FairPoint Communications 2007 Annual Report Download - page 105
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Table of Contents
In February 2005, the Company adopted the FairPoint Communications, Inc. 2005 Stock Incentive Plan (the 2005 Plan). The 2005
Plan provides for the grant of up to 947,441 shares of non-vested stock, stock units and stock options to members of the Company’s
board of directors and certain key members of the Company’s management. Shares granted to employees under the 2005 Plan vest over
periods ranging from three to four years and certain of these shares pay current dividends. At December 31, 2007, up to 274,276
additional shares of common stock may be issued in the future pursuant to awards authorized under the 2005 Plan.
In March 2006, the Company’s board of directors approved the grant of an additional 100,000 shares to the Company’s chief
executive officer. These shares were granted under the 2005 Plan in two installments of 50,000 shares each on January 1, 2007 and
January 1, 2008. These shares are considered to have been granted in March 2006 under SFAS 123(R) at a grant date fair value of $14.02
per share.
In 2005, the Company’s board of directors approved an annual award to each of the Company’s non-employee directors in the form
of non-vested stock or stock units, at the recipient’s option, issued under the 2005 Plan. The non-vested stock and stock units will vest
in four equal quarterly installments on the first day of each of the first four calendar quarters following the grant date and the holders
thereof will be entitled to receive dividends from the date of grant, whether or not vested. The following table presents information
regarding stock units granted to non-employee directors under the 2005 Plan (including stock units granted in lieu of dividends):
Outstanding at December 31, 2004 — $ —
Granted 7,888 16.13
Outstanding at December 31, 2005 7,888 16.13
Granted 13,017 14.15
Outstanding at December 31, 2006 20,905 14.90
Granted 12,377 18.86
Exercised (4,017) 21.41
Forfeited (589) 21.41
Outstanding at December 31, 2007 28,676 $ 15.10
The fair value of the awards is calculated as the fair value of the shares on the date of grant. Beginning on January 1, 2006, the
Company adopted the provisions of SFAS 123(R) using the modified prospective method for the awards under the 2005 Plan as all
awards were granted subsequent to the Company becoming public. Under this methodology, the Company is required to estimate expected
forfeitures related to these grants and, for the non-dividend paying shares, the compensation expense is reduced by the present value of the
dividends which were not paid on those shares prior to their vesting.
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