Frontier Communications 2008 Annual Report Download - page 78

for grant under these plans and 4,170,361 shares available for grant. No further awards may be granted under
the MEIP, the 1996 EIP or the Deferred Fee Plan.
In connection with the Director Plans, compensation costs associated with the issuance of stock units was
$0.8 million, $1.6 million and $2.0 million in 2008, 2007 and 2006, respectively. Cash compensation associated
with the Director Plans was $0.5 million in each of 2008, 2007 and 2006. These costs are recognized in other
operating expenses.
We have granted restricted stock awards to key employees in the form of our common stock. The number
of shares issued as restricted stock awards during 2008, 2007 and 2006 were 887,000, 722,000 and 732,000,
respectively. None of the restricted stock awards may be sold, assigned, pledged or otherwise transferred,
voluntarily or involuntarily, by the employees until the restrictions lapse, subject to limited exceptions. The
restrictions are time based. At December 31, 2008, 1,702,000 shares of restricted stock were outstanding.
Compensation expense, recognized in other operating expenses, of $6.9 million, $6.6 million and $6.0 million,
for the years ended December 31, 2008, 2007 and 2006, respectively, has been recorded in connection with
these grants.
Management Equity Incentive Plan
Prior to its expiration on June 21, 2000, awards of our common stock could have been granted under the
MEIP to eligible officers, management employees and non-management employees in the form of incentive
stock options, non-qualified stock options, stock appreciation rights (SARs), restricted stock or other stock-
based awards.
Since the expiration of the MEIP, no awards have been or may be granted under the MEIP. The exercise
price of stock options issued was equal to or greater than the fair market value of the underlying common stock
on the date of grant. Stock options were not ordinarily exercisable on the date of grant but vested over a period
of time (generally four years). All stock options granted under the MEIP are vested. Under the terms of the
MEIP, subsequent stock dividends and stock splits have the effect of increasing the option shares outstanding,
which correspondingly decreases the average exercise price of outstanding options.
1996 and 2000 Equity Incentive Plans
Since the expiration date of the 1996 EIP on May 22, 2006, no awards have been or may be granted under
the 1996 EIP. Under the 2000 EIP, awards of our common stock may be granted to eligible officers,
management employees and non-management employees in the form of incentive stock options, non-qualified
stock options, SARs, restricted stock or other stock-based awards. As discussed under the Non-Employee
Directors’ Compensation Plans below, prior to May 25, 2006 non-employee directors received an award of
stock options under the 2000 EIP upon commencement of service.
At December 31, 2008, there were 13,517,421 shares authorized for grant under the 2000 EIP and
1,940,083 shares available for grant, as adjusted to reflect stock dividends. No awards will be granted more
than 10 years after the effective date (May 18, 2000) of the 2000 EIP plan. The exercise price of stock options
and SARs under the 2000 and 1996 EIP generally shall be equal to or greater than the fair market value of the
underlying common stock on the date of grant. Stock options are not ordinarily exercisable on the date of grant
but vest over a period of time (generally four years). Under the terms of the EIPs, subsequent stock dividends
and stock splits have the effect of increasing the option shares outstanding, which correspondingly decrease the
average exercise price of outstanding options.
On March 17, 2008, the Company adopted the Long-Term Incentive Program (LTIP). The LTIP covers the
named executive officers and certain other officers. The LTIP is designed to incent and reward the Company’s
senior executives if they achieve aggressive growth goals over three-year performance periods (the
Measurement Periods). LTIP awards will be granted in shares of the Company’s common stock following
the applicable Measurement Period if pre-established goals are achieved over the Measurement Period. At the
time that the LTIP was adopted, the Compensation Committee approved LTIP target award opportunities for
F-27
FRONTIER COMMUNICATIONS CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements