Windstream 2011 Annual Report Download - page 28

performance goal measured over the three-year vesting period of the PBRSUs and assuming that the threshold
Adjusted OIBDA goal was met in each of the three fiscal performance periods covered by the vesting schedules.
For the 2011 grant, this long-term overachievement goal was based on growth in total revenue, and for 2012 it
was based on total shareholder return of Windstream common stock equaling the return of 50% or more of the
companies in the S&P 500 Index.
All Windstream equity compensation awards have been issued as either time-based restricted stock,
performance-based restricted stock or performance-based restricted stock units under the Windstream Amended and
Restated 2006 Equity Incentive Plan (“Equity Plan”). In 2011, 50% of the equity compensation granted to the
named executive officers (other than Mr. Gardner) was performance-based and 50% was time-based vesting. For
Mr. Gardner, 100% of his 2011 annual equity compensation was performance-based. Mr. Gardner also received a
one-time grant of time-based restricted stock but this grant was not considered part of his ongoing annual
compensation. 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 or unit 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 2011 and 2012, all performance-based equity awards were granted in the form of PBRSUs.
For all outstanding grants of time-based restricted stock, executive officers have 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. For all outstanding grants of performance-based equity compensation, the dividends
are accrued and paid out only when and if the performance conditions are satisfied. In 2011, Windstream placed
performance targets on 100% of the annual grants of equity compensation to Mr. Gardner and 50% for all other
executive officers. For 2012, named executive officers other than Mr. Gardner received 70% of their total equity
compensation in the form of performance-based equity compensation, and Mr. Gardner continued to receive
100% of his total equity compensation in the form of performance-based equity compensation.
The Windstream Board of Directors has delegated responsibility for administration of the Equity 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 stock to award to any
individual under the Equity Plan, the Compensation Committee divides the approved grant value for such
individual by the closing stock price of Windstream Common Stock on the date that the Compensation
Committee approves the award (rounded down to the nearest whole share). As a matter of policy, the
Compensation Committee does not approve awards of equity compensation through the adoption of a unanimous
written consent in lieu of a meeting. The following discussion addresses our annual equity compensation
program during 2011.
During 2011, the Compensation Committee approved the following categories of annual equity
compensation awards to executive officers:
• Time-Based Vesting Awards — For each executive officer other than Mr. Gardner, fifty percent
(50%) of each 2011 stock award vests ratably over three years.
• Performance-Based Vesting Awards — Mr. Gardner received one hundred percent (100%), and each
other executive officer received fifty percent (50%), of his or her stock annual grants in the form of
performance-based restricted stock units. The units vests ratably over a three-year period with each
year set as a separate performance period. The units vests only if the performance threshold is met and
the executive is still employed on the date of vesting. For 2011, the performance criteria was set at 95%
of the Adjusted OIBDA goal of $2,023 million, and this goal was achieved.
For the performance period from January 1 to December 31, 2012, the Compensation Committee has set
the performance measure at 97% of the Adjusted OIBDA goal established by the Company for the internal
forecast.
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