Windstream 2013 Annual Report Download - page 36

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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. In addition, performance-based restricted stock units
are eligible for deduction for tax purposes under Section 162(m) of the Internal Revenue Code.
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.
The Windstream Board of Directors 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 annual 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.
In the first quarter of 2013, the Compensation Committee approved the amounts and types of equity-based
compensation awards described below to the named executive officers. As with other elements of compensation,
the Compensation Committee based individual equity-based incentive awards on such individual’s contributions to
Windstream and the market level of compensation for such position without benchmarking against a specific percentile.
Named Executive Officer
2013 Grants of
Time-Based
Restricted Stock ($)
2013 Grants of Performance-Based
Restricted Stock Units
Threshold ($) Target ($)
Total Amount,
Including Possible
Overachievement
($)
Jeffery R. Gardner — 2,049,996 4,099,991 6,149,987
Anthony W. Thomas 549,998 274,999 549,998 824,997
Brent Whittington 750,004 375,002 750,004 1,125,006
John P. Fletcher 549,998 274,999 549,998 824,997
J. David Works, Jr. 312,498 156,249 312,498 468,747
Time-Based Restricted Stock – These awards vest ratably over three years subject to continuous employment
by Windstream through February 15, 2016.
Performance-Based Restricted Stock Units – For 2013, all performance-based equity awards were granted in
the form of PBRSUs. The grants set forth in the table above vest ratably over a three-year period with each year set
as a separate performance period. The PBRSUs vest only if the performance thresholds are met and the executive is
still employed on the date of vesting. The Compensation Committee sets the performance measures for these awards
each year during the three-year vesting period. It is the Compensation Committee’s goal to set such amounts at
levels that it believes are difficult but achievable and designed to drive industry leading results. For fiscal 2013, the
Committee selected Adjusted OIBDA as the baseline performance measure and added an overachievement measure
(the “Overachievement Measure”) based on Windstream total stockholder return.
The target Adjusted OIBDA metric for the 2013 performance period was set at 97% of an Adjusted OIBDA
goal of $2.363 billion and the threshold was 92% of this amount. No shares are awarded under these grants if actual
Adjusted OIBDA is less than the threshold and no additional amounts are awarded if actual Adjusted OIBDA exceeds
the target.
For the Overachievement Measure, each NEO is entitled to receive an additional number of shares up to 50%
of his/her target payout amount if (1) Windstream achieves the Total Stockholder Return goal (as described below)
over the three-year vesting period of the PBRSUs, and (2) at least 92% of the Adjusted OIBDA goal is met in each of