Windstream 2011 Annual Report Download - page 31

conditions set forth in the policy. See “Compensation of Named Executive Officers – Clawback Policy” for a
description of the terms of the policy. 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. The Compensation Committee intends to modify the
clawback policy to comply with the final regulations to be issued by the SEC pursuant to the requirements of the
Dodd-Frank Wall Street Reform and Consumer Protection Act.
Other Services Performed By Compensation Consultant. The Compensation Committee has adopted a
policy that the compensation consultant to the Compensation Committee should not perform any other services
to Windstream, and PM&P performed no services to Windstream during 2011 other than in its role as
compensation consultant to the Compensation Committee.
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 established the performance objective for its annual cash incentive plan
based on achievement of Windstream’s 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. 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&P 500 over a
three-year period, as well as reduced amounts if Adjusted OIBDA performance falls between threshold and target
criteria.
Compensation of Directors
During 2011, Windstream non-employee directors received the following compensation: (1) an annual
cash retainer of $60,000, (2) a cash fee of $2,000 for each Board and committee meeting attended, except that no
fees were paid for periodic informational update meetings and Governance Committee meetings, and (3) an
annual grant of $80,000 in restricted stock under the Equity Plan. The restricted shares granted to non-employee
directors vest if the grantee continues to serve on the Board for the period beginning on the date of grant and
ending on February 15 of the following year or earlier, if the grantee dies or becomes permanently disabled while
serving on the Board or a change of control of Windstream occurs. In addition, in 2011, the chairs of the Audit
and Compensation Committees received additional annual cash retainers of $20,000 and $15,000, respectively.
The Board chairman received an additional annual cash retainer of $100,000 for his service as non-executive
chairman. All non-employee directors have the option to elect to receive any cash retainer in the form of
Windstream Common Stock. Beginning in 2012, the chair of the Governance Committee will receive an
additional annual cash retainer of $15,000 and the cash fee of $2,000 will be paid for meetings of the Governance
Committee.
Board members receive pro-rated amounts of the annual cash retainer and the annual restricted stock
grant for the portion of the first year in which they are appointed or elected to serve as a Board member or
Committee Chair.
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