Windstream 2011 Annual Report Download - page 49

PROPOSAL NO. 3
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.”
At the 2011 Annual Meeting of Stockholders, stockholders were provided an advisory (nonbinding) vote on
the frequency at which stockholder advisory votes on executive compensation (like this Proposal No. 3) should
be held. Consistent with the recommendation of the Board of Directors, approximately eighty-four percent
(84%) of votes casts at the 2011 Annual Meeting were cast in favor of holding shareholder advisory votes on
executive compensation on an annual basis. Accordingly, Windstream has determined to hold such votes on an
annual basis, and the next advisory vote to approve Windstream’s compensation of its named executive officers
will be held at the 2013 Annual Meeting of Stockholders.
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:
• Our strategy has been and continues to be the transformation of our business into a next-generation
communications company while creating value for shareholders. Since Windstream was formed in
2006, we have executed a focused strategy to transform our business from a rural, consumer-focused
voice and broadband provider into a national provider of advanced communications and technology
solutions to businesses. From our formation in 2006 through December 31, 2011, this strategy has
resulted in total cumulative shareholder returns (assuming reinvestment of dividends) for Windstream
common stock of approximately 63%, which exceeded the returns of both the S&P 500 and S&P
Telecom Indices for this period.
• In order to create value for shareholders, our strategy is focused on maintaining and increasing our free
cash flow, which in turn hinges on our ability to grow revenues while managing cash expenditures. We
believe that Adjusted Operating Income Before Depreciation and Amortization (Adjusted OIBDA) is
the performance metric best aligned with the goal of maintaining and increasing the cash flows of our
business, and we have included Adjusted OIBDA as a key component of our short-term and long-term
incentive plans since our formation in 2006.
• 2011 was an incredibly successful year for Windstream. Throughout the year, we integrated several
key acquisitions made in 2010, which expanded our suite of business offerings. In December 2011,
Windstream added another key business to our portfolio with the acquisition of PAETEC. We also
made many success-based capital investments that we believe will enhance future growth, and we
made significant improvements to our balance sheet and debt maturity profile. Our 2011 pro forma
financial results reflect this transformation. For 2011, pro forma revenue was $6.2 billion, or a decline
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