America Online 2009 Annual Report Download - page 93

Table of Contents
Subsequent to the spin-off, AOL employees participate in domestic and international defined contribution plans, primarily consisting of AOL's
domestic savings plan. AOL's contributions to these plans are based on a percentage of the employees' elected contributions and are subject to plan provisions.
Expenses related to AOL's contribution to the Time Warner and AOL plans amounted to $17.4 million, $19.8 million and $27.8 million for the years
ended December 31, 2009, 2008 and 2007, respectively.
Equity-Based Compensation
AOL Equity Plan
Pursuant to the Company's 2010 Stock Incentive Plan, or "2010 SIP", options are generally granted to employees and non-employee directors of AOL
with exercise prices equal to the quoted fair market value of the common stock at the date of grant. Generally, the stock options vest ratably over a four year
vesting period and expire ten years from the date of grant. Certain stock option awards provide for accelerated vesting upon an election to retire pursuant to
the Company's defined benefit retirement plans or after reaching a specified age and years of service, as well as certain additional circumstances for non-
employee directors.
Also pursuant to the 2010 SIP, AOL may also grant shares of common stock or restricted stock units ("RSUs") to its employees and non-employee
directors, which generally vest ratably over a four year period from the date of grant. Holders of restricted stock and RSU awards are generally entitled to
receive regular cash dividends or dividend equivalents, respectively, if paid by the Company during the period of time that the restricted stock or RSU awards
are unvested.
The Company is authorized to grant equity awards to employees covering an aggregate of 11.3 million shares of AOL common stock under the 2010
SIP, of which up to 6.6 million awards may be issued in the form of restricted stock or restricted stock units.
Upon the (i) exercise of a stock option award, (ii) the vesting of a RSU or (iii) the grant of restricted stock, shares of AOL common stock are issued
from authorized but unissued shares or from treasury stock. At both December 31, 2009 and December 31, 2008, the Company did not have any shares of
treasury stock.
On December 9, 2009, Time Warner equity awards held by AOL's Chairman and Chief Executive Officer at the time of the separation were converted
into AOL equity awards. This modification preserved both the intrinsic value and the fair value of his awards at the separation date, and accordingly, there
was no incremental compensation expense associated with this modification.
Time Warner Equity Plans
Until consummation of the separation from Time Warner, AOL employees participated in Time Warner's equity plans. See "Note 1: Description of
Business, Basis of Presentation and Summary of Significant Accounting Policies—Summary of Significant Accounting Policies—Equity-based
Compensation" for additional information on the treatment of vested and unvested Time Warner equity awards held by AOL employees upon separation.
Time Warner had two active equity plans under which it was authorized to grant equity awards of Time Warner common stock to AOL employees. Options
had been granted to employees of AOL with exercise prices equal to the fair market value of the underlying common stock at the date of grant. Generally, the
stock options vested ratably over a four-year vesting period and expired 10 years from the date of grant. Certain stock option awards provided for accelerated
vesting upon an election to retire pursuant to the Time Warner defined benefit retirement plans or after reaching a specified age and years of service.
Pursuant to these equity plans, Time Warner also granted shares of common stock or RSUs to employees of AOL. These awards generally vested
between three to five years from the date of grant. Certain RSU awards provided for accelerated vesting upon an election to retire pursuant to Time Warner's
defined benefit retirement
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