Stock-Based and Deferred Compensation Plans

12 Months Ended

Dec. 31, 2023

Share-Based Payment Arrangement [Abstract]

Stock-Based and Deferred Compensation Plans

14.Stock-Based and Deferred Compensation Plans

Prior to the Merger Date, the Company granted stock options, stock appreciation rights, performance-based awards, restricted stock units, and time-based restricted shares to officers and key employees under the 2017 Long-Term Incentive Plan and stock options, restricted shares, and restricted stock units to directors under the 2017 Stock Plan for Non-Employee Directors.

On July 2, 2018, the Company completed its acquisition of Hawaiian Telcom. In conjunction with the acquisition, the Company assumed responsibility for the eventual payout of certain stock-based compensation awards that were previously granted to Hawaiian Telcom employees under the Hawaiian Telcom 2010 Equity Incentive Plan. These awards were originally granted by Hawaiian Telcom in the first quarter of 2017 and in the first quarter of 2018, before the merger with Cincinnati Bell was completed.

Subsequent to the Merger Date, awards will no longer be granted under the 2017 Long-Term Incentive Plan or the 2017 Stock Plan for Non-Employee Directors.

Stock Options and Stock Appreciation Rights

Generally, the awards of stock options and stock appreciation rights fully vested three years from grant date and expired ten years from grant date. Beginning in 2012, some of the stock options vested over a three year period based on the achievement of certain performance objectives. The Company generally issued new shares when options to purchase common shares or stock appreciation rights were exercised. The following table summarizes stock options and stock appreciation rights activity:

	Successor												Predecessor
	Year Ended December 31, 2023				Year Ended December 31, 2022				September 8, 2021 to December 31, 2021				January 1, 2021 to September 7, 2021
(in thousands, except per share amounts)	Shares		Weighted- Average Exercise Price Per Share		Shares		Weighted- Average Exercise Price Per Share		Shares		Weighted- Average Exercise Price Per Share		Shares			Weighted- Average Exercise Price Per Share
Outstanding at beginning of period		—	$	—		—	$	—		—	$	—		143		$	18.37
Exercised		—		—		—		—		—		—		—			—
Forfeited		—		—		—		—		—		—		—			—
Awards cancelled pursuant to Merger Agreement		—		—		—		—		—		—		(143	)		18.37
Outstanding and exercisable at end of period		—	$	—		—	$	—		—	$	—		—		$	—
(dollars in millions)
Compensation expense for the period	$	—			$	—			$	—			$	—
Tax benefit related to compensation expense	$	—			$	—			$	—			$	—
Intrinsic value of awards exercised	$	—			$	—			$	—			$	—
Cash received from awards exercised	$	—			$	—			$	—			$	—
Grant date fair value of awards vested	$	—			$	—			$	—			$	—

Performance-Based Restricted Awards

Awards granted generally vested over three years and upon the achievement of certain performance-based objectives. Performance-based awards were expensed based on their grant date fair value if it was probable that the performance conditions would be achieved.

The following table summarizes our outstanding performance-based restricted award activity:

	Successor												Predecessor
	Year Ended December 31, 2023				Year Ended December 31, 2022				September 8, 2021 to December 31, 2021				January 1, 2021 to September 7, 2021
(in thousands, except per share amounts)	Shares		Weighted- Average Exercise Price Per Share		Shares		Weighted- Average Exercise Price Per Share		Shares		Weighted- Average Exercise Price Per Share		Shares			Weighted- Average Exercise Price Per Share
Non-vested at beginning of period		—	$	—		—	$	—		—	$	—		1,037		$	10.87
Granted*		—		—		—		—		—		—		—			—
Vested		—		—		—		—		—		—		(1,037	)		10.87
Forfeited		—		—		—		—		—		—		—			—
Non-vested at end of period		—	$	—		—	$	—		—	$	—		—		$	—
(dollars in millions)
Compensation expense for the period	$	—			$	—			$	—			$	6.2
Tax benefit related to compensation expense	$	—			$	—			$	—			$	(1.5	)
Grant date fair value of awards vested	$	—			$	—			$	—			$	11.3

* Assumes the maximum number of awards that can be earned if the performance conditions are achieved.

In connection with the Merger, $5.0 million of expense related to performance-based restricted awards was accelerated upon the Closing Date and recorded in the Predecessor period in 2021.

Time-Based Restricted Awards

Awards granted to Cincinnati Bell employees in 2019 vested as of the Merger Date and were paid to employees in cash. Awards granted to directors in 2020 vested as of the Merger Date and were paid to directors in cash.

As part of the terms of the acquisition of Hawaiian Telcom, certain stock-based compensation awards granted by Hawaiian Telcom before the merger date were converted to time-based restricted stock units. The Company assumed responsibility for the eventual payout of these time-based restricted stock units as part of the acquisition. These awards were originally granted by Hawaiian Telcom in the first quarter of 2017 and 2018, and vested in one-fourth increments over a period of four years. One-fourth of the awards granted in the first quarter of 2017 vested and were distributed by Hawaiian Telcom prior to July 2, 2018. All remaining awards that vested after July 2, 2018, including awards that were accelerated and vested as of the Merger Date, were distributed by Cincinnati Bell Inc.

The following table summarizes our time-based restricted award activity:

	Successor												Predecessor
	Year Ended December 31, 2023				Year Ended December 31, 2022				September 8, 2021 to December 31, 2021				January 1, 2021 to September 7, 2021
(in thousands, except per share amounts)	Shares		Weighted- Average Exercise Price Per Share		Shares		Weighted- Average Exercise Price Per Share		Shares		Weighted- Average Exercise Price Per Share		Shares			Weighted- Average Exercise Price Per Share
Non-vested at beginning of period		—	$	—		—	$	—		—	$	—		792		$	11.42
Granted		—		—		—		—		—		—		—			—
Vested		—		—		—		—		—		—		(792	)		11.42
Forfeited		—		—		—		—		—		—		—			—
Non-vested at end of period		—	$	—		—	$	—		—	$	—		—		$	—
(dollars in millions)
Compensation expense for the period	$	—			$	—			$	—			$	6.9
Tax benefit related to compensation expense	$	—			$	—			$	—			$	(1.7	)
Grant date fair value of awards vested	$	—			$	—			$	—			$	9.0

In connection with the Merger, $4.3 million of expense related to time-based restricted awards was accelerated upon the Closing Date and recorded in the Predecessor period in 2021.

Cash-Settled Awards

For the year ended December 31, 2021, Parent granted officers and key employees of the Company cash-settled awards that vest ratably over a 4-year period beginning with the first anniversary of the grant date with the final 20% vesting upon the occurrence of a liquidity event, defined as a change of control or qualified public offering. In the absence of a liquidity event, the awards will expire in eight years. The ultimate payment of the awards upon the occurrence of a liquidity event is based on the i) number of vested awards and ii) an amount determined from the excess of the proceeds received from the liquidity event over the invested capital, adjusted for internal rates of return. No compensation expense was recorded in the years ended December 31, 2023 and 2022 and the Predecessor and Successor periods in 2021.

For the year ended December 31, 2020, the Company granted officers and key employees cash-settled awards of $10.5 million in place of performance-based restricted awards and time-based restricted awards. Per the terms of the award, one-fourth of these cash-settled awards accelerated and vested as of the Merger Date. Subsequent to the Merger Date, one-fourth of these cash-settled awards vested at the end of six months, and the remaining awards vest at the end of 18 months. Employees generally must be actively employed on the vesting date in order to receive the award payout. The amount recorded on the Consolidated Balance Sheets as of December 31, 2022 related to these awards was $4.6 million, and was recorded to “Other noncurrent liabilities.” The remaining awards vested and were paid by the Company in the first quarter of 2023.

Expense incurred for cash payment awards was $0.3 million and $3.3 million for the years ended December 31, 2023 and 2022, respectively, and $1.0 million and $2.4 million for the Successor and Predecessor periods in 2021, respectively.