Windstream 2006 Annual Report Download - page 41

Payments to Messrs. Mueller, Vaughn, and Ojile Following the Merger
The following table provides a summary of the payments and benefits that each of Messrs. Mueller,
Vaughn, and Ojile received as a result of the Valor merger or their termination of employment:
Name
Cash
Severance
($)
Continued
Health
Care
Benefits
($) (1)
COBRA
Premiums
($)
Continued
Life
Insurance
Premiums
($) (1)
Excise
Tax
Gross-
Up
($)
Accelerated
IPO
Retention
Bonus
($)
Accelerated
Vesting of
Restricted
Shares
($)
Consulting
Fee
($)
Total
($)
John J. Mueller 2,000,000 16,176 34,010 1,795 - 400,000 3,806,523 518,000 6,776,504
Jerry E. Vaughn 975,000 8,088 25,255 4,301 844,119 - 3,897,776 - 5,754,539
William M. Ojile 750,000 20,220 31,316 474 - 100,000 1,438,017 102,500 2,442,527
(1) Reflects premiums paid by Windstream and Valor.
Employment Agreements. Each of Messrs. Mueller, Vaughn and Ojile were subject to an employment
agreement with Valor. Pursuant to the terms of the employment agreements, as amended in connection with the
merger, Windstream was obligated to pay the following amounts and provide the following benefits in the event
that Windstream terminated the executive’s employment without “cause” or the executive terminated his
employment with Windstream for “good reason”:
• With respect to Mueller and Ojile, a cash payment equal to two times (1.5 times for Mr. Vaughn) the sum
of the executive’s base salary and target bonus, a portion of which was payable in July 2006 and the
remainder in January 2007.
• Health care benefits under the Windstream Supplemental Medical Expense Reimbursement Plan (SMRP),
as follows: (i) lifetime coverage for Mr. Mueller and his spouse; (ii) 26 months of coverage for
Mr. Vaughn, and (iii) six months for Mr. Ojile. The foregoing benefits under SMRP run concurrently
with and do not duplicate the 18 months of coverage for which such individuals are eligible under
COBRA.
• A cash equivalent for dental insurance premiums under COBRA, grossed-up for applicable taxes, a
portion of which was payable in July 2006 and the remainder in January 2007.
• Continued life insurance premiums for a two year period (18 months for Mr. Vaughn), not to exceed
$25,000 in any annual period.
• With respect to Mr. Vaughn only, a reimbursement for all excise taxes that were imposed on him under
Section 4999 of the Internal Revenue Code in connection with the severance payments and benefits
received in connection with the merger and his termination of employment, plus any income and excise
taxes that were payable by him as a result of such reimbursements.
Mr. Mueller’s employment was terminated without “cause”, effective July 17, 2006, and Mr. Vaughn and
Mr. Ojile resigned for “good reason”, effective July 17, 2006, and they therefore were entitled to the payments
and benefits described above.
In exchange for the severance benefits described above, each of Messrs. Mueller, Vaughn and Ojile is
prohibited from soliciting employees, customers or other business relationships of or competing against
Windstream or its affiliates for a one-year period. Moreover, each executive was required to sign a release of all
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