FairPoint Communications 2003 Annual Report Download - page 60

Financial Officer 2001 186,250 33,000 21,191 —8,100
John P. Duda
President
2003
2002
2001
$189,000
189,081
200,000
$61,625
50,568
—
$31,127
37,431
29,701
—
285,640
—
$10,435
10,435
10,839
Shirley J. Linn
Vice President, General Counsel
and Secretary
2003
2002
2001
$188,758
180,000
168,294
$76,700
40,157
64,782
—
—
—
93,750
48,594
—
$11,379
9,898
9,378
(1) Reflects the value of certain benefits provided pursuant to employment arrangements.
(2) Reflects matching contributions made under our 401(k) plan and the value of group term life insurance coverage.
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Our 1995 Stock Option Plan, or 1995 plan, was adopted on February 22, 1995. The 1995 plan provides for the grant of options to
purchase up to an aggregate of 1,136,800 shares of our class A common stock. The 1995 plan is administered by our compensation
committee, which makes discretionary grants of options to our officers, directors and employees.
Options granted under the 1995 plan may be incentive stock options, which qualify for favorable Federal income tax treatment under
Section 422A of the Internal Revenue Code, or nonstatutory stock options.
The selection of participants, allotment of shares, determination of price and other conditions of purchase of such options is determined
by our compensation committee, in its sole discretion. Each option grant is evidenced by a written incentive stock option agreement or
nonstatutory stock option agreement dated as of the date of grant and executed by us and the optionee. Such agreement also sets forth the
number of options granted, the option price, the option term and such other terms and conditions as may be determined by the board of
directors. As of March 15, 2004, a total of 592,460
87
options to purchase shares of our class A common stock were outstanding under the 1995 plan. Such options are exercisable at a price of
$.25 per share.
Options granted under the 1995 plan are nontransferable, other than by will or by the laws of descent and distribution.
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In August 1998, we adopted our 1998 Stock Incentive Plan, or 1998 plan. The 1998 plan provides for grants to members of
management of up to 6,952,540 nonqualified options to purchase our class A common stock, at the discretion of our compensation
committee. These options generally vest in 25% increments on the second, third, fourth, and fifth anniversaries of an individual grant. In the
event of a change in control (as defined in the 1998 plan), outstanding options will vest immediately. As of March 15, 2004, a total of
4,413,700 options were outstanding under the 1998 plan.
Pursuant to the terms of the grant, 4,395,400 options become exercisable only in the event that we are sold, an initial public offering of
our common stock occurs, or other changes in control (as defined in the 1998 plan) occur. The number of options that may ultimately
become exercisable also depends upon the extent to which the price per share obtained in a sale of the Company would exceed a minimum
selling price of $4.28 per share. These options have a term of ten years from date of grant. We will accrue as compensation expense the
excess of the estimated fair value of our common stock over the exercise price of the options when and if a sale of the Company, at the prices
necessary to result in exercisable options under the grant, becomes imminent or likely.
On December 31, 2001, 450,000 options were forfeited and the vesting schedule of 200,000 options was modified. These options were
rescheduled to vest equally over the ensuing 24 months on a monthly vesting schedule of 8,333.34 options per month such that all 200,000
options were fully vested in December 2003.
On January 1, 2002, an additional 250,000 shares were issued at $7.00 per option. At issuance, 41,667 options were vested
immediately. The remaining 208,333 options vested equally over 15 months at a rate of 13,888.87 options per month such that all 250,000
options were fully vested in March 2003.
In April 2000, all of the options outstanding under Carrier Services' stock option plan were converted to options to purchase our class A
common stock under the 1998 plan. As a result, 925,500 options to purchase common stock of Carrier Services were converted into an
aggregate of 1,693,665 options to purchase our class A common stock, which become immediately exercisable upon vesting. As of
March 15, 2004, 18,300 options to purchase our class A common stock at an exercise price of $3.28 per share were outstanding under this
grant. Upon completion of the conversion, the Carrier Services stock option plan was terminated.
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