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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K/A

For the transition period from       to       

Commission File No. 0-15279

GENERAL COMMUNICATION, INC.

(Exact name of registrant as specified in its charter)

2550 Denali Street

Suite 1000

Registrant’s telephone number, including area code: (907) 868-5600

Securities registered pursuant to Section 12(b) of the Exchange Act: None

Securities registered pursuant to Section 12(g) of the Exchange Act:

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

Yes o  No x

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act.

Yes o  No x

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes x  No o

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.  o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).  Yes o  No x

The aggregate market value of the voting common stock held by non-affiliates of the registrant, computed by reference to the average bid and asked prices of such stock as of the close of trading as of the last business day of the registrant’s most recently completed second fiscal quarter of June 30, 2009 was approximately $193.4 million.  Shares of voting stock held by each officer and director and by each person who owns 5% or more of the outstanding voting stock (as publicly reported by such persons pursuant to Section 13 and Section 16 of the Exchange Act) have been excluded in that such persons may be deemed to be affiliates.  This determination of affiliate status is not necessarily a conclusive determination for other purposes.

The number of shares outstanding of the registrant’s common stock, as of March 31, 2010, was:

Class A common stock — 51,588,467 shares; and

Class B common stock — 3,185,284 shares.

DOCUMENTS INCORPORATED BY REFERENCE

The registrant through this Amendment No. 1 on Form 10-K/A (“Amendment”) to its Form 10-K for the year ended December 31, 2009 (“Annual Report”) files Part III of that Annual Report relating to registrant’s definitive proxy statement for its 2010 annual meeting of shareholders, and makes that filing of such information within 120 days following the end of registrant’s fiscal year ended December 31, 2009.

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Explanatory Note

General Communication, Inc. (unless the context otherwise requires, includes its direct and indirect subsidiaries and is referred to as “Company,” “we,” “us” or “our”) is filing this Amendment to its Annual Report on Form 10-K for the fiscal year ended December 31, 2009, which was originally filed on March 12, 2010 (“Original Filling”).

The purpose of this Amendment is to provide the information required by Part III of Form 10-K.  This Amendment amends and restates in their entirety only the cover page, Part III, the Exhibit Index, and Exhibits 31.1 and 31.2.  This Amendment does not affect any other parts of, or exhibits to, the Original Filing, and those unaffected parts or exhibits are not included in this Amendment.

Except as expressly stated in this Amendment, this Amendment continues to speak as of the date of the Original Filing, and the Company has not updated the disclosure contained in the Amendment to reflect events that have occurred since the filing of the Original Filing.  Accordingly, this Amendment must be read in conjunction with the Company’s other filings, if any, made with the Securities and Exchange Commission (“SEC”) subsequent to the filing of the Original Filing, including amendments to those filings, if any.

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GENERAL COMMUNICATION, INC.

2009 ANNUAL REPORT ON FORM 10-K/A

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SIGNATURES

This Amendment is for the year-ended December 31, 2009. This Amendment, along with our annual report for the year ended December 31, 2009 (“Annual Report”), modifies and supersedes documents filed prior to the Annual Report, as amended. The SEC allows us to “incorporate by reference” information that we file with the SEC, which means that we can disclose important information to you by referring you directly to those documents. Information incorporated by reference is considered to be part of our Annual Report.  However, we have chosen to file Part III of the Annual Report through Form 10-K/A.  In addition, information that we file with the SEC in the future will automatically update and supersede information contained in this Annual Report.

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FORM 10-K/A

FOR GENERAL COMMUNICATION, INC.

FOR YEAR-ENDED DECEMBER 31, 2009

Part III

Item 10. Directors, Executive Officers and Corporate Governance.

Identification

As of the December 31, 2009, our board consisted of eight director positions, divided into three classes of directors serving staggered three-year terms.

A director on our board is elected at an annual meeting of shareholders and serves until the earlier of his or her resignation or removal, or his or her successor is elected and qualified.  Our executive officers generally are appointed at our board’s first meeting after each annual meeting of shareholders and serve at the discretion of the board.

The following table sets forth certain information about our directors and executive officers as of the December 31, 2009.

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(1)                                  The present classification of our board is as follows: (1) Class I — Messrs. Edgerton and Kroloff, whose present terms expire at the time of our 2011 annual meeting; (2) Class II — Messrs. Brett, Duncan and Mooney whose present terms expire at the time of our 2012 annual meeting; and (3) Class III — Messrs. Fisher, Glasgow, and Schneider, whose present terms expire at the time of out 2010 annual meeting.

(2)                                  Mr. Westlund retired from, and was no longer a full-time officer of, the Company as of December 31, 2009.   However, he was a part-time employee of the Company as of that date.

We believe the specific experiences, qualifications and skills of each of our directors as set forth below provide us with a board equipped to direct us through an ever challenging course in several segments of the telecommunication business in which we are involved.  These attributes include experience in entrepreneurial, cable service, telecommunication, technological and financial aspects of companies similar to, as well as much larger than, us.

Stephen M. Brett.  Mr. Brett has served as Chairman of our board since June 2005 and as a director on our board since January 2001.  He has been of counsel to Sherman and Howard, a law firm, since January 2001.  He was Senior Executive Vice President for AT&T Broadband from March 1999 to April 2000.  His present term as a director on our board expires at the time of our 2012 annual meeting.

Ronald A. Duncan.  Mr. Duncan is a co-founder of the Company and has served as a director on our board since 1979.  Mr. Duncan has served as our President and Chief Executive Officer since January 1989.  His present term as director on the board expires at the time of our 2012 annual meeting.

John M. Lowber.  Mr. Lowber has served as our Chief Financial Officer since January 1987, as our Secretary and Treasurer since July 1988 and as one of our Senior Vice Presidents since December 1989.

G. Wilson Hughes.  Mr. Hughes has served as our Executive Vice President and General Manager since June 1991.

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William C. Behnke.  Mr. Behnke has served as one of our Senior Vice Presidents since January 2001.  Prior to that, he served as our Senior Vice President — Marketing and Sales from January 1994.

Natalie W. Blaylock.  Ms. Blaylock has served as our Vice President — General Manager, Network Access Services since April 2009.  Prior to that, she served as our Vice President, Roaming Services from July 2008 and was a consultant in a comparable role through Strong-Bridge Consultants from April 2008 through June 2008.  Prior to joining us, Ms. Blaylock was Vice President, Revenue for Sea Mobile (a Seattle, Washington business) from February 2006 to April 2008.  The bulk of her telecommunications career took place with T-Mobile and its predecessors (Voice Stream, Western Wireless and Pacific Northwest Cellular).  She worked in various information technology, revenue assurance and product development roles from August 1992 through December 2005.

Gina R. Borland.  Ms. Borland has served as our Vice President, Product Management — Voice and Messaging since September 2005.  Prior to that, she served as our Vice President-General Manager, Local Services beginning in January 2001.  Prior to that, she was a member of our Corporate Development Department serving in various capacities generally involving business development from September 1996 through December 2000.

Martin E. Cary.  Mr. Cary has served as our Vice President — General Manager, Managed Broadband Services since September 2004.  Prior to that he served as our Vice President — Broadband Services from June 1999 to September 2004.

Gregory F. Chapados.  Mr. Chapados has served as one of our Senior Vice Presidents since June 2006.  Prior to that he was the Managing Director of Integrated Strategies Initiatives LLC from August 2004 to May 2006.  Integrated Strategies was at the time a boutique investment bank serving middle-market companies in defense and other areas of federal contracting.  Prior to that Mr. Chapados was a Managing Director at the investment bank, Hoak Breedlove Wesneski & Co. from February 1995 to July 2004.

Richard P. Dowling.  Mr. Dowling has served as one of our Senior Vice Presidents since December 1990.

Paul E. Landes.  Mr. Landes has served as our Vice President and General Manager, Consumer Services since September 2005.  Prior to that, he served as our Vice President — Marketing and Sales, and Chief Marketing Officer beginning in 2002.  Prior to that, he was our Vice President — Marketing from 1999 to 2002.

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Terry J. Nidiffer.  Mr. Nidiffer has served as our Vice President, Product Management — Data and Entertainment since September 2005.  Prior to that, he served as our Vice President — General Manager, Internet Services beginning in February 2000.

Gregory W. Pearce.  Mr. Pearce has served as our Vice President and General Manager, Commercial Services since September 2005.  Prior to that, he served as our Vice President /Director of Long Distance Products beginning in January 1998.

Dana L. Tindall.  Ms. Tindall has served as one of our Senior Vice Presidents since January 1994.

Richard D. Westlund.  Mr. Westlund served as one of our Senior Vice Presidents from April 2009 to December 31, 2009.  Prior to that, he was our Senior Vice President and General Manager, Network Access Services beginning in September 2005.  Prior to that, he was our Vice President-General Manager, Long Distance and Wholesale Services beginning in January 2001.

Jerry A. Edgerton.  Mr. Edgerton has served as a director on our board since June 2004.  Since July 2009, he has been President of Government Markets for Core 180, a network integrator for large governmental and commercial customers.  From November 2007 to May 2009, he was Chief Executive Officer for Command Information, Inc., a next generation internet service company.  From April 2007 to October 2007, Mr. Edgerton was an advisor on matters affecting the telecommunications industry as well as the U.S. government.  Prior to that from January 2006 to April 2007, he was Group President of Verizon Federal.  Prior to that, he had since November 1996 served as Senior Vice President — Government Markets for MCI Communications Corporation, an affiliate of MCI, which was later acquired by Verizon Communications, Inc. (collectively with its subsidiaries, “Verizon”).  His present term as a director on our board expires at the time of our 2011 annual meeting.

Scott M. Fisher.  Mr. Fisher has served on our board since December 2005.  From 1998 to the present, he has been a partner of Fisher Capital Partners, Ltd., a private equity and real estate investment company located in Denver, Colorado.  During that time, Fisher Capital owned and operated Peak Cablevision, a multiple system cable television operator with approximately 120,000 subscribers.  At Peak Cablevision, Mr. Fisher was responsible for television programming and corporate development.  From June 1990 to April 1998, he was Vice President at The Bank of New York and BNY Capital Resources Corporation, an affiliate of The Bank of New York, where he worked in the corporate lending and commercial leasing departments.  Mr. Fisher serves on the advisory boards of several private companies.  His present term as director on our board expires at the time of our 2010 annual meeting.

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William P. Glasgow.  Mr. Glasgow has served as a director on our board since 1996.  From 2005 to the present, Mr. Glasgow has been Chief Executive Officer of AmericanWay Education.  From 1999 to December 2004, he was President/CEO of Security Broadband Corp.  From 2000 to the present Mr. Glasgow has been President of Diamond Ventures, L.L.C., a Texas limited liability company and sole general partner of Prime II Management, L.P., and Prime II Investments, L.P., both of which are Delaware limited partnerships.  Since 1996, he has been President of Prime II Management, Inc., a Delaware corporation, which was formerly the sole general partner of Prime II Management, L.P.  His present term as a director on our board expires at the time of our 2010 annual meeting.

Mark W. Kroloff.  Mr. Kroloff has served as a director on our board since February 2009.  Since January 2010, he has been a principal at First Alaskan Capital Partners, an investment firm.  From May 2005 to December 2009, he was Senior Executive Vice President and Chief Operating Officer of Arctic Slope Regional Corporation (“ASRC”), one of several corporations formed under Alaska corporate law and pursuant to the federal Alaska Native Claims Settlement Act of 1971, as amended.  From 2001 to April 2005, Mr. Kroloff was Chief Operating Officer of Cook Inlet Region, Inc., also one of those corporations formed pursuant to that federal act.  Prior to that, from 1989 to 2001 he was Vice President and General Counsel of Cook Inlet Region, Inc.  Mr. Kroloff’s present term as a director on our board expires at the time of our 2011 annual meeting.

Stephen R. Mooney.  Mr. Mooney has served as a director on our board since January 1999.  He has been a Managing Director with the McLean Group, LLC, a national financial advisory services firm based in Washington, D.C. since April 2010.  From February 2008 to November 2009, Mr. Mooney was Vice President, Business Development for Affiliated Computer Services, Inc., a global information technology and business process outsourcing company.  From October 2007 to January 2008, he was a consultant with Allied Capital Corp., a business development company specializing in private finance and development.  From January 2006 to September 2007, he was Executive Director, Business Development of VerizonBusiness, a unit of Verizon.  Prior to that, he was Vice President, Corporate Development and Treasury Services at MCI beginning in 2002.  From 1999 to 2002, he was Vice President of WorldCom Ventures Fund, Inc.  His present term as a director on our board expires at the time of our 2012 annual meeting.

James M. Schneider.  Mr. Schneider has served as a director on our board since July 1994.  He has been Chairman of Frontier Bancshares, Inc. since February 2007.  Prior to that, Mr. Schneider had been Senior Vice President and Chief Financial Officer for Dell, Inc. from March 2000 to February 2007.  Prior to that, he was Senior Vice President — Finance for Dell Computer Corporation from September 1998 to March 2000.  He presently serves on the board of directors of, and is a member of the audit committee of, GAP, Inc.  He also serves on the board of, and is a member of, the audit and management development and compensation committees of, Lockheed Martin Corporation.   His present term as a director on our board expires at the time of our 2010 annual meeting.

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Litigation and Regulatory Matters

We were, as of December 31, 2009, involved in several administrative and civil action matters primarily related to our telecommunications markets in Alaska and the remaining 49 states and other regulatory matters.  These actions are discussed elsewhere in our Annual Report.  However, as of that date, our board was unaware of any legal proceedings in which one or more of our directors, officers, affiliates or owners of record or beneficially of more than 5% of any class of our voting securities, or any associates of the previously listed persons were parties adverse to us or any of our subsidiaries.  Furthermore, as of that date, our board was unaware of any events occurring during the past five years materially adverse to an evaluation of the ability or integrity of any director, person nominated to become a director or executive officer of the Company.

Section 16(a) Beneficial Ownership Reporting Compliance

During 2009, one of our directors (Mr. Mooney) inadvertently failed to file with the SEC a Form 4 (Change in Beneficial Ownership Report) on a timely basis as required under Section 16(a) of the Securities Exchange Act of 1934.  That is, he failed to file Form 4 on the due date of December 7, 2009, but the filing was made on December 8, 2009.

Code of Business Conduct and Ethics

Our Ethics Code, i.e., our Code of Business Conduct and Ethics, was adopted by our board in 2003.  It applies to all of our officers, directors and employees.  The Ethics Code takes as its basis a set of business principles adopted by our board several years ago.  It also builds upon the basic requirements for a code of ethics as required by federal securities law and rules adopted by the SEC.

Through our Ethics Code, we reaffirm our course of business conduct and ethics as based upon key values and characteristics and through adherence to a clear code of ethical conduct.  Our Ethics Code promotes honest and ethical conduct, including ethical handling of actual or apparent conflicts of interest between personal and professional relationships of our employees.  It also promotes full, fair, accurate, timely and understandable disclosure in our reports and documents filed with, or submitted to, the SEC and other public communications made by us.  Our Ethics Code further promotes compliance with applicable governmental laws, rules and regulations, internal reporting of violations of the code to appropriate persons as identified in the code and accountability for adherence to the code.

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A copy of our Ethics Code is displayed on our internet website at www.gci.com  (click on “About GCI,” then click on “Corporate Governance,” and then click on “Code of Business Conduct and Ethics”).  Also, a copy of the Ethics Code may be obtained at no charge and upon written request to us at the following address:

ATTN: Secretary (Ethics Code)

General Communication, Inc.

2550 Denali Street, Suite 1000

Anchorage, Alaska  99503

No Change in Nominating Procedures

There were no changes made during 2009 to the procedures by which our shareholders may recommend nominees to our board.

Audit Committee, Audit Committee Financial Expert

Our Audit Committee is composed of Messrs. Glasgow, Mooney, and Schneider.   All of the members of the committee are considered by our board to be Independent Directors as defined elsewhere in this report.  See within item 13 of this report, “Director Independence.”  In addition, they are all considered by our board to be audit committee financial experts (“Audit Committee Financial Experts”).

Our Audit Committee is governed by, and carries out its responsibilities under, the Audit Committee Charter, as adopted and amended from time to time by our board (“Audit Committee Charter”).  The charter sets forth the purpose of the Audit Committee and its membership prerequisites, operating principles, relationship with our principal accountant (“External Accountant”) and primary responsibilities.  A copy of our Audit Committee Charter is available to our shareholders on our internet website: www.gci.com (click on “About GCI,” then click on “Corporate Governance,” and then click on “Audit Committee Charter”).

The Nasdaq corporate governance listing standards require that at least one member of our Audit Committee must have past employment experience in finance or accounting, requisite professional certification in accounting, or comparable experience or background which results in the individual’s “financial sophistication.”  This financial sophistication may derive from the person being or having been a chief executive officer, chief financial officer or other senior officer with financial oversight responsibilities.  Our board believes that Messrs. Glasgow, Mooney and Schneider are Audit Committee Financial Experts and also meet the Nasdaq requirements for financial sophistication.  Our board further believes these individuals are Independent Directors.

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Under the SEC’s rules, an Audit Committee Financial Expert is defined as a person who has all of the following attributes:

·                                          Understanding of accounting principles generally accepted in the United States of America (“GAAP”) and financial statements.

·                                          Ability to assess the general application of GAAP in connection with accounting for estimates, accruals and reserves.

·                                          Experience in preparing, auditing, analyzing or evaluating financial statements that present a breadth and level of complexity of accounting issues that are generally comparable to the breadth and complexity of issues that can reasonably be expected to be raised by our financial statements, or experience actively supervising one or more persons engaged in such activities.

·                                          Understanding of internal control over financial reporting.

·                                          Understanding of audit committee functions.

The Audit Committee Charter specifies how one may determine whether a person has acquired the attributes of an Audit Committee Financial Expert.  They are one or more of the following:

·                                          Education and experience as a principal financial officer, principal accounting officer, controller, public accountant or auditor or experience in one or more positions that involved the performance of similar functions.

·                                          Experience actively supervising a principal financial officer, principal accounting officer, controller, public accountant, auditor or person performing similar functions.

·                                          Experience overseeing or assessing the performance of companies or public accountants with respect to the preparation, auditing or evaluation of financial statements.

·                                          Other relevant experience.

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Our Audit Committee acts on behalf of our board and generally carries out specific duties including the following, all of which are described in detail in our Audit Committee Charter:

·                                          Principal Accountant Selection, Qualification — Is directly responsible for appointment, compensation, retention, oversight, qualifications and independence of our External Accountant.

·                                          Financial Statements — Assists in our board’s oversight of integrity of the Company financial statements.

·                                          Financial Reports, Internal Control — Is directly responsible for oversight of the audit by our External Accountant of our financial reports and reports on internal control.

·                                          Annual Reports — Prepares reports required to be included in our annual proxy statement.

·                                          Complaints — Receives and responds to certain complaints relating to internal accounting controls, and auditing matters, confidential, anonymous submissions by our employees regarding questionable accounting or auditing matters, and certain alleged illegal acts or behavior-related conduct in violation of our Ethics Code.  See within this item 10, “Code of Business Conduct and Ethics.”

·                                          Principal Accountant Disagreements — Resolves disagreements, if any, between our External Accountant and us regarding financial reporting.

·                                          Non-Audit Services — Reviews and pre-approves any non-audit services (audit-related, tax and other non-audit services) offered to us by our External Accountant (“Non-Audit Services”).

·                                          Attorney Reports — Addresses certain attorney reports, if any, relating to violation of securities law or fiduciary duty by one of our officers, directors, employees or agents.

·                                          Related Party Transactions — Reviews certain related party transactions as described elsewhere in this report.  See within item 13 of this report, “Certain Transactions.”

·                                          Other — Carries out other assignments as designated by our board.

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Item 11. Executive Compensation.

Compensation Discussion and Analysis

Overview

Compensation of our executive officers and directors during 2009 was subject to processes and procedures carried out through our Compensation Committee (“Compensation Program”).  This compensation discussion and analysis (“Compensation Discussion and Analysis”) addresses the material elements of our Compensation Program as applied to our chief executive officer, our chief financial officer, and to each of our three other most highly compensated executive officers other than the chief executive officer and chief financial officer who were serving as executive officers as of December 31, 2009.  All five of these officers are identified in the Summary Compensation Table (“Named Executive Officers”).  See within this item 11, “Executive Compensation:  Summary Compensation Table.”

Both the Compensation Committee and the Company believe that the compensation paid to the Named Executive Officers under our Compensation Program is fair, reasonable, competitive and consistent with our Compensation Principles.

Compensation Committee

Our Compensation Committee is composed of Messrs. Brett, Edgerton, Fisher, Glasgow, Kroloff, Mooney, and Schneider.  All of the members of the committee are considered by our board to be Independent Directors.

Our board had not as of December 31, 2009 adopted a charter for the Compensation Committee.  However, consideration and determination of compensation of our executive officers and directors during 2009 was subject to our Compensation Program, the aspects of which are described elsewhere in this report.  See within this item 11, “Compensation Discussion and Analysis — Process.”

Our Compensation Program sets forth the scope of authority of our Compensation Committee and requires the committee to carryout the following:

·                                          Review, on an annual basis, plans and targets for executive officer and board member compensation, if any —

·                                          Review is specifically to address expected performance and compensation of, and the criteria on which compensation is based for, the chief executive officer and such other of our executive officers as our board may designate for this purpose.

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·                                          Monitor the effect of ongoing events on, and the effectiveness of, existing compensation policies, goals, and plans —

·                                          Events specifically include but are not limited to the status of the premise that all pay systems correlate with our compensation goals and policies.

·                                          Report from time to time, its findings to our board.

·                                          Administer our Amended and Restated 1986 Stock Option Plan (“Stock Option Plan”) and approve grants of options and awards pursuant to the plan.

·                                          Monitor compensation-related publicity and public and private sector developments on executive compensation.

·                                          Familiarize itself with, and monitor the tax, accounting, corporate, and securities law ramifications of, our compensation policies, including but not limited to —

·                                          Comprehending a senior executive officer’s total compensation package.

·                                          Comprehending the package’s total cost to us and its total value to the recipient.

·                                          Paying close attention to salary, bonuses, individual insurance and health benefits, perquisites, special benefits to specific executive officers, and other retirement benefits.

·                                          Establish the overall cap on executive compensation and the measure of performance for executive officers, either by predetermined measurement or by a subjective evaluation.

·                                          Strive to make our compensation plans simple, fair, and structured so as to maximize shareholder value.

In carrying out its duties, our Compensation Committee may accept for review and inclusion in its annual review with our board, recommendations from our chief executive officer as to expected performance and compensation of, and the criteria on which compensation is based for, executive officers other than the chief executive officer.  However, our Compensation Committee, in being established as a committee of the board under our Bylaws, was not specifically authorized to delegate any of its duties to another person.  Our Compensation Committee has in the past retained and made use of compensation consultants in determining or recommending the amount or form of executive compensation as further discussed elsewhere in this report.  See within this item 11, “Compensation Discussion and Analysis — Process.”

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Principles of the Compensation Program

Our Compensation Program is based upon the following principles (“Compensation Principles”):

·                                          Compensation is related to performance and must cause alignment of interests of executive officers with the long term interests of our shareholders.

·                                          Compensation targets must take into consideration competitive market conditions and provide incentives for superior performance by the Company.

·                                          Actual compensation must take into consideration the Company’s and the executive officer’s performance over the prior year and the long term, and the Company’s resources.

·                                          Compensation is based upon both qualitative and quantitative factors.

·                                          Compensation must enable the Company to attract and retain management necessary to cause the Company to succeed.

Process

Compensation Committee and Compensation Consultant Interaction.  Our Compensation Committee reviews annually and recommends to our board for approval the base salary, incentive and other compensation of the chief executive officer.  These reviews are performed and recommendations are made in executive session that excludes all members of management.  Board action on the recommendations is done by vote of our Independent Directors.

Our Compensation Committee further reviews annually and recommends to our board for approval the base salary, incentive and other compensation of our senior executive officers, including the Named Executive Officers.  These reviews are performed and recommendations are made in executive session that excludes all members of management.  The analyses and recommendations of the chief executive officer on these matters as relating to senior executive officers other than the chief executive officer may be considered by our Compensation Committee in its deliberations and recommendations to our board.  Board action on the recommendations is done by vote of our Independent Directors.

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Other elements of executive compensation and benefits as described in this section are also reviewed by our Compensation Committee on a regular basis.

In October 2005, our Compensation Committee selected, retained and commenced a process of working with an outside compensation consultant (Towers Perrin, which subsequently merged with another entity and became Towers Watson, “Compensation Consultant”).  The Compensation Consultant reported directly to our Compensation Committee and assisted the committee in evaluating and analyzing the Compensation Program, its principles and objectives, and in evaluating and analyzing the specific compensation element recommendations presented by our chief executive officer.  The Compensation Consultant has, at the request of the Compensation Committee, subsequently reviewed and consulted with the committee in 2009 regarding those initial and subsequent evaluations in light of changing market conditions and compensation of executive officers of businesses similar to that of the Company.

Discussions on executive compensation and benefits made by the Compensation Committee have been guided by our Compensation Principles.  The elements of compensation as described later in this section are believed by the Compensation Committee to be integral and necessary parts of the Compensation Program.

Our Compensation Committee has concluded that each individual segment of each element of executive compensation continues generally to be consistent with one or more of our Compensation Principles.  Our Compensation Committee has further concluded the amount of compensation provided by the segment is reasonable, primarily based upon a comparison of the compensation amounts and segments we provide when compared to those offered by other similar companies in our industry and in our market.

Our process for determining executive compensation and benefits does not involve a precise and identifiable formula or link between each element and our Compensation Principles.  However, it takes into consideration market practice and information provided by our Compensation Consultant and management.  It is also the result of discussion among our Compensation Committee members and management.  Ultimately it is based upon the judgment of our Compensation Committee.

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We chose to include as an alternative in each agreement to allow the Company to elect to pay a portion of the compensation in the form of non-cash items, e.g., options and awards, to limit the immediate cash outlay and at the same time allow us to provide an incentive to the officer to work hard toward the goal of making us successful in our marketplace.  That is, as we prove successful in the marketplace, the investing public should see our publicly traded stock as more valuable, which in turn makes the stock subject to the options or awards held by the officers more valuable when the options are exercised and the stock is issued or the awards vest.

The Compensation Committee will during 2010 perform a review of all elements of our Compensation Program.

In 2009, base salary and incentive stock targets were compared to amounts offered by a group of similar companies.  The Company’s relative financial performance was reviewed in order to determine what a reasonable amount of compensation might be in relation to its peer group.  The compensation peer group is principally made up of the following:

·                                          Publicly held companies in industries similar to our Company.

·                                          Companies with which our Company competes for executive talent.

·                                          Our Company’s direct business competitors.

·                                          Companies that compete with our Company for investment dollars.

The compensation peer group list used in determining the reasonableness of our Compensation Program consisted of 16 companies as follows:

The results of this benchmark analysis were size-adjusted to take into consideration differences between the Company’s revenue size and that of the peer group companies.  Individual levels of element compensation were generally targeted to be set within a range of between the 50th and 75th percentile, based upon the executive’s individual performance in the prior year relative to his or her peers, the executive’s future potential, and the scope of the executive’s responsibilities and experience.  Input from the individual executives in terms of their expectation and requirements were considered as well.

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We believe this method of setting compensation enables the Company to attract and retain individuals who are necessary to lead and manage the Company while enabling the Company to differentiate between executives and performance levels and responsibility.  The comparison to other companies also allowed the Compensation Committee to determine the reasonableness of the balance between long-term incentive and annual compensation.

Based upon the information received from its Compensation Consultant, the Compensation Committee determined that, in general, compensation levels for the Company’s senior officers were reasonable when compared to officers of companies in our peer group having comparable financial performance.  As a result, with one exception, the Compensation Committee made no adjustments to base compensation for senior executive officers in 2009.  That is, our Compensation Committee separately determined to increase Mr. Hughes’ base compensation from $200,000 to $225,000 for that year.

In establishing 2009 base salary and incentive compensation targets, the Compensation Committee, although it did review the information and, except for grants that vested over multiple years, concluded it was not appropriate to take into account payments or compensation earned by executive officers as a result of options or awards granted in prior years.

Other compensation elements as discussed in this section were periodically reviewed to ensure that they continued to remain both competitive and reasonable based upon market survey data obtained from various sources at the time of review.  While such data were typically not customized to the Company, they were used by our Compensation Committee as a guide for overall reasonableness and competitiveness of the benefits.

Elements of Compensation

Overview.  The elements of compensation in our Compensation Program were for 2009 and (except as noted below) are for 2010 as follows:

·                                          Base Salary.

·                                          Incentive Compensation Bonus Plan (“Incentive Compensation Plan”).

·                                          Stock Option Plan.

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·                                          Perquisites.

·                                          Retirement and Welfare Benefits.

There are no compensatory plans or arrangements providing for payments to any of the Named Executive Officers in conjunction with any termination of employment or other working relationship of such an officer with us (including without limitation, resignation, severance, retirement or constructive termination of employment of the officer).  Furthermore, there are no such plans or arrangements providing for payments to any of the Named Executive Officers in conjunction with a change of control of us or a change in such an officer’s responsibilities to us.

Base Salary.  Effective January 1, 2009, based upon the process previously described in this section, the base salaries reported in the Summary Compensation Table (see within this item 11, “Executive Compensation:  Summary Compensation Table”) were approved by the Compensation Committee.

Mr. Duncan’s base salary reflects cash compensation of $600,000 per year until adjusted by our Compensation Committee.  Mr. Duncan’s duties remained unchanged during 2009.

Mr. Hughes’ base salary reflects cash compensation of $225,000 per year, $225,000 credited to his Deferred Compensation Arrangement account with us, and amortization of the prepaid portion of a retention agreement with him in the amount of $37,500.  Mr. Hughes’ compensation is subject to change by our Compensation Committee, and his duties remained unchanged during 2009.

Mr. Lowber’s base salary reflects cash compensation of $260,000 and $65,000 credited to his Deferred Compensation Arrangement account with us.  Mr. Lowber’s compensation is subject to change by our Compensation Committee, and his duties remained unchanged during 2009.

Ms. Tindall’s base salary reflects cash compensation of $275,000.  Ms. Tindall’s compensation is subject to change by our Compensation Committee, and her duties remained unchanged during 2009.

Mr. Landes’ base salary reflects cash compensation of $150,000.  Mr. Landes’ compensation is subject to change by our Compensation Committee, and his duties remained unchanged during 2009.

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Incentive Compensation Plan.  A portion of the Company’s compensation to each Named Executive Officer relates to, and is contingent upon, the officer’s performance and our financial performance and resources.  This portion of compensation took the form of incentive bonus agreements with each of the Named Executive Officers pursuant to our Incentive Compensation Plan.

In early 2009, our Compensation Committee, using as a guide the Compensation Principles, established compensation levels for 2009 for all senior corporate officers, including the Named Executive Officers.  The specific level for a given officer and related terms for the program and the Incentive Compensation Plan were set forth in agreements between the Company and each officer.  Targeted incentive compensation amounts were established at $350,000 for Mr. Duncan and $100,000 for each of Messrs. Hughes and Lowber and Ms. Tindall.  Mr. Landes’ incentive compensation was based upon improvements in EBITDA (earnings before interest, taxes, depreciation and amortization) compared to the prior year in the consumer line of our business.

The specific form and targeted amount of incentive compensation for a Named Executive Officer once adopted by the Compensation Committee as a part of the Compensation Program, was submitted to the board for approval.  Thereafter, these matters were informally reviewed with the employee by our Chief Executive Officer.

The payout opportunities for our senior executive officers, including our Named Executive Officers, are for each officer based upon subjective levels of achievement by the individual officer and are heavily influenced by the financial performance of the Company against its current year business plan.  In general, if the plan is met and the individual performed as expected, the targeted amount of incentive compensation would be paid.  From time to time, a special award may be made to an individual following an effort resulting in a significant benefit to the Company.  Should the Company’s financial performance materially exceed its business plan, the Compensation Committee would take that into consideration in possibly increasing the amount of the bonus awarded for that year.  In the event an incentive goal is not met, the Compensation Committee may decrease the corresponding bonus.

The Company has no specific policies for allocating between long-term and currently paid out compensation.  The Compensation Committee attempts to strike an appropriate balance between available resources, the desires of the applicable employee, and a determination of reasonableness based upon an awareness of the competitive environment.  This desire for balance also extends to the allocation between cash and non-cash compensation and among different forms of non-cash compensation.  The Company has no specific policy in the context of long-term compensation for the basis for allocating compensation to each different form of award but strives to encourage management at an appropriate cost to the Company to focus on the long-term performance of the Company in order that management share in the Company’s success as well as participate in any downturns.

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Compensation levels may be adjusted by the Compensation Committee based upon a number of factors including available Company resources, financial performance of the Company, an evaluation of the competitive marketplace, and the requirements of its key employees.  Accounting and income tax treatments of compensation are considered by the Compensation Committee with the primary focus on ascertaining that taxable income to the recipients is deductible by the Company and the accounting treatment is consistent with the requirements of current accounting literature.

The Company has no requirements with respect to security ownership by its officers or directors, and it has no policies regarding hedging the economic risk of ownership of Company equity.  Executive officers are invited to provide their input with respect to their compensation to the Compensation Committee primarily through our Chief Executive Officer.

A Named Executive Officer participating in the Compensation Program could, under terms of the corresponding Incentive Compensation Plan agreement with us and pursuant to our Deferred Compensation Plan, elect to defer a significant portion of that compensation.  In this instance, the Named Executive Officer becomes our unsecured creditor.  See within this item 11, “Nonqualified Deferred Compensation.”

During 2009, all of our Named Executive Officers participated in the Incentive Compensation Plan.  Our Compensation Committee determined that the performance requirements of the Incentive Compensation Plan had been satisfied during 2009 and, in consideration of the competitive market, authorized cash payouts to the Named Executive Officers pursuant to the plan as follows:  Mr. Duncan — $750,000; Mr. Hughes — $252,000; Mr. Lowber — $125,000; Ms. Tindall — $213,723; and Mr. Landes — $664,671.

Stock Option Plan.  Options and awards, if granted to the Named Executive Officers, were granted pursuant to terms of our Stock Option Plan.  In particular, the exercise price for options in each instance was identified as an amount within the trading range for our Class A common stock on Nasdaq on the day of the grant of the option.  Options, if granted, were granted contemporaneously with the approval of the Compensation Committee, typically early in the year in question or late the previous year as described above.  See within this item 11, “Compensation Discussion and Analysis — Elements of Compensation — Incentive Compensation Plan.”

We adopted our stock option plan in 1986.  It has been subsequently amended from time to time and presently is our Stock Option Plan, i.e., our Amended and Restated 1986 Stock Option Plan.  Under our Stock Option Plan, we are authorized to grant options to purchase shares of Class A common stock to selected officers, directors and other employees of, and consultants or advisors to, the Company and its subsidiaries.  These options are more specifically referred to as nonstatutory stock options or incentive stock options within Section 422 of the Internal Revenue Code of 1986, as amended (“Internal Revenue Code”).  In addition, under the Stock Option Plan restricted stock awards may be granted as further described below.

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The number of shares of Class A common stock allocated to the Stock Option Plan is 15.7 million shares.  The number of shares for which options or awards may be granted is subject to adjustment upon the occurrence of stock dividends, stock splits, mergers, consolidations and certain other changes in corporate structure or capitalization.  As of December 31, 2009, there were 1,625,463 shares subject to outstanding options under the Stock Option Plan, 2,563,088 share grants had been awarded, 7,871,097 shares had been issued upon the exercise of options under the plan, 480,968 share options had been repurchased and 4,121,320 shares remained available for additional grants under the plan.

Under our Stock Option Plan, our key employees (including officers and directors who are employees) and non-employee directors of, and consultants or advisors to, us are eligible for grants.  The selection of grantees is made by our Compensation Committee.

Restricted stock awards granted under the Stock Option Plan may be subject to vesting conditions based upon service or performance criteria as the Compensation Committee may specify.  These specifications may include attainment of one or more performance targets.  Shares acquired pursuant to such an award may not be transferred by the participant until vested.  Unless otherwise provided by the Compensation Committee, a participant will forfeit any shares of restricted stock where the restrictions have not lapsed prior to the participant’s termination of service with us.  Participants holding restricted stock will have the right to vote the shares and to receive dividends paid, if any.  However, those dividends or other distributions paid in shares will be subject to the same restrictions as the original award.

Our Compensation Committee selects each grantee and the time of grant of an option or award and determines the terms of each grant, including the number of shares covered by each grant and the exercise price.  In selecting a participant, as well as in determining these other terms and conditions of each grant, our Compensation Committee takes into consideration such factors as it deems, in its sole discretion, relevant in connection with accomplishing the purpose of the plan.

Under the Stock Option Plan, an option becomes vested and exercisable at such time or upon such event and subject to such terms, conditions, performance criteria or restrictions as specified by the Compensation Committee.  The maximum term of any option granted under the plan is 10 years, provided that an incentive stock option granted to a person who at the time of grant owns stock possessing more than 10% of the total combined voting power of all classes of stock of the Company or any subsidiary corporation of the Company (“Ten Percent Shareholder”) must have a term not exceeding five years.  Unless otherwise permitted by the Compensation Committee, an option generally remains exercisable for 30 days following the participant’s termination of service, with limited exception.  The exception arises if service terminates as a result of the participant’s death or disability, in which case the option generally remains exercisable for 12 months.  In any event, the option must be exercised no later than its expiration date.

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In particular, under the present Stock Option Plan, the Compensation Committee may set an option exercise price not less than the fair market value of the stock on the effective date of grant of the option.  However, in the case of an incentive stock option granted to a Ten Percent Shareholder, the exercise price must equal at least 110% of the fair market value of the stock on the date of grant.

Our Compensation Committee may, subject to certain limitations on the exercise of its discretion required by Section 162(m) of the Internal Revenue Code, amend, cancel or renew any option granted under the Stock Option Plan, waive any restrictions or conditions applicable to any option under the plan, and accelerate, continue, extend or defer the vesting of any option under the plan.  The Stock Option Plan provides, subject to certain limitations, for indemnification by the Company of any director, officer, or employee against all reasonable expenses incurred in connection with any legal action arising from that person’s action or failure to act in administering the plan.  All grants of options under the Stock Option Plan are to be evidenced by a written agreement between the Company and the optionee specifying the terms and conditions of the grant.

Options granted that have not become exercisable terminate upon the termination of the employment or directorship of the optionholder.  Exercisable options terminate from one month to one year after such termination, depending upon the cause of such termination.  If an option expires or terminates, the shares subject to such option become available for subsequent grants under the Stock Option Plan.

Incentive stock options are nontransferable by the participant other than by will or by the laws of descent and distribution, and are exercisable during the participant’s lifetime only by the participant.  However, a nonstatutory stock option may be assigned or transferred to members of the optionholder’s immediate family, to the extent permitted by the Compensation Committee in its sole discretion.

Our Stock Option Plan provides that payment upon exercise of an option may be in the form of money or shares of our Class A common stock.  If the optionee chooses the latter form of payment, the shares must have a fair market value not less than the exercise price.  The plan further provides, notwithstanding other restrictions on transferability of options, that an optionee, with approval of our Compensation Committee, may transfer an option for no consideration to, or for the benefit of, the optionee’s immediate family.  There is no restriction in the Stock Option Plan that an option granted under the plan must be held by the optionee for a minimum period of time.

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Under our Stock Option Plan, our authority to modify or amend the plan is subject to prior approval of our shareholders only in cases of increasing the number of shares of our stock allocated to, and available and reserved for, issuance under the plan, changing the class of persons eligible to receive incentive stock options or where shareholder approval is required under applicable law, regulation or rule.  One such law requiring shareholder approval before the Company may rely on it is Section 162(m) of the Internal Revenue Code.

Subject to these limitations, the Company may terminate or amend the Stock Option Plan at any time.  However, no termination or amendment may affect any outstanding option or award unless expressly provided by the Compensation Committee.  In any event, no termination or amendment of the plan may adversely affect an outstanding option or award without the consent of the participant unless necessary to comply with applicable law, regulation or rule.

With limited exception, no maximum or minimum exists with regard to the amount, either in dollars or in numbers, of options that may be exercised in any year, either by a single optionee or by all optionees under our Stock Option Plan.  At the 2002 annual meeting, our shareholders approved an amendment to the plan placing a limitation on accumulated grants of options of not more than 500,000 shares of Class A common stock per optionee per year.

With these exceptions, there are no fixed limitations on the number or amount of securities being offered, other than the practical limitations imposed by the number of employees eligible to participate in the plan and the total number of shares of stock authorized and available for granting under the plan.   Shares covered by options which have terminated or expired for any reason prior to their exercise are available for grant of new options pursuant to the plan.

With shareholder approval at the 2009 annual meeting, the Stock Option Plan subsequently offered to certain participants a one time opportunity to exchange options for restricted stock.  The persons allowed to participate in the exchange were certain of our officers and employees and other persons who participated in, and were granted prior options under, the Stock Option Plan during the time period 1999 through February 15, 2009.  There were further limitations and eligibility requirements for participation in that offer as described in the proxy statement for our 2009 annual meeting.  The offer was completed as of September 4, 2009 with a total of 5,241,700 options exchanged for 1,908,890 shares of our Class A common stock.

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Perquisites.  The Company provides certain perquisites to its Named Executive Officers.  The Compensation Committee believes these perquisites are reasonable and appropriate and consistent with our awareness of perquisites offered by similar publicly traded companies.  The perquisites assist in attracting and retaining the Named Executive Officers and, in the case of certain perquisites, promote health, safety and efficiency of our Named Executive Officers.  These perquisites are as follows:

·              Use of Company Leased Aircraft — The Company permits employees, including the Named Executive Officers, to use Company aircraft for personal travel for themselves and their guests.  Such travel is generally limited to a space available basis on flights that are otherwise business-related.  Where a Named Executive Officer or a guest of that officer, flies on a space available basis, the additional variable cost to the Company (such as fuel, catering, and landing fees) is de minimus.  As a result, no amount is reflected in the Summary Compensation Table for that flight.  Where the additional variable cost to the Company occurs on such a flight for solely personal purposes of that Named Executive Officer or guest, that cost is included in the Summary Compensation Table for that officer.  Because it is rare for a flight to be purely personal in nature, fixed costs (such as hangar expenses, crew salaries and monthly leases) are not included in the Summary Compensation Table.  In any case, in the event such a cost is non-deductible by the Company, the value of that lost deduction is included in the Summary Compensation Table entry for that Named Executive Officer.  When employees, including the Named Executive Officers, use Company aircraft for such travel they are attributed with taxable income in accordance with Internal Revenue Service regulations.  The Company does not “gross up” or reimburse employees for taxes they owe on such attributed income.  Messrs. Duncan, Hughes and Landes have made use of the aircraft for personal travel, the variable cost, if any, of which is included in the Summary Compensation Table.  See within this item 11, “Executive Compensation:  Summary Compensation Table.”

·              Enhanced Long Term Disability Benefit — The Company provides the Named Executive Officers and other senior executive officers of the Company with an enhanced long term disability benefit.  This benefit provides a supplemental replacement income benefit of 60% of average monthly compensation capped at $10,000 per month.  The normal replacement income benefit applying to other of our employees is capped at $5,000 per month.

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·              Enhanced Short Term Disability Benefit  — The Company provides the Named Executive Officers and other senior executive officers of the Company with an enhanced short term disability benefit.  This benefit provides a supplemental replacement income benefit of 66 2/3% of average monthly compensation, capped at $2,300 per week.  The normal replacement income benefit applying to other of our employees is capped at $1,150 per week.

·              Miscellaneous — Aside from benefits offered to its employees generally, the Company provided miscellaneous other benefits to its Named Executive Officers including the following (see within this item 11, “Executive Compensation:  Summary Compensation Table — Components of ‘All Other Compensation’“):

·              Success Sharing — An incentive program offered to all of our employees that shares 15% of the excess earnings before interest, taxes, depreciation, amortization and share based compensation expense over the highest previous year (“Success Sharing”).

·              Tax Reimbursement — Provided to all of our employees, including the Named Executive Officers, from time to time, on $100 longevity stock awards.

·              Board Fees — Provided to Mr. Duncan as one of our directors.

Retirement and Welfare Benefits — GCI 401(k) Plan.  Named Executive Officers may, along with our employees generally, participate in our GCI 401(k) Plan (previously named Stock Purchase Plan and now referred to as “GCI 401(k) Plan”) in which we may provide matching contributions in accordance with the terms of the plan.

We initially adopted our qualified employee stock purchase plan effective in January 1987.  It has been subsequently amended from time to time and presently is our GCI 401(k) Plan.  The plan is qualified under Section 401 of the Internal Revenue Code.  All of our employees (excluding employees subject to a collective bargaining agreement) who have completed at least one year of service are eligible to participate in the plan.  An eligible highly compensated employee (earning more than $110,000 within the prior year) may elect to contribute up to 12% of such compensation to the employee’s account in the plan.  Otherwise, an eligible employee may elect to contribute up to 50% of such compensation.  In both cases, these contributions are up to a maximum per employee of $16,500 for 2010.  Participants over the age of 50 may make additional elective deferral contributions to their accounts in the plan of up to $5,500 for 2010.

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Subject to certain limitations, we may make matching contributions to the GCI 401(k) Plan for the benefit of employees.  Matching contributions will vest in accordance with a six-year schedule if the employee completes at least 1,000 hours of service in each year.  Such a contribution will vest in increments over the first six years of employment.  Thereafter, they are fully vested when made.

Except for additional elective contributions made by participants over age 50, the combination of pre-tax elective contributions, Roth 401(k) contributions and our matching contributions for any employee cannot exceed $33,000 for 2010.

Under the terms of the GCI 401(k) Plan, participating eligible employees may direct their contributions to be invested in common stock of the Company and shares of various identified mutual funds.

The GCI 401(k) Plan is administered through a plan administrator (currently Mr. Lowber, our Senior Vice President and Chief Financial Officer) and our Plan Committee.  The plan administrator and members of the Plan Committee all are our employees.  The Plan Committee has broad administrative discretion under the terms of the plan.

As of December 31, 2009, there remained 39,269 shares of Class A and 463,989 shares of Class B common stock allocated to the GCI 401(k) Plan and available for issuance by us or otherwise acquisition by the plan for the benefit of participants in the plan.  However, as of March 31, 2010, the shares allocated to the GCI 401(k) Plan and registered under the Securities Act had been all issued under terms of the plan, and an additional 292,368 shares of Class A common stock had been issued as restricted stock under terms of the plan.  As of that date, the Company was preparing a registration of 3 million additional shares for allocation to the plan.

· Deferred Compensation Program.  The Company provides to certain of our employees, including our executive officers and Named Executive Officers, opportunities to defer certain compensation under our nonqualified, unfunded, deferred compensation plan (“Deferred Compensation Plan”).  In addition, we offer to our executive officers and to certain of our Named Executive Officers nonqualified, deferred compensation arrangements more specifically fashioned to the needs of the officer and us (“Deferred Compensation Arrangements”).  Together, the Deferred Compensation Plan and Deferred Compensation Arrangements constitute our Deferred Compensation Program and is part of our Compensation Program.  During 2009, three of our officers participated in the Deferred Compensation Plan.  Furthermore, during 2009, six of our officers (including three of the Named Executive Officers) participated in Deferred Compensation Arrangements.

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The Deferred Compensation Program enables these individuals to defer compensation in excess of limits that apply to qualified plans, like our GCI 401(k) Plan, and to pursue other income tax goals which they set for themselves.  The Deferred Compensation Program is described in more detail elsewhere in this report.  See within this item 11, “Nonqualified Deferred Compensation.”

Based upon its review of our Deferred Compensation Program, our Compensation Committee concluded that the benefits provided under the program are both reasonable and an important tool in attracting and retaining executive officers, including the Named Executive Officers as well as other employees eligible to participate in the GCI 401(k) Plan.

· Welfare Benefits.  With the exception of the enhanced long term and short term disability benefits described previously, the Company provided to the Named Executive Officers the same health and welfare benefits provided generally to all other employees of the Company at the same general premium rates as charged to those employees.  The cost of the health and welfare programs is subsidized by the Company for all eligible employees including the Named Executive Officers.

Contemplated Shift in Compensation Structure.  As of December 31, 2009, the Company was contemplating a shift in compensation structure to establish a defined mix of base compensation, annual cash incentive compensation and long term incentive compensation for senior officers and managerial level employees within the Company.  Both the annual cash incentive compensation and the long term equity compensation would be awarded following each year end based upon performance measured against defined targets.

In the past, the Company has used the Stock Option Plan to motivate our employees with compensation that is tied to the Company’s stock performance.  However, many employees do not recognize the tangible benefits of holding stock options.  The Black-Sholes Model, although elegant and deterministic, is at its core very complex.  A much simpler calculation that is often used by employees is to multiply the number of options by the amount that the options are in the money to calculate the current “value” of those options.  Unfortunately, this simpler calculation effectively ignores the remaining term of the option and drastically reduces its value in motivating and retaining option holders.

With limited exceptions (one involving Mr. Duncan, a Named Executive Officer), since mid-2009 we have used restricted stock in place of options.  That is, on February 8, 2010 we granted an option for 150,000 shares of Class A common stock to Mr. Duncan.  That option vests on February 8, 2012.

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Performance Rewarded

Our Compensation Program is, in large part, designed to reward individual performance.  What constitutes performance varies from officer to officer, depending upon the nature of the officer’s responsibilities.  Consistent with the Compensation Program, the Company identified key business drivers and established defined targets related to those drivers for each Named Executive Officer.  The targets were regularly reviewed by management, from time to time, and provided an immediate and clear picture of performance and enabled management to respond quickly to both potential problems as well as potential opportunities.

The Compensation Program also was used to establish and track corresponding applicable targets for individual management employees.  At year end, the results from this program were factored in determining the level of payout for the personal performance portion of the annual incentive for Named Executive Officers.

In 2009, the Compensation Program was used in development of each Named Executive Officer’s individual performance goals and established incentive compensation targets.  The Compensation Committee evaluated the performance of each of the executive officers and the financial performance of the Company and awarded incentive compensation as described above.

Timing of Equity Awards

Director Compensation Plan.  As a part of the Director Compensation Plan, we grant awards of our common stock to board members, including those persons who may be also serving as one or more of our executive officers.  Mr. Duncan, a board member and Named Executive Officer, has been granted such awards in the past.  These awards are made annually in June of each year in accordance with the terms of the Director Compensation Plan.  The awards are made through our Stock Option Plan.  See within this item 11, “Compensation Discussion and Analysis — Elements of Compensation — Stock Option Plan.”

Incentive Compensation Plan.  As a part of our Compensation Program, from time to time, we grant stock options and awards in our Class A common stock to our executive officers, including the Named Executive Officers.  In particular, stock options and awards are granted in conjunction with the agreements that we enter into with Named Executive Officers pursuant to our Incentive Compensation Program.  The grants of such options and awards are typically made early in the year at the time each agreement is entered into with the corresponding executive officer.  All such options and awards are granted through the Stock Option Plan.  See within this item 11, “Compensation Discussion and Analysis — Elements of Compensation — Incentive Compensation Plan” and “Compensation Discussion and Analysis — Elements of Compensation — Stock Option Plan.”

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Stock Option Plan.  As a part of our Compensation Program, from time to time, we grant stock options or awards in our Class A common stock to our executive officers, including the Named Executive Officers, and to certain of our advisors.  In the case of an executive officer, these options or awards may be granted regardless of whether there is in place an agreement entered into with the officer under our Incentive Compensation Plan.  In the case of a new hire and where we choose to grant options or awards, the grant may be done at the time of hire.  Under the Stock Option Plan, the Compensation Committee may set the exercise price for our Class A common stock at not less than its fair market value.  That value is presently determined on Nasdaq.  In all cases, regardless of the identity of the grantee, the timing, amount and other terms of the grant of options or awards under our Stock Option Plan are determined in the sole discretion of our Compensation Committee.  See within this item 11, “Compensation Discussion and Analysis — Elements of Compensation — Stock Option Plan.”

In the event an executive level employee is hired or promoted during a year, that employee may be eligible to receive an equity option under the plans previously described in this section.  Grants of options in this context may be made at the recommendation of management and only with action of the Compensation Committee.

Grant Policy.  Under our grant policy, all approved grants are granted effective the date they are approved by the committee and are priced at an amount not less than the market value at the close of trading on that date.  The terms of the award are then communicated immediately to the recipient.

The Company does not, and has not in the past, timed its release of material nonpublic information for purposes of affecting the value of equity compensation.

Tax and Accounting Treatment of Executive Compensation

In determining the amount and form of compensation granted to executive officers, including the Named Executive Officers, the Company takes into consideration both tax treatment and accounting treatment of the compensation.  Tax and accounting treatment for various forms of compensation is subject to changes in, and changing interpretations of, applicable laws, regulations, rulings and other factors not within the Company’s control.  As a result, tax and accounting treatment is only one of several factors that the Company takes into account in designing the previously described elements of compensation.

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Executive Compensation

Summary Compensation Table

As of December 31, 2009, the Company did not have employment agreements with any of the Named Executive Officers.  The following table summarizes total compensation paid or earned by each Named Executive Officer for fiscal years 2009, 2008 and 2007.  The process followed by the Compensation Committee in establishing total compensation for each Named Executive Officer as set forth in the table is described elsewhere in this report.  See within this item 11, “Compensation Discussion and Analysis.”

Summary Compensation Table

(1)           For 2007, 2008 and 2009, salary includes deferred compensation of $225,000 and $65,000 for Messrs. Hughes and Lowber, respectively.

(2)           See, “Components of ‘All Other Compensation’“ table displayed below for more detail.

(3)           In 2007, Mr. Duncan received $84,422 in compensation relating to his service on our board including $40,000 in board fees and stock awards valued at $44,422.  In 2008, Mr. Duncan received $64,509 in compensation relating to his service on our board including $40,000 in board fees and stock awards valued at $24,500.  In 2009, Mr. Duncan received $76,500 in compensation for service on our board in the form of director fees of $40,000 and stock awards valued at $36,500. 

(4)           For 2007, 2008 and 2009, includes $37,500 for Mr. Hughes representing the amount vested during each of 2007, 2008 and 2009 pursuant to prepaid retention agreements. 

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The amounts reported under the “All Other Compensation” column are comprised of the following:

Components of “All Other Compensation”

(1)                                  Amounts are contributions by us matching each employee’s contribution.  Matching contributions by us under our GCI 401(k) Plan are available to each of our full time employees with over one year of service.  During 2009, the match was based upon the lesser of $24,500 ($23,000 for 2008 and $22,500 for 2007), 10% of the employee’s salary and the total of the employee’s pre-tax and post-tax contributions to the plan.  See within this item 11, “Compensation Discussion and Analysis:  Elements of Compensation — Retirement and Welfare Benefits — GCI 401(k) Plan.”

(2)                                  The highest year on which the Success Sharing was based was 2009.  See within this item 11, “Compensation Discussion and Analysis:  Elements of Compensation — Perquisites.”

(3)                                  The value of use of Company leased aircraft displayed here are shown at variable cost to the Company.  Previously, we had shown $12,143 and $28,300 in 2008 and 2007, respectively, for Mr. Duncan, $538 in 2008 for Mr. Hughes and had calculated $4,420 in 2008 for Mr. Landes, all computed based upon standard industrial fare levels.

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Grants of Plan-Based Awards Table

The following table displays specific information on grants of options and awards under our Compensation Program and, in addition, in the case of Mr. Duncan, our Director Compensation Plan, made to Named Executive Officers during 2009.  We had no non-equity payouts during that year, and under our present Compensation Program we did not as of December 31, 2009 contemplate having any such payouts for any of the Named Executive Officers pertaining to that year.

Grants of Plan-Based Awards

(1)                                  Determined as the closing price of the stock on Nasdaq on the date of grant and as required in accordance with GAAP.

(2)                                  Mr. Duncan’s stock award was granted pursuant to the terms of our Director Compensation Plan.  See within this item 11, “Director Compensation.”

(3)                                  Grant was given as part of the option exchange offer made to certain participants in our Stock Option Plan.  Under the exchange, options were given up as consideration for the grants with values (determined as of the date of the exchange and in accordance with GAAP) in each case for each Named Executive Officer participating in the exchange as follows:  Mr. Hughes — $1,473,810; Mr. Lowber — $1,504,510; Ms. Tindall — $621,026 and Mr. Landes — $374,890.  Mr. Duncan did not participate in the exchange.  The exchange is further described elsewhere in this report.  See within this item 11, “Compensation Discussion and Analysis:  Elements of Compensation — Stock Option Plan.”

Outstanding Equity Awards at Fiscal Year-End Table

The following table displays specific information on unexercised options, stock that has not vested and equity incentive plan awards for each of the Named Executive Officers and outstanding as of December 31, 2009.  Vesting of these options and awards varies for the Named Executive Officers as described in the footnotes to the table.

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Outstanding Equity Awards at Fiscal Year-End