—

Outstanding at June 30, 2012
45,285

 
$
12.70

 
450

 
$
19.74

Exercisable at June 30, 2012
16,338

 
$
12.80

 
450

 
$
19.74


The following table provides additional information about outstanding Awards to purchase Liberty Interactive common stock at June 30, 2012.
 
No. of
outstanding
Awards (000's)
 
WAEP of
outstanding
Awards
 
Weighted
average
remaining
life
 
Aggregate
intrinsic
value
(000's)
 
No. of
exercisable
Awards
(000's)
 
WAEP of
exercisable
Awards
 
Weighted
average
remaining
life
 
Aggregate
intrinsic
value
(000's)
Series A Liberty Interactive
45,285

 
$
12.70

 
5.1 years
 
$
248,831

 
16,338

 
$
12.80

 
2.7 years
 
$
97,816

Series B Liberty Interactive
450

 
$
19.74

 
2.9 years
 
$
—

 
450

 
$
19.74

 
2.9 years
 
$
—


As of June 30, 2012, the total unrecognized compensation cost related to unvested Liberty Interactive equity Awards was approximately $107 million. Such amount will be recognized in the Company's consolidated statements of operations over a weighted average period of approximately 2.4 years.