Benefit Plans

We recognized share-based payment expense of $78,212, $68,876 and $63,822 for the years ended December 31, 2014, 2013 and 2012, respectively.

We account for equity instruments granted to employees in accordance with ASC 718, Compensation - Stock Compensation. ASC 718 requires all share-based compensation payments to be recognized in the financial statements based on fair value. ASC 718 requires forfeitures to be estimated at the time of grant and revised in subsequent periods if actual forfeitures differ from initial estimates. We use the Black-Scholes-Merton option-pricing model to value stock option awards and have elected to treat awards with graded vesting as a single award. Share-based compensation expense is recognized ratably over the requisite service period, which is generally the vesting period, net of forfeitures. We measure restricted stock awards and units using the fair market value of the restricted shares of common stock on the day the award is granted.

Fair value as determined using the Black-Scholes-Merton model varies based on assumptions used for the expected life, expected stock price volatility and risk-free interest rates. In 2014, 2013 and 2012, we estimated the fair value of awards granted using the hybrid approach for volatility, which weights observable historical volatility and implied volatility of qualifying actively traded options on our common stock. The expected life assumption represents the weighted-average period stock-based awards are expected to remain outstanding. These expected life assumptions are established through a review of historical exercise behavior of stock-based award grants with similar vesting periods. Where historical patterns do not exist, contractual terms are used. The risk-free interest rate represents the daily treasury yield curve rate at the grant date based on the closing market bid yields on actively traded U.S. treasury securities in the over-the-counter market for the expected term. Our assumptions may change in future periods.

Stock-based awards granted to employees, non-employees and members of our board of directors include warrants, stock options, and restricted stock units.

2009 Long-Term Stock Incentive Plan

In May 2009, our stockholders approved the Sirius XM Radio Inc. 2009 Long-Term Stock Incentive Plan (the “2009 Plan”). Employees, consultants and members of our board of directors are eligible to receive awards under the 2009 Plan. The 2009 Plan provides for the grant of stock options, restricted stock awards, restricted stock units and other stock-based awards that the compensation committee of our board of directors may deem appropriate. Vesting and other terms of stock-based awards are set forth in the agreements with the individuals receiving the awards. Stock-based awards granted under the 2009 Plan are generally subject to a vesting requirement. Stock-based awards generally expire ten years from the date of grant. Each restricted stock unit entitles the holder to receive one share of common stock upon vesting. As of December 31, 2014, approximately 19,950,000 shares of common stock were available for future grants under the 2009 Plan.

Other Plans

We maintain four other share-based benefit plans — the XM 2007 Stock Incentive Plan, the Amended and Restated Sirius Satellite Radio 2003 Long-Term Stock Incentive Plan, the XM 1998 Shares Award Plan and the XM Talent Option Plan. No further awards may be made under these plans, and all outstanding awards are fully vested.

The following table summarizes the weighted-average assumptions used to compute the fair value of options granted to employees and members of our board of directors:



	For the Years Ended December 31,
	2014	2013	2012
Risk-free interest rate	1.6%	1.4%	0.8%
Expected life of options — years	4.72	4.73	5.06
Expected stock price volatility	33%	47%	49%
Expected dividend yield	0%	0%	0%

There were no options granted to third parties during the years ended December 31, 2014, 2013 and 2012. We do not intend to pay regular dividends on our common stock. Accordingly, the dividend yield percentage used in the Black-Scholes-Merton option value was zero for all periods.

The following table summarizes stock option activity under our share-based plans for the years ended December 31, 2014, 2013 and 2012 (options in thousands):



	Options		Weighted- Average Exercise Price (1)		Weighted-Average Remaining Contractual Term (Years)	Aggregate Intrinsic Value
Outstanding at the beginning of January 1, 2012	439,580		$	1.25
Granted	58,626		$	2.53
Exercised	(214,199	)	$	0.59
Forfeited, cancelled or expired	(9,495	)	$	3.09
Outstanding as of December 31, 2012	274,512		$	1.92
Granted	57,228		$	3.59
Exercised	(61,056	)	$	1.31
Forfeited, cancelled or expired	(6,445	)	$	2.02
Outstanding as of December 31, 2013	264,239		$	2.42
Granted	61,852		$	3.39
Exercised	(46,943	)	$	1.63
Forfeited, cancelled or expired	(11,294	)	$	4.08
Outstanding as of December 31, 2014	267,854		$	2.72	7.09	$	246,067
Exercisable as of December 31, 2014	121,272		$	2.27	5.28	$	179,913


(1)	The weighted-average exercise price for options outstanding as of December 31, 2012 in the table above has been adjusted to reflect the reduction to the exercise prices related to the December 28, 2012 special cash dividend.

The weighted average grant date fair value of options granted during the years ended December 31, 2014, 2013 and 2012 was $1.05, $1.48 and $1.09, respectively. The total intrinsic value of stock options exercised during the years ended December 31, 2014, 2013 and 2012 was $89,428, $142,491 and $399,794, respectively. During the years ended December 31, 2014 and 2013, the number of shares which were issued as a result of stock option exercises were 15,228,394 and 32,649,857, respectively, due to the net settlement method that began in 2013.

We recognized share-based payment expense associated with stock options of $69,754, $66,231 and $60,299 for the years ended December 31, 2014, 2013 and 2012, respectively.

The following table summarizes the nonvested restricted stock unit activity under our share-based plans for the years ended December 31, 2014, 2013 and 2012 (shares in thousands):



	Shares		Grant Date Fair Value
Nonvested as of January 1, 2012	421		$	1.46
Granted	8		$	—
Vested	—		$	—
Forfeited	—		$	—
Nonvested as of December 31, 2012	429		$	3.25
Granted	6,873		$	3.59
Vested	(192	)	$	3.27
Forfeited	(126	)	$	3.61
Nonvested as of December 31, 2013	6,984		$	3.58
Granted	6,108		$	3.38
Vested	(1,138	)	$	3.62
Forfeited	(379	)	$	3.52
Nonvested as of December 31, 2014	11,575		$	3.47

The weighted average grant date fair value of restricted stock units granted during the years ended December 31, 2014 and 2013 was $3.38 and $3.59, respectively. The total intrinsic value of restricted stock units that vested during the years ended December 31, 2014, 2013 and 2012 was $4,044, $605 and $0, respectively. In connection with the special cash dividend paid in December 2012, we granted 8,000 incremental restricted stock units to prevent the economic dilution of the holders of our restricted stock units. This grant did not result in any additional incremental share-based payment expense being recognized in 2012.

We recognized share-based payment expense associated with restricted stock units of $8,458, $2,645 and $0 during the years ended December 31, 2014, 2013 and 2012, respectively. During the years ended December 31, 2014 and 2013, the number of shares which were issued as a result of restricted stock units that vested were 731,626 and 191,524, respectively.

Total unrecognized compensation costs related to unvested share-based payment awards for stock options and restricted stock units granted to employees and members of our board of directors at December 31, 2014 and 2013, net of estimated forfeitures, were $162,985 and $164,292, respectively. The total unrecognized compensation costs at December 31, 2014 are expected to be recognized over a weighted-average period of 3 years.

401(k) Savings Plan

Sirius XM sponsors the Sirius XM Radio Inc. 401(k) Savings Plan (the “Sirius XM Plan”) for eligible employees. The Sirius XM Plan allows eligible employees to voluntarily contribute from 1% to 50% of their pre-tax eligible earnings, subject to certain defined limits. We match 50% of an employee’s voluntary contributions per pay period on the first 6% of an employee’s pre-tax salary up to a maximum of 3% of eligible compensation. Employer matching contributions under the Sirius XM Plan vest at a rate of 33.33% for each year of employment and are fully vested after three years of employment for all current and future contributions. Beginning in January 2014, our cash employer matching contributions were no longer used to purchase shares of our common stock on the open market, unless the employee elects our common stock as their investment option for this contribution. Prior to January 2014, the cash from employer matching contributions was used to purchase shares of our common stock on the open market. We contributed $5,385 and $4,181 during the years ended December 31, 2014 and 2013, respectively, to the Sirius XM Plan in fulfillment of our matching obligation. During the year ended December 31, 2012, employer matching contributions were made in the form of shares of our common stock, resulting in share-based payment expense of $3,523.