Earthlink 2012 Annual Report Download - page 98

Download and view the complete annual report

Please find page 98 of the 2012 Earthlink annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 133

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122
  • 123
  • 124
  • 125
  • 126
  • 127
  • 128
  • 129
  • 130
  • 131
  • 132
  • 133

Table of Contents EARTHLINK, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
Dividends
During the years ended December 31, 2010, 2011 and 2012 , cash dividends declared were $0.62 , $0.20 and $0.20
per common share,
respectively. The Company also pays cash dividend amounts on each outstanding restricted stock unit to be paid at the time the restricted stock
unit vests. Cash dividend amounts are forfeited if the restricted stock units do not vest. Total dividend payments were $67.5 million ,
$22.9
million and $21.1 million , respectively, during the years ended December 31, 2010, 2011 and 2012
. The Company currently intends to pay
regular quarterly dividends on its common stock. Any decision to declare future dividends will be made at the discretion of the Board of
Directors and will depend on, among other things, the Company’
s results of operations, financial condition, cash requirements, investment
opportunities and other factors the Board of Directors may deem relevant. In addition, the agreements governing the Company’
s Senior Notes
and senior secured revolving credit facility contain restrictions on the amount of dividends the Company can pay.
12. Stock-Based Compensation
Stock-based compensation expense was $10.0 million , $13.5 million and $10.5 million during the years ended
December 31, 2010,
2011 and 2012 , respectively. The Company has classified stock-
based compensation expense within selling, general and administrative
expense, the same operating expense line item as cash compensation paid to employees.
Stock Incentive Plans
The Company has granted options and restricted stock units to employees and non-employee directors to purchase the Company’
s
common stock under various stock incentive plans. Under the plans, employees and non-
employee directors are eligible to receive awards of
various forms of equity-
based incentive compensation, including stock options, restricted stock, restricted stock units, phantom share units and
performance awards, among others. The plans are administered by the Board of Directors or the Leadership and Compensation Committee of the
Board of Directors, which determine the terms of the awards granted. Stock options are generally granted with an exercise price equal to the
closing market value of EarthLink, Inc. common stock on the date of grant, have a term of ten years or less, and vest over terms of four years
from the date of grant. Restricted stock units are granted with various vesting terms that range from one to three years from the date of grant. The
Company's various stock incentive plans provide for the issuance of a maximum of 23.5 million shares, of which approximately
19.9 million
shares were still available for grant as of December 31, 2012
. Upon exercise of stock options or vesting of restricted stock units, the Company
will issue authorized but unissued common stock.
In connection with the acquisition of ITC^DeltaCom, the Company assumed certain restricted stock units granted under
ITC^DeltaCom's stock plans. These restricted stock units generally retained all of the rights, terms and conditions of the respective plans under
which they were originally granted. As of December 31, 2012 , 0.1 million restricted stock units were outstanding under these plans.
Options Outstanding
The following table summarizes stock option activity as of and for the year ended December 31, 2012 :
The aggregate intrinsic value amounts in the table above represent the closing price of the Company’s common stock on
December 31,
2012
in excess of the exercise price, multiplied by the number of stock options outstanding, exercisable or vested and expected to vest, when the
closing price is greater than the exercise price. This represents the amount that would have been
87
Stock Options
Weighted
Average
Exercise
Price
Weighted
Average
Remaining
Contractual
Term (Years)
Aggregate
Intrinsic
Value
(shares and dollars in thousands)
Outstanding as of December 31, 2011
1,875
$
8.97
Granted
2,581
7.55
Exercised
(54
)
6.21
Forfeited and expired
(679
)
8.43
Outstanding as of December 31, 2012
3,723
8.12
6.7
$
—
Vested and expected to vest as of December 31, 2012
3,617
$
8.14
6.6
$
—
Exercisable as of December 31, 2012
1,609
$
8.86
3.5
$
—