FairPoint Communications 2011 Annual Report Download - page 120

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Table of Contents
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 vested 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 were entitled to receive dividends from
the date of grant, whether or not vested.
The fair value of the awards was calculated as the fair value of the shares on the date of grant. Beginning on January 1, 2006, the Company adopted the
provisions of the Compensation – Stock Compensation Topic of the ASC 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 was 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.
During the year ended December 31, 2009, 6,272 stock units were issued under the 2005 Stock Incentive Plan with a weighted average grant date fair
value of less than $0.1 million. There was no activity during the year ended December 31, 2010. As of December 31, 2010, 79,781 stock units under the
2005 Stock Incentive Plan were outstanding with a weighted average grant date fair value of $11.24 per share. There was no activity during the 24 days ended
January 24, 2011.
As of December 31, 2010, there were 16,666 shares of non-vested stock under the 2005 Stock Incentive Plan with a weighted average grant date fair
value of $13.02 per share. There was no activity during the 24 days ended January 24, 2011.
On the Effective Date, all awards outstanding under the 2005 Stock Incentive Plan were cancelled due to the Company’s emergence from bankruptcy.
(d) 2008 Long Term Incentive Plan
In March 2008, the Company adopted the FairPoint Communications, Inc. 2008 Long Term Incentive Plan (the “2008 Long Term Incentive Plan”). The
2008 Long Term Incentive Plan provided for the grant of up to 9,500,000 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 2008 Long Term Incentive
Plan vested over periods ranging from two to three years and certain of these shares pay current dividends.
In 2008, 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 2008 Long Term 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 2008 Plan (including stock units granted in lieu of dividends).
The fair value of the awards was calculated as the fair value of the shares on the date of grant. Beginning on January 1, 2006, the Company adopted the
provisions of the Compensation – Stock Compensation Topic of the ASC 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.
During the year ended December 31, 2009, 175,352 stock units were issued under the 2008 Stock Incentive Plan with a weighted average grant date fair
value of $0.3 million. There was no activity during the year ended December 31, 2010. As of December 31, 2010, 175,352 stock units under the 2008 Stock
Incentive Plan were outstanding with a weighted average grant date fair value of $1.79 per share. There was no activity during the 24 days ended January 24,
2011.
As of December 31, 2010, there were no shares of non-vested stock under the 2008 Stock Incentive Plan. There was no activity during the 24 days
ended January 24, 2011.
On the Effective Date, all awards outstanding under the 2008 Stock Incentive Plan were cancelled due to the Company’s emergence from bankruptcy.
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