America Online 2010 Annual Report Download - page 100

Table of Contents
AOL INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTE 8—EQUITY-BASED COMPENSATION AND EMPLOYEE BENEFIT PLANS
Defined Contribution Plans
Prior to the spin-off, AOL employees participated in certain Time Warner domestic and international defined contribution plans, including savings and
profit sharing plans. AOL's contributions to Time Warner's savings plans were primarily based on a percentage of the employees' elected contributions and
were subject to plan provisions. Subsequent to the spin-off, AOL employees are no longer participating in and AOL is no longer contributing to these plans.
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 $11.5 million, $17.3 million and $19.8 million for the years
ended December 31, 2010, 2009 and 2008, respectively.
Equity-Based Compensation
AOL Equity Plan
Pursuant to the Company's Amended and Restated 2010 Stock Incentive Plan, or "2010 SIP", stock options are granted to employees, advisors and non-
employee directors of AOL with exercise prices equal to the quoted 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 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, advisors 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 16.6 million shares of AOL common stock under the 2010
SIP, of which up to 7.8 million awards may be issued in the form of full-value awards, such as restricted stock or RSUs. Amounts available for issuance
pursuant to grants under the 2010 SIP will change over time based on such activities as the conversion of equity awards into common stock, the forfeiture of
equity awards and the cancellation of equity awards, among other activities.
Upon the (i) exercise of a stock option award, (ii) vesting of a RSU or (iii) grant of restricted stock, shares of AOL common stock are issued from
authorized but unissued shares or from treasury stock. At both December 31, 2010 and December 31, 2009, the Company did not have any shares of treasury
stock.
Time Warner Equity Plans
Until consummation of the separation from Time Warner, AOL employees participated in Time Warner's equity plans. Time Warner had two active
equity plans under which it was authorized to grant equity awards of
96