Windstream 2010 Annual Report Download - page 164

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
9. Share-Based Compensation Plans, Continued:
restricted stock, restricted stock units or stock appreciation rights. 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 2010, 2009 and 2008, the Windstream Board of Directors approved grants of restricted stock to officers,
executives, 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 executive officers, other than the CEO, and select members of executive management. The
one-time grant was approved to provide a retention incentive and increase the long-term incentive values toward
market values for certain executives. The grant was approved August 3, 2010 and totaled 516,075 shares. The
vesting periods and grant date fair value for shares issued was as follows for the years ended December 31:
2010 2009 2008
(Thousands)
Common
Shares
Common
Shares
Common
Shares
Vest ratably over remaining service period, up to four years (a) 222.4 - -
Vest ratably over a three-year service period 899.0 966.3 721.2
Vest contingently over a three-year performance period 596.9 677.5 534.1
Vest three years from date of grant, service based 651.3 186.8 6.0
Vest one year from date of grant, service based (b) 72.1 55.2 43.6
Total granted 2,441.7 1,885.8 1,304.9
Grant date fair value (Millions) $ 26.2 $ 16.5 $ 14.3
(a) In conjunction with the acquisition of Iowa Telecom, Windstream granted 222,400 restricted shares to former
Iowa Telecom employees to replace outstanding unvested Iowa Telecom restricted shares held by these same
employees as of acquisition date. The vesting provisions of the original grants were retained, including
provisions requiring accelerated vesting upon an involuntary termination following a change of control.
(b) Represents shares granted to non-employee directors.
For performance based shares granted in 2010 the operating targets for the first vesting period were approved by
the Board of Directors in February 2010. For the performance based shares granted in 2009, the operating targets
for the first and second vesting period were approved by the Board of Directors in February 2009 and 2010,
respectively. For performance based shares granted in 2008, the operating targets for the first, second and third
vesting period were approved by the Board of Directors in February 2008, 2009 and 2010, respectively. For 2010
and measurement periods prior, each of the operating targets was met by the end of their respective measurement
periods.
Restricted share activity for the year ended December 31, 2010 was as follows:
(Thousands)
Number of
Shares
Weighted
Average Fair
Value Per Share
Non-vested at December 31, 2009 2,890.7 $ 9.90
Granted 2,441.7 10.73
Vested (1,393.9) 10.69
Forfeited (104.8) 10.49
Non-vested at December 31, 2010 3,833.7 $10.13
At December 31, 2010, unrecognized compensation expense totaled $21.3 million and is expected to be
recognized over the weighted average vesting period of 1.4 years. Unrecognized compensation expense is
included in additional paid-in capital in the accompanying consolidated balance sheets and statements of
shareholders’ equity. The total fair value of shares vested during 2010, 2009 and 2008 was $14.9 million, $27.5
million and $12.3 million, respectively. Share-based compensation expense was $17.0 million, $17.4 million and
$18.1 million for 2010, 2009 and 2008, respectively.
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