(2)   Stock-Based Compensation

Liberty grants, to certain of its directors, employees and employees of its subsidiaries, restricted stock, stock options and stock appreciation rights ("SARs") to purchase shares of its 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) 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 SARs 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 SIRIUS XM, as discussed below:

During the nine months ended September 30, 2014, the Company granted approximately 1 thousand options to purchase shares of Series A Liberty common stock at a weighted average grant-date fair value of $38.86 per share.  These options vest quarterly over a 4 year vesting period.

Liberty  calculates the grant-date fair value for all of its equity classified awards and the subsequent remeasurement of its liability classified awards using the Black-Scholes Model. Liberty 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 common stock and the implied volatility of publicly traded Liberty options. Liberty uses a zero dividend rate and the risk-free rate for Treasury Bonds with a term similar to that of the subject Awards.

Liberty—Outstanding Awards

The following tables present the number and weighted average exercise price ("WAEP") of Awards to purchase Liberty common stock granted to certain officers, employees and directors of the Company and certain Awards of employees of Starz.

On July 23, 2014 a dividend of Series C common stock was distributed and adjustments to the Awards outstanding were required to reflect the changes to the capital structure of the Company.  For every Series A Award held, two Series C Awards were issued with an exercise price equal to one third the exercise price of the outstanding Award.  Additionally, the exercise price of the outstanding Series A Awards was adjusted to one third the exercise price associated with such Award.  The change to outstanding Awards did not change the aggregate intrinsic value associated with the Awards outstanding just prior to the distribution and immediately following the distribution.

As of September 30, 2014, the total unrecognized compensation cost related to unvested Liberty Awards was approximately $32 million, including compensation associated with the option exchange that occurred in December 2012. Such amount will be recognized in the Company's consolidated statements of operations over a weighted average period of approximately 1.8 years.

As of September 30, 2014, Liberty reserved 10.3 million shares of Series A and Series C common stock for issuance under exercise privileges of outstanding stock Awards.

SIRIUS XM - Stock-based Compensation

During the nine months ended September 30, 2014, SIRIUS XM granted stock options and restricted stock units to its employees and members of its board of directors.  As of September 30, 2014, SIRIUS XM has approximately 282 million options outstanding of which approximately 134 million are exercisable, each with a weighted-average exercise price per share of $2.67 and $2.21, respectively. The aggregate intrinsic value of SIRIUS XM options outstanding and exercisable as of September 30, 2014 is $270 million and $204 million, respectively. The stock-based compensation related to SIRIUS XM stock options was $39 million and $38 million for the three months ended September 30, 2014 and 2013, respectively, and $110 million and $97 million for the nine months ended September 30, 2014 and 2013, respectively. As of September 30, 2014, the total unrecognized compensation cost related to unvested SIRIUS XM stock options was $274 million.  The SIRIUS XM unrecognized compensation cost will be recognized in the Company's consolidated statements of operations over a weighted average period of approximately 2.5 years.