Frontier Communications 2014 Annual Report Download - page 87

$15,000 and the chair of the Retirement Plan Committee receives an additional annual cash stipend of
$10,000, which in each case he or she may elect to receive in the form of stock units. The annual
stipend paid to the Lead Director and each of the committee chairs is payable in arrears in equal
quarterly installments on the last business day of each quarter. Each director is required to irrevocably
elect by December 31 of the prior year whether to receive the cash portion of his or her retainer and/or
his or her stipend in stock units.
As of October 1, 2013, stock units are credited to the director’s account in an amount that is
determined as follows: the total cash value of the fees payable to the director is divided by the closing
prices of Frontier common stock on the grant date of the units. Prior to October 1, 2013, stock units
were credited to the director’s account in an amount that was determined as follows: the total cash
value of the fees payable to the director divided by 85% of the closing prices of Frontier common stock
on the grant date of the units. Units are credited to the director’s account quarterly. Directors must also
elect to convert the units to either common stock (convertible on a one-to-one basis) or cash upon
retirement or death.
Dividends are paid on stock units held by directors at the same rate and at the same time as we
pay dividends on shares of our common stock. Dividends on stock units are paid in the form of
additional stock units.
The number of shares of common stock authorized for issuance under the Directors’ Equity Plan is
2,540,761, which includes 540,761 shares that were available for grant under the Deferred Fee Plan
on the effective date of the Directors’ Equity Plan. In addition, if and to the extent that any “plan units”
outstanding on May 25, 2006 under the Deferred Fee Plan are forfeited or if any option granted under
the Deferred Fee Plan terminates, expires, or is cancelled or forfeited, without having been fully
exercised, shares of common stock subject to such “plan units” or options cancelled shall become
available under the Directors’ Equity Plan. At December 31, 2014, there were 811,002 shares available
for grant. There were 12 directors participating in the Directors’ Plans during all or part of 2014. The
total plan units earned were 237,607, 374,383 and 306,634 in 2014, 2013 and 2012, respectively.
Options granted prior to the adoption of the Directors’ Equity Plan were granted under the 2000 EIP. At
December 31, 2014, 105,000 options were outstanding and exercisable under the Director Plans at a
weighted average exercise price of $12.10.
To the extent directors elect to receive the distribution of their stock unit account in cash, they are
considered liability-based awards. To the extent directors elect to receive the distribution of their stock
unit accounts in common stock, they are considered equity-based awards. Compensation expense for
stock units that are considered equity-based awards is based on the market value of our common
stock at the date of grant. Compensation expense for stock units that are considered liability-based
awards is based on the market value of our common stock at the end of each period.
In connection with the Director Plans, compensation costs associated with the issuance of stock
units were $4 million, $2 million and $1 million in 2014, 2013 and 2012, respectively. Cash
compensation associated with the Director Plans was $1 million in 2014, 2013 and 2012, respectively.
These costs are recognized in “Selling, general and administrative expenses.”
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FRONTIER COMMUNICATIONS CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements