Stock Plans

12 Months Ended

Dec. 31, 2023

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(14) Stock Plans:

Upon emergence the Frontier Communications Parent, Inc. 2021 Management Incentive Plan (the “2021 Incentive Plan”) was approved and adopted by the Board. The 2021 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 of the Board. Under the 2021 Incentive Plan, 15,600,000 shares of common stock have been reserved for issuance. As of December 31, 2023, approximately 4,309,000 shares were available to grant under the Emergence LTI Program.

Successor Plans - The 2021 Incentive Plan

Restricted Stock Units

The following summary presents information regarding unvested restricted stock under the 2021 Incentive Plan:


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	-	$		$	-
Restricted stock granted	2,578	$	28.66	$	75
Restricted stock vested	(21)	$	28.44	$	-
Restricted stock forfeited	(74)	$	28.52
Balance at January 1, 2022	2,483	$	28.67	$	72
Restricted stock granted	1,104	$	25.80	$	28
Restricted stock vested	(892)	$	25.81	$	(23)
Restricted stock forfeited	(181)	$	25.88
Balance at December 31, 2022	2,514	$	25.78	$	64
Restricted stock granted	1,373	$	23.11	$	35
Restricted stock vested	(1,225)	$	25.77	$	(31)
Restricted stock forfeited	(194)	$	24.97
Balance at December 31, 2023	2,468	$	24.37	$	63

For purposes of determining compensation expense, the fair value of each restricted stock grant is estimated based on the closing price of our common stock on the date of grant. The non-vested restricted stock units granted in 2022 and 2023 generally vest, and are expensed, on a ratable basis over three years from the grant date of the award. Total remaining unrecognized compensation cost associated with unvested restricted stock awards that is deferred at December 31, 2023 was $36 million and the weighted average vesting period over which this cost is expected to be recognized is approximately 1 year.

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 $38 million and $34 million, for the years ended December 31, 2023, and 2022, respectively, has been recorded in connection with restricted stock.

Performance Stock Units

Under the 2021 Incentive Plan, a target number of performance units (“PSU”) are awarded to each participant with respect to the three year performance period (the “Measurement Period”). The performance metrics under the 2021 PSU awards consist of targets for (1) Adjusted Fiber EBITDA, (2) Fiber Locations Constructed and (3) Expansion Fiber Penetration. In addition, there is an overall relative total shareholder return (TSR)” modifier, which is based on our total return to stockholders over the Measurement Period relative to the S&P 400 Mid Cap Index. Each performance metric is weighted 33.3%, and targets for each metric are set for each of the three years during the Measurement Period. Achievement of the metrics will be measured separately, and the number of awards earned will be determined based on actual performance relative to the targets of each performance metric, plus the effect of the TSR modifier. Achievement is measured on a cumulative basis for each performance metric individually at the end of the three year Measurement Period. The payout of the 2021 PSUs can range from 0% to a maximum award payout of 300% of the target units. The payout of the 2022 PSUs can range from 0% to a maximum award payout of 200% of the target units. The payout of the 2023 PSUs can range from 0% to a maximum award payout of 200% of the target units.

The number of PSU awards earned at the end of the Measurement Period may be more or less than the number of target PSUs granted as a result of performance. An executive must maintain a satisfactory performance rating during the Measurement Period and, except for limited circumstances, 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. PSUs awards, to the extent earned, will be paid out in the form of common stock on a one-for-one basis.

Under ASC 718, Stock Based Compensation Expense, a grant date, and the fair value of a performance award are determined once the targets are finalized. For the 2021, 2022 and 2023 PSU awards, targets for all of the metrics have been fully set for each performance period and the related expense will be amortized over the appropriate performance period.

The following summary presents information regarding performance shares and changes during the period with regard to performance shares awarded under the 2021 Incentive Plan:


2021 Incentive Plan
			Weighted Average
	Number of		Award Date
	Shares		Fair Value
	(in thousands)		(per share) ⁽¹⁾
Balance at April 30, 2021	-	$	-
Target performance shares awarded, net	3,157	$	25.62 ⁽²⁾
Target performance shares forfeited	(13)	$	25.61
Balance at January 1, 2022	3,144	$	25.62
Target performance shares awarded, net	388	$	25.66 ⁽³⁾
Target performance shares forfeited	(47)
Balance at December 31, 2022	3,485	$	25.62
Target performance shares awarded, net	1,040	$	24.36
Target performance shares forfeited	(38)
Balance at December 31, 2023	4,487	$	25.33

⁽¹⁾ Represents the weighted average of the closing price of our stock on the date of the awards.
⁽²⁾ Approximately 1.1 million shares included in this award were granted in 2021 with a grant date fair value of $30.85 per share. Approximately 2.1 million shares were granted in 2022 with a grant date fair value price of $27.22 per share.
⁽³⁾ Approximately 0.2 million shares included in this award were granted in 2022 with a grant date fair value of $26.81 per share. Approximately 0.2 million shares have been granted as of December 31, 2023 with a grant date fair value of $23.95 per share.

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, adjusted to reflect the fair value of the relative TSR modifier. In 2023 and 2022, we recognized net compensation expense, reflected in “Selling, general, and administrative expenses,” of $69 million and $47 million, respectively related PSU awards.

Non-Employee Director Equity Compensation

Non-employee directors receive $250,000 of annual core compensation which includes $150,000 of RSUs granted annually. In both 2023 and 2022, we recognized $1 million in stock-based compensation expense related to non-employee director units.

In 2021, non-employee directors received an initial emergence RSU grant valued at $300,000. In addition, Board committee chairs receive retainers for their committee service in the form of RSUs. In 2021, we recognized $1 million in stock-based compensation expense related to non-employee director units.

Predecessor Plans - 2017 Equity Incentive Plan

Under the 2017 EIP, awards of our common stock were granted to eligible employees in the form of incentive stock options, non-qualified stock options, SARs, restricted stock, performance shares or other stock-based awards. No awards were granted more than 10 years after the effective date (May 10, 2017) of the 2017 EIP plan. The exercise price of stock options and SARs under the EIPs generally were equal to or greater than the fair market value of the underlying common stock on the date of grant. Stock options were not ordinarily exercisable on the date of grant but vested over a period of time (generally four years). Under the terms of the EIPs, subsequent stock dividends and stock splits had the effect of increasing the option shares outstanding, which correspondingly decreased the average exercise price of outstanding options.

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Restricted Stock

The following summary presents information regarding unvested restricted stock with regard to restricted stock under the 2017 EIP:



		Weighted
		Average
	Number of	Grant Date			Aggregate
	Shares	Fair Value			Fair Value
	(in thousands)	(per share)			(in millions)
Balance at December 31, 2020 (Predecessor)	304	$		$	-
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)	-	$	-	$	-

Compensation expense was $(1) million for the four months ended April 30, 2021.