Time Warner Cable 2009 Annual Report Download - page 98

TWC Restricted Stock Units
The following table summarizes information about unvested TWC RSUs as of December 31, 2009:
Number of
Units
(a)
Weighted-
Average
Grant Date
Fair Value
(a)
(in thousands)
Unvested as of December 31, 2008 . . . .............................................. 1,564 $ 93.75
Granted
(b)
.................................................................... 2,645 38.80
Vested....................................................................... (75) 71.09
Forfeited ..................................................................... (125) 72.42
Unvested as of December 31, 2009 . . . .............................................. 4,009 58.55
(a)
Amounts recast to reflect the 1-for-3 TWC Reverse Stock Split.
(b)
Of the 2.6 million RSUs granted in 2009, 1,285,000 were granted at a weighted average grant date fair value of $53.01 per RSU, 1,305,000 were granted as Special
Dividend retained distributions at a weighted-average grant date fair value of $24.99 per RSU, for which no compensation expense will be recognized, and 55,000
were granted as Separation-related “make-up” equity awards at a weighted-average grant date fair value of $33.80 per RSU.
As of December 31, 2009, the intrinsic value of unvested TWC RSUs was $166 million. Total unrecognized compensation cost
related to unvested TWC RSUs as of December 31, 2009, without taking into account expected forfeitures, is $91 million and is expected
to be recognized over a weighted-average period of 2.46 years. The fair value of TWC RSUs that vested during the year was $6 million in
2009, $4 million in 2008 and less than $1 million in 2007.
The number and weighted-average grant date fair value of TWC RSUs granted during the year was 2.6 million at $38.80 per RSU in
2009, 993,000 at $82.35 per RSU in 2008 and 722,000 at $110.94 per RSU in 2007.
During February 2010, TWC granted approximately 1.9 million RSUs under the 2006 Plan at a grant date fair value of $45.15 per
RSU.
Time Warner Equity Plans
Prior to 2007, Time Warner granted options to purchase Time Warner common stock and shares of Time Warner common stock
(“restricted stock”) or RSUs under its equity plans (collectively, the “Time Warner Equity Awards”) to employees of TWC. Time Warner
did not grant Time Warner Equity Awards to employees of TWC after TWC Common Stock began to trade publicly in March 2007. In
addition, employees of Time Warner who became employed by TWC prior to the Separation retained their Time Warner Equity Awards
pursuant to their terms and TWC recorded equity-based compensation expense from the date of transfer through the end of the applicable
vesting period. The stock options granted by Time Warner to employees of TWC were granted with exercise prices equal to, or in excess
of, the fair market value of a share of Time Warner common stock at the date of grant. Generally, the stock options vested ratably over a
four-year vesting period and expired ten years from the date of grant. The awards of restricted stock or RSUs generally vested between
three to five years from the date of grant. Holders of Time Warner restricted stock and RSUs were generally entitled to receive cash
dividends or dividend equivalents, respectively, paid by Time Warner during the period of time that the restricted stock or RSUs were
unvested. Certain Time Warner stock options and RSUs provided for accelerated vesting upon an election to retire pursuant to TWC’s
defined benefit pension plans or a voluntary termination of employment after reaching a specified age and years of service.
In connection with the Spin-Off Dividend and the 1-for-3 reverse stock split implemented by Time Warner on March 27, 2009 (the
“Time Warner Reverse Stock Split”), and as provided for in Time Warner’s equity plans, the number of outstanding Time Warner Equity
Awards and the exercise prices of stock options were adjusted to maintain the fair value of those awards. In addition, in connection with
Time Warner’s distribution to its shareholders of all of the shares of AOL Inc. stock that it owned on December 9, 2009, the number of
outstanding Time Warner Equity Awards and the exercise prices of stock options were further adjusted to maintain the fair value of those
awards. These adjustments were made pursuant to existing antidilution provisions in Time Warner’s equity plans and, therefore, did not
result in the recognition of incremental compensation expense for the Company.
Under the terms of Time Warner’s equity plans and related award agreements, as a result of the Separation, TWC employees who
held Time Warner Equity Awards were treated as if their employment with Time Warner had been terminated without cause at the time of
the Separation. This treatment resulted in the forfeiture of unvested stock options and shortened exercise periods for vested stock options
and pro rata vesting of the next installment of (and forfeiture of the remainder of) the RSUs for those TWC employees who did not satisfy
retirement-treatment eligibility provisions in the Time Warner equity plans and related award agreements. During the second quarter of
2009, TWC granted the Separation-related “make-up” equity awards or cash payment awards to TWC employees to offset the forfeiture
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TIME WARNER CABLE INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)