Windstream 2011 Annual Report Download - page 26

Mr. Gardner which has a three year cliff-vesting provision. The following table shows for each named executive
officer the amount awarded for the 2011 annual equity grant for comparison purposes.
Named Executive Officer
2011 Annual Equity Grant
$
Jeffery R. Gardner 3,599,993 (1)
Anthony W. Thomas 799,998
Brent Whittington 999,998
John P. Fletcher 799,998
Cynthia B. Nash 399,998
(1) Does not include additional retention grant of $1,999,996 that was made in 2011 and not considered part of
Mr. Gardner’s annual compensation.
The Compensation Committee believes that a substantial portion of executive compensation should be at
risk through allocation of compensation to short-term cash incentives and long-term equity-based incentives. The
following table illustrates the allocation for each named executive officer for 2011:
Named Executive Officer
Percentage of Annual Total
Direct Compensation
Allocated to Short-term
Incentive and Performance-
Based Equity Compensation
(%)
Percentage of Annual
Total Direct Compensation
Allocated to Equity-Based
Compensation (%)
Jeffery R. Gardner 83% 62%
Anthony W. Thomas 47% 48%
Brent Whittington 47% 47%
John P. Fletcher 47% 48%
Cynthia B. Nash 43% 42%
Total direct compensation for these purposes equals base salary, short-term cash incentive payment at target
levels and the full up-front fair value of the annual equity-based awards determined in accordance with
authoritative guidance on share-based compensation.
2012 Compensation. The Compensation Committee has approved an executive compensation program
for 2012 that is consistent with past practice subject to the following principal changes in program design. For
2012, the Compensation Committee has established the performance objective for its annual cash incentive plan
based on achievement of Windstream’s adjusted operating income before depreciation and amortization
excluding pension expense, restructuring charges, and restricted stock expense (“Adjusted OIBDA”) as well as
achievement of Windstream’s strategic revenue. As in prior years, each performance metric is set at a level that is
difficult but achievable and designed to drive industry leading results. The Compensation Committee continued
grants of performance-based equity awards in the form of performance-based restricted stock units (“PBRSUs”),
that vest at threshold and target levels based on achievement of Adjusted OIBDA, and the PBRSUs will accrue
dividend equivalents to be paid if performance-based conditions are satisfied. The Compensation Committee
increased the percentage of equity awards granted in the form of performance-based equity awards to 70% (up
from 50% in 2011) for named executive officers other than Mr. Gardner and continued to grant all equity awards
to Mr. Gardner in the form of performance-based equity awards. The PBRSUs provide for the issuance of
additional shares above target level (which will not accrue dividends) for achievement of total shareholder return
compared to the S&P500 over a three-year period, as well as reduced amounts if Adjusted OIBDA performance
falls between threshold and target criteria.
Base Salary. Base salary is designed primarily to provide competitive compensation that reflects the
contributions and skill levels of each executive.
Short-Term Cash Incentive Payments. Windstream maintains short-term cash incentive plans which are
designed primarily to motivate executives to achieve Company-wide performance goals over annual or quarterly
periods. Under these plans, the Compensation Committee sets different target payout amounts (as a percentage of
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