Windstream 2010 Annual Report Download - page 43

(4) The Board determines in its sole discretion that it is in the best interests of Windstream and its
stockholders for the executive officer to repay the covered compensation.
The Board can determine that a restatement applies to covered compensation if (i) in the case of performance-
based compensation, the vesting or payment of such compensation was based on the achievement of financial
results that were subsequently the subject of the restatement, and the amount of compensation that would have
been received by the executive officer had the financial results been properly reported, after giving effect to the
restatement, would have been lower than the amount actually received, (ii) in the case of time-based restricted
stock, the vesting of such compensation occurred during the fiscal period whose results were subject to the
restatement, and (iii) in the case of severance payments under a change-in-control agreement, the executive
officer engaged in the fraud giving rise to the restatement during the 12 months prior to the consummation of the
change-in-control that was a condition to the vesting and payment of any cash severance received by the
executive officer pursuant to the change-in-control agreement, and the amount of severance under the
change-in-control agreement exceeds the cash severance that would have been available under Windstream’s
severance policies generally available to employees.
The Board of Directors of Windstream, acting solely through its independent directors, is the administrator
of the policy. The policy applies to covered compensation granted or awarded on or after January 1, 2010,
including severance payments that may be issued after January 1, 2010 under Windstream’s existing
change-in-control agreements.
Risks Presented by Windstream’s Compensation Programs
As required by SEC rules, Windstream has assessed the risks that could arise from its compensation
policies for all employees, including employees who are not officers, and has concluded that such policies are not
reasonably likely to have a material adverse effect on Windstream. To the extent that Windstream’s
compensation programs create a potential misalignment of risk incentives, Windstream believes that it has more
than adequate compensating controls to mitigate against the potential impact of any such misalignment. These
compensating controls include strong internal controls over financial reporting, robust stock ownership
guidelines, a clawback policy for senior executives, and a three year vesting cycle for equity-based
compensation. The result is a strong alignment between the interests of management and shareholders.
Windstream also engages in an annual risk assessment process that is conducted by Windstream’s Internal Audit
Department. The results of this risk assessment are reported annually to Windstream’s Audit Committee and full
Board of Directors, and this assessment is designed in part to identify any activities that create improper risks to
Windstream.
Compensation Committee Interlocks and Insider Participation
During 2010, the Compensation Committee consisted of Messrs. Montgomery (Chairman), Beall and
Foster. All members of the Compensation Committee during 2010 were independent directors, and no member
was an officer or employee of the Windstream or a former officer of Windstream. No member of the
Compensation Committee serving during 2010 had any relationship requiring disclosure under the section titled
“Certain Relationships and Related Transactions” in this Proxy Statement. During 2010, none of our executive
officers served on the compensation committee (or its equivalent) or board of directors of another entity whose
executive officer served on either our Compensation Committee or our Board of Directors.
37