XO Communications 2010 Annual Report Download - page 72

XO Holdings, Inc.
Notes to Consolidated Financial Statements
12. SHARE-BASED COMPENSATION
Stock Incentive Plans
The XO Communications, Inc. 2002 Stock Incentive Plan (the ‘‘2002 Plan’’) was initially adopted in
January 2003. Under the 2002 Plan, the Company is authorized to issue awards for up to 17.6 million shares
of its common stock in the form of restricted stock or options to purchase stock. The 2002 Plan is
administered by the Compensation Committee of the Company’s Board of Directors, which has the
discretionary authority to determine all matters relating to awards of stock options and restricted stock,
including the selection of eligible participants, the number of shares of common stock to be subject to each
option or restricted stock award, the exercise price of each option, vesting, and all other terms and conditions
of awards. Generally, the awards vest ratably over periods ranging from two to four years and in most cases
the exercise price is greater than or equal to the market price of the stock on the date of grant. Unless the
Compensation Committee designates otherwise, all options expire on the earlier of (i) ten years after the date
of grant, (ii) twelve months after termination of employment with the Company due to death or complete and
permanent disability, (iii) immediately upon termination of employment by the Company for cause, or
(iv) three months after termination of employment by the employee or by the Company for other than cause.
In June 2003, the Compensation Committee of a predecessor of XO Communications, LLC approved the
adoption of the 2003 Employee Retention and Incentive Plan (the ‘‘Retention Plan’’) which is a component of
the 2002 Plan. The Retention Plan provides for the payment of cash bonuses and the issuance of options to
the Company’s employees based on the attainment of certain performance goals. As of December 31, 2010,
the Company had outstanding fully vested options to purchase an aggregate of 30,724 shares of Company
common stock pursuant to the Retention Plan. The exercise price for all options issued and outstanding under
the Retention Plan is $5.84 per share. No further grants under the Retention Plan are permitted.
In June 2003, the 2003 Annual Bonus Plan (the ‘‘Bonus Plan’’) was adopted, which is also a component
of the 2002 Plan. The Bonus Plan provides for the payment of cash bonuses and the issuance of options to the
Company’s employees who were ineligible to participate in the Retention Plan. The payment of bonuses and
the issuance of options under the Bonus Plan were contingent upon the same performance targets contained in
the Retention Plan. As of December 31, 2010, there were outstanding options to purchase 19,057 shares of
Company common stock under the Bonus Plan. The exercise price for all options issued and outstanding
under the Bonus Plan is $6.53 per share. No further grants under the Bonus Plan are permitted.
Stock Options
A summary of stock option activity as of December 31, 2010, and changes during the year then ended is
presented below:
Number of
Shares
Weighted
Average
Exercise
Price
Weighted
Average
Remaining
Contractual
Term
Outstanding at December 31, 2009............... 7,441,639 $5.03 4.1 years
Forfeited............................... (31,125) 5.00
Expired ............................... (1,260,146) 5.19
Outstanding at December 31, 2010............... 6,150,368 $5.00 3.2 years
Exercisable at December 31, 2010 ............... 5,972,618 $5.00 3.2 years
Expected to vest at December 31, 2010 ........... 164,196 $5.00 6.9 years
Available for future issuance at December 31, 2010 . . . 9,467,084
The aggregate intrinsic value is calculated as the difference between the exercise price and market value
of the underlying common stock. As of December 31, 2010, the aggregate intrinsic value of options
outstanding was zero, as the exercise price exceeded the market value on that date. There were no options
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