Windstream 2013 Annual Report Download - page 50

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Change-in-Control
Windstream does not maintain any plans or arrangements that would provide benefits to the NEOs solely as a
result of a change-in-control (a single trigger).
Change-in-Control Agreements. Effective January 1, 2013, Windstream entered into a new form of change-
in-control agreement to replace and supersede the prior change-in-control agreement with its executive officers,
including the NEOs. The terms of the current form of change-in-control agreement are generally the same as the
prior form of change-in-control agreement, except that the new form of change-in-control agreement eliminates
the tax gross-up provision applicable under certain circumstances under agreements entered into prior to 2009.
The current form of change-in-control agreement does not provide for a gross-up payment to any of Windstream’s
named executive officers to offset any excise taxes that may be imposed on excess parachute payments under Section
4999 of the Internal Revenue Code. Instead, under the current form of change-in-control agreement, if such excise
taxes would be imposed, the executive will either receive all of the benefits to which he or she is entitled under the
agreement, subject to the excise tax, or have his or her benefits under the agreement reduced to a level at which the
excise tax will not apply, depending upon which approach would provide the executive with the greater net after-tax
benefit.
Under the current change-in-control agreement, a covered executive would be entitled to certain severance
benefits if, during the two-year period following a change-in-control (as defined below), Windstream terminates the
executive’s employment without “cause” (as defined below) or the executive terminates his or her employment with
Windstream for “good reason” (as defined below). In general, the executive officers would be entitled to receive, in a
lump sum paid by Windstream or its successor, the following amounts pursuant to the change-in-control agreements:
• Three times for Messrs. Gardner, Thomas, Whittington, Fletcher and Works 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, Thomas, Whittington, Fletcher and Works of
health care premiums; and
• Outplacement services with a value of no more than $50,000 for all NEOs.
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 change-in-control agreement.
The Compensation Committee believes these benefits are consistent with market practice and fit into the overall
compensation packages to sufficiently attract and retain talent. Windstream is protected by the non-competition
provisions of the arrangements and by having these benefits, senior executives are not discouraged from pursuing the
best alternative for long-term value for stockholders, which might include potential change-in-control transactions.
Accelerated Vesting of Restricted Shares. All unvested restricted stock or performance-based restricted stock
or units held by the named executive officers listed above would have become vested if a change-in-control (as
defined below) occurred on December 31, 2013 and Windstream terminated the executive’s employment without
“cause” (as defined below) or the executive terminated his or her employment with Windstream for “good reason”
(as defined below) 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;
(iii) a reorganization, merger, consolidation or sale or other disposition of more than 50% of Windstream’s
assets in which any one of the following is true: Windstream’s pre-transaction stockholders do not hold
at least 50% of the combined enterprise; there is a 50%-or-more stockholder of the combined enterprise