Windstream 2012 Annual Report Download - page 42

agreement. Under the policy, each executive officer is required to forfeit or repay covered compensation, to the fullest extent
permitted by law, if all of the following conditions are met: (i) Windstream financial statements filed during an executive
officer's employment become subject to a restatement; (ii) the Board determines that fraud caused or significantly contributed
to the need for the restatement; (iii) the Board determines that the restatement applies to the covered compensation; and (iv)
the Board determines in its sole discretion that it is in the best interests of Windstream and its stockholders for the executive
officer to repay the covered compensation. The policy is limited to compensation that is vested or paid based on the
achievement of financial results that subsequently become subject to restatement. The Board can determine that a
restatement applies to covered compensation if the vesting or payment of such compensation was based on the achievement
of financial results that were subsequently the subject of a restatement, and the amount of compensation that would have been
received by the executive officer had the financial results been properly reported, after giving effect to the restatement, would
have been lower than the amount actually received. Each executive officer is required to sign an agreement that he or she has
received, read and understood the policy. In addition, the policy provides that repayment and forfeiture remedies are not the
exclusive remedies and that Windstream may pursue every other right or remedy at law or in equity available.
Risks Presented by Windstream’s Compensation Programs
As required by SEC rules, Windstream has assessed the risks that could arise from its compensation policies for all
employees, including employees who are not officers, and has concluded that such policies are not reasonably likely to have
a material adverse effect on Windstream. To the extent that Windstream’s compensation programs create a potential
misalignment of risk incentives, Windstream believes that it has more than adequate compensating controls to mitigate
against the potential impact of any such misalignment. These compensating controls include strong internal controls over
financial reporting, robust stock ownership guidelines, a clawback policy for senior executives, and a three year vesting cycle
for equity-based compensation. The result is a strong alignment between the interests of management and shareholders.
Windstream also engages in an annual risk assessment process that is conducted by Windstream’s Internal Audit Department.
The results of this risk assessment are reported annually to Windstream’s Audit Committee and full Board of Directors, and
this assessment is designed in part to identify any activities that create improper risks to Windstream.
Compensation Committee Interlocks and Insider Participation
During 2012, the Compensation Committee consisted of Messrs. Beall (Chairman), Foster and Montgomery. All
members of the Compensation Committee during 2012 were independent directors, and no member was an officer or
employee of Windstream or a former officer of Windstream. No member of the Compensation Committee serving during
2012 had any relationship requiring disclosure under the section titled “Certain Relationships and Related Transactions” in
this Proxy Statement. During 2012, none of our executive officers served on the compensation committee (or its equivalent)
or board of directors of another entity whose executive officer served on either our Compensation Committee or our Board of
Directors.
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