Frontier Communications 2009 Annual Report Download - page 84

As of December 31, 2008, EPPICS representing a total principal amount of $197.8 million have been
converted into 15,969,645 shares of our common stock. There were no outstanding EPPICS as of December 31,
2008. As a result of the redemption of all outstanding EPPICS as of December 31, 2008, the $10.5 million in
debt with related parties was reclassified by the Company against an offsetting investment.
(12) Capital Stock:
On October 27, 2009, in conjunction with the shareholder vote to approve the Verizon Transaction, our
stockholders approved an increase in the number of authorized shares of Frontier common stock from 600,000
to 1,750,000. The Certificate of Amendment to our Restated Certificate of Incorporation effectuating the
increase will be filed and become effective immediately prior to the effective time of the merger. The amount
and timing of dividends payable on common stock are, subject to applicable law, within the sole discretion of
our Board of Directors.
(13) Stock Plans:
At December 31, 2009, we had five stock-based compensation plans under which grants have been made
and awards remained outstanding. These plans, which are described below, are the 1996 Equity Incentive Plan
(1996 EIP), the Amended and Restated 2000 Equity Incentive Plan (2000 EIP), the Non-Employee Directors’
Deferred Fee Equity Plan (Deferred Fee Plan), the Non-Employee Directors’ Equity Incentive Plan (Directors’
Equity Plan, and together with the Deferred Fee Plan, the Director Plans) and the 2009 Equity Incentive Plan
that was adopted on May 14, 2009 (2009 EIP).
Our general policy is to issue shares upon the grant of restricted shares and exercise of options from
treasury. At December 31, 2009, there were 12,540,761 shares authorized for grant under these plans and
12,057,989 shares available for grant under two of the plans. No further awards may be granted under three of
the plans: the 1996 EIP, the 2000 EIP or the Deferred Fee Plan.
In connection with the Director Plans, compensation costs associated with the issuance of stock units was
$0.7 million, $0.8 million and $1.6 million in 2009, 2008 and 2007, respectively. Cash compensation associated
with the Director Plans was $0.6 million in 2009 and $0.5 million in each of 2008 and 2007. 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 2009, 2008 and 2007 were 1,119,000, 887,000 and 722,000,
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, 2009, 2,193,000 shares of restricted stock were outstanding.
Compensation expense, recognized in Other operating expenses, of $8.7 million, $6.9 million and $6.6 million,
for the years ended December 31, 2009, 2008 and 2007, respectively, has been recorded in connection with
these grants.
1996, 2000 and 2009 Equity Incentive Plans
Since the expiration dates of the 1996 EIP and the 2000 EIP on May 22, 2006 and May 14, 2009,
respectively, no awards have been or may be granted under the 1996 EIP and the 2000 EIP. Under the 2009
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, 2009, there were 10,000,000 shares authorized for grant under the 2009 EIP and
9,979,000 shares available for grant. No awards were granted more than 10 years after the effective date (May
14, 2009) of the 2009 EIP plan. The exercise price of stock options and SARs under the 2009, 2000 and 1996
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FRONTIER COMMUNICATIONS CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements