Frontier Communications 2012 Annual Report Download - page 83

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granted in the form of performance shares. The LTIP is offered under the Company’s 2009 Equity Incentive
Plan and participants consist of senior vice presidents and above. The LTIP awards have performance, market
and time-vesting conditions.
Beginning in 2012, during the first 90 days of a three-year performance period (a Measurement Period), a
target number of performance shares are awarded to each LTIP participant with respect to the Measurement
Period. The performance metrics under the LTIP are (1) annual targets for operating cash flow based on a goal
set during the first 90 days of each year in the three-year Measurement Period and (2) an overall performance
"modifier" set during the first 90 days of the Measurement Period, based on the Company’s total return to
stockholders (i.e., Total Shareholder Return or TSR) relative to the Diversified Telecommunications Services
Group (GICS Code 501010) for the three-year Measurement Period. Operating cash flow performance is
determined at the end of each year and the annual results will be averaged at the end of the three-year
Measurement Period to determine the preliminary number of shares earned under the LTIP award. The TSR
performance measure is then applied to decrease or increase payouts based on the Company’s three year
relative TSR performance. LTIP awards, to the extent earned, will be paid out in the form of common stock
shortly following the end of the three-year Measurement Period.
On February 15, 2012, the Compensation Committee granted 930,020 performance shares under the LTIP
for the 2012-2014 Measurement Period and set the operating cash flow performance goal for the first year in
that Measurement Period and the TSR modifier for the three-year Measurement Period. The number of shares
of common stock earned at the end of the three-year Measurement Period may be more or less than the number
of target performance shares granted as a result of operating cash flow and TSR performance. An executive
must maintain a satisfactory performance rating during the Measurement Period and must be employed by the
Company at the end of the three-year Measurement Period in order for the award to vest. The Compensation
Committee will determine the number of shares earned for the 2012-2014 Measurement Period in February
2015.
The Company recognized an expense of $0.4 million during 2012 for the LTIP awards granted in 2012.
Restricted Stock
The following summary presents information regarding unvested restricted stock and changes with regard
to restricted stock under the 2009 EIP:
Number of
Shares
Weighted
Average
Grant Date
Fair Value
Aggregate
Fair Value
Balance at January 1, 2010 . ...................................... 2,193,000 $10.41 $17,126,000
Restricted stock granted . . ...................................... 3,264,000 $ 7.54 $31,760,000
Restricted stock vested . . . ...................................... (874,000) $10.86 $ 8,507,000
Restricted stock forfeited . ...................................... (143,000) $ 7.95
Balance at December 31, 2010 .................................... 4,440,000 $ 8.29 $43,199,000
Restricted stock granted . . ...................................... 1,734,000 $ 9.38 $ 8,930,000
Restricted stock vested . . . ...................................... (1,146,000) $ 9.52 $ 5,899,000
Restricted stock forfeited . ...................................... (181,000) $ 7.99
Balance at December 31, 2011 .................................... 4,847,000 $ 8.40 $24,962,000
Restricted stock granted . . ...................................... 3,976,000 $ 4.18 $17,017,000
Restricted stock vested . . . ...................................... (1,387,000) $ 8.78 $ 5,937,000
Restricted stock forfeited . ...................................... (387,000) $ 5.99
Balance at December 31, 2012 .................................... 7,049,000 $ 6.08 $30,169,000
In connection with the completion of the Transaction on July 1, 2010, the Company granted an aggregate
of 1,911,000 shares of restricted stock with a total fair value of $14.2 million to its senior management, as a
retention and transaction bonus based on contributions that senior management made to achieve key milestones
F-22
FRONTIER COMMUNICATIONS CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements