Charter 2002 Annual Report Download - page 107

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CHARTER COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2002, 2001 and 2000
(dollars in millions, except where indicated)
September and October 2001, in connection with new employment agreements and related option agreements
entered into by the Company, certain executives of the Company were awarded an aggregate of 256,000 shares
of restricted Class A common stock, of which 26,250 shares were cancelled as of December 31, 2002. In
January and February of 2003, an additional 92,813 shares were canceled. The shares vested 25% upon grant,
with the remaining shares vesting monthly over a three-year period beginning after the Ñrst anniversary of the
date of grant. As of December 31, 2002, deferred compensation remaining to be recognized in future periods
totaled $1 million.
In September 2001, when the Company's former President and Chief Executive OÇcer terminated his
employment, as part of his separation agreement he waived his right to an option to purchase approximately
seven million Charter Holdco membership units, of which approximately 5 million had vested. Accordingly,
the Company recorded a reversal of compensation expense previously recorded on unvested options of
$22 million.
A summary of the activity for the Company's stock options, excluding granted shares of restricted
Class A common stock, for the years ended December 31, 2002, 2001 and 2000, is as follows (options in
thousands, except per share data):
2002 2001 2000
Weighted Weighted Weighted
Average Average Average
Exercise Exercise Exercise
Shares Price Shares Price Shares Price
Options outstanding, beginning of period ÏÏÏÏÏÏ 46,558 $17.10 28,482 $19.24 20,758 $19.79
Granted ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 13,122 4.88 29,395 16.01 10,247 18.06
ExercisedÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ Ì Ì (278) 19.23 (17) 20.00
Cancelled ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ (6,048) 16.32 (11,041) 19.59 (2,506) 18.98
Options outstanding, end of period ÏÏÏÏÏÏÏÏÏÏÏ 53,632 $14.22 46,558 $17.10 28,482 $19.24
Weighted average remaining contractual life ÏÏÏ 8 years 9 years 9 years
Options exercisable, end of period ÏÏÏÏÏÏÏÏÏÏÏÏ 17,844 $17.93 9,994 $18.51 7,044 $19.98
Weighted average fair value of options granted $ 2.89 $ 9.15 $ 9.63
The following table summarizes information about stock options outstanding and exercisable as of
December 31, 2002:
Options Outstanding Options Exercisable
Weighted-Average Weighted-Average
Range of Number Remaining Weighted-Average Remaining Weighted-Average
Exercise Prices Outstanding Contractual Life Exercise Price Number Exercisable Contractual Life Exercise Price
(in thousands) (in thousands)
$ 1.11 - $ 2.85 9,184 10 years $ 2.58 125 10 years $ 1.58
$ 9.13 - $13.96 19,676 9 years 12.20 4,330 9 years 12.50
$14.31 - $20.00 16,180 7 years 19.04 11,024 7 years 19.23
$20.46 - $23.09 8,592 8 years 22.21 2,365 8 years 22.14
The Company uses the intrinsic value method prescribed by APB Opinion No. 25, ""Accounting for Stock
Issued to Employees,'' to account for the option plans. Option compensation expense of $5 million, a net
option compensation beneÑt of $5 million and option compensation expense of $38 million for the years ended
December 31, 2002, 2001 and 2000, respectively, was recorded in the consolidated statements of operations
F-39