Windstream 2010 Annual Report Download - page 24

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specifically target compensation to any market percentile based on the market data. The Compensation
Committee utilizes the survey data in this manner due to a variety of factors, including the limited number of
direct industry competitors of comparable size pursuing a similar business strategy, the variability of the data
over the past few years, and the Committee’s focus on aligning pay and performance as opposed to simply
paying competitively.
Elements of Compensation. The compensation of Windstream’s executive officers consists of three
principal components:
• Base salary;
• Short-term (annual) cash incentive payments; and
• Long-term incentives in the form of equity-based compensation.
The compensation program for all executive officers also includes the Windstream 2007 Deferred
Compensation Plan, the Windstream 401(k) Plan, a change-in-control agreement, and limited perquisites.
Windstream has also entered into an employment agreement with Mr. Gardner, and certain executive officers
were eligible to participate, on a grandfathered-basis, in the Windstream Pension Plan and the related
Windstream Benefit Restoration Plan.
2010 Compensation Philosophy. The Compensation Committee considers the total compensation of
each executive officer as well as the allocation of compensation among base salary, short-term incentive
compensation, and equity-based compensation for determining compensation levels. For 2010, the Compensation
Committee approved increases in elements of total direct compensation for named executive officers after
considering individual performance, Company performance, strategic importance of the role, retention risk, and
current compensation compared to competitive market data.
Retention remains a key driver of the equity compensation program. Significant demands are imposed on
the senior leadership team by the Company’s difficult financial and operational targets and high volume of
strategic initiatives. The relatively young team has achieved tremendous success in a consolidating industry with
intense competition. After reviewing the unvested equity values, the Compensation Committee approved
additional grants of time-based restricted stock in August 2010 for executive officers (excluding Mr. Gardner)
and other key members of the Company’s leadership team. These equity awards have a three year cliff-vesting
provision. The following table shows for each named executive officer the amount awarded as part of this special
equity grant along with the amount awarded for the 2010 annual equity grant for comparison purposes.
Named Executive Officer
Special Equity Grant
$
2010 Annual Equity
Grant
$
Jeffery R. Gardner -0- 3,599,994
Anthony W. Thomas 749,996 499,983
Brent Whittington 749,996 899,993
John P. Fletcher 749,996 649,992
Cynthia B. Nash 499,997 319,080
18