FairPoint Communications 2013 Annual Report Download - page 97

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95
and the end of the contractual term. This method was utilized for the stock options due to the lack of historical
exercise behavior of the Company's employees. The 10.00-year expected life of stock options granted during
the 341 days ended December 31, 2011 was based on an expectation of the estimated period of time the Company
believed the stock options granted to an employee during this time period would be outstanding upon an analysis
of stock options' strike price.
(2) For all stock options granted during 2011, 2012 and 2013, no dividends are expected to be paid over the
contractual term of the stock options resulting in the use of a zero expected dividend rate.
(3) The expected volatility rate is based on the observed historical and implied volatilities of comparable companies,
which were adjusted to account for the various differences between the comparable companies and the Company.
(4) The risk-free interest rate is specific to the date of grant. On the Effective Date, the risk-free interest rate was
interpolated from the yields on the 5-year and 7-year United States Treasury bonds. For stock options granted
after the Effective Date, the risk-free interest rate is based on the United States Treasury 10-year constant
maturity market yield in effect at the time of the grant.
(b) During the years ended December 31, 2013 and 2012, the total intrinsic value of stock options that were exercised was
negligible.
(c) Based upon a fair market value of the common stock as of December 31, 2013 of $11.31 per share, the stock options
that are exercisable have an aggregate intrinsic value (equal to the value of in-the-money stock options above their
respective exercise price) of $1.0 million.
(d) Based upon a fair market value of the common stock as of December 31, 2013 of $11.31 per share, the stock options
that have vested and are expected to vest have an aggregate intrinsic value (equal to the value of in-the-money stock
options above their respective exercise price) of $2.5 million.
Based upon the respective grant fair value, the aggregate fair value of stock options that vested during the years ended
December 31, 2013 and December 31, 2012, the 341 days ended December 31, 2011 and the 24 days ended January 24, 2011 was
$2.2 million, $2.0 million, $0.1 million and $2.0 million, respectively.
Restricted Stock Awards. Restricted stock award activity under the Long Term Incentive Plan is summarized as follows:
Awards
Outstanding
Weighted Average
Grant Date Fair
Value Per Share
Non-vested at January 24, 2011 (Predecessor entity) ——
Granted (a) 547,792 $ 18.53
Vested (b) (187,044) 18.53
Forfeited ——
Non-vested at January 24, 2011 (Post-emergence entity) 360,748 $ 18.53
Granted (a) 13,800 $ 11.52
Vested (b) (4,900) 17.87
Forfeited (17,650) 18.53
Non-vested at December 31, 2011 351,998 $ 18.26
Granted (a) 30,000 $ 5.51
Vested (b) (116,202) $ 18.26
Forfeited (21,550) $ 18.49
Non-vested at December 31, 2012 244,246 $ 16.65
Granted (a) 184,610 $ 9.46
Vested (b) (157,318) $ 15.24
Forfeited (6,883) $ 10.43
Non-vested at December 31, 2013 264,655 $ 12.64
(a) Except for the restricted stock awards granted on the Effective Date, the grant date fair value per share of the restricted
stock awards under the Long Term Incentive Plan is calculated as the fair market value per share of the common stock
on the date of grant. The grant date fair value per share of the restricted stock awarded on the Effective Date is equal
to the fair value per share of the Company's common stock calculated in conjunction with fresh start accounting. During
the year ended December 31, 2013, the year ended December 31, 2012, the 341 days ended December 31, 2011 and