Annual report pursuant to Section 13 and 15(d)

STOCK-BASED COMPENSATION

v3.6.0.2
STOCK-BASED COMPENSATION
 12 Months Ended
Dec. 31, 2016
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]  
STOCK-BASED COMPENSATION
STOCK-BASED COMPENSATION
In December 2005, the Company adopted its 2005 Stock Incentive Plan, which has been amended and/or restated on several occasions. In connection with the Company’s merger with Ticketmaster, the Company adopted the Amended and Restated Ticketmaster 2008 Stock & Annual Incentive Plan. The plans authorize the Company to grant stock option awards, director shares, stock appreciation rights, restricted stock and deferred stock awards, other equity-based awards and performance awards. The Company has granted restricted stock awards and options to purchase its common stock to employees, directors and consultants of the Company and its affiliates under the stock incentive plans at no less than the fair market value of the underlying stock on the date of grant. The stock incentive plans contain anti-dilutive provisions that require the adjustment of the number of shares of the Company’s common stock represented by, and the exercise price of, each option for any stock splits or stock dividends.
The following is a summary of stock-based compensation expense recorded by the Company during the respective periods:
  
Year Ended December 31,
 
2016
 
2015
 
2014
 
(in thousands)
Selling, general and administrative expenses
$
15,687

 
$
16,380

 
$
21,204

Corporate expenses
17,036

 
16,981

 
17,825

Total
$
32,723

 
$
33,361

 
$
39,029


As of December 31, 2016, there was $31.2 million of total unrecognized compensation cost related to stock-based compensation arrangements for stock options and restricted stock awards. This cost is expected to be recognized over a weighted-average period of 1.6 years.
Stock Options
Stock options are granted for a term not exceeding ten years and the nonvested options are generally forfeited in the event the employee or director terminates his or her employment or relationship with the Company or one of its affiliates. Any options that have vested at the time of termination are forfeited to the extent they are not exercised within the applicable post-employment exercise period provided in their option agreements. These options vest over two to five years.
The following assumptions were used to calculate the fair value of the Company’s options on the date of grant:
 
 
Year Ended December 31,
 
2016
 
2015
 
2014
Risk-free interest rate
1.24% - 1.49%

 
1.47% - 1.75%

 
1.67% - 2.00%

Dividend yield
0.0
%
 
0.0
%
 
0.0
%
Volatility factors
29.42% - 36.11%

 
34.18% - 43.36%

 
42.41% - 47.00%

Weighted average expected life (in years)
5.76

 
5.94

 
6.06


The following table presents a summary of the Company’s stock options outstanding at, and stock option activity (“Price” reflects the weighted average exercise price per share):
 
 
Year Ended December 31,
 
2016
 
2015
 
2014
 
    Options     
 
 
    Price     
 
 
    Options     
 
 
    Price     
 
 
    Options     
 
 
    Price     
 
 
(in thousands, except per share data)
Outstanding January 1
16,309

 
$
13.54

 
16,999

 
$
13.78

 
16,628

 
$
12.68

Granted
1,103

 
19.53

 
1,667

 
25.32

 
2,345

 
21.03

Exercised
(1,063
)
 
19.10

 
(1,098
)
 
14.50

 
(1,769
)
 
12.32

Forfeited or expired
(66
)
 
22.39

 
(1,259
)
 
31.58

 
(205
)
 
19.58

Outstanding December 31
16,283

 
$
13.55

 
16,309

 
$
13.54

 
16,999

 
$
13.78

 
 
 
 
 
 
 
 
 
 
 
 
Exercisable December 31
12,628

 
$
12.01

 
11,177

 
$
11.54

 
10,669

 
$
13.68

Weighted average fair value per option granted
 
 
$
6.98

 
 
 
$
9.93

 
 

 
$
9.82


The total intrinsic value of stock options exercised during the years ended December 31, 2016, 2015 and 2014 was $8.5 million, $14.1 million and $20.2 million, respectively. Cash received from stock option exercises for the years ended December 31, 2016, 2015 and 2014 was $20.3 million, $16.3 million and $21.8 million, respectively.
There were 11.9 million shares available for future grants under the stock incentive plan at December 31, 2016. Upon share option exercise or vesting of restricted stock, the Company issues new shares or treasury shares to fulfill these grants. Vesting dates on the stock options range from March 2017 to October 2020, and expiration dates range from February 2017 to October 2026 at exercise prices and average contractual lives as follows:  
Range of
Exercise
Prices
 
Outstanding
as of
12/31/16
 
Weighted
Average
Remaining
Contractual
Life
 
Weighted
Average
Exercise
Price 
 
Exercisable
as of
12/31/16
 
Weighted
Average
Remaining
Contractual
Life
 
Weighted
Average
Exercise
Price
 
 
(in thousands) 
 
(in years) 
 
 
 
(in thousands) 
 
(in years) 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$2.75 - $4.99
 
2,228

 
2.2
 
$
2.84

 
2,228

 
2.2
 
$
2.84

$5.00 - $9.99
 
4,757

 
5.8
 
$
8.81

 
3,917

 
5.7
 
$
8.82

$10.00 - $14.99
 
3,108

 
4.1
 
$
11.40

 
3,108

 
4.1
 
$
11.40

$15.00 - $19.99
 
1,582

 
7.0
 
$
19.05

 
466

 
2.3
 
$
18.38

$20.00 - $24.99
 
3,030

 
5.4
 
$
22.03

 
2,267

 
4.8
 
$
22.29

$25.00 - $29.99
 
1,578

 
8.1
 
$
25.37

 
642

 
8.1
 
$
25.34



The total intrinsic value of options outstanding and options exercisable as of December 31, 2016 was $433.1 million and $335.9 million, respectively.
Restricted Stock
The Company has granted restricted stock awards to its employees and directors under its stock incentive plans. These common shares carry a legend which restricts their transferability for a term of one to five years and are forfeited in the event the recipient’s employment or relationship with the Company is terminated prior to the lapse of the restriction. In addition, certain restricted stock awards require the Company or the recipient to achieve minimum performance targets in order for these awards to vest.
In 2016, the Company granted 0.4 million shares of restricted stock and 0.4 million shares of performance-based awards, respectively, under the Company’s stock incentive plans. These awards will vest over one or four years with the exception of the performance-based awards which will generally vest within two years if the performance criteria are met.
In 2015, the Company granted 0.3 million shares of restricted stock and 0.2 million shares of performance-based awards, respectively, under the Company’s stock incentive plans. These awards will generally vest over one or four years with the exception of the performance-based awards which will generally vest within two years if the performance criteria are met. As of December 31, 2016, the performance-based criteria for these awards have been met unless otherwise forfeited.
In 2014, the Company granted 0.4 million shares of restricted stock and 0.3 million shares of market-based or performance-based awards under the Company’s stock incentive plans. These awards will all generally vest over one or four years with the exception of the market-based awards which will vest within two years if the performance criteria are met. As of December 31, 2016, the performance or market-based criteria for these awards have been met unless otherwise forfeited.
The following table presents a summary of the Company’s unvested restricted stock awards outstanding at December 31, 2016, 2015 and 2014 (“Price” reflects the weighted average share price at the date of grant):
 
 
Restricted Stock 
 
Awards
 
Price
 
(in thousands, except per share data)
Unvested at December 31, 2013
2,210

 
$
10.68

Granted
752

 
21.64

Forfeited
(237
)
 
12.64

Vested
(1,554
)
 
11.50

Unvested at December 31, 2014
1,171

 
$
16.18

Granted
456

 
26.11

Forfeited
(6
)
 
10.02

Vested
(760
)
 
14.74

Unvested at December 31, 2015
861

 
$
22.67

Granted
751

 
20.65

Forfeited
(50
)
 
21.63

Vested
(482
)
 
21.73

Unvested at December 31, 2016
1,080

 
$
21.67


The total grant date fair market value of the shares issued upon the vesting of restricted stock awards during the years ended December 31, 2016, 2015 and 2014 was $10.5 million, $11.2 million and $17.9 million, respectively. As of December 31, 2016, there were 0.4 million restricted stock awards outstanding which require the Company or the recipient to achieve minimum performance targets in order for the awards to vest.