FairPoint Communications 2010 Annual Report Download - page 117

Table of Contents
As of March 31, 2008, there were 6,957 stock units outstanding with a grant date fair value per share of $32.51. During 2008, 1,703 stock units were
forfeited and 5,254 stock units vested and were converted to common shares. No unvested awards remained as of December 31, 2008. The intrinsic value of
the 5,254 stock units that vested during 2008 was $0.1 million.

In February 2005, the Company adopted the FairPoint Communications, Inc. 2005 Stock Incentive Plan (the “2005 Stock Incentive Plan”). The 2005
Stock Incentive Plan provides for the grant of up to 947,441 shares of non-vested stock, stock units and stock options to members of the Company’s board of
directors and certain key members of the Company’s management. Shares granted to employees under the 2005 Stock Incentive Plan vest over periods ranging
from three to four years and certain of these shares pay current dividends. At December 31, 2010, up to 79,781 additional shares of common stock may be
issued in the future pursuant to awards authorized under the 2005 Stock Incentive Plan.
In March 2006, the Company’s board of directors approved the grant of an additional 100,000 shares to the Company’s chief executive officer. These
shares were granted under the 2005 Stock Incentive Plan in two installments of 50,000 shares each on January 1, 2007 and January 1, 2008. These shares are
considered to have been granted in March 2006 under SFAS 123(R) at a grant date fair value of $14.02 per share.
In 2005, the Company’s board of directors approved an annual award to each of the Company’s non-employee directors in the form of non-vested stock or
stock units, at the recipient’s option, issued under the 2005 Stock Incentive Plan. The non-vested stock and stock units will vest in four equal quarterly
installments on the first day of each of the first four calendar quarters following the grant date and the holders thereof will be entitled to receive dividends from
the date of grant, whether or not vested. The following table presents information regarding stock units granted to non-employee directors under the 2005 Stock
Incentive Plan (including stock units granted in lieu of dividends):
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
 
  
Outstanding at March 31, 2008 29,544 $ 15.04
Granted 43,965 9.86
Exercised — —
Forfeited — —
Outstanding at December 31, 2008 73,509 $ 11.94
Granted 6,272 3.02
Exercised — —
Forfeited — —
Outstanding at December 31, 2009 79,781 $ 11.24
Granted — —
Exercised — —
Forfeited — —
Outstanding at December 31, 2010 79,781 $ 11.24
The fair value of the awards is calculated as the fair value of the shares on the date of grant. Beginning on January 1, 2006, the Company adopted the
provisions of SFAS 123(R) using the modified prospective method for the awards under the 2005 Stock Incentive Plan as all awards were granted subsequent
to the Company becoming public. Under this methodology, the Company is required to estimate expected forfeitures related to these grants and, for the non-
dividend paying shares, the compensation expense is reduced by the present value of the dividends which were not paid on those shares prior to their vesting.
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