Windstream 2008 Annual Report Download - page 24

other executive officer. Also, under the terms of Windstream’s agreements for its equity compensation awards of
restricted stock or performance-based restricted stock, the unvested equity awards held by Mr. Gardner and other
executive officers will vest on a “double-trigger” basis that is substantially similar to the events that trigger the
cash payments under the change-in-control agreements. The change-in-control agreements also obligate
Windstream to reimburse each executive officer for excise taxes imposed on such individual pursuant to
Section 4999 of the Internal Revenue Code as a result of the foregoing payments if the payments exceed 110% of
the greatest amount payable to the executive without triggering excise taxes.
The change-in-control agreements were amended in November 2007 to comply with the final regulations
issued under Section 409A of the Internal Revenue Code and to clarify the scope of the non-compete provisions.
In consideration of these changes, the term of the agreements was extended one year. No changes have been
made to the change-in-control agreements since November 2007.
Perquisites and Other Benefits. During 2008, the primary perquisites available to Mr. Gardner and other
named executive officers were the personal use of corporate aircraft, the payment of the initiation and ongoing
fees at a country club, and the reimbursement of up to $5,000 in taxable dollars for financial planning and related
expenses. Beginning in 2009, the country club and financial planning programs have been discontinued.
Windstream permits limited personal use of Windstream’s corporate aircraft by Mr. Gardner and other
named executive officers. Under Windstream’s policy, this use cannot interfere with other required business use
of the aircraft. Mr. Gardner is allowed to utilize Windstream’s corporate aircraft for personal use pursuant to a
time-sharing arrangement in which Mr. Gardner reimburses Windstream for the incremental cost of such use,
which primarily includes costs for fuel, maintenance charges allocable to such use and contract-pilot charges and
excludes depreciation of the aircraft, general maintenance, compensation of Windstream’s employee pilots, and
other general charges related to ownership of the aircraft. Other executive officers are allowed to have family
members accompany them on a business trip on the aircraft, subject to seat availability and prior approval of
Mr. Gardner. Any other personal use of the aircraft by the other executive officers is permitted only as approved
in advance by Mr. Gardner. The Compensation Committee monitors the use by Mr. Gardner and all executive
officers to ensure the amount of usage is reasonable. Windstream believes that personal use of aircraft for
Mr. Gardner and other senior executives is a reasonable benefit in light of the significant demands that are
imposed on their schedules as a result of their responsibilities to Windstream.
Compensation of Directors
During 2008, Windstream non-employee directors received the following compensation: (1) an annual
cash retainer of $60,000, (2) a cash fee of $1,750 for each Board and committee meeting attended, except that no
fees are paid beginning in 2009 for periodic informational update meetings and (3) an annual grant of $60,000 in
restricted stock under the Windstream 2006 Equity Incentive Plan. The restricted shares granted to non-employee
directors vest if the grantee continues to serve on the Board for the period beginning on the date of grant and
ending on February 15, 2009 or, if earlier, if the grantee dies or becomes permanently disabled while serving on
the Board or a change of control of Windstream occurs. In addition, each non-employee director who serves as
chair of a Board committee received an additional cash fee of $12,500. Board members receive pro-rated
amounts of the annual cash retainer, committee chair fees and the annual restricted stock grant for the portion of
the first year in which they are appointed or elected to serve as a Board member or Committee Chair.
Mr. Frantz, Chairman of the Board of Directors, retired as an employee of Windstream effective as of
December 31, 2006, but continues to serve as Chairman of the Board. During 2006, Mr. Frantz received
restricted share grants comprising annual grants for his service as an executive officer and replacement and
one-time grants in connection with the spin-off and merger, and these grants will vest in full by August 2009.
During 2008, Mr. Frantz received the same compensation received by all other non-employee directors plus an
annual supplemental cash retainer in the amount of $25,000 for his service as Chairman.
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