Cincinnati Bell 2009 Annual Report Download - page 159

The following table summarizes the Company’s outstanding and exercisable awards at December 31, 2009
(shares in thousands):
Outstanding Exercisable
Range of Exercise Prices Shares
Weighted-Average
Exercise Prices
Per Share Shares
Weighted-Average
Exercise Prices
Per Share
$1.30 to $3.48 ................................... 6,113 $ 2.10 2,371 $ 2.92
$3.49 to $4.00 ................................... 3,841 3.83 3,015 3.83
$4.06 to $5.66 ................................... 5,732 5.28 5,378 5.31
$5.68 to $29.09 .................................. 3,783 16.24 3,783 16.24
$29.21 to $37.19 ................................. 703 35.62 703 35.62
Total ........................................ 20,172 $ 7.15 15,250 $ 8.76
As of December 31, 2009, the aggregate intrinsic value for awards outstanding was approximately $8.2
million and for exercisable awards was $1.3 million. The weighted-average remaining contractual life for awards
outstanding and exercisable is approximately five years and four years, respectively. As of December 31, 2009,
there was $1.4 million of unrecognized stock compensation expense, which is expected to be recognized over a
weighted-average period of approximately two years.
The fair values at the date of grant were estimated using the Black-Scholes option-pricing model with the
following weighted-average assumptions:
2009 2008 2007
Expected volatility ............................................. 41.7% 34.7% 29.6%
Risk-free interest rate ........................................... 2.1% 2.0% 3.6%
Expected holding period — years .................................555
Expected dividends ............................................ 0.0% 0.0% 0.0%
Weighted-average grant date fair value ............................. $1.45 $0.74 $1.61
The expected volatility assumption used in the Black-Scholes pricing model was based on historical
volatility. The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the time of grant. The
expected holding period was estimated using the historical exercise behavior of employees and adjusted for
abnormal activity. Expected dividends are based on the Company’s history of not paying dividends.
Deferred Compensation Plans
The Company currently has deferred compensation plans for both the Board of Directors and certain
executives of the Company. Under the directors deferred compensation plan, each director can defer receipt of all
or a part of their director fees and annual retainers, which can be invested in various investment funds including
the Company’s common stock. In addition, the Company annually grants 6,000 phantom shares to each
non-employee director on the first business day of each year, which are fully vested once a director has five years
of service. Distributions to the directors are generally in the form of cash. The executive deferred compensation
plan allows for certain executives to defer a portion of their annual base pay, bonus, or stock awards. Under the
executive deferred compensation plan, participants can elect to receive distributions in the form of either cash or
common shares. At December 31, 2009 and 2008, there were 0.9 million and 0.8 million common shares
deferred in these plans. As these awards can be settled in cash, the Company records compensation costs each
period based on the change in the Company’s stock price. The Company recognized compensation expense of
$1.4 million in 2009, income of $2.0 million in 2008 and expense of $0.3 million in 2007.
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Form 10-K