Windstream 2015 Annual Report Download - page 56

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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 NEOs 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 is entitled under the agreement, subject to the excise tax, or have
his 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 herein), 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 herein). 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. Thomas, Fletcher, and Works, two times for Mr. Gunderman, and one time
for Mr. Eichler 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 of health care premiums for Messrs. Thomas, Fletcher and Works,
two years for Mr. Gunderman, and one year for Mr. Eichler; and
▪ Outplacement services with a value of no more than $50,000 for Messrs. Thomas, Fletcher, and
Works and $25,000 for Messrs. Gunderman and Eichler.
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; provided,
however, that Mr. Thomas is subject to a two-year period upon termination. 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.
• Accelerate Vesting of Restricted Shares. All unvested restricted stock or performance-based restricted
stock or units held by the NEOs listed above would have become vested if a change-in-control (as defined
herein) occurred on December 31, 2015 and Windstream terminated the executive’s employment without
“cause” (as defined herein) or the executive terminated his or her employment with Windstream for “good
reason” (as defined herein) following such change-in-control.