Windstream 2006 Annual Report Download - page 49

their financial affairs in a prudent manner. The Board also believes that the Guidelines will further align the
interests of our executive officers and directors with the long-term interests of stockholders, while allowing
Windstream to use equity-based compensation as an incentive in a balanced approach that supports the
recruitment and retention of qualified individuals.
Board Recommendation
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE “AGAINST” THE
STOCKHOLDER PROPOSAL. PROXIES SOLICITED BY THE BOARD OF DIRECTORS WILL BE
VOTED AGAINST THE STOCKHOLDER PROPOSAL UNLESS STOCKHOLDERS SPECIFY A
CONTRARY VOTE.
STOCKHOLDER PROPOSALS FOR 2008 ANNUAL MEETING
Stockholders who intend to present proposals at the 2008 Annual Meeting, and who wish to have those
proposals included in Windstream’s proxy statement for the 2008 Annual Meeting, must be certain that those
proposals are received by the Corporate Secretary at 4001 Rodney Parham Road, Little Rock, Arkansas 72212,
prior to December 1, 2007. Such proposals must meet the requirements set forth in the rules and regulations of
the SEC in order to be eligible for inclusion in the proxy statement for Windstream’s 2008 Annual Meeting.
CERTAIN TRANSACTIONS
Effective November 7, 2006, Windstream adopted a procedure for the review and approval of related
party transactions. The Governance Committee is responsible for the review and approval of transactions covered
by the policy, although transactions can also be approved by the disinterested members of the Board of Directors.
Under the policy, the Governance Committee or the Board must approve any transaction in which
Windstream is a participant, the amount involved exceeds $60,000, and in which any covered person has a direct
or indirect material interest. To be approved, the transaction must be on terms comparable to those that could be
obtained in arm’s length dealings with an unrelated third party or is otherwise determined to be fair and in the
best interests of Windstream. A transaction does not include the provision of services, the sale of products or
other transactions conducted by Windstream in the ordinary course of business and on terms generally available
to employees or customers. A transaction also does not include an employment or service relationship involving
a director or executive officer and any related compensation resulting from that relationship that is approved by
Windstream’s Compensation Committee or is disclosed in the proxy statement pursuant to the SEC’s executive
compensation rules. The persons covered by the policy are Windstream’s directors, director nominees, and
executive officers, an immediate family member of any of the foregoing, and any entity that is controlled by any
of the foregoing persons.
On December 12, 2006, Windstream announced that it would split off its directory publishing business in
a tax-free transaction with entities affiliated with Welsh, Carson, Anderson & Stowe (“WCAS”), a private equity
investment firm. Anthony deNicola is a partner of WCAS and served as a director for Valor and Spinco prior to
July 17, 2006 and as a director of Windstream from July 17 until December 14, 2006, when he resigned from the
Board. At the time of signing, the total value of the transaction was approximately $525 million. The transaction
will result in the repurchase of at least 19,574,422 shares of Windstream common stock held by affiliates of
WCAS, with a value of approximately $275 million based on the average closing price of Windstream common
stock over the five trading day period ended December 8, 2006. In addition, the transaction is expected to result
in the retirement of at least $220 million of outstanding Windstream debt.
In connection with the consummation of the transaction, Windstream (or its applicable subsidiaries) and
affiliates of WCAS will enter into certain related ancillary agreements, including a Publishing Agreement, a
Billing and Collection Agreement and a Tax Sharing Agreement. Pursuant to the Publishing Agreement,
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