Earthlink 2012 Annual Report Download - page 122

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Table of Contents
EarthLink restricted stock units was determined by multiplying the number of shares of common stock subject to the ITC^DeltaCom
restricted stock units by the conversion ratio set forth in the merger agreement. As a result, approximately 1.8 million ITC^DeltaCom
restricted stock units were converted into 587,672 EarthLink restricted stock units. The assumption of the ITC^DeltaCom Amended and
Restated Stock Incentive Plan by us qualified under the exception for plans or arrangements involving a merger or acquisition to the
shareholder approval requirement of NASDAQ Listing Rule 5635(c). As of December 31, 2012 , 142,726
of these restricted stock units
were outstanding.
Pursuant to our merger agreement with New Edge Holding Company in 2006, we were required to grant options to purchase up to
657,000 shares of our Common Stock to New Edge employees. These options were "inducement grants" to new employees in
connection with our acquisition of New Edge that qualified under the "inducement grant exception" to the shareholder approval
requirement of NASDAQ Listing Rule 5635(c). In connection with the closing, the Leadership and Compensation Committee approved
the EarthLink, Inc. Stock Option Plan for Inducement Awards Relating to the Acquisition of New Edge Holding Company. The
Leadership and Compensation Committee then granted options to purchase 657,000 shares of our Common Stock to these New Edge
employees in accordance with this plan. As of December 31, 2012 , 166,603 of these options were outstanding. The options have an
exercise price equal to the last reported price of $9.48 per share and vested 25 percent after 12 months and 6.25 percent each quarter
thereafter and are fully vested. The options have a term of 10 years.
Item 13. Certain Relationships and Related Transactions, and Director Independence.
Information regarding certain relationships and transactions between EarthLink and certain of our affiliates is set forth under the caption
"Executive Compensation—Leadership and Compensation Committee Interlocks and Insider Participation" and "Executive Compensation
—
Certain Relationships and Related Transactions" in our Proxy Statement referred to in Item 10 above or in a subsequent amendment to this
Annual Report on Form 10-K. Information regarding director independence is set forth under the caption "Corporate Governance—
Director
Independence" in our Proxy Statement referred to in Item 10 above or in a subsequent amendment to this Annual Report on Form 10-
K. Such
information is incorporated herein by reference.
Item 14. Principal Accounting Fees and Services.
Information regarding our principal accounting fees and services is set forth under the caption "Proposal 3—
Ratification of
Appointment of Independent Registered Public Accounting Firm" in our Proxy Statement referred to in Item 10 above or in a subsequent
amendment to this Annual Report on Form 10-K. Such information is incorporated herein by reference.
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