Classmates.com 2009 Annual Report Download - page 137

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Table of Contents
UNITED ONLINE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
9. STOCK-BASED COMPENSATION PLANS (Continued)
stock upon vesting. The restricted stock units will vest as to one-third of the total number of shares awarded annually over a three-year period
beginning February 15, 2010.
Effective February 15, 2010, the Secondary Compensation Committee of the Board of Directors of United Online, Inc. approved grants of
1.2 million restricted stock units with a grant-date fair value equal to $7.7 million to certain of 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 a four-year period beginning
February 15, 2010.
Effective February 15, 2010, the Compensation Committee approved grants of 0.7 million shares of common stock with a grant-date fair
value equal to $3.7 million to the Company's executive officers in connection with awards earned under the 2009 Management Bonus Plan.
Stock Option Exchange Program for Three Executive Officers
In March 2009, the Compensation Committee implemented a stock option exchange program pursuant to which three executive officers
were 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 United Online, Inc. for each restricted stock 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 number of restricted stock units issued for each exchanged underwater stock option was determined in accordance with a 1-for-3
exchange ratio. All 2.0 million of underwater stock options eligible for the exchange program were exchanged for 0.6 million restricted stock
units. All underwater stock options were canceled upon exchange for restricted stock units pursuant to the Company's 2001 Stock Incentive Plan.
The restricted stock units will vest in quarterly increments over two years measured from February 15, 2009, subject to the executive
officer's continued employment with the Company through the vesting date of such restricted stock units. Upon vesting, the Company will issue
shares of common stock corresponding to the number of vested restricted stock units awarded to the officer, less the number of shares having an
aggregate value equal to the Company's statutory withholding obligations with respect to applicable employee withholding taxes (all as
consistent with the Company's current practices with respect to restricted stock units). The grant-
date fair value of the 0.6 million restricted stock
units totaled $2.5 million.
F-33