Windstream 2006 Annual Report Download - page 34

Windstream Executive Deferred Compensation Plan. The Windstream Executive Deferred
Compensation Plan (the “Executive Plan”) is an unfunded, unsecured defined contribution plan for a group of
highly compensated employees. The Executive Plan was established to administer the benefits assumed by
Windstream from the Alltel Corporation Executive Deferred Compensation Plan in connection with the spin-off.
Of the named executive officers, only Mr. Frantz participated in the Executive Plan as of the end of 2006. No
deferrals could be made under the Executive Plan during 2006. Payments can be made under the Executive Plan
in cash at certain future dates specified by participants (or upon the participant’s earlier death) in the form of a
lump sum or up to five annual installments as selected by participants. Payments will be accelerated and paid in a
lump sum in the event of a change-in-control of Windstream. Windstream could accelerate payments in the event
of a participant’s financial hardship. The deferred compensation accounts are generally credited with earnings at
the end of each calendar year, although as a result of the spin-off, earnings were credited on two separate dates in
2006: July 17, 2006 and December 31, 2006. The deferred compensation accounts of named executive officers
are credited with earnings based on a fixed rate of 5.00%.
Windstream Management Deferred Compensation Plan. The Windstream Management Deferred
Compensation Plan (the “Management Plan”) is an unfunded, unsecured defined contribution plan for a group of
highly compensated employees. The Management Plan was established to administer the benefits assumed by
Windstream from the Alltel Corporation 1998 Management Deferred Compensation Plan in connection with the
spin-off. Of the named executive officers, only Messrs. Gardner and Frantz participated in the Management Plan
as of the end of 2006. Participants could defer up to 50% of their salary and 100% of their bonus under the
Management Plan during 2006. Payments can be made under the Management Plan in cash at certain future dates
specified by participants (or upon the participant’s earlier death) in the form of a lump sum or up to five annual
installments as selected by participants. Payments will be accelerated and paid in a lump sum in the event of a
change-in-control of Windstream. Windstream could accelerate payments in the event of a participant’s financial
hardship. Participant accounts generally are credited with earnings as of the end of each calendar year based on
the prime rate in effect on the first business day of the following calendar year, plus 200 basis points. As a result
of the spin-off, however, accounts were credited with earnings in 2006 as follows: (i) the prime rate in effect on
the first business day of 2006, plus 200 basis points (i.e., 9.25%) for the period commencing January 1, 2006 and
ending July 17, 2006, pro-rated for the partial year, and (ii) the prime rate in effect on the first business day of
2007, plus 200 basis points (i.e., 10.25%) for the period commencing July 18, 2006 and ending December 31,
2006, pro-rated for the partial year.
Windstream Benefit Restoration Plan. During 2006, the Windstream Benefit Restoration Plan (the
“BRP”) contained an unfunded, unsecured defined contribution plan for a group of highly compensated
employees. The BRP was established to administer the benefits assumed by Windstream from the Alltel
Corporation Benefit Restoration Plan in connection with the spin-off. Of the named executive officers, only
Messrs. Gardner and Frantz participated in the BRP as of the end of 2006. The BRP was comprised of two
defined contribution plan components: the 401(k) Plan component and the profit sharing component.
•401(k) Plan Component. Under the 401(k) Plan component of the BRP, during 2006 eligible participants
could defer up to 15% of their compensation (generally comprised of salary, annual bonus and other
non-equity incentive plan compensation) in excess of IRS limits ($220,000 for 2006) and could receive a
matching credit equal to 4% of such excess compensation. Payments from the 401(k) Plan component
generally commence upon the participant’s termination of employment in the form of a lump sum.
•Profit Sharing Component. Under the profit sharing component of the BRP, during 2006 participants
received a profit sharing credit equal to 2% of their compensation (generally comprised of salary, annual
bonus and other non-equity incentive plan compensation) in excess of IRS limits ($220,000 for 2006).
Payments from the profit sharing component generally commence upon the participant’s termination of
employment in the form of five equal annual installments.
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