Frontier Communications 2012 Annual Report Download - page 82

(10) Capital Stock:
We are authorized to issue up to 1,750,000,000 shares of common stock. The amount and timing of
dividends payable on common stock are, subject to applicable law, within the sole discretion of our Board of
Directors.
(11) Stock Plans:
At December 31, 2012, we had five stock-based compensation plans under which grants were made and
awards remained outstanding. No further awards may be granted under three of the plans: the 1996 Equity
Incentive Plan (the 1996 EIP), the Amended and Restated 2000 Equity Incentive Plan (the 2000 EIP) and the
Non-Employee Directors’ Deferred Fee Equity Plan (the Deferred Fee Plan). At December 31, 2012, there were
12,540,761 shares authorized for grant and 2,169,089 shares available for grant under the 2009 Equity Incentive
Plan (the 2009 EIP and together with the 1996 EIP and the 2000 EIP, the EIPs) and the Non-Employee
Directors’ Equity Incentive Plan (the Directors’ Equity Plan, and together with the Deferred Fee Plan, the
Director Plans). Our general policy is to issue shares from treasury upon the grant of restricted shares and the
exercise of options.
In connection with the Director Plans, compensation costs associated with the issuance of stock units was
$0.8 million, ($0.6) million and $1.7 million in 2012, 2011 and 2010, respectively. Cash compensation
associated with the Director Plans was $0.7 million in 2012, $0.7 million in 2011 and $0.5 million in 2010.
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 2012, 2011 and 2010 were 3,976,000, 1,734,000 and 3,264,000,
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, 2012, 7,049,000 shares of restricted stock were outstanding.
Compensation expense, recognized in Other operating expenses, of $15.9 million, $14.8 million and $12.8
million, for the years ended December 31, 2012, 2011 and 2010, 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, performance shares 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, 2012, there were 10,000,000 shares authorized for grant under the 2009 EIP and 746,097
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 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.
Performance Shares
On February 15, 2012, the Company’s Compensation Committee, in consultation with the other non-
management directors of the Company’s Board of Directors and the Committee’s independent executive
compensation consultant, adopted the new Frontier Long-Term Incentive Plan (the LTIP). LTIP awards are
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FRONTIER COMMUNICATIONS CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements