Windstream 2008 Annual Report Download - page 157

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
9. Stock-Based Compensation Plans:
Under the Company’s stock-based compensation plans, Windstream may issue restricted stock and other equity
securities to directors, officers and other key employees. The maximum number of shares available for issuance
under the Windstream 2006 Equity Incentive Plan is 10.0 million shares. As of December 31, 2008, the balance
available for grant was approximately 5.2 million shares. The cost of each restricted stock award is determined
based on the fair market value of the shares on the date of grant, and is fully expensed over the vesting period.
During 2008, 2007 and 2006, the Windstream Board of Directors approved grants of restricted stock to officers,
executives, and non-employee directors and certain management employees. These grants include the standard
annual grants to this employee and director group as a key component of their annual incentive compensation plan
and a one-time grant to a select group of executive management largely related to the replacement of equity
forfeited in the Alltel spin off.
The vesting periods and weighted-average grant date fair value for shares issued was as follows for the years
ended December 31:
2008 2007 2006
(Thousands)
Common
Shares
Common
Shares
Common
Shares
Vest ratably over a three-year service period 721.2 502.2 1,186.5(a)
Vest contingently over a three-year performance period 534.1 329.9 600.3
Vest three years from date of grant, service based 6.0 - 1,324.3(b)
Vest one year from date of grant, service based 43.6 38.7 45.2
Total granted 1,304.9 870.8 3,156.3
Weighted-average grant date fair value (Millions) $ 14.3 $ 12.8 $ 39.2
(a) Includes a one-time grant to any former Alltel employees who forfeited Alltel stock options upon the spin
off.
(b) Includes a one-time grant made to all salaried, non-bargaining, former Alltel employees.
For the performance based shares granted in 2008, the operating targets for the first vesting period were approved
by the Board of Directors in February 2008. For performance based shares granted in 2007, the operating targets
for the first and second vesting period were approved by the Board of Directors in February 2007 and February
2008, respectively. The targets for the first, second and third measurement periods for the performance based
shares issued in 2006 were established by the compensation committee in August 2006, February 2007 and
February 2008, respectively. Each of these operating targets was met by the end of their respective measurement
periods.
The targets for the last measurement period for the shares granted in 2007 and for the second vesting period for
the shares granted in 2008 was established in February 2009. While achievement of these performance targets
remains uncertain, management has determined that it is probable that such targets will be met for fiscal year
2009.
The Company also assumed restricted stock awards that had been granted by Valor prior to the merger to
employees that were retained by Windstream. Based on the closing stock price on July 17, 2006 of $11.50, these
shares had an aggregate fair value of $2.1 million, and vested either as employees were terminated due to
elimination of positions or by January 1, 2008 for employees who remained with the Company.
F-69