FairPoint Communications 2011 Annual Report Download - page 119

Table of Contents
of a change in control, outstanding options would vest immediately. Effective in February 2005, the Company could no longer grant awards under the 1998
Plan. In February 2007, triggered by certain events noted in the 1998 Plan, all options outstanding under the 1998 Plan were cancelled except for 47,373
options to purchase shares of Old Common Stock with an exercise price of $36.94 per share.
These stock options were granted by the Company prior to becoming a public company and therefore the Predecessor Company was accounting for
these options under the prospective method under the Compensation – Stock Compensation Topic of the ASC. As of December 31, 2010, options to purchase
47,373 shares of Old Common Stock were fully vested and outstanding with a weighted average exercise price of $36.94 per share. There was no activity
during the 24 days ended January 24, 2011.
On the Effective Date, all options outstanding under the 1998 Plan were cancelled due to the Company’s emergence from bankruptcy.
(b) 2000 Employee Stock Incentive Plan
In May 2000, the Company adopted the FairPoint Communications, Inc. 2000 Employee Stock Incentive Plan (the “2000 Employee Stock Incentive
Plan”). The 2000 Employee Stock Incentive Plan provided for grants to members of management of up to 1,898,521 options to purchase common stock, at
the discretion of the compensation committee. During 2002, the Company amended the 2000 Employee Stock Incentive Plan to limit the number of shares
available for grant to 448,236. In December 2003, the Company amended the 2000 Employee Stock Incentive Plan to allow for the grant to members of
management of up to 1,898,521 shares of stock units in addition to shares available for stock options. Options granted under the 2000 Employee Stock
Incentive Plan could have been either of two types: (i) incentive stock options and (ii) non-statutory stock options. Unless the compensation committee
specified otherwise at the time of grant, any option granted under the 2000 Employee Stock Incentive Plan was a non-statutory stock option. Effective in
February 2005, the Company could no longer grant awards under the 2000 Employee Stock Incentive Plan.
Under the 2000 Employee Stock Incentive Plan, unless otherwise determined by the compensation committee at the time of grant, participating employees
were granted options to purchase common stock at exercise prices not less than the market value of the Company’s common stock at the date of grant. Options
had a term of 10 years from date of grant. Options vested in increments of 10% on the first anniversary, 15% on the second anniversary, and 25% on the
third, fourth and fifth anniversaries of an individual grant. Stock units vested in increments of 33% on each of the third, fourth, and fifth anniversaries of the
award. Subject to certain provisions, the Company could have canceled each option in exchange for a payment in cash of an amount equal to the excess of the
fair value of the shares over the exercise price for such option. The Company did not exercise this right.
The 2000 Employee Stock Incentive Plan stock options and stock units were granted by the Company prior to becoming a public company and therefore
the Predecessor Company was accounting for these awards under the prospective method under the Compensation – Stock Compensation Topic of the ASC.
As of December 31, 2010, options to purchase 130,935 shares of Old Common Stock were fully vested and outstanding with a weighted average exercise price
of $36.94 per share. There was no activity during the 24 days ended January 24, 2011.
On the Effective Date, all options outstanding under the 2000 Employee Stock Incentive Plan were cancelled due to the Company’s emergence from
bankruptcy.
(c) 2005 Stock Incentive Plan
In February 2005, the Company adopted the FairPoint Communications, Inc. 2005 Stock Incentive Plan (the “2005 Stock Incentive Plan”). The 2005
Stock Incentive Plan provided 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 vested over periods
ranging from three to four years and certain of these shares paid current dividends.
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.
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