Windstream 2011 Annual Report Download - page 24

Chair role which has been held by Mr. Montgomery since 2007, Mr. Beall has been appointed to serve as Chair
beginning in May 2012, and Mr. Montgomery will continue to serve on the Committee. The Windstream Board
has determined that each member of the Compensation Committee is an independent director under NASDAQ
listing standards, a “non-employee director” for purposes of Section 16 of the Securities Exchange Act of 1934,
and an “outside director” as defined in Section 162(m) of the Internal Revenue Code.
The Compensation Committee assists the Board in fulfilling its oversight responsibility related to the
compensation programs, plans, and awards for Windstream’s directors and principal officers. The Compensation
Committee annually reviews and approves goals relevant to Mr. Gardner’s compensation and, based on an annual
evaluation of these performance goals, determines and approves Mr. Gardner’s compensation. The Committee
conducts this review using a survey of compensation data of comparable employers that is prepared by the
Committee’s outside compensation consultant based on criteria specified by the Committee.
Independent Consultant
The Compensation Committee has the sole authority to retain and terminate any executive compensation
consultant to be used in the evaluation of director, CEO or executive officer compensation and to approve the
consultant’s fees and other retention terms. It is the policy of the Compensation Committee that the
compensation consultant should perform no services for Windstream other than services as consultant to the
Compensation Committee. During 2011, the Compensation Committee engaged Pearl Meyer & Partners, LLC
(“PM&P”) to assist the Committee in the review and design of Windstream’s executive compensation program.
PM&P reports directly to the Compensation Committee and performed no services to Windstream during 2011
other than in its role as compensation consultant to the Compensation Committee. During 2011, PM&P
conducted a competitive review of the Company’s executive pay levels and executive pay program designs, with
such data and information being used by the Committee, along with all other relevant information, to inform the
Committee’s decisions regarding the executive compensation program.
Windstream Management
Windstream’s management assists the consultant in its survey of executive compensation by providing
historical compensation information and by reviewing and commenting on preliminary drafts of the survey
reports. At the first Compensation Committee meeting of each year (which is expected to be held in early
February of each year), the Compensation Committee reviews and approves executive compensation for such
year. Based on the compensation surveys and compensation principles previously specified by the Compensation
Committee, Mr. Gardner and members of Windstream’s Human Resources department prepare recommendations
for compensation levels for executive officers in consultation with the Compensation Committee’s consultant,
except that no recommendation is made for Mr. Gardner’s compensation. The Compensation Committee then
meets to review and determine Mr. Gardner’s compensation and reviews and recommends the compensation for
all other executive officers. The Compensation Committee determines Mr. Gardner’s compensation, and
recommends the compensation of all other executive officers, based on an evaluation of a number of factors,
including historical compensation, individual performance, retention considerations, discussions with
Windstream management including Mr. Gardner, compensation survey data, the strategic importance of each
position, general economic conditions, and discussions with the compensation consultant. The Windstream Board
approves or, in the case of Mr. Gardner’s compensation, ratifies the actions of the Compensation Committee.
Competitive Market Analysis
As part of the process of approving executive compensation levels and plan designs, the Compensation
Committee regularly reviews and considers competitive market data. This competitive market analysis generally
takes place in the fall of each year and is used as part of the decision-making process for the following year.
During 2010, PM&P provided, and the Compensation Committee reviewed, competitive market data as part of
its process for approving 2011 executive compensation levels and plan designs.
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