Exhibit 10.8
WINDSTREAM
PERFORMANCE INCENTIVE COMPENSATION PLAN
RECITALS
     Pursuant to Section 7.01(a)(2) of the Employee Benefits Agreement by and
between ALLTEL Corporation and ALLTEL Holding Corp. (the “Company”) dated as of
December 8, 2005 (the “Employee Benefits Agreement”), the Company agreed to
establish, or cause to be established, a plan, the provisions of which are
substantially identical to the provisions of the ALLTEL Corporation Performance
Incentive Compensation Plan, which such plan shall apply to the performance
period beginning the day after the Distribution Date (as defined in the Employee
Benefits Agreement) and ending December 31, 2006. The Company has adopted this
Windstream Performance Incentive Compensation Plan (the “Plan”) pursuant to the
terms of the Employee Benefits Agreement.
I. PURPOSE
     The purpose of the Plan is to advance the interests of the Company by
strengthening, through the payment of incentive awards, the linkage between
executives of the Company and stockholders of the Company, the decision-making
focus of executives of the Company upon improving stockholder wealth, and the
ability of the Company to attract and retain those key employees upon whose
judgment, initiative, and efforts the successful growth and profitability of the
Company depends.
II. DEFINITIONS
     a. “Award” shall mean a cash award granted under the Plan to a Participant
by the Committee pursuant to such terms, conditions, restrictions and/or
limitations, if any, as the Committee may establish.
     b. “Beneficiary” shall mean the beneficiary or beneficiaries designated in
accordance with Section XII to receive any amount payable under the Plan after
the death of a Participant.
     c. “Board” shall mean the Board of Directors of the Company.
     d. “CEO” shall mean the Chief Executive Officer of the Company.
     e. “Code” shall mean the Internal Revenue Code of 1986, as amended.
     f. “Committee” shall mean the Compensation Committee of the Board (or
subcommittee thereof), consisting of not less than two Board members each of
whom shall be (i)

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a “non-employee director” as defined in Rule 16b-3 of the Securities Exchange
Act of 1934, as amended, and (ii) an “outside director” as defined in the
regulations under Section 162(m) of the Code.
     g. “Company” shall mean ALLTEL Holding Corp., a Delaware corporation, its
successors and survivors resulting from any merger or acquisition of ALLTEL
Holding Corp. with or by any other corporation or other entity or enterprise
including, without limitation, the surviving corporation resulting from the
proposed merger between the Company and Valor Communications Group, Inc.
pursuant to the terms of the Agreement and Plan of Merger dated as of
December 8, 2005, among ALLTEL Corporation, ALLTEL Holding Corp., and Valor
Communications Group, Inc. (which merged corporation is to be known as
Windstream Corporation).
     h. “Covered Employee” shall mean a Participant who the Committee deems
likely to have compensation for the Plan Year which would be non-deductible by
the Company under Section 162(m) of the Code if the Company did not comply with
the provisions of Section 162(m) of the Code and the regulations thereunder with
respect to such compensation.
     i. “Disability” shall mean incapacity resulting in the Participant’s being
unable to engage in gainful employment at his usual occupation by reason of any
medically demonstrable physical or mental condition, excluding, however,
incapacity contracted, suffered or incurred while the Participant was engaged
in, or which resulted from having engaged in, a felonious enterprise; incapacity
resulting from or consisting of chronic alcoholism or addiction to drugs or
abuse; and incapacity resulting from an intentionally self-inflicted injury or
illness.
     j. “Effective Date” shall mean the day after the Distribution Date as
defined in the Employee Benefits Agreement.
     k. “Eligible Employee” shall mean any officer or key management employee of
the Company or a Subsidiary who is a regular full-time employee of the Company
or a Subsidiary. A director of the Company or a Subsidiary is not an Eligible
Employee unless he is also a regular full-time salaried employee of the Company
or a Subsidiary. A “full-time” employee means any employee who is customarily
employed more than 20 hours per week and at least six months per year.
     l. “Participant” shall mean any Eligible Employee who is approved by the
Committee for participation in the Plan for the Plan Year with respect to which
an Award may be made and which has not been paid, forfeited or otherwise
terminated or satisfied under the Plan.
     m. “Payout Formula” shall mean the formula established by the Committee for
determining Awards for a Plan Year based on the level of achievement of the
Performance Objectives for the Plan Year.
     n. “Performance Objectives” means the measurable performance objective or
objectives established pursuant to the Plan for Participants. Performance
Objectives may be described in terms of Company-wide objectives or objectives
that are related to the performance of the individual Participant or of the
Subsidiary, division, department, region or function within the Company or
Subsidiary in which the Participant is employed. The Performance Objectives

 

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may be made relative to the performance of other corporations. The Performance
Objectives applicable to any Award to a Covered Employee that is intended to
qualify for the performance-based compensation exception to Section 162(m) of
the Code shall be based on specified levels of growth in one or more of the
following criteria: revenues, weighted average revenue per unit, earnings from
operations, operating income, earnings before or after interest and taxes,
operating income before or after interest and taxes, net income, cash flow,
earnings per share, debt to capital ratio, economic value added, return on total
capital, return on invested capital, return on equity, return on assets, total
return to stockholders, earnings before or after interest, taxes, depreciation,
amortization or extraordinary or special items, operating income before or after
interest, taxes, depreciation, amortization or extraordinary or special items,
return on investment, free cash flow, cash flow return on investment (discounted
or otherwise), net cash provided by operations, cash flow in excess of cost of
capital, operating margin, profit margin, contribution margin, stock price
and/or strategic business criteria consisting of one or more objectives based on
meeting specified product development, strategic partnering, research and
development, market penetration, geographic business expansion goals, cost
targets, customer satisfaction, gross or net additional customers, average
customer life, employee satisfaction, management of employment practices and
employee benefits, supervision of litigation and information technology, and
goals relating to acquisitions or divestitures of subsidiaries, affiliates and
joint ventures. Performance Objectives may be stated as a combination of the
listed factors.
     o. “Plan” shall mean the Windstream Performance Incentive Compensation
Plan, as set forth in this instrument, as amended from time to time.
     p. “Plan Year” shall mean (i) the period beginning on the Effective Date
and ending on December 31, 2006 and (ii) for each period beginning after
December 31, 2006, the Company’s fiscal year for tax and financial reporting
purposes, or such other period as determined by the Committee in its discretion,
to be used to measure actual performance against Performance Objectives and to
determine the amount of Awards for Participants.
     q. “Retirement” shall mean the Participant’s termination of employment with
the Company and/or all Subsidiaries for any reason other than death after
either: (i) attaining age fifty-five and completing twenty (20) or more “Vesting
Years of Service”; (ii) attaining age sixty (60) and completing fifteen (15) or
more “Vesting Years of Service”; or (iii) satisfying the conditions specified
for eligibility for “retirement” under a written employment contract between the
Participant and the Company and/or a Subsidiary. For purposes of the immediately
preceding sentence, “Vesting Years of Service” shall have the meaning given it
under the terms of the Windstream Pension Plan.
     r. “Subsidiary” shall mean a corporation of which fifty percent (50%) or
more of the issued and outstanding voting stock is owned (directly or
indirectly) by the Company.
III. ADMINISTRATION
     a. Administration of the Plan shall be by the Committee, which shall, in
applying and interpreting the provisions of the Plan, have full power and
authority to construe, interpret and carry out the provisions of the Plan. All
decisions, interpretations and actions of the

 

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Committee under the Plan shall be at the Committee’s sole and absolute
discretion and shall be final, conclusive and binding upon all parties. The
generality of the provisions of the immediately preceding sentence shall not be
deemed to be limited by any reference to the Committee’s discretion in any other
provision of the Plan. The Committee may delegate to the CEO or other officers,
subject to such terms as the Committee shall determine, authority to perform
certain functions, including administrative functions, except that the Committee
shall retain exclusive authority to determine matters relating to Awards to the
CEO and other individuals who are Covered Employees. In the event of such
delegation, all references to the Committee in this Plan shall be deemed
references to such officers as it relates to those aspects of the Plan that have
been delegated.
     b. No member of the Committee shall be jointly or severally liable by
reason of any contract or other instrument executed by him or on his behalf in
his capacity as a member of the Committee, nor for any mistake of judgment made
in good faith, and the Company shall indemnify and hold harmless each member of
the Committee and each other officer, employee and director of the Company to
whom any duty or act relating to the administration of the Plan may be allocated
or delegated, against any cost or expense (including counsel fees) or liability
(including any sum paid in settlement of the claim with the approval of the
Board) arising out of any act or omission to act in connection with the Plan,
unless arising out of such person’s or persons’ own fraud or bad faith.
     c. The existence of this Plan or any Award or other right granted hereunder
will not affect the authority of the Company or the Committee to take any other
action, including in respect of the grant or award of any annual or long-term
bonus or other right or benefit, whether or not authorized by this Plan, subject
only to limitations imposed by applicable law.
IV. ELIGIBILITY FOR PARTICIPATION
     a. As soon as practicable after the beginning of each Plan Year, the
Committee shall designate those Eligible Employees who shall participate in the
Plan for the current Plan Year (or, if a person becomes an Eligible Employee
after the beginning of the Plan Year, he shall be designated as a Participant as
soon as practicable after he becomes an Eligible Employee). In determining which
Eligible Employees shall participate for any given Plan Year, the Committee
shall consider the recommendations of the CEO. Each Eligible Employee shall be
notified of his participation in the Plan as soon as practicable after approval
of his participation for any Plan Year (or portion thereof) for which his
participation has been approved. An Eligible Employee who is a Participant for a
given Plan Year is neither guaranteed nor assured of being selected for
participation in any subsequent Plan Year.
     b. Notwithstanding anything contained in Section IV(a) to the contrary,
individuals who are Covered Employees shall be designated by the Committee to
participate in the Plan no later than 90 days following the beginning of the
Plan Year or before 25% of the Plan Year has elapsed, whichever is earlier.
     c. Notwithstanding anything contained in this Section IV to the contrary,
the individuals listed on Exhibit A, and such other individuals as may be
designated pursuant to this

 

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Section IV, shall participate in the Plan for the Plan Year beginning on the day
after the Effective Date and ending on December 31, 2006.
V. DETERMINATION OF AWARDS
     a. The Committee shall establish the Performance Objectives and Payout
Formulas for each Participant during the first quarter of each Plan Year and
notify each Participant in writing of his or her Payout Formulas and Performance
Objectives. In determining the applicable Payout Formulas or Performance
Objectives other than for the CEO, the Committee shall consider the
recommendations of the CEO. The Performance Objectives and Payout Formulas
established by the Committee need not be uniform with respect to any or all
Participants. The Committee may also make Awards to newly hired or newly
promoted executives without compliance with such timing and other limitations as
provided herein, which Awards may be based on performance during less than the
full Plan Year and may be pro rated in the discretion of the Committee.
     b. Participants must achieve the Performance Objectives established by the
Committee in order to receive an Award under the Plan. However, the Committee
may determine that only the threshold level relating to a Performance Objective
must be achieved for Awards to be paid under the Plan. Similarly, the Committee
may establish a minimum threshold performance level, a maximum performance
level, and one or more intermediate performance levels or ranges, with target
award levels or ranges that will correspond to the respective performance levels
or ranges included in the Payout Formula.
     c. The Committee may establish multiple Performance Objectives with respect
to a single Participant. If more than one Performance Objective is selected by
the Committee for a Plan Year, the Performance Objectives will be weighted by
the Committee to reflect their relative importance to the Company in the
applicable Plan Year. If the Committee establishes a threshold level of
achievement with respect to multiple Performance Objectives, Awards will be paid
under the Plan upon achievement of threshold levels of one or more of the
specified Performance Objectives.
     d. The Committee may in its sole discretion modify such Payout Formulas,
Performance Objectives or the related minimum acceptable level of achievement,
in whole or in part, as the Committee deems appropriate and equitable (i) to
reflect a change in the business, operations, corporate structure or capital
structure of the Company or its Subsidiaries, the manner in which it conducts
its business, or other events or circumstances or (ii) in the event that a
Participant’s responsibilities materially change during a Plan Year or the
Participant is transferred to a position that is not designated or eligible to
participate in the Plan.
     e. Notwithstanding anything contained in this Section IV to the contrary,
the Committee shall establish the Performance Objectives (including the relative
weight of multiple Performance Objectives) and Payout Formulas for each Covered
Employee not later than 90 days following the beginning of the Plan Year or
before 25% of the Plan Year has elapsed, whichever is earlier. Furthermore, the
Committee shall not modify the Performance Objectives (including the relative
weight of multiple Performance Objectives) and Payout Formulas

 

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applicable to a Covered Employee to the extent that such action would result in
the loss of the otherwise available exemption of the Award under Section 162(m)
of the Code.
     f. Notwithstanding any other provision of the Plan to the contrary, in no
event shall an Award paid to any Participant for a Plan Year exceed $7,000,000.
VI. CERTIFICATION OF ACHIEVEMENT
     a. Promptly following the end of each Plan Year, the Committee shall meet
to certify achievement of the Performance Objectives for the applicable Plan
Year and, if such Performance Objectives have been achieved, to review
management recommendations and approve actual Awards under the Plan pursuant to
the applicable Payout Formulas. Such certification of achievement of the
Performance Objectives of a Covered Employee shall be documented in writing (and
otherwise conform to the requirements of applicable regulations under Section
162(m) of the Code) prior to the payout of such Award to a Covered Employee.
     b. If a Participant’s employment with the Company and its Subsidiaries is
terminated before the last day of a Plan Year due to Disability, death, or
Retirement, the Participant’s Award shall be pro rated on the basis of the ratio
of the number of days of participation during the Plan Year to which the Award
relates to the aggregate number of days in such Plan Year. If a Participant’s
employment with the Company and its Subsidiaries is terminated before the last
day of a Plan Year for any other reason, then, unless otherwise determined by
the Committee, such Participant shall become ineligible to participate in the
Plan and shall not receive payment of any Award for any Plan Year that has not
ended prior to the Participant’s termination of employment.
     c. Notwithstanding any contrary provision of this Plan, the Committee in
its sole discretion may (i) eliminate or reduce the amount of any Award payable
to any Participant below that which otherwise would be payable under the Payout
Formula, and (ii) except in the case of a Covered Employee, increase the amount
of any Award payable to any Participant above that which otherwise would be
payable under the Payout Formula to recognize a Participant’s individual
performance or in other circumstances deemed appropriate by the Committee.
VII. PAYMENT OF AWARDS
          Subject to Section VI hereof, Awards shall be paid as soon as
practicable after the close of the Plan Year, but in no event later than 75 days
after the end of the Plan Year to which the Awards relate. Notwithstanding the
foregoing, the Committee may, in its sole discretion and upon such terms and
conditions as it may establish, direct that payments to the Participants (other
than Covered Employees) be made during December of the Plan Year in the amount
of all or any portion specified by the Committee of the estimated Award for that
Plan Year, subject to adjustment as soon as practicable after the end of the
Plan Year and the determination of the exact amount of the Award therefore.

 

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VIII. AMENDMENT AND TERMINATION OF PLAN
     a. The Board reserves the right, at any time, to amend, suspend or
terminate the Plan, in whole or in part, in any manner, and for any reason, and
without the consent of any Participant, Eligible Employee or Beneficiary or
other person; provided, that no such amendment, suspension or termination shall
adversely affect the payment of any amount for a Plan Year ending prior to the
action of the Board amending, suspending or terminating the Plan.
     b. It is the intention of the Company that the Plan qualify for the
performance-based compensation exception of Section 162(m) of the Code and the
short-term deferral exception of Section 409A of the Code. The Plan and any
Awards hereunder shall be administrated in a manner consistent with this intent,
and any provision that would cause the Plan or any Awards hereunder to fail to
satisfy either such exception shall have no force and effect until amended to so
comply (which amendment may be retroactive and may be made by the Company
without the consent of any Participant, Eligible Employee or Beneficiary or
other person).
IX. GOVERNING LAW
     The provisions of the Plan shall be governed and construed in accordance
with the laws of the State of Delaware.
X. MISCELLANEOUS PROVISIONS
     Nothing contained in the Plan shall give any employee the right to be
retained in the employment of the Company or a Subsidiary or affect the right of
the Company or a Subsidiary to dismiss any employee. The Plan shall not
constitute a contract between the Company or a Subsidiary and any employee. No
Participant shall receive any right to be granted an Award hereunder. No Award
shall be considered as compensation under any employee benefit plan of the
Company or a Subsidiary, except as may be otherwise provided in such employee
benefit plan. No reference in the Plan to any other plan or program maintained
by the Company shall be deemed to give any Participant or other person a right
to benefits under such other plan or program. The Company and its Subsidiaries
shall have the right to deduct from all payments made to any person under the
Plan any federal, state, local, foreign or other taxes which, in the opinion of
the Company and its Subsidiaries are required to be withheld with respect to
such payments.
XI. NO ALIENATION OF BENEFITS
     Except insofar as may otherwise be required by law, no amount payable at
any time under the Plan shall be subject in any manner to alienation by
anticipation, sale, transfer, assignment, bankruptcy, pledge, attachment, charge
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manner be subject to the debts or liabilities of a Participant or Beneficiary,
and any attempt to so alienate or subject any such amount, whether presently or
thereafter payable, shall be void.
XII. DESIGNATION OF BENEFICIARIES
     a. Each Participant shall file with the Company a written designation of
one or more persons as the Beneficiary who shall be entitled to receive any
Award payable under the Plan after his death. A Participant may from time to
time, revoke or change his Beneficiary designation without the consent of any
prior Beneficiary by filing a new designation with the Company.
     b. The last such designation received by the Company shall be controlling;
except that no designation, or change or revocation thereof, shall be effective
unless received by the Company prior to the Participant’s death, and in no event
shall it be effective as of the date prior to such receipt.
     c. If no designation is in effect at the time of a Participant’s death, or
if no designated Beneficiary survives the Participant, or if such designation,
in the Company’s discretion, conflicts with applicable law, the Participant’s
estate shall be deemed to have been designated his Beneficiary and shall receive
any Award payable under the Plan after his death.
     d. A Participant’s Beneficiary designation made by the Participant in
accordance with the terms of the ALLTEL Corporation Performance Incentive
Compensation Plan prior to the Effective Date shall constitute a proper
Beneficiary designation under the Plan and shall remain in effect after the
Effective Date until revoked or otherwise modified by the Participant in
accordance with this Article XII.
XIII. PAYMENTS TO PERSON OTHER THAN PARTICIPANT
     If the Committee shall find that a Participant or his Beneficiary to whom
an Award is payable under the Plan is unable to care for his affairs because of
illness or accident, or is a minor, or has died, then any payment due him or his
estate (unless a prior claim therefore has been made by a duly appointed
representative) may, if the Committee so directs, be paid to his spouse, child,
a relative, an institution maintaining custody of such person or any other
person deemed by the Committee to be a proper recipient on behalf of such person
otherwise entitled to payment. Any such payment shall be a complete discharge of
the liability of the Plan, the Company and the Committee therefore.
XIV. NO RIGHT, TITLE OR INTEREST IN COMPANY’S ASSETS
     No Participant or Beneficiary shall have any right, title or interest
whatsoever in or to any investments which the Company or a Subsidiary may make
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under the Plan. Nothing contained in the Plan, and no action taken pursuant to
its provisions, shall create, or be construed to create, a trust of any kind, or
fiduciary relationship between the Company or a Subsidiary and any Participant
or Beneficiary or any other person. To the extent that any person acquires a
right to receive payments from the Company under the Plan, such rights shall be
no greater than the right of an unsecured general creditor of the Company. All
payments to be made hereunder shall be paid from the general funds of the
Company, and no special or separate funds shall be established, and no
segregation of assets shall be made, to assure payment thereof.
XV. SUCCESSORS
     The Company shall require any successor (whether direct or indirect, by
purchase, merger, consolidation, reorganization or otherwise) to all or
substantially all of the business and/or assets of the Company expressly to
assume this Plan. This Plan shall be binding upon and inure to the benefit of
the Company and any successor of or to the Company, including without limitation
any persons acquiring directly or indirectly all or substantially all of the
business and/or assets of the Company whether by sale, merger, consolidation,
reorganization or otherwise (and such successor shall thereafter be deemed the
“Company” for the purposes of this Plan), and the heirs, beneficiaries,
executors and administrators of each Participant; provided that any successor to
this Plan shall not assume any obligation with respect to any Participant for
services performed or related compensation earned by the Participant prior the
Effective Date or any obligation of Alltel Corporation to such Participant under
the Alltel Corporation Incentive Compensation.