Frontier Communications 2010 Annual Report Download - page 80

(11) Capital Stock:
On October 27, 2009, in conjunction with the shareholder vote to approve the Transaction, our
stockholders approved an increase in the number of authorized shares of Frontier common stock from
600,000,000 to 1,750,000,000. The Certificate of Amendment to our Restated Certificate of Incorporation
effectuating the increase was filed and became effective immediately prior to the effective date 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.
(12) Stock Plans:
At December 31, 2010, 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
(2009 EIP, and together with the 2000 EIP, the EIP).
Our general policy is to issue shares from treasury upon the grant of restricted shares and exercise of
options. At December 31, 2010, there were 12,540,761 shares authorized for grant under these plans and
8,786,756 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
$1.7 million, $0.7 million and $0.8 million in 2010, 2009 and 2008, respectively. Cash compensation associated
with the Director Plans was $0.5 million in 2010, $0.6 million in 2009 and $0.5 million in 2008. These costs
are recognized in Other operating expenses.
We have granted restricted stock awards to employees in the form of our common stock. The number of
shares issued as restricted stock awards during 2010, 2009 and 2008 were 3,264,000, 1,119,000 and 887,000,
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, 2010, 4,440,000 shares of restricted stock were outstanding.
Compensation expense, recognized in Other operating expenses, of $12.8 million, $8.7 million and $6.9
million, for the years ended December 31, 2010, 2009 and 2008, 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, 2010, there were 10,000,000 shares authorized for grant under the 2009 EIP and
6,829,944 shares available for grant. No awards may be 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 EIPs generally are 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.
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FRONTIER COMMUNICATIONS CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements