Windstream 2011 Annual Report Download - page 173

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
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F-65
appraised value, as determined by a third-party valuation firm, of approximately $60.6 million. The pension trust subsequently
sold all 4.9 million shares prior to June 30, 2011 for approximately $61.1 million. On September 21, 2011, we contributed 5.9
million shares of our common stock to our Pension Plan to meet our remaining 2011 and expected 2012 obligation. At the time
of the contribution, these shares had an appraised value, as determined by an unaffiliated third party valuation firm, of
approximately $75.2 million. The pension trust subsequently sold all 5.9 million shares for approximately $72.4 million.
Effective January 1, 2011, changes to our Retiree Medical Plan will allow retirees to elect their prescription plan through the
UnitedHealthCare Medicare Connector. This change will result in savings for us. However, we will no longer be eligible for the
Medicare Part D subsidy. We expect to receive $0.4 million in Medicare prescription drug subsidies relating to the 2010 plan
year during 2012.
Employee Savings Plan – We also sponsor 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 plan 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, we decreased our matching contribution to employee savings accounts from a
maximum of 6.0 percent to a maximum of 4.0 percent of employee pretax contributions for employees contributing at least 5.0
percent. Our matching contribution is funded annually. We recorded $13.7 million, $10.9 million and $8.9 million in 2011,
2010 and 2009, respectively, related to the employee savings plan, which was included in cost of services and selling, general
and administrative and other expenses in the consolidated statements of income.
9. Share-Based Compensation Plans:
Under the Amended and Restated 2006 Equity Incentive Plan (the “Incentive Plan”), we may issue a maximum of 20.0 million
equity stock awards in the form of restricted stock, restricted stock units, stock appreciation rights or stock options. Restricted
stock, restricted stock units and stock appreciation rights were limited to 18.5 million of the total awards issuable under the
Incentive Plan. As of December 31, 2011, the Incentive Plan had remaining capacity of 9.7 million awards, of which 8.2
million were issuable in the form of 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.
In conjunction with the acquisition of PAETEC, Windstream assumed the PAETEC Holding Corp. 2011 Omnibus Incentive
Plan (the “PAETEC Incentive Plan”). Under the PAETEC Incentive Plan, we may issue equity stock awards in the form of
restricted stock, restricted stock units, unrestricted stock, stock appreciation rights, stock options, dividend equivalent rights,
performance awards, incentive awards or cash awards to former PAETEC employees. As of December 31, 2011, the PAETEC
Incentive Plan had remaining capacity of 3.4 million awards. 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.
Restricted Stock and Restricted Stock Unit Activity - During 2011, 2010 and 2009, our 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
one-time grants. On February 8, 2011, a one-time grant totaling 237,989 shares of restricted stock was approved to provide a
retention incentive to the CEO and select members of management. On August 3, 2010, a one-time grant totaling 516,075
shares of restricted stock was approved to provide a retention incentive and increase the long-term incentive values toward
market values for select members of executive management, other than the CEO. Additionally, in 2011, we issued
performance-based restricted stock units to executive officers rather than performance-based restricted shares. Each recipient of
the performance-based restricted stock units may vest in a number of shares from zero to 150.0 percent of their award based on
attainment of certain operating targets over a three-year period. The vesting periods and grant date fair value for restricted stock
and restricted stock units issued was as follows for the years ended December 31:
(Thousands)
Vest ratably over remaining service period, up to four years (a) (b)
Vest ratably over a three-year service period
Vest contingently over a three-year performance period
Vest three years from date of grant, service based
Vest one year from date of grant, service based (c)
Total granted
Grant date fair value (Millions)
2011
Common
Shares
886.3
1,024.0
522.9
388.5
48.6
2,870.3
$ 36.3
2010
Common
Shares
222.4
899.0
596.9
651.3
72.1
2,441.7
$ 26.2
2009
Common
Shares
—
966.3
677.5
186.8
55.2
1,885.8
$ 16.5