Windstream 2010 Annual Report Download - page 41

change-in-control (as defined below), Windstream terminates the executive’s employment without “cause” (as
defined below) or the executive terminates his employment with Windstream for “good reason” (as defined
below). In general, the executive officers would be entitled to receive, in a lump sum, the following amounts
pursuant to the Change-in-Control Agreements:
• Three times for Messrs. Gardner, Whittington and Fletcher and two times for Mr. Thomas and
Ms. Nash the sum of the executive’s base salary and target annual incentive compensation (in each
case, as in effect on the date of the change-in-control, or if higher, on the date of termination);
• Pro-rated amount of target annual incentive compensation for the year of termination;
• A cash equivalent for three years for Messrs. Gardner, Whittington and Fletcher and two times for
Mr. Thomas and Ms. Nash of health care premiums; and
• Outplacement services with a value of no more than $50,000 for Messrs. Gardner, Whittington and
Fletcher or $25,000 for Mr. Thomas and Ms. Nash.
Terminated executives are prohibited from soliciting employees or customers or competing against
Windstream or the acquiring or successor entity for a one-year period and are subject to a confidentiality
restriction. Moreover, a terminated executive is required to sign a release of all claims against Windstream and
the acquiring or successor entity prior to receiving severance benefits under the agreement.
Excise Tax Gross-Up. On or after a change-in-control, the named executive officers listed above may
be subject to certain excise taxes pursuant to Section 4999 of the Internal Revenue Code. For Messrs. Gardner,
Thomas, Whittington and Fletcher, Windstream or its successor is obligated under the Change-in-Control
Agreements to reimburse each such named executive officer for all Section 4999 excise taxes that are imposed
on him, whether as a result of payments received under his Change-in-Control Agreement or otherwise, and any
income, employment and excise taxes that are payable by the executive as a result of such reimbursements. If,
however, the aggregate parachute payments do not exceed 110% of the maximum total payments that could be
made without triggering the excise tax under Section 4999, then the parachute payments would be automatically
reduced to such maximum amount and no gross-up payment would be made. In general, the reimbursements
would be made to the named executive officers by Windstream or its successor at the same time that the
payments or benefits subject to the excise tax are paid or provided. The total tax gross-up amount in the above
table assumes that (i) the excise tax rate is 20%, the federal income tax rate is 35%, the Medicare tax rate is
1.45%, and the state and local tax rate is 7%, and (ii) no amounts will be discounted as attributable to reasonable
compensation and no value will be attributed to the non-solicitation or non-competition covenants contained in
the Change-in-Control Agreements. The calculations exclude benefits paid from qualified plans or the BRP.
Ms. Nash’s agreement was entered into after 2009 and does not obligate Windstream or its successor to
reimburse her for excise tax. Her payment will be reduced to the maximum amount that could be made without
triggering the excise tax under Section 4999.
Accelerated Vesting of Restricted Shares. All unvested restricted stock or performance-based restricted
stock held by the named executive officers listed above would have become vested if a change-in-control (as
defined below) occurred on December 31, 2010 and Windstream terminated the executive’s employment without
“cause” (as defined below) or the executive terminated his employment with Windstream for “good reason” (as
defined below) immediately following such change-in-control.
Definitions. For purposes of the Change-in-Control Agreements and the restricted shares described
above for all executive officers, the following terms have the meanings set forth below:
•Change-in-control. A change-in-control generally means any of the following: (i) an acquisition of 50%
or more of Windstream’s Common Stock; (ii) a change in the membership of Windstream’s board of
directors, such that the current incumbents and their approved successors no longer constitute a majority;
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