Windstream 2012 Annual Report Download - page 24

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Compensation Mix. Our executive compensation program consists of base salary, annual cash incentives and long-
term equity incentives. The Compensation Committee considers the total compensation of each executive officer as well as
the allocation of compensation among base salary, short-term incentive compensation, and equity-based compensation in
determining compensation levels. The following table illustrates the allocation for each named executive officer for 2012:
Named Executive Officer
Percentage of Annual
Total Direct
Compensation* Allocated
to Short-term Incentive
(%)
Percentage of Annual
Total Direct
Compensation*
Allocated to Equity-
Based Compensation
(%)
Percentage of Annual
Total Direct
Compensation*Allocated
to Base Salary (%)
Jeffery R. Gardner 21% 64% 15%
Anthony W. Thomas 20% 55% 25%
Brent Whittington 19% 57% 24%
John P. Fletcher 20% 55% 25%
Cynthia B. Nash 23% 44% 33%
* 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.
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 Compensation
Committee also believes that, because of his considerable ability to affect the financial results of Windstream, Mr. Gardner’s
base salary should be a smaller component of his total compensation and at risk compensation should be a larger component.
The following charts show the weighting of at risk compensation relative to total compensation for the CEO and collectively
for the other NEOs.
Percentage of At Risk Compensation in 2012
At Risk All Other
Compensation Committee. Windstream’s Compensation Committee is presently comprised of Samuel E. Beall, III,
Chairman, Dennis E. Foster and William A. Montgomery. 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 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 2012,
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 was
originally selected in 2010 following an interview process of independent compensation consultants. During 2012, PM&P
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