Windstream 2012 Annual Report Download - page 165

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
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F-67
8. Employee Benefit Plans and Postretirement Benefits, Continued:
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. Windstream matches up 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 expect to make the 2012 contribution in Windstream stock,
whereas the contribution was made in cash prior to 2012. We recorded $17.8 million, $13.7 million and $10.9 million in 2012,
2011 and 2010, 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, 2012, the Incentive Plan had remaining capacity of 8.4 million awards, of which 6.9
million were issuable in the form of restricted stock, restricted stock units or stock appreciation rights. As of December 31,
2012, we had additional remaining capacity of 3.2 million awards from a similar equity incentive plan acquired in the PAETEC
acquisition. 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 2012, 2011 and 2010, our Board of Directors approved grants of
restricted stock and restricted stock units 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. In 2011, we began
issuing 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, some of which are indexed to the performance of Standard & Poor's 500
Stock Index, over a three-year period.
As a result of the management restructuring announced on May 31, 2012, 0.6 million shares with a weighted average grant date
fair value of $7.5 million were forfeited during the year ended December 31, 2012.
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:
2012 2011 2010
(Thousands)
Common
Shares
Common
Shares
Common
Shares
Vest ratably over remaining service period, up to four years (a) (b) — 886.3 222.4
Vest ratably over a three-year service period 1,543.7 1,024.0 899.0
Vest variably over a three-year service period 54.7 — —
Vest contingently over a three-year performance period 723.5 522.9 596.9
Vest three years from date of grant, service based 4.0 388.5 651.3
Vest one year from date of grant, service based (c) 51.4 48.6 72.1
Total granted 2,377.3 2,870.3 2,441.7
Grant date fair value (Millions) $ 29.4 $ 36.3 $ 26.2
(a) In conjunction with the acquisition of PAETEC, we granted 886,300 restricted stock units to former PAETEC
employees to replace outstanding, unvested PAETEC restricted stock units held by these same employees as of
acquisition date. The vesting provisions of the original grants were retained. Each recipient is entitled to one restricted
share per restricted stock unit.