Windstream 2012 Annual Report Download - page 23

xNo Hedging Transactions – Our directors and executive officers are prohibited from engaging in any
transaction involving derivative securities intended to hedge the market risk in our stock, pledging our
stock, or purchasing our stock on loan or margin.
xNo Repricings – Our stock incentive plans prohibit us from repricing options without stockholder approval.
xNo Tax Gross-ups – Our compensation programs do not provide for the gross-up or reimbursement of taxes
for executive officers in any situation.
xNo Special Perquisites for Former Executives –We do not have perquisites for former and/or retired
executives that differ materially from those available to employees generally.
xNo Top Hat Plan – We do not have a top hat plan or other supplemental executive retirement plan.
Our Board recognizes the fundamental interest our stockholders have in the compensation of our executive officers.
At the 2012 Annual Meeting, our stockholders approved by a vote of over 92 percent the compensation of our named
executive officers. Based upon the results of such vote and our review of our compensation policies and decisions, we believe
that our existing compensation policies and decisions are consistent with our compensation philosophy and objectives
discussed below and adequately align the interests of our named executive officers with the long term goals of Windstream.
Stockholders at the 2013 Annual Meeting will be asked to again approve, on an advisory basis, the compensation of
our named executive officers. The following is a summary of key considerations that stockholders should take into account
when assessing our executive compensation program:
xWindstream’s vision is to become the premier enterprise communications and services provider in the
United States while maintaining our strong, stable consumer business. Our goal is to generate solid and
sustainable cash flow over time, and we return a significant portion of this cash flow to our shareholders
through our current dividend practice.
xWe believe that Adjusted Operating Income Before Depreciation and Amortization (Adjusted OIBDA) is
the best measure of our ability to generate solid and sustainable cash flow over the long-term, which is why
we include Adjusted OIBDA as a key performance objective for our short-term and long-term incentive
plans.
xOur 2012 compensation reflected our mixed operating results by paying short-term incentive payouts below
target. Our stock price decline also impacted 2012 compensation by providing a lower value to executives
upon vesting of their equity awards compared to their grant value. In addition, because our executives are
required to own a significant amount of company stock, the value of our executive’s total stock holdings
declined during the year.
xThe Compensation Committee’s 2013 compensation decisions for NEOs included (a) no increases to base
salaries, (b) no increases to short-term incentive opportunities, (c) no increases in the long-term incentive
grant values, and (d) the addition of dividend payout ratio as a measure in the short-term incentive plan to
strengthen the focus and accountability for preserving the cash flow necessary to fund the Company’s
dividend.
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