Windstream 2009 Annual Report Download - page 22

intermediate, target and maximum levels. The executive officers were eligible to receive 25% to 200% of these
target payout amounts if threshold or maximum levels, respectively, were achieved. No payout would be made if
performance was below the threshold level. During 2009, the target performance goal was the achievement of
OIBDA of $1,604 million. Windstream’s actual performance for OIBDA for 2009 was $1,597 million, which
reflected an approximate 93% achievement against the target performance goal for OIBDA. The following table
shows the target and actual payouts under the short-term incentive plan for 2009:
Named Executive Officer Target Payout Percentage Actual Payout Percentage
Jeffery R. Gardner 100% 93%
Anthony W. Thomas 53%(1) 49%
Brent Whittington 70% 65%
John P. Fletcher 70% 65%
Richard J. Crane 50% 46%
(1) Prior to his appointment to CFO in August 2009, Mr. Thomas had a target payout percentage of 40%. As
CFO, Mr. Thomas’ target payout percentage was 70%.
The Compensation Committee believes the payouts reflect the solid financial performance driven by
Windstream’s management amid difficult economic conditions and continued delivery of industry leading
operating metrics. Windstream’s management was able to deliver these results while engaging in a high level of
activity regarding strategic initiatives including entering into definitive agreements to acquire four companies,
completing the integration of the D&E Communications, Inc. billing systems, raising $1.1 billion in new
financing, and extending the maturity profile of its senior secured credit facilities.
Equity-Incentive Awards. Windstream maintains an equity-based compensation program for executive
officers to provide long-term incentives, to better align the interests of executives with stockholders and to
provide a retention incentive. The Compensation Committee has implemented its equity-compensation program
as part of its goal to make a substantial portion of total direct compensation at risk. The Compensation
Committee also prefers equity incentives over cash and has used it exclusively in lieu of cash as the method of
providing long-term compensation incentives. Each officer receives a portion of his or her total direct annual
compensation for a given year in the form of long-term equity-based incentive compensation.
All Windstream equity compensation awards have been issued as either time-based restricted stock or
performance-based restricted stock under the Windstream 2006 Equity Incentive Plan. Windstream has not
issued any stock options or other forms of equity compensation to its directors, executive officers or other
employees. The Compensation Committee believes that restricted stock or performance-based restricted stock
awards are a preferred mechanism of equity compensation compared to stock options or other devices that derive
value from future stock price appreciation due to the high-dividend,low-growth profile of Windstream.
For grants of restricted stock made in 2009 and prior years, executive officers have received the rights of a
stockholder to vote the restricted stock and to receive any cash dividends paid with respect to the restricted shares
during the vesting period. Beginning with equity compensation granted in 2010, the dividends on performance-
based restricted stock will accrue and be paid out only when and if the performance conditions are satisfied.
Windstream places performance targets on 100% of the grants of restricted stock to Mr. Gardner and 50% for all
other executive officers.
The Windstream Board of Directors has delegated responsibility for administration of the 2006 Equity
Incentive Plan, including the authority to approve awards, to the Compensation Committee. It is the
Compensation Committee’s policy to review and approve all equity compensation awards to directors, executive
officers and all other eligible employees at its first regularly scheduled meeting of each year, which is expected
to occur each February. In determining the number of shares of restricted stock or performance-based restricted
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