Stock-Based Compensation

12 Months Ended

Dec. 31, 2011

Stock-Based Compensation

Stock-Based Compensation

(9) Stock-Based Compensation

        During the predecessor year ended December 31, 2010, our employees participated in an Equity Incentive Plan ("EIP") and Employee Stock Purchase Plan ("ESPP"). Due to CenturyLink's acquisition of us and the purchasing of our outstanding stock, we no longer offer these plans.

Stock-Based Compensation Expense

        Stock-based compensation expenses were included in cost of services and products, and selling, general, and administrative expenses in our consolidated statements of operations. During our predecessor years, we recognized compensation expense relating to awards granted to our employees under the EIP using the straight-line method over the applicable vesting periods. We also recognized compensation expense when our employees purchased our common stock under the ESPP for the difference between the employees' purchase price and the fair value of our stock.

        For the successor nine months ended December 31, 2011, we were allocated a stock based compensation expense of $20 million from our parent company, CenturyLink. For the predecessor three months ended March 31, 2011 and the predecessor years ended December 31, 2010, and 2009, our total stock-based compensation expense was approximately $4 million, $123 million, and $49 million, respectively. We also recognized an income tax benefit of $8 million, $2 million, $31 million, and $19 million associated with our stock compensation expense during the successor nine months ended December 31, 2011, the predecessor three months ended March 31, 2011 and the predecessor years ended December 31, 2010, and 2009, respectively.

        On December 21, 2010, we accelerated the vesting of certain restricted stock and performance share awards issued under its Equity Incentive Plan in order to preserve certain economic benefits to its stockholders that otherwise would have been lost in connection with CenturyLink's acquisition of us. Accordingly, an additional $63 million of stock compensation expense was recorded in the predecessor fourth quarter 2010 as a result of the acceleration.

        Due to CenturyLink's acquisition of us, we now record stock based compensation expense that is allocated to us from CenturyLink, which is included in operating expenses-affiliates in our consolidated statements of operations. Based on many factors that affect the allocation, the amount of stock-based compensation expense recorded at CenturyLink and ultimately allocated to us may fluctuate. We cash settle the stock-based compensation expense allocated to us from CenturyLink.