Stock Plans

9 Months Ended

Sep. 30, 2021

Stock Plans [Abstract]

Stock Plans

(16) Stock Plans:

Upon emergence, all outstanding stock-based compensation plans of Old Frontier were terminated and, in accordance with the Plan, the form of the Frontier Communications Parent, Inc. 2021 Management Incentive Plan (the “Incentive Plan”) was approved and adopted by the Board. The Incentive Plan permits stock-based awards to be made to employees, directors, or consultants of the Company or its affiliates, as determined by the Compensation and Human Capital Committee. At emergence, there were 15,600,000 shares of Common Stock reserved for issuance pursuant to the Incentive Plan.  As of September 30 2021, the Company had awarded an aggregate of approximately 5,278,041 unvested restricted stock units and performance stock units (which reflects the “target” number of performance stock units subject to performance conditions granted to certain officers), under the Incentive Plan to certain employees, directors and officers of the Company, subject to satisfaction of the applicable vesting conditions.

Restricted Stock

The following summary presents information regarding unvested restricted stock with regard to restricted stock granted under the 2017 EIP and 2021 Incentive Plan:

2017 EIP
		Weighted
		Average
	Number of	Grant Date		Aggregate
	Shares	Fair Value		Fair Value
	(in thousands)	(per share)		(in millions)
Balance at January 1, 2021 (Predecessor)	304	$	6.78	$	-
Restricted stock granted	-	$	-	$	-
Restricted stock vested	(41)	$	8.23	$	-
Restricted stock forfeited	(109)	$	8.23
Balance at April 30, 2021 (Predecessor)	154	$	5.38	$	-
Cancellation of restricted stock	(154)	$	-	$	-
Balance at April 30, 2021 (Predecessor)	-	$	-	$	-
2021 Incentive Plan
		Weighted
		Average
	Number of	Grant Date		Aggregate
	Shares	Fair Value		Fair Value
	(in thousands)	(per share)		(in millions)
Balance at April 30, 2021 (Successor)	-	$	-	$	-
Restricted stock granted	2,365	$	28.75	$	66
Restricted stock vested	(9)	$	28.75	$	-
Restricted stock forfeited	(42)	$	28.75
Balance at September 30, 2021 (Successor)	2,314	$	28.75	$	65

For purposes of determining compensation expense, the fair value of each restricted stock grant is estimated based on the closing price of a share of our common stock on the date of the grant. Total remaining unrecognized compensation cost associated with unvested restricted stock awards that is deferred at September 30, 2021 was $63 million, and the weighted average vesting period over which this cost is expected to be recognized is approximately 2 years.

We have granted restricted stock awards to employees in the form of our common stock. None of the restricted stock awards may be sold, assigned, pledged or otherwise transferred, voluntarily or involuntarily, by the employees until the restrictions lapse, subject to limited exceptions. The restrictions are time-based. Compensation expense, recognized in “Selling, general and administrative expenses,” of $4 million for the three and five month period ended September 30, 2021, has been recorded in connection with these grants. During the four months ended April 30, 2021, Old Frontier recognized stock-based compensation credit of $1 million related to Old Frontier Director and Employee Compensation Plans.

Performance Stock Units

On July 7, 2021, Frontier’s Compensation and Human Capital Committee, in consultation with the other directors of Frontier’s Board of Directors and the Committee’s independent executive compensation consultant, reviewed and approved a long-term equity award program or “Emergence LTI Program” under the 2021 Management Incentive Plan (“MIP”).

The Emergence LTI Program consists of both Restricted Stock Units (RSUs) and Performance Stock Units (PSUs). RSUs are time-based awards that vest over time and the value reflects the stock price of the Company.  PSUs are tied to the financial performance and long-term target of the Company and consist of a three-year performance period (a Measurement Period).  A target number of performance units are awarded to each participant with respect to the Measurement Period. The performance metrics under the 2021 PSU grants consist of targets for (1) Adjusted Fiber EBITDA, (2) Fiber Locations Constructed and (3) Expansion Fiber Penetration. In addition, there is an overall performance modifier, based on Frontier’s total return to stockholders over the Measurement Period (i.e., Total Shareholder Return or TSR) relative to the S&P 400 Mid Cap index.  The TSR performance modifier can decrease or increase payouts based on Frontier’s three-year performance. PSU awards, to the extent earned, will be paid out in the form of common stock shortly following the end of the Measurement Period.

The number of shares of common stock or units earned at the end of the Measurement Period may be more or less than the number of target performance shares or units granted as a result of performance. An executive must maintain a satisfactory performance rating during the Measurement Period and must be employed by Frontier upon determination in order for the award to vest. The Compensation and Human Capital Committee will determine the number of shares earned for the Measurement Period in the first quarter of the year following the end of the Measurement Period.

The following summary presents information regarding performance shares as of September 30, 2021 and changes during the nine months then ended with regard to performance shares awarded under the 2021 Incentive Plan:

2021 Incentive Plan
	Number of
	Shares
	(in thousands)
Balance at April 30, 2021 (Successor)	-
Target performance shares granted, net	2,975
Target performance shares earned	-
Target performance shares forfeited	(11)
Balance at September 30, 2021 (Successor)	2,964

For purposes of determining compensation expense, the fair value of each performance share grant is estimated based on the closing price of a share of our common stock on the date of the grant. For the three and five months ended September 30, 2021, we recognized net compensation expense, reflected in “Selling, general and administrative expenses,” of $4 million related PSU awards. The value of the PSU awards were adjusted to reflect the fair value of the relative TSR modifier.