Quarterly report pursuant to Section 13 or 15(d)

Stock-Based Compensation

v2.4.0.8
Stock-Based Compensation
 6 Months Ended
Jun. 30, 2013
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 the accompanying condensed consolidated statements of operations are the following amounts of stock-based compensation, a portion of which relates to TripAdvisor as discussed below:
 
Three months ended
June 30,
 
Six months ended
June 30,
 
2013
 
2012
 
2013
 
2012
 
(amounts in millions)
Operating expense
$
5

 
—

 
13

—

—

Selling, general and administrative expense
39

 
18

 
73

 
35

 
$
44

 
18

 
86

 
35


During the six months ended June 30, 2013, Liberty granted, primarily to QVC employees, 4.2 million options to purchase shares of Series A Liberty Interactive common stock. Such options had a weighted average grant-date fair value of $8.16 per share and vest semi-annually over the four 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 tables present the number and weighted average exercise price ("WAEP") of the Awards to purchase Liberty Interactive and Liberty Ventures 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, 2013
33,839

 
$
16.92

 
432

 
$
17.92

Granted
4,188

 
$
21.08

 
—

 
$
—

Exercised
(2,365
)
 
$
10.44

 
—

 
$
—

Forfeited/Cancelled
(450
)
 
$
14.58

 
—

 
$
—

Outstanding at June 30, 2013
35,212

 
$
17.88

 
432

 
$
17.92

Exercisable at June 30, 2013
14,263

 
$
16.18

 
432

 
$
17.92


 
Liberty Ventures
 
Series A (000's)
 
WAEP
 
Series B (000's)
 
WAEP
Outstanding at January 1, 2013
1,155

 
$
56.26

 
22

 
$
46.69

Granted
—

 
$
—

 
—

 
$
—

Exercised
(84
)
 
$
48.58

 
—

 
$
—

Forfeited/Cancelled
(1
)
 
$
43.48

 
—

 
$
—

Outstanding at June 30, 2013
1,070

 
$
56.87

 
22

 
$
46.69

Exercisable at June 30, 2013
450

 
$
54.69

 
22

 
$
46.69


The following table provides additional information about outstanding Awards to purchase Liberty Interactive and Liberty Ventures common stock at June 30, 2013.
 
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
35,212

 
$
17.88

 
5.3 years
 
$
181,134

 
14,263

 
$
16.18

 
4.1 years
 
$
97,735

Series B Liberty Interactive
432

 
$
17.92

 
1.9 years
 
$
1,819

 
432

 
$
17.92

 
1.9 years
 
$
1,819

Series A Liberty Ventures
1,070

 
$
56.87

 
5.5 years
 
$
30,130

 
450

 
$
54.69

 
4.4 years
 
$
13,687

Series B Liberty Ventures
22

 
$
46.69

 
1.9 years
 
$
827

 
22

 
$
46.69

 
1.9 years
 
$
827


As of June 30, 2013, the total unrecognized compensation cost related to unvested Liberty outstanding equity Awards was approximately $143 million, including compensation associated with the option exchange that occured in December 2012. Such amount will be recognized in the Company's consolidated statements of operations over a weighted average period of approximately 2.1 years.
TripAdvisor - Stock-based Compensation
During six months ended June 30, 2013, TripAdvisor issued 1.6 million of primarily service based stock options under their 2011 Incentive Plan with a weighted average estimated grant-date fair value per option of $23.15. As of June 30, 2013, TripAdvisor has 9.0 million options outstanding of which 3.8 million are exercisable. TripAdvisor stock-based compensation for the three and six months ended June 30, 2013 was approximately $14 million and $30 million, respectively. As of June 30, 2013, the total unrecognized compensation cost related to unvested TripAdvisor stock options was approximately $90 million and will be recognized over a weighted average period of approximately 2.9 years.
Additionally, during the six months ended June 30, 2013, TripAdvisor granted 994,000 service based RSUs under their 2011 Incentive Plan for which the fair value was measured based on the quoted price of TripAdvisor common stock at the date of grant. As of June 30, 2013, the total unrecognized compensation cost related to 1 million unvested TripAdvisor RSUs was approximately $41 million and will be recognized over a weighted average period of approximately 3.5 years.
Other
Certain of the Company's other subsidiaries have stock based compensation plans under which employees and non-employees are granted options or similar stock based awards. Awards made under these plans vest and become exercisable over various terms. The awards and compensation recorded, if any, under these plans is not significant to Liberty.