Charter 2005 Annual Report Download - page 92

CHARTER COMMUNICATIONS, INC. 2005 FORM 10-K
outstanding performance shares will lapse as if all performance Participation by employees was voluntary. Non-employee mem-
objectives had been satisfied at the maximum level. bers of the board of directors of Charter or any of its
subsidiaries were not eligible to participate in the exchange offer.
February 2004 option exchange. In January 2004, we offered In the closing of the exchange offer on February 20, 2004,
employees of Charter and its subsidiaries the right to exchange we accepted for cancellation eligible options to purchase
all stock options (vested and unvested) under the 1999 Charter approximately 18,137,664 shares of our Class A common stock.
Communications Option Plan and 2001 Stock Incentive Plan In exchange, we granted approximately 1,966,686 shares of
that had an exercise price over $10 per share for shares of restricted stock, including 460,777 performance shares to eligible
restricted Charter Class A common stock or, in some instances, employees of the rank of senior vice president and above, and
cash. Based on a sliding exchange ratio, which varied depending paid a total cash amount of approximately $4 million (which
on the exercise price of an employee’s outstanding options, if an amount includes applicable withholding taxes) to those employ-
employee would have received more than 400 shares of ees who received cash rather than shares of restricted stock.
restricted stock in exchange for tendered options, we issued to The restricted stock was granted on February 25, 2004.
that employee shares of restricted stock in the exchange. If, Employees tendered approximately 79% of the options eligible
based on the exchange ratios, an employee would have received to be exchanged under the program.
400 or fewer shares of restricted stock in exchange for tendered The cost of the stock option exchange program was
options, we instead paid to the employee cash in an amount approximately $10 million, with a 2004 cash compensation
equal to the number of shares the employee would have expense of approximately $4 million and a non-cash compensa-
received multiplied by $5.00. The offer applied to options to tion expense of approximately $6 million to be expensed ratably
purchase a total of 22,929,573 shares of Class A common stock, over the three-year vesting period of the restricted stock issued
or approximately 48% of our 47,882,365 total options (vested in the exchange.
and unvested) issued and outstanding as of December 31, 2003.
The participation of the Named Executive Officers in this exchange offer is reflected in the following table:
Number of
Securities Market Price Length of Original
Underlying of Stock at Exercise Price New Option Term
Options Time of at Time of Exercise Remaining at
Name Date Exchanged Exchange ($) Exchange ($) Price ($) Date of Exchange
Carl E. Vogel 2/25/04 3,400,000 $4.37 $13.68 (1) 7 years 7 months
Former President and Chief Executive Officer
Paul E. Martin 2/25/04 15,000 4.37 23.09 (2) 7 years 0 months
Senior Vice President, 50,000 4.37 11.99 7 years 7 months
Principal Accounting Officer 40,000 4.37 15.03 6 years 3 months
and Corporate Controller
Wayne H. Davis 2/25/04 40,000 4.37 23.09 (3) 7 years 0 months
Executive Vice President 40,000 4.37 12.27 7 years 11 months
and Chief Technical Officer
(1) On February 25, 2004, in exchange for 3,400,000 options tendered, 340,000 performance shares were granted with a three year performance cycle and three year vesting
along with 340,000 restricted stock units with one-third of the shares vesting on each of the first three anniversaries of the grant date. On the grant date, the price of our
common stock was $4.37.
(2) On February 25, 2004, in exchange for 105,000 options tendered, 8,607 performance shares were granted with a three year performance cycle and three year vesting
along with 8,607 restricted stock units with one-third of the shares vesting on each of the first three anniversaries of the grant date. On the grant date, the price of our
common stock was $4.37.
(3) On February 25, 2004, in exchange for 80,000 options tendered, 4,000 performance shares were granted with a three year performance cycle and three year vesting along
with 4,000 restricted stock units with one-third of the shares vesting on each of the first three anniversaries of the grant date. On the grant date, the price of our
common stock was $4.37.
2005 EXECUTIVE CASH AWARD PLAN Compensation Committee designated and approved as Plan
participants the permanent President and Chief Executive Officer
In June 2005, Charter adopted the 2005 Executive Cash Award position, Executive Vice President positions and selected Senior
Plan to provide additional incentive to, and retain the services of, Vice President positions.
certain officers of Charter and its subsidiaries, to achieve the The Plan provides that each participant be granted an
highest level of individual performance and contribute to the award which represents an opportunity to receive cash pay-
success of Charter. Eligible participants are employees of Charter or ments in accordance with the Plan. An award will be credited in
any of its subsidiaries who have been recommended by the CEO book entry format to a participant’s account in an amount equal
and designated and approved as Plan participants by the Compen- to 100% of a participant’s base salary on the date of Plan
sation Committee of Charter’s board of directors. At the time the approval in 2005 and 20% of participant’s base salary in each
Plan was adopted, the interim CEO recommended and the year 2006 through 2009, based on that participant’s base salary
82