FairPoint Communications 2007 Annual Report Download - page 102
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Table of Contents
these plans will be made using newly issued shares. Amounts recognized in the financial statements with respect to these plans are as
follows (in thousands):
Amounts charged against income, before income tax benefit $3,966 $2,859 $ 2,350
Amount of related income tax benefit recognized in income 1,491 1,075 884
Total net income impact $ 2,475 $ 1,784 $1,466
In February 1995, the Company adopted the FairPoint Communications, Inc. (formerly MJD Communications, Inc.) 1995 Stock
Incentive Plan (the 1995 Plan). The 1995 Plan covers officers, directors, and employees of the Company. The Company was allowed to
issue qualified or nonqualified stock options to purchase up to 215,410 shares of the Company’s Class A common stock to employees
that would vest equally over 5 years from the date of employment of the recipient and are exercisable during years 5 through 10. In 1995,
the Company granted options to purchase 161,596 shares at $1.32 per share. No options have been granted since 1995. Effective in
February 2005, the Company may no longer grant awards under the 1995 Plan. As of January 1, 2006, only 18,013 options remained
outstanding. The life of these options had previously been extended to May 21, 2008. In March 2006, the remaining 18,013 options
outstanding were exercised. The intrinsic value of these options on the date of exercise was $230,000, the cash received was $24,000 and
the tax benefit was $87,000.
These stock options were granted by the Company prior to becoming a public company and therefore the Company accounted for
these options under the prospective method under SFAS 123(R).
Stock option activity under the 1995 Plan is summarized as follows:
Outstanding at January 1: — 18,013 112,265
Granted — — —
Exercised — (18,013) (94,252)
Forfeited — — —
Outstanding at December 31 — — 18,013
Exercisable at December 31, 2007 —
Stock options available for grant at December 31, 2007 —
In August 1998, the Company adopted the FairPoint Communications, Inc. (formerly MJD Communications, Inc.) Stock Incentive
Plan (the 1998 Plan). The 1998 Plan provided for grants of up to 1,317,425 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. All options have a term of 10 years from date of grant. In the event of a
change in control, outstanding options will vest immediately. Effective in February 2005, the Company may no longer grant awards
under the 1998 Plan.
Pursuant to the terms of the grant, options granted in 1998 and 1999 would have become exercisable only in the event that the
Company was sold, an initial public offering of the Company’s common stock
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