Windstream 2011 Annual Report Download - page 174

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
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F-66
(a) In conjunction with the acquisition of PAETEC, we granted 886,300 restricted stock units to former PAETEC
employees to replace outstanding, unvested PAETEC restricted stock units held by these same employees as of
acquisition date. The vesting provisions of the original grants were retained. Each recipient is entitled to one restricted
share per restricted stock unit.
(b) In conjunction with the acquisition of Iowa Telecom, we granted 222,400 shares of restricted stock to former Iowa
Telecom employees to replace outstanding, unvested Iowa Telecom restricted stock shares held by these same
employees as of acquisition date. The vesting provisions of the original grants were retained, including provisions
requiring accelerated vesting upon an involuntary termination following a change of control.
(c) Represents restricted stock granted to non-employee directors.
For performance based restricted stock units granted in 2011 the operating targets for the first vesting period were approved by
the Board of Directors in February 2011. For the performance based restricted stock granted in 2010, the operating targets for
the first and second vesting period were approved by the Board of Directors in February 2010 and 2011, respectively. For
performance based restricted stock granted in 2009, the operating targets for the first, second and third vesting period were
approved by the Board of Directors in February 2009, 2010 and 2011, respectively. For 2011 and measurement periods prior,
each of the operating targets was met by the end of their respective measurement periods.
Restricted stock and restricted stock unit activity for the year ended December 31, 2011 was as follows:
Non-vested at December 31, 2010
Granted
Vested
Forfeited
Non-vested at December 31, 2011
(Thousands)
Underlying
Number of
Shares
3,833.7
2,870.3
(1,553.5)
(199.5)
4,951.0
Weighted
Average Fair
Value
$ 10.13
12.66
10.00
11.83
$ 11.57
At December 31, 2011, unrecognized compensation expense totaled $37.1 million and is expected to be recognized over the
weighted average vesting period of 1.3 years. Unrecognized compensation expense is included in additional paid-in capital in
the accompanying consolidated balance sheets and statements of shareholders’ equity. The total fair value of shares vested
during 2011, 2010 and 2009 was $15.5 million, $14.9 million and $27.5 million, respectively. Share-based compensation
expense was $24.0 million, $17.0 million and $17.4 million for 2011, 2010 and 2009, respectively.
Stock Option Activity - In conjunction with the acquisition of PAETEC, we issued 3,933,230 stock options to former PAETEC
employees to replace outstanding PAETEC stock options held by these same employees as of the acquisition date. The exercise
price of the options granted was 0.460 shares of the exercise price on the original issuances. All other terms of the original
options, including the vesting provisions, were retained. The contractual term of the options granted is ten years from the
original issuance date. Awards generally vest ratably over a three- or four-year service period.
The following table summarizes stock option activity for the year ended December 31, 2011:
Outstanding at December 31, 2010
Granted
Exercised
Canceled
Forfeited
Outstanding at December 31, 2011
Vested or expected to vest at December 31, 2011
Exercisable at December 31, 2011
(Thousands)
Number of
Shares
Underlying
Options
—
3,933.2
(344.5)
(85.4)
—
3,503.3
3,058.7
3,001.2
Weighted
Average
Exercise
Price
$—
$ 10.04
$ 6.67
$ 19.85
$—
$ 10.13
$ 10.33
$ 10.36
(Years)
Weighted
Average
Remaining
Contractual
Life
5.5
5.1
5.0
(Millions)
Aggregate
Intrinsic
Value
$ 13.0
$ 11.5
$ 11.3