FairPoint Communications 2011 Annual Report Download - page 121

Table of Contents
(e) 2009 CEO Compensation Plan
On June 10, 2009, the Company’s compensation committee approved the award of certain equity incentives to David L. Hauser, the Company’s then
new Chairman and Chief Executive Officer, as an inducement to accept employment with the Company (the “Inducement Awards”). As provided in
Mr. Hauser’s employment agreement, dated June 11, 2009, the Inducement Awards included: (i) the Inducement Options; (ii) the Inducement Restricted Stock;
and (iii) performance units for two performance periods beginning on July 1, 2009 and ending on December 31, 2010 and December 31, 2011, respectively
(the “Inducement Performance Units”). The Inducement Options, totaling 1,600,000, were granted on July 1, 2009, at an exercise price of $0.95 per share.
The Inducement Options vested and became exercisable in three equal annual installments commencing on July 1, 2010, provided that Mr. Hauser remains
employed by the Company through each such date. The Inducement Restricted Stock were awarded in the following three installments: (i) $500,000 on July 1,
2009; (ii) $1,750,000 on July 1, 2010; and (iii) $1,750,000 on July 1, 2011, and were valued based on the average closing prices of the Company’s common
stock during the thirty calendar days immediately preceding the applicable award date. Accordingly, on July 1, 2009, 523,810 shares of restricted stock were
awarded to Mr. Hauser. The Inducement Restricted Stock would have become fully vested on July 1, 2012, provided that Mr. Hauser remained employed by
the Company through such date. No shares of restricted stock were issued on July 1, 2010. The Inducement Performance Units would have been earned and
paid in shares of the Company’s common stock, based on the Company’s performance during the performance periods, with a target amount of 200% of
Mr. Hauser’s base salary and a maximum of 400% of Mr. Hauser’s base salary. The number of shares subject to the Inducement Options and the option
exercise price would have been adjusted, and additional shares of Inducement Restricted Stock would have been awarded, as necessary, to preserve the value
of the Inducement Options and the Inducement Restricted Stock awarded on July 1, 2009 if, prior to December 31, 2010, the Company had completed a
restructuring of its indebtedness.
The grant date fair value of the Inducement Options was determined using the Black-Scholes model. Key assumptions used for determining the fair
value of the Inducement Options were as follows: risk-free rate—3.54%; expected term—10 years; expected volatility—5.70%.
All of Mr. Hauser’s non-vested Inducement Options and Inducement Restricted Stock were cancelled upon his resignation, effective August 24, 2010.
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The Company hired Gilbane Building Company to construct a new data center in Manchester, New Hampshire and to perform restoration services on a
flooded building in Raymond, New Hampshire. Thomas F. Gilbane, Jr., a director of the Predecessor Company, is Chairman and Chief Executive Officer of
Gilbane Building Company. Gilbane Building Company was hired by the Company for both projects prior to Mr. Gilbane’s designation to the board of
directors. The Company did not pay any fees to Gilbane Building Company in the years ended December 31, 2011 and 2010. The Company paid Gilbane
Building Company fees of $0.8 million in the year ended December 31, 2009.
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The quarterly information presented below represents selected quarterly financial results for the sixty-six days ended March 31, 2011, the 24 days ended
January 24, 2011, the quarters ended June 30, September 30 and December 31, 2011 and 2010 and the quarter ended March 31, 2010 (in thousands, except
per share data).
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Revenue $66,378 $188,402 $262,636 $257,912 $254,162
Reorganization income
(expense) $ 897,313 $ (2,736) $ (2,510) $ 3,735 $1,743
Impairment of goodwill and trade name $ — $ — $ — $(262,019) $ —
Net (loss) income $586,907 $(24,423) $ (27,097) $(279,441) $(83,984)
(Loss) income per share:
Basic $6.56 (0.95) $(1.05) $(10.81) $(3.25)
Diluted $6.54 (0.95) $(1.05) $(10.81) $(3.25)
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