FairPoint Communications 2009 Annual Report Download - page 186

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Mr. Johnson's employment agreement included the following severance obligations, subject to certain conditions, when he retired from the
Company on June 30, 2009: (i) continuation of medical coverage for Mr. Johnson and his spouse, at his election, for their respective lives upon
payment of applicable premiums; (ii) extension of Mr. Johnson's right to exercise all of his vested options under the Company's 2000 Employee Stock
Option Plan until the earlier of (1) March 12, 2012, or (2) the sale of the Company (as defined in the Company's 1998 Stock Incentive Plan); and
(iii) continued vesting of all restricted stock granted through June 30, 2009 under the Company's 2005 Stock Incentive Plan as provided in the restricted
stock agreement applicable to each grant of such restricted stock. This agreement and the severance obligations were terminated in November 2009.
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Section 162(m) of the Internal Revenue Code (the "Code") generally disallows a tax deduction to public corporations for compensation, other than
performance based compensation, over $1.0 million paid for any fiscal year to any of the corporation's Chief Executive Officer and three other highly
compensated executive officers as of the end of any fiscal year. The Company's policy is to qualify its executive officers for deductibility under
Section 162(m) to the extent the compensation committee determines such to be appropriate. In 2009, compensation did not exceed the deductibility
limits of Section 162(m) for any NEO. The compensation committee remains aware of the Code Section 162(m) limitations and the available
exemptions and special rules, and will address the issue of 162(m) deductibility when and if circumstances warrant the use of such exemptions or other
considerations.
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