Windstream 2006 Annual Report Download - page 32

after age 60 with 15 years of service (with reduction in the life annuity of 0.25% for each month that
commencement precedes age 65 for a participant whose benefit commences before age 62). As of the end of
2006, none of the named executive officers satisfied the foregoing age and service requirements to commence
receipt of an early retirement benefit under the Pension Plan.
For deferred vested participants (i.e. those who terminate employment before early retirement), the
accrued benefit is payable in a monthly life annuity beginning at normal retirement age. If a deferred vested
participant has 15 years of service, the accrued benefit is also payable in a monthly life annuity beginning as
early as age 60 (with reduction in the life annuity of 0.50% for each month commencement precedes age 65),
and, if the deferred vested participant has at least 20 years of service, the accrued benefit is also payable in a
monthly life annuity beginning as early as age 55 (with reduction in the life annuity of 0.50% for each month
commencement precedes age 65).
For a participant eligible for normal retirement or early retirement, payment is also available in actuarial
equivalent joint and surviving spouse annuities, which provide a reduced monthly amount for the participant’s
life with the surviving spouse receiving 50% or 100%, as elected, of the reduced monthly amount, or in an
actuarial equivalent 10-year certain annuity, which provides a reduced monthly amount for the participant’s life
and, if the participant dies within 10 years of benefit commencement, with payments to a designated beneficiary
for the remainder of the 10-year certain period. For a married deferred vested participant, payment is also
available in the form of an actuarial equivalent joint and 50% surviving spouse annuity. If a vested participant
dies before benefit commencement, an annuity generally is payable to the participant’s surviving spouse in an
amount based on the joint and 50% surviving spouse annuity that would have been payable to the participant
beginning on the later of when the participant died or would have been eligible to commence a benefit.
Under the Pension Plan, post-January 1, 1988 through December 31, 2005 service (December 31, 2010
service for employees who had attained age 40 with two years of service as of December 31, 2005) is credited at
1% of compensation, including salary, bonus and other non-equity incentive compensation, plus 0.4% of that part
of the participant’s compensation in excess of the Social Security taxable wage base for such year. Service prior
to 1988, if any, is credited on the basis of a percentage of the participant’s highest consecutive five-year average
annual salary, equal to 1% for each year of service prior to 1982 and thereafter increasing by 0.05% each year
until 1988, but only prospectively, i.e., with respect to service earned in such succeeding year. In addition,
participants receive an additional credit of 0.25% for each pre-1988 year of service after age 55, subject to a
maximum of 10 years of credit, plus an amount equal to .4% of the amount by which the participant’s pre-1988
career average annual base salary (three highest years) exceeds his or her Social Security covered compensation,
multiplied by his years of pre-1988 credited service.
Windstream Benefit Restoration Plan. The Windstream Benefit Restoration Plan (“BRP”) contains an
unfunded, unsecured pension benefit for a group of highly compensated employees. Of Windstream’s named
executive officers, only Messrs. Gardner and Frantz participated in the pension benefit of the BRP as of the end
of 2006. The pension benefit under the BRP is calculated as the excess, if any, of (x) the participant’s Pension
Plan benefit (on a single life-annuity basis payable commencing on the later of the participant’s retirement date
or age 65) without regard to the IRS compensation limit ($220,000 for 2006) and without regard to the benefit
limitation ($175,000 for 2006) over (y) the participant’s actual Pension Plan benefit (on a single life-annuity
basis payable commencing on the later of the participant’s retirement date or age 65). If the participant has not
attained age 65 on the date his benefit is scheduled to commence, the BRP benefit is reduced to the same extent,
if any, as the Pension Plan benefit. For purposes of the preceding calculations, compensation has the same
meaning provided in the foregoing description of the Pension Plan. Benefits are paid over the life of the
participant if the participant is alive when benefits commence or over the life of the spouse if the benefit is paid
as a pre-retirement death benefit. Windstream may direct that the benefit be paid in an alternative form provided
that it is the actuarial equivalent of the normal form of benefit so that the BRP benefit is paid in the same form as
the Pension Plan benefit. None of the named executive officers were eligible for an early retirement benefit under
the BRP as of the end of 2006.
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