FairPoint Communications 2003 Annual Report Download - page 61

In May 2000, we adopted the 2000 Employee Stock Incentive Plan, or 2000 plan. The 2000 plan provides for grants to members of
management of up to 10,019,200 options to purchase our class A common stock, at the discretion of our compensation committee. During
2002, we amended the 2000 plan to limit the number of shares available for grant to 2,365,510. In December 2003, we amended the 2000
plan to allow for the grant to members of management of shares of restricted stock in addition to stock options. As of March 15, 2004,
144,506 restricted stock units were outstanding. Options granted under the 2000 plan may be of two types: (i) incentive stock options and
(ii) nonstatutory stock options. Unless the compensation committee shall otherwise specify at the time of grant, any option granted under the
2000 plan shall be a nonstatutory stock option.
Under the 2000 plan, unless otherwise determined by our compensation committee at the time of grant, participating employees are
granted options to purchase our class A common stock at exercise prices not less than the market value of our class A common stock at the
date of grant. Options have a term of 10 years from date of grant. Options vest in increments of 10% on the first anniversary, 15%
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on the second anniversary, and 25% on the third, fourth, and fifth anniversaries of an individual grant. Subject to certain provisions, in the
event of a change of control, we will cancel each option in exchange for a payment in cash of an amount equal to the excess, if any, of the
highest price per share of class A common stock offered in conjunction with any transaction resulting in a change of control over the exercise
price for such option.
On August 3, 2001, the Company made an offer to its employees to cancel their existing options issued under the 2000 plan in
exchange for new options to be granted on the date that is on or after six months and one day following the expiration date of the offer. As a
result of this offer, 3,274,935 options were cancelled. The remaining options outstanding under this plan were forfeited during 2001. In
March 2002, an additional 1,337,109 shares were issued at $7.00 per option. During 2003, 111,758 options were forfeited and 478,025
options were issued at $7.00 per option. As of March 15, 2004, 1,585,729 options were outstanding under the 2000 plan.
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The following table sets forth the information with respect to the named executive officers set forth in the Summary Compensation Table
concerning the exercise of options during fiscal year 2003, the number of securities underlying options as of December 31, 2003 and the
year-end value of all unexercised in-the-money options held by such individuals.
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Eugene B. Johnson 0 0 267,266/1,499,065 $1,260,012/$5,314,763
Peter G. Nixon 0 0 12,627/288,705 — /$627,807
Walter E. Leach, Jr. 0 0 204,139/838,539 — /$3,210,410
John P. Duda 0 0 157,880/632,820 $561,805/$2,169,578
Shirley J. Linn 0 0 19,182/123,162 — /$115,500
(1) Represents the difference between the exercise price and the fair market value of our common stock at December 31, 2003.
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In December 2002, we entered into an employment agreement with Mr. Johnson, pursuant to which we named Mr. Johnson Chief
Executive Officer of the Company and/or Chairman of the Company's Board of Directors from December 31, 2002 to December 31, 2006.
The employment agreement provides that Mr. Johnson will receive an annual base salary of $350,000, an annual discretionary bonus, and
Mr. Johnson shall be entitled to participate in all incentive, savings, stock option and retirement plans, practices, policies and programs
applicable generally to other senior management. The employment agreement also provides that upon (i) the expiration of Mr. Johnson's
employment period, or (ii) the termination of Mr. Johnson's employment as Chief Executive Officer without cause, Mr. Johnson is entitled to
receive certain benefits. These benefits include continued medical coverage for Mr. Johnson and his wife until each has reached age 65, the
accelerated vesting of all options granted to Mr. Johnson under the Company's 1998 plan and 2000 plan and extension of Mr. Johnson's right
to exercise all of his vested options under the 1995 plan and the 2000 plan within certain time periods. If we terminate Mr. Johnson for cause
or he voluntarily resigns he is not entitled to any benefits under the employment agreement. If Mr. Johnson's employment is terminated
without cause during the term of his employment agreement he is entitled to receive payment of his salary as of the termination event for
two years, subject to suspension for a breach of Mr. Johnson's covenant
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not to compete with us. Upon the expiration of the term of Mr. Johnson's employment agreement at December 31, 2006, unless extended,
he is entitled to receive payment of his salary as of such expiration date for one year thereafter, subject to suspension for a breach of
Mr. Johnson's covenant not to compete with us. The employment agreement supersedes and terminates all prior employment agreements