Annual report pursuant to Section 13 and 15(d)

Stockholders' Equity

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Stockholders' Equity
 12 Months Ended
Dec. 31, 2013
Stockholders' Equity Note [Abstract]  
Stockholders Equity
Stockholders’ Equity

Common Stock
GCI’s Class A and Class B common stock are identical in all respects, except that each share of Class A common stock has one vote per share and each share of Class B common stock has ten votes per share. Each share of Class B common stock outstanding is convertible, at the option of the holder, into one share of Class A common stock.

During the years ended December 31, 2013, 2012 and 2011, we repurchased 1.8 million, 1.5 million and 5.2 million shares, respectively, of our Class A common stock at a cost of $15.6 million, $14.0 million and $52.6 million, respectively, pursuant to the Class A and Class B common stock repurchase program authorized by GCI’s Board of Directors.  During the years ended December 31, 2013, 2012 and 2011, we retired 2.0 million, 1.8 million and 5.2 million shares, respectively, of our Class A common stock.

Shared-Based Compensation
Our Amended and Restated 1986 Stock Option Plan ("Stock Option Plan"), provides for the grant of options and restricted stock awards (collectively "award") for a maximum of 15.7 million shares of GCI Class A common stock, subject to adjustment upon the occurrence of stock dividends, stock splits, mergers, consolidations or certain other changes in corporate structure or capitalization. If an award expires or terminates, the shares subject to the award will be available for further grants of awards under the Stock Option Plan. The Compensation Committee of GCI’s Board of Directors administers the Stock Option Plan. Substantially all restricted stock awards granted vest over periods of up to three years. Substantially all options vest in equal installments over a period of five years and expire ten years from the date of grant. The requisite service period of our awards is generally the same as the vesting period.  Options granted pursuant to the Stock Option Plan are only exercisable if at the time of exercise the option holder is our employee, non-employee director, or a consultant or advisor working on our behalf.  New shares are issued when stock option agreements are exercised or restricted stock awards are granted.  We have 3.2 million shares available for grant under the Stock Option Plan at December 31, 2013.

The fair value of restricted stock awards is determined based on the number of shares granted and the quoted price of our common stock.  We estimate pre-vesting option forfeitures at the time of grant and periodically revise those estimates in subsequent periods if actual forfeitures differ from those estimates. We record share-based compensation expense only for those awards expected to vest using an estimated forfeiture rate based on our historical pre-vesting forfeiture data. We review our forfeiture estimates annually and adjust our share-based compensation expense in the period our estimate changes.

A summary of option activity under the Stock Option Plan as of December 31, 2013 and changes during the year then ended is presented below:

 
Shares (in thousands)
 
Weighted Average Exercise Price
 
Weighted Average Remaining Contractual Term
 
Aggregate Intrinsic Value (in thousands)
Outstanding at January 1, 2013
719

 
$
7.65

 
 
 
 
Exercised
(87
)
 
$
7.16

 
 
 
 
Expired
(12
)
 
$
6.61

 
 
 
 
Outstanding at December 31, 2013
620

 
$
7.74

 
2.8 years
 
$
2,153

Exercisable at December 31, 2013
601

 
$
7.78

 
2.7 years
 
$
2,060



There were no options granted during the years ended December 31, 2013, 2012 and 2011.  The total fair value of options vesting during the years ended December 31, 2013, 2012 and 2011, was $78,000, $560,000 and $379,000, respectively.  The total intrinsic values, determined as of the date of exercise, of options exercised in the years ended December 31, 2013, 2012 and 2011, were $0.2 million, $1.3 million and $0.3 million, respectively. We received $0.6 million, $2.1 million and $0.9 million in cash from stock option exercises in the years ended December 31, 2013, 2012 and 2011, respectively.

A summary of nonvested restricted stock award activity under the Stock Option Plan for the year ended December 31, 2013, follows (share amounts in thousands):

 
Shares
 
Weighted
Average
Grant Date
Fair Value
Nonvested at January 1, 2013
1,127

 
$
9.59

Granted
680

 
$
8.30

Vested
(582
)
 
$
10.05

Forfeited
(16
)
 
$
8.60

Nonvested at December 31, 2013
1,209

 
$
8.60



The weighted average grant date fair value of awards granted during the years ended December 31, 2013, 2012 and 2011, were $8.30, $9.23 and $12.08, respectively. We have recorded share-based compensation expense of $6.6 million, $5.0 million and $6.6 million for the years ended December 31, 2013, 2012 and 2011, respectively. Share-based compensation expense is classified as Selling, General and Administrative Expense in our Consolidated Income Statements.  Unrecognized share-based compensation expense was $6.2 million relating to 1.2 million restricted stock awards and $27,000 relating to 19,000 unvested stock options as of December 31, 2013.  We expect to recognize share-based compensation expense over a weighted average period of 0.6 years for stock options and 2 years for restricted stock awards.

GCI 401(k) Plan
In 1986, we adopted an Employee Stock Purchase Plan (“GCI 401(k) Plan”) qualified under Section 401 of the Internal Revenue Code of 1986. The GCI 401(k) Plan provides for acquisition of GCI’s Class A common stock at market value as well as various mutual funds. We may match a percentage of the employees' contributions up to certain limits, decided by GCI’s Board of Directors each year. Our matching contributions allocated to participant accounts totaled $8.2 million, $7.5 million and $7.1 million for the years ended December 31, 2013, 2012 and 2011, respectively.  We used cash to fund all of our employer-matching contributions during the years ended December 31, 2013, 2012 and 2011.