Windstream 2010 Annual Report Download - page 44

PROPOSAL NO. 2
ADVISORY VOTE ON EXECUTIVE COMPENSATION
At the Annual Meeting and pursuant to the Dodd-Frank Wall Street Reform and Consumer Protection Act
and Section 14A of the Securities Exchange Act of 1934, the Board of Directors is providing stockholders of
Windstream the opportunity to vote on the following advisory (nonbinding) resolution:
“Resolved, that the compensation paid to Windstream’s named executive officers, as disclosed in
this Proxy Statement, including the Compensation Discussion and Analysis, compensation tables
and narrative discussion, is hereby APPROVED.”
As described in the Compensation Discussion and Analysis, our executive compensation philosophy,
policies, and practices are designed to:
• Provide a high correlation between pay and performance;
• Align management’s interests with the long-term interests of Windstream’s stockholders; and
• Provide competitive compensation and incentives to attract and retain key executives.
Our core program consists of base salary, annual cash incentives and long-term equity incentives.
The following is a summary of key considerations that stockholders should take into account when assessing
our executive compensation program:
• During 2010, we delivered industry-leading financial and operational performance while successfully
executing on a wide range of key strategic initiatives. Those initiatives were designed to grow and
transform the Company into a next-generation communications company. As a result of these efforts,
58% of 2010 revenues (pro forma to reflect all acquisitions as if they closed prior to January 1, 2010)
come from broadband and business, the growth segments of the Company. Our annual (short-term)
incentive plan recognized these results with a payout of 181% of target levels and our performance-
based equity awards were earned at target level. These payouts demonstrate our desired correlation
between pay and performance.
• Our dividend is a key component of our total shareholder return and we believe Adjusted Operating
Income Before Depreciation and Amortization (Adjusted OIBDA) is the right performance metric to
motivate management to maintain and increase the cash flows of the business to support the dividend.
For 2011, the short-term incentive program will be based 100% on Adjusted OIBDA.
• We seek to align management with the long-term interests of our shareholders and in 2011, the
performance-based restricted stock units were modified to raise the performance bar five hundred basis
points over 2010 goals, and a three-year revenue goal has been added to the program. These changes,
along with our robust stock ownership guidelines, including ten times base salary for the CEO, and
clawback policy that allows Windstream to recover both incentive and non-incentive based
compensation in certain situations, strengthen our executive compensation program without creating
incentives for excessive risk taking.
The Board of Directors values and encourages constructive dialogue on compensation and other important
governance topics with Windstream’s stockholders, to whom it is ultimately accountable. The Board of Directors
requests stockholder approval of the Company’s overall executive compensation philosophy, policies and
practices. Although your vote is advisory and will not be binding upon the Company or the Board of Directors,
nor will it create or imply any change in the fiduciary duties of the Company or the Board of Directors, the
Compensation Committee will take into account the outcome of the vote when considering future executive
compensation decisions.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE “FOR” APPROVAL OF
PROPOSAL NO. 2. PROXIES SOLICITED BY THE BOARD OF DIRECTORS WILL BE VOTED FOR
PROPOSAL NO. 2 UNLESS STOCKHOLDERS SPECIFY A CONTRARY VOTE.
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