Windstream 2013 Annual Report Download - page 54

48 |
PROPOSAL NO. 3
AMENDMENT AND RE-APPROVAL OF THE
WINDSTREAM 2006 EQUITY INCENTIVE PLAN
Our stockholders are being asked to approve an amendment to the Windstream 2006 Equity Incentive Plan (as
amended, the “Equity Plan”) to (i) extend the term of the Equity Plan through February 12, 2019, and (ii) increase the
maximum number of shares authorized for issuance or delivery under the Equity Plan from 20,000,000 to 35,000,000
shares, representing a net increase of 15,000,000 shares. A copy of the Equity Plan is attached as Appendix A to this
proxy statement.
Additionally, stockholders are being asked to re-approve the performance goals set forth in the Equity Plan to
allow us to structure incentive compensation that preserves our tax deductions under Section 162(m) of the Internal
Revenue Code of 1986, as amended (the “Code”). Section 162(m) denies a corporation’s federal income tax deduction
for compensation it pays to certain executive officers in excess of $1 million per year for each such officer. Section
162(m) provides an exception to this limitation for performance-based compensation, the material terms of which
have been approved by a corporation’s stockholders at least every five years. To that end, approval of the Amendment
also will constitute approval of the performance objectives upon which qualified performance-based awards may
be based (as further described below under the heading “Management Objectives”), the annual maximum limits per
individual (as further described below under the heading “Individual Limits”), and the eligible employees (as further
described below under the heading “Eligible Participants”).
Upon recommendation of the Compensation Committee, the Board of Directors has approved the Amendment.
Description of the Equity Plan
The Equity Plan was first approved by stockholders in 2006, was amended on January 1, 2008, was amended
and restated effective February 17, 2010, was assumed by Windstream Holdings in August 2013, and was amended
and restated, subject to stockholder approval, as applicable, effective February 12, 2014. The following description of
the Equity Plan is qualified in its entirety by reference to the applicable provisions of the Equity Plan in Appendix A.
Purpose. The purpose of the Equity Plan is to attract, retain and motivate employees and directors and to
provide long-term incentives to employees and directors to better align their interests with the long-term interests of
our stockholders.
Shares Authorized for Issuance. Subject to adjustment as provided for in the Equity Plan, the maximum number
of shares authorized for issuance or delivery under the Equity Plan is 20,000,000. As of December 31, 2013, 4,819,043
shares remained available for future grants under the Equity Plan. If the Amendment is approved by stockholders, the
number of shares available for future grants will increase by 15,000,000.
Individual Limits. In order to comply with the exemption from Section 162(m) of the Code relating to
performance-based compensation, the Equity Plan imposes the following additional sub-limits: (i) no participant
may be granted option rights and stock appreciation rights (“SARs”), in the aggregate, for more than 1,000,000
shares of Windstream common stock during any calendar year, (ii) no participant may be granted performance shares
and restricted shares specifying management objectives (described below), in the aggregate, for more than 1,000,000
shares of Windstream common stock during any calendar year, and (iii) no participant may be granted performance
units having an aggregate maximum value as of their date of grant in excess of $12,000,000 during any calendar year.
Administration. The Board of Directors has delegated responsibility for administration of the Equity Plan,
including the authority to approve awards, to the Compensation Committee. The Compensation Committee has
complete and absolute authority to make any and all decisions regarding the administration of the Equity Plan,
including the authority to construe and interpret the Equity Plan and awards granted thereunder. The Compensation
Committee makes determinations such as to whom awards will be made, what type of awards will be made, how
many shares will be subject to each grant, the duration and exercise price of stock options, vesting schedules,
performance criteria, conditions upon which a grant may be forfeited, and any restriction, limitation, procedure or
deferral related to a grant.