Classmates.com 2008 Annual Report Download - page 141

Table of Contents
UNITED ONLINE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
10. STOCK-BASED COMPENSATION PLANS (Continued)
Classmates Media Corporation Equity Awards
In connection with the preparation for the potential initial public offering ("IPO") by the Company's Classmates Media Corporation
("CMC") subsidiary, employment agreements were signed with certain employees, which guaranteed such employees an aggregate $13.0 million
of value in restricted stock units in CMC. Because the IPO was not effective by April 30, 2008, certain of these employment agreements were
modified and the related equity awards were issued as restricted stock units in the Company based on prices set forth in the employment
agreements. In connection with the modification of these agreements, 0.5 million restricted stock units are to be issued over the period ending in
August 2011 if the CMC IPO is not effective. At December 31, 2008, 0.1 million of these restricted stock units had been issued and 0.4 million
were still subject to issuance. No additional compensation expense was recognized in connection with the modifications. Stock-based
compensation associated with these equity awards has been recorded in the Company's consolidated financial statements from the execution
dates of these agreements. During the year ended December 31, 2008, certain of the employment agreements with guaranteed values totaling
$6.5 million in restricted stock units in CMC were canceled and $0.7 million of stock-based compensation previously recorded in the year ended
December 31, 2007 was reversed and reflected in general and administrative expenses in the Company's consolidated statements of operations
for the year ended December 31, 2008.
Recent Awards
Effective February 15, 2009, the Compensation Committee of the Board of Directors of United Online, Inc. (the "Compensation
Committee") approved grants of 0.9 million restricted stock units with a grant-date fair value equal to $4.9 million to certain members of the
Company's senior management. Each restricted stock unit entitles the recipient to receive one share of the Company's common stock upon
vesting. The restricted stock units will vest in full on February 15, 2010.
Effective February 15, 2009, the Company approved grants of 0.9 million restricted stock units with a grant-date fair value equal to
$4.6 million to the Company's non-executive officer employees. The restricted stock units will vest as to twenty-five percent of the total number
of shares awarded annually over the four-year period beginning February 15, 2009.
Effective February 15, 2009, 0.5 million shares of common stock with a grant-date fair value equal to $5.3 million were issued to certain
members of senior management.
Stock Option Exchange Program for Three Executive Officers
On February 12, 2009, the Compensation Committee adopted a stock option exchange program pursuant to which three executive officers
will be given the opportunity to exchange certain "out-of-the-money," or "underwater," stock options previously granted to them under the
Company's 2001 Stock Incentive Plan, for an award of restricted stock units pursuant to which the executive officers will be entitled to receive
one share of common stock of the Company for each unit that is granted under the award on the date that each such unit vests in accordance with
its terms and the designated vesting schedule. The Compensation Committee determined that it is in the best interests of the Company to provide
such executive officers with compensation comprised in part of equity incentives designed to retain their services and to align their interests
more closely to those of the Company's stockholders.
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