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Stock-Based Compensation
 12 Months Ended
Dec. 31, 2014
Share-based Compensation [Abstract]  
Stock-Based Compensation
Stock-Based Compensation
Stock-based compensation expense recognized in the financial statements is as follows (in thousands):
 
 
Years Ended December 31,
 
2014
 
2013
 
2012
 
Amounts charged against income, before income tax benefit
$
4,274

 
$
5,807

 
$
4,055

Amount of related income tax benefit recognized in income
(1,714
)
 
(2,326
)
 
(1,656
)
Total net loss impact
$
2,560

 
$
3,481

 
$
2,399


At December 31, 2014, the Company had $3.3 million of stock-based compensation cost related to non-vested awards that will be recognized over a weighted average period of 1.83 years, all of which is related to awards granted under the FairPoint Communications, Inc. Amended and Restated 2010 Long Term Incentive Plan (the "Long Term Incentive Plan").
Long Term Incentive Plan
The Long Term Incentive Plan provides for grants of up to 5,674,277 shares of common stock awards, of which stock options and restricted stock awards and other types of equity awards can be granted. As of December 31, 2014, there are 2,877,285 shares available for grant under the Long Term Incentive Plan. Each stock option granted reduces the availability under the Long Term Incentive Plan by one share. Prior to the approval of the amendment and restatement of the Long Term Incentive Plan by the Company's stockholders on May 12, 2014, each restricted stock award granted reduced the availability under the Long Term Incentive Plan by one share and on or after May 12, 2014 each restricted stock award granted reduces the availability by 1.35 shares. Upon the exercise of each stock option or vesting of each restricted share award, one new share of common stock will be issued.
For the years ended December 31, 2014, 2013 and 2012, the Company has granted shares of restricted stock and stock options with one of the following vesting terms: (i) vest immediately; (ii) vest 100% on the first anniversary; (iii) vest over three equal annual installments, with one-third vesting on the first anniversary of the grant date and one-third on the second and third anniversaries thereafter or (iv) vest 25% immediately and 25% on the first, second and third anniversaries thereafter.
Stock Options. Stock options have a term of 10 years from the date of grant; however, vested stock options will generally expire 90 days after an employee's termination with the Company, unless the Company is in a blackout period. Stock option activity under the Long Term Incentive Plan is summarized as follows:
 
 
Options
Outstanding
 
Weighted Average
Exercise Price
Per Share
 
Weighted  Average Remaining Contractual Life (in years)
Outstanding at December 31, 2011
947,737

 
$
24.29

 
 
Granted (a)
347,880

 
4.82

 
 
Exercised
(14,212
)
 
4.51

 
 
Forfeited
(87,783
)
 
19.32

 
 
Expired
(63,793
)
 
23.96

 
 
Outstanding at December 31, 2012
1,129,829

 
$
18.95

 
 
Granted (a)
368,016

 
9.37

 
 
Exercised
(18,750
)
 
4.63

 
 
Forfeited
(41,893
)
 
11.95

 
 
Expired
(38,079
)
 
22.29

 
 
Outstanding at December 31, 2013
1,399,123

 
$
16.74

 
 
Granted (a)
462,374

 
13.31

 
 
Exercised (b)
(51,050
)
 
6.28

 
 
Forfeited
(2,005
)
 
4.31

 
 
Expired
(33,597
)
 
23.65

 
 
Outstanding at December 31, 2014
1,774,845

 
$
16.03

 
7.4
 
 
 
 
 
 
Exercisable at December 31, 2014 (c)
1,198,318

 
$
18.31

 
6.8
Vested and Expected to Vest at December 31, 2014 (d)
1,766,262

 
$
16.04

 
7.3
(a)
During the years ended December 31, 2014, 2013 and 2012, the weighted average grant date fair value of stock options granted was $3.2 million, $1.5 million and $0.7 million, respectively. For purposes of determining compensation expense, the grant date fair value per share of the stock options was estimated using the Black-Scholes option pricing model which requires the use of various assumptions including the expected life of the option, expected dividend rate, expected volatility and risk-free interest rate. Key assumptions used for determining the fair value of stock options granted were as follows: 
 
 
Years Ended December 31,
 
2014
 
2013
 
2012
 
 
 
 
 
 
Expected life (1)
5.5 - 6.5 years

 
5.5 - 6 years

 
5.75 - 6 years

Expected dividend (2)
—

 
—

 
—

Expected volatility (3)
51
%
 
45
%
 
45
%
Risk-free interest rate (4)
1.63% - 2.19%

 
0.77% - 1.92%

 
0.82% - 1.21%


(1)
The 5.5-year, 5.75-year, 6.0-year and 6.5-year expected lives (estimated period of time outstanding) of stock options granted were estimated using the ‘Simplified Method' which utilizes the midpoint between the vesting date and the end of the contractual term. This method was utilized for the stock options due to the lack of historical exercise behavior of the Company's employees. 
(2)
For all stock options granted during 2012, 2013 and 2014, no dividends are planned to be paid over the contractual term of the stock options resulting in the use of a zero expected dividend rate. 
(3)
The expected volatility rate is based on the observed historical volatilities of the Company's common stock and observed historical and implied volatilities of comparable companies, which were adjusted to account for the various differences between the comparable companies and the Company. 
(4)
The risk-free interest rate is specific to the date of grant and is based on the United States Treasury constant maturity market yield in effect at the time of the grant.
(b)
During the years ended December 31, 2014 and 2013, the total intrinsic value of stock options that were exercised was $0.4 million and negligible, respectively.
(c)
Based upon a fair market value of the common stock as of December 31, 2014 of $14.21 per share, the stock options that are exercisable have an aggregate intrinsic value (equal to the value of in-the-money stock options above their respective exercise price) of $2.6 million.
(d)
Based upon a fair market value of the common stock as of December 31, 2014 of $14.21 per share, the stock options that have vested and are expected to vest have an aggregate intrinsic value (equal to the value of in-the-money stock options above their respective exercise price) of $4.3 million.
Based upon the respective grant fair value, the aggregate fair value of stock options that vested during the years ended December 31, 2014 , 2013, and 2012 was $2.9 million, $2.2 million, and $2.0 million, respectively.
Restricted Stock Awards. Restricted stock award activity under the Long Term Incentive Plan is summarized as follows:
 
 
Awards
Outstanding
 
Weighted Average
Grant Date Fair
Value Per Share
Non-vested at December 31, 2011
351,998

 
$
18.26

Granted (a)
30,000

 
$
5.51

Vested (b)
(116,202
)
 
18.26

Forfeited
(21,550
)
 
18.49

Non-vested at December 31, 2012
244,246

 
$
16.65

Granted (a)
184,610

 
$
9.46

Vested (b)
(157,318
)
 
$
15.24

Forfeited
(6,883
)
 
$
10.43

Non-vested at December 31, 2013
264,655

 
$
12.64

Granted (a)
216,586

 
$
13.21

Vested (b)
(249,205
)
 
$
13.58

Non-vested at December 31, 2014
232,036

 
$
12.15

(a)
The grant date fair value per share of the restricted stock awards under the Long Term Incentive Plan is calculated as the fair market value per share of the common stock on the date of grant. During the years ended December 31, 2014, 2013 and 2012, the weighted average grant date fair value of restricted stock awards granted was $2.9 million, $1.7 million, and $0.2 million, respectively.
(b)
Based upon the respective grant date fair value, the aggregate fair value of restricted stock which vested during the year ended December 31, 2014, 2013 and 2012 was $3.4 million, $2.4 million and $2.1 million, respectively.