Windstream 2007 Annual Report Download - page 22

other executive officer. Also, under the terms of Windstream’s agreements for its equity compensation awards of
restricted stock or performance-based restricted stock, the unvested equity awards held by Mr. Gardner and other
executive officers will vest on a “double-trigger” basis that is substantially similar to the events that trigger the
cash payments under the change-in-control agreements. The change-in-control agreements also obligate
Windstream to reimburse each executive officer for excise taxes imposed on such individual pursuant to
Section 4999 of the Internal Revenue Code as a result of the foregoing payments if the payments exceed 110% of
the greatest amount payable to the executive without triggering excise taxes.
The change-in-control agreements were amended in 2007 to comply with the final regulations issued
under Section 409A of the Internal Revenue Code and to clarify the scope of the non-compete provisions. In
consideration of these changes, the term of the agreements was extended one year.
Perquisites and Other Benefits. During 2007, the primary perquisites available to Mr. Gardner and other
named executive officers were the personal use of corporate aircraft, the payment of the initiation and ongoing
fees at a country club, and the reimbursement of up to $5,000 in taxable dollars for financial planning and related
expenses. The Compensation Committee believes that the perquisites provided to senior management are
consistent with its overall efforts to provide a total compensation package that is competitive with the
compensation arrangements of other market participants.
Windstream permits limited personal use of Windstream’s corporate aircraft by Mr. Gardner and other
named executive officers. Under Windstream’s policy, this use cannot interfere with other required business use
of the aircraft. Mr. Gardner is allowed to utilize Windstream’s corporate aircraft for personal use pursuant to a
time-sharing arrangement in which Mr. Gardner reimburses Windstream for the incremental cost of such use,
which primarily includes costs for fuel, maintenance charges allocable to such use and contract-pilot charges and
excludes depreciation of the aircraft, general maintenance, compensation of Windstream’s employee pilots, and
other general charges related to ownership of the aircraft. Other executive officers are allowed to have family
members accompany them on a business trip on the aircraft, subject to seat availability and prior approval of
Mr. Gardner. Any other personal use of the aircraft by the other executive officers is permitted only as approved
in advance by Mr. Gardner. The Compensation Committee monitors the use by Mr. Gardner and all executive
officers to ensure the amount of usage is reasonable. Windstream believes that personal use of aircraft for
Mr. Gardner and other senior executives is a reasonable benefit in light of the significant demands that are
imposed on their schedules as a result of the responsibilities to Windstream.
Windstream provides for the reimbursement of country club fees in order to encourage senior
management to belong to a club where they can increase their ties to the community. With respect to the
perquisites for financial planning expense reimbursement, Windstream believes that good financial planning by
experts can reduce the amount of time and attention that senior management must spend on that topic and can
help maximize the net financial reward to the employee of compensation received from Windstream.
Compensation of Directors
During 2007, Windstream non-employee directors received the following compensation: (1) an annual
cash retainer of $60,000, (2) a cash fee of $1,750 for each Board and committee meeting attended, and (3) an
annual grant of $60,000 in restricted stock under the Windstream 2006 Equity Incentive Plan. In addition,
Ms. Armitage received an initial grant of $60,000 in restricted stock in connection with her appointment to the
Board in 2007. The restricted shares granted to non-employee directors vest if the grantee continues to serve on
the Board for the period beginning on the date of grant and ending on February 15, 2008 or, if earlier, if the
grantee dies or becomes permanently disabled while serving on the Board or a change of control of Windstream
occurs. In addition, each non-employee director who serves as chair of a Board committee received a cash fee of
$12,500. Board members receive pro-rated amounts of the annual cash retainer, committee chair fees and the
annual restricted stock grant for the portion of the first year in which they are appointed or elected to serve as a
Board member or Committee Chair.
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