Windstream 2013 Annual Report Download - page 56

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SARs can be tandem (granted with option rights to provide an alternative to exercise of the option rights) or
free-standing. Tandem SARs may only be exercised at a time when the related option right is exercisable and the
spread is positive, and requires that the related option right be surrendered for cancellation. Free-standing SARs must
have a base price per appreciation right (not less than the fair market value of a share on the date of grant) and may
not be exercisable more than ten years from the date of grant.
Any grant of SARs may specify that the amount payable by Windstream on exercise of the appreciation right
may be paid in cash, in shares of Windstream common stock or in any combination thereof, and may either grant to
the recipient or retain in the Compensation Committee the right to elect among those alternatives. Any grant of SARs
may provide for the payment of dividend equivalents in the form of cash or shares of Windstream common stock
paid on a current, deferred or contingent basis. Each grant must specify the period of continuous employment that is
necessary before the SARs become exercisable, and may provide for the earlier exercise of such SARs in the event
of a change in control of Windstream, retirement, death or disability of the employee, or other similar transaction or
event approved by the Compensation Committee. Any grant of SARs may specify Management Objectives that must
be achieved as a condition to exercise such rights.
Performance Shares and Performance Units. The Compensation Committee may, in its discretion, award
performance shares and/or performance units to officers and other key employees of Windstream and its subsidiaries.
A performance share is the equivalent of one share of Windstream common stock and a performance unit is the
equivalent of $1.00.
The participant will be given one or more Management Objectives to meet within a specified period (the
“performance period”). A minimum level of acceptable achievement will also be established by the Compensation
Committee. If by the end of the performance period, the participant has achieved the specified Management
Objectives, the participant will be deemed to have fully earned the performance shares or performance units. If the
participant has not achieved the Management Objectives, but has attained or exceeded a predetermined minimum
level of acceptable achievement, the participant will be deemed to have partly earned the performance shares or
performance units in accordance with a predetermined formula. To the extent earned, the performance shares or
performance units will be paid to the participant at the time and in the manner determined by the Compensation
Committee in cash, shares of Windstream common stock or any combination thereof. The grant may provide for the
payment of dividend equivalents thereon in cash or in shares of Windstream common stock on a current, deferred
or contingent basis. The grant may also provide for the earlier termination of the performance period in the event of
a change in control of Windstream, retirement, death or disability of the participant, or other similar transaction or
event approved by the Compensation Committee.
Restricted Shares. The Compensation Committee may, in its discretion, award restricted shares to officers
and other key employees of Windstream and its subsidiaries. Restricted shares constitute an immediate transfer of
ownership of a specified number of shares of Windstream common stock to the recipient in consideration of the
performance of services. The participant is entitled immediately to voting, dividend and other ownership rights in
shares of Windstream common stock (unless otherwise determined by the Compensation Committee). The transfer
may be made without additional consideration or in consideration of a payment by such participant that is less than
the fair market value per share of Windstream common stock on the date of grant.
Restricted shares must be subject to a “substantial risk of forfeiture,” within the meaning of Section 83 of the
Code, for a period to be determined by the Compensation Committee on the date of the grant, and may provide for the
earlier termination of the forfeiture provisions in the event of a change in control of Windstream, retirement, death or
disability of the participant, or other similar transaction or event approved by the Compensation Committee. In order
to enforce these forfeiture provisions, the transferability of restricted shares will be prohibited or restricted in the
manner prescribed by the Compensation Committee on the date of grant for the period during which such forfeiture
provisions are to continue.
Any grant of restricted shares may specify Management Objectives which, if achieved, will result in termination
or early termination of the restrictions applicable to such shares. Any such grant may also specify in respect of such
specified Management Objectives, a minimum acceptable level of achievement and must set forth a formula for
determining the number of restricted shares on which restrictions will terminate if performance is at or above the
minimum level, but below full achievement of the specified Management Objectives.