FairPoint Communications 2003 Annual Report Download - page 50
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Outstanding at December 31 592,460 592,460 592,460
Exercisable at December 31 592,460 592,460 592,460
Stock options available to grant at December 31, 2003 284,000
In August 1998, the Company adopted the 1998 Plan. The 1998 Plan provides for grants of up to 6,952,540 nonqualified stock options
to executives and members of management, at the discretion of the compensation committee of the board of directors. Options vest in 25%
increments on the second, third, fourth, and fifth anniversaries of an individual grant. In the event of a change in control, outstanding options
will vest immediately.
Pursuant to the terms of the grant, options granted in 1998 and 1999 become exercisable only in the event that the Company is sold,
an initial public offering of the Company's common stock results in the principal shareholders holding less than 10% of their original
ownership, or other changes in control, as defined, occur. The number of options that may become ultimately exercisable also depends upon
the extent to which the price per share obtained in the sale of the Company would exceed a minimum selling price of $4.28 per share. All
options have a term of 10 years from date of grant. For those options granted in 1998 and 1999, the Company will record compensation
expense for the excess of the estimated market value of its common stock over the exercise price of the options when and if a sale of the
Company, at the prices necessary to result in exercisable options under the grant, becomes imminent or likely.
Pursuant to the terms of the grant, options granted in 2000 become exercisable immediately upon vesting. The per share weighted
average fair value of stock options granted under the 1998 Plan during 2000 was $11.17 on the date of grant using the Black Scholes option-
pricing model. Input variables used in the model included no expected dividend yields, a risk-free interest rate of 6.52%, and an estimated
option life of 10 years. Because the Company was nonpublic on the date of the grant, no assumption as to the volatility of the stock price was
made.
73
Stock option activity under the 1998 Plan is summarized as follows:
Outstanding at January 1, 2001 6,088,315 $2.22
Granted — —
Exercised (91,500) 3.28
Forfeited (1,590,525) 3.21
Outstanding at December 31, 2001 4,406,290 1.84
Granted 250,000 7.00
Exercised — —
Forfeited (225,090) 3.28
Outstanding at December 31, 2002 4,431,200 2.06
Granted — —
Exercised — —
Forfeited (17,500) 1.71
Outstanding at December 31, 2003 4,413,700 2.06
Stock options available to grant at December 31, 2003 2,538,840
$1.71 3,961,400 4.60 — $ —
2.74 184,000 5.50 — —
3.28 18,300 6.30 13,725 3.28
7.00 250,000 8.00 — —