Windstream 2009 Annual Report Download - page 175

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
8. Employee Benefit Plans and Postretirement Benefits, Continued:
The expected employer contribution for pension benefits consists of $0.7 million necessary to fund the expected
benefit payments related to the unfunded supplemental retirement pension plans. Future contributions to the plan
will depend on various factors including future investment performance, the finalization of funding requirements,
changes in future discount rates and changes in the demographics of the population participating in the
Company’s pension plan. Expected benefit payments include amounts to be paid from the plans or directly from
the Company’s assets, and exclude amounts that will be funded by participant contributions to the plans.
The Company also sponsors an employee savings plan under section 401(k) of the Internal Revenue Code, which
covers substantially all salaried employees and certain bargaining unit employees. Employees may elect to
contribute to the plans a portion of their eligible pretax compensation up to certain limits as specified by the plans
and by the Internal Revenue Service. Effective January 2009, the Company decreased its matching contribution to
employee savings accounts from a maximum of 6 percent to a maximum of 4 percent of employee pretax
contributions for employees contributing at least 5 percent. The Company’s matching contribution is funded
annually. During 2007 and 2008, the Company made matching contributions of 6 percent of employee pretax
contributions. The Company recorded $8.9 million, $13.2 million and $13.3 million in 2009, 2008 and 2007,
respectively, related to the employee savings plan, which was included in cost of services and selling, general,
administrative and other expenses in the consolidated statements of income.
9. Share-Based Compensation Plans:
Under the Company’s share-based compensation plans, Windstream may award restricted shares 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. As of December 31, 2009, the balance available
for grant was approximately 3.5 million shares. The cost of each award is determined based on the fair value of
the shares on the date of grant, and is fully expensed over the vesting period.
During 2009, 2008 and 2007, the Windstream Board of Directors approved grants of restricted shares 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. The vesting periods and grant date fair value for shares issued was as follows for the years ended
December 31:
2009 2008 2007
(Thousands)
Common
Shares
Common
Shares
Common
Shares
Vest ratably over a three-year service period 966.3 721.2 427.9
Vest contingently over a three-year performance period 677.5 534.1 329.9
Vest three years from date of grant, service based 186.8 6.0 74.3
Vest one year from date of grant, service based (a) 55.2 43.6 38.7
Total granted 1,885.8 1,304.9 870.8
Grant date fair value (Millions) $ 16.5 $ 14.3 $ 12.8
(a) Represents shares granted to non-employee directors.
For the performance based shares granted in 2009, the operating targets for the first vesting period were approved
by the Board of Directors in February 2009. For performance based shares granted in 2008, the operating targets
for the first and second vesting period were approved by the Board of Directors in February 2008 and 2009,
respectively. The targets for the first, second and third vesting periods for the performance based shares issued in
2007 were established by the compensation committee in February 2007, 2008 and 2009, respectively. For 2009
and measurement periods prior, each of these operating targets was met by the end of their respective
measurement periods. Targets for the last measurement period for the shares granted in 2008 and for the second
vesting period for the shares granted in 2009 were established in February 2010. While achievement of
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