NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 24: STOCK OPTIONS, SHARE UNITS AND SHARE
PURCHASE PLANS
We measure stock-based compensation to employees at fair value. We
determine fair value using our Class B Non-Voting share price, and the
Black-Scholes option pricing model or trinomial option pricing models,
depending on the nature of the share-based award.
The table below is a summary of our stock-based compensation
expense, which is included in employee salaries and benefits expense:
2013 2012
Stock-based compensation:
Stock options $3 0 $3 5
Restricted share units 42 35
Deferred share units 4 7
Equity Derivative effect, net of interest receipt 8 –
$8 4 $7 7
At December 31, 2013, we had a total liability recorded at its fair value
of $164 million (December 31, 2012 – $195 million) related to stock-
based compensation, including stock options, RSUs and DSUs. The
current portion of this is $128 million (December 31, 2012 –
$158 million) and is included in accounts payable and accrued liabilities.
The total intrinsic value of vested liabilities, which is the difference
between the strike price of the share-based awards and the trading
price of the RCI Class B Non-Voting shares for all vested share-based
awards at December 31, 2013 was $85 million (December 31, 2012 –
$109 million).
We paid $101 million in 2013 (2012 – $76 million) to holders of stock
options, RSUs and DSUs upon exercise, representing a weighted
average share price on the date of exercise of $48.18 (2012 – $39.42).
Stock Options
Stock Option Plans
Options to purchase our Class B Non-Voting shares on a one-for-one
basis may be granted to our employees, directors and officers by the
Board of Directors or our Management Compensation Committee.
There are 65 million options authorized under various plans, and each
option has a term of seven to ten years. The vesting period is generally
graded vesting over four years, however, the Management
Compensation Committee may adjust the vesting terms on the grant
date. The exercise price is equal to the fair market value of the Class B
Non-Voting shares, determined as the five-day average before the grant
date as quoted on the TSX.
Performance Options
We granted 1,415,482 performance-based options in 2013 (2012 –
806,100) to certain key executives. These options vest on a graded basis
over four years provided that certain targeted stock prices are met on or
after each anniversary date. At December 31, 2013, we had 4,728,959
performance options (December 31, 2012 – 5,435,555) outstanding.
Summary of Stock Options
The table below is a summary of the stock option plans, including performance options:
2013 2012
Number of
options
Weighted
average
exercise price
Number of
options
Weighted
average
exercise price
Outstanding, beginning of year 8,734,028 $ 32.34 10,689,099 $ 28.59
Granted 1,415,482 47.56 1,397,751 37.86
Exercised (3,323,239) 27.78 (3,075,879) 21.53
Forfeited (457,868) 42.15 (276,943) 35.53
Outstanding, end of year 6,368,403 $ 37.39 8,734,028 $ 32.34
Exercisable, end of year 4,066,698 $ 35.08 4,638,496 $ 28.94
The table below shows the range of exercise prices, the weighted average exercise price and the weighted average remaining contractual life at
December 31, 2013:
Options outstanding Options exercisable
Range of
exercise prices
Number
outstanding
Weighted
average remaining
contractual life
(years)
Weighted
average
exercise price
Number
exercisable
Weighted
average
exercise price
$12.30 – $18.99 132,332 0.28 $ 12.28 132,332 $ 12.28
$19.00 – $29.99 737,888 2.13 29.41 727,888 29.41
$30.00 – $34.99 1,777,365 3.48 33.97 1,288,612 33.81
$35.00 – $39.99 2,427,906 2.86 38.39 1,712,529 38.62
$40.00 – $48.56 1,292,912 9.19 47.35 205,337 48.30
6,368,403 4.18 $ 37.39 4,066,698 $ 35.08
2013 ANNUAL REPORT ROGERS COMMUNICATIONS INC. 121