CenturyLink 2015 Annual Report Download - page 35

• through a net exercise procedure if approved by the Committee, or
• in any other manner authorized by the Committee.
Stock Appreciation Rights. A stock appreciation right, or SAR, is a right to receive, without payment to
CenturyLink, a number of Common Shares determined by dividing the product of the number of shares as to
which the stock appreciation right is exercised and the amount of the appreciation in each share by the fair
market value of a share on the date of exercise of the right. The Committee will determine the base price used to
measure share appreciation (which may not be less than the fair market value of a Common Share on the date of
grant), whether the right may be paid in cash, and the number and term of stock appreciation rights, provided that
the term of a SAR may not exceed ten years. The Committee may accelerate the exercisability of any SAR at any
time. The Plan restricts decreases in the base price and certain exchanges of SARs on terms similar to the
restrictions described above for options.
Restricted Stock. The Committee may grant Common Shares subject to restrictions on sale, pledge, or other
transfer by the recipient for a certain restricted period. Generally, the restricted period must be a minimum of
three years, except for shares vesting based on the attainment of performance goals, shares granted to non-
employee directors, and shares issued in payment of amounts earned under our annual incentive plan. If the
vesting of the shares is subject to the future attainment of specified performance goals, the restricted period for
employees, consultants, or advisors must be at least one year. In addition to the previously described exceptions,
an aggregate total of 1,500,000 Common Shares may be issued in connection with restricted stock, restricted
stock units, or other stock-based awards without compliance with these minimum vesting periods.
All shares of restricted stock will be subject to such restrictions as the Committee may provide in an
agreement with the participant, including provisions that may obligate the participant to forfeit the shares to us in
the event of termination of employment or if specified performance goals or targets are not met. Subject to
restrictions provided in the participant’s incentive agreement and the Plan, a participant receiving restricted stock
shall have all of the rights of a shareholder as to such shares, including the right to receive dividends.
Restricted Stock Units. A restricted stock unit, or RSU, represents the right to receive from CenturyLink
one Common Share on a specific future vesting or payment date. All RSUs will be subject to such restrictions as
the Committee may provide in an agreement with the participant, including provisions that may obligate the
participant to forfeit the RSUs in the event of termination of employment or if specified performance goals or
targets are not met. Subject to the restrictions provided in the incentive agreement and the Plan, a participant
receiving RSUs has no rights of a shareholder until Common Shares are issued to him or her. Restricted stock
units may be granted with dividend equivalent rights. Restricted stock units are subject to the same minimum
vesting requirements and exceptions described above for restricted stock.
Other Stock-Based Awards. The Plan also permits the Committee to grant to participants awards of
Common Shares and other awards that are denominated in, payable in, valued in whole or in part by reference to,
or are otherwise based on the value of, or the appreciation in value of, Common Shares (other stock-based
awards). The Committee has discretion to determine the times at which such awards are to be made, the size of
such awards, the form of payment, and all other conditions of such awards, including any restrictions, deferral
periods, or performance requirements. Other stock-based awards are subject to the same minimum vesting
requirements and exceptions described above for restricted stock.
Performance Goals for Section 162(m) Awards. Performance-based compensation does not count toward
the $1 million limit on CenturyLink’s federal income tax deduction for compensation paid to each of its most
highly-compensated executive officers. Grants of restricted stock, restricted stock units, or other stock-based
awards that we intend to qualify as performance-based compensation under Section 162(m) must be made subject
to the achievement of pre-established performance goals. The pre-established performance goals, both as
currently provided in the Plan and as proposed to be continued following the adoption of the Plan Proposal, will
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