Windstream 2009 Annual Report Download - page 43

Option rights provide the right to purchase shares of Windstream common stock at a price not less than fair
market value of the common stock on the date of grant (which date may not be earlier than the date that the
Compensation Committee takes action with respect thereto). As of the close of trading on the NASDAQ Stock
Market on March 1, 2010, the fair market value of one share of our common stock was $10.29.
No option rights may be exercised more than ten years from the date of grant. Each grant must specify the
period of continuous employment that is necessary before the option rights become exercisable, and may provide
for the earlier exercise of such option rights in the event of a change in control of Windstream, retirement, death
or disability of the optionee, or other similar transaction or event approved by the Compensation Committee.
The option price is payable at the time of exercise (i) in cash, (ii) by the transfer to Windstream of
nonforfeitable, unrestricted shares of Windstream common stock that are already owned by the option holder and
have a value at the time of exercise equal to the option price, (iii) with any other legal consideration that the
Compensation Committee may deem appropriate or (iv) by any combination of the foregoing methods of
payment. Any grant of option rights may provide for deferred payment of the option price from the proceeds of
sale through a broker on the date of exercise of some or all of the shares of Windstream common stock to which
the exercise relates, or the payment of the option price in installments (although, in the case of executive officers
and directors, these payment methods may be affected by the restrictions on personal loans to executive officers
provided by the Sarbanes-Oxley Act of 2002).
Any grant of option rights may specify management objectives (as described below) that must be achieved
as a condition to exercise such rights. The Compensation Committee may, at the date of grant of any option
rights (other than the grant of an ISO), provide for the payment of dividend equivalents to the optionee on a
current, deferred or contingent basis or may provide that such equivalents be credited against the option price.
Successive grants may be made to the same option holder regardless of whether option rights previously granted
to him or her remain unexercised.
SARs
The Compensation Committee may, in its discretion, award SARs to officers and other key employees of
Windstream and its subsidiaries. SARs represent the right to receive from Windstream an amount, determined by
the Compensation Committee and expressed as a percentage not exceeding 100 percent, of the difference
between the base price established for such SARs (not less than the fair market value per share of Windstream
common stock on the date of grant) and the market value of the common stock on the date the SARs are
exercised.
SARs can be tandem (granted with option rights to provide an alternative to exercise of the option rights) or
free-standing. Tandem SARs may only be exercised at a time when the related option right is exercisable and the
spread is positive, and requires that the related option right be surrendered for cancellation. Free-standing SARs
must have a base price per appreciation right (not less than the fair market value of a share on the date of grant)
and may not be exercisable more than ten years from the date of grant.
Any grant of SARs may specify that the amount payable by Windstream on exercise of the appreciation
right may be paid in cash, in shares of Windstream common stock or in any combination thereof, and may either
grant to the recipient or retain in the Compensation Committee the right to elect among those alternatives. Any
grant of SARs may provide for the payment of dividend equivalents in the form of cash or shares of Windstream
common stock paid on a current, deferred or contingent basis. Each grant must specify the period of continuous
employment that is necessary before the SARs become exercisable, and may provide for the earlier exercise of
such SARs in the event of a change in control of Windstream, retirement, death or disability of the employee, or
other similar transaction or event approved by the Compensation Committee. Any grant of SARs may specify
management objectives (as described below) that must be achieved as a condition to exercise such rights.
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