Windstream 2012 Annual Report Download - page 43

PROPOSAL NO. 2
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 (non-binding) 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 (non-binding) vote on the
frequency at which stockholder advisory votes on executive compensation (like this Proposal No. 2) should be held.
Consistent with the recommendation of the Board of Directors, approximately eighty-four percent (84%) of votes cast 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 2014 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:
• Windstream’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.
• We 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.
• Our 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.
• The 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.
The Board of Directors values and encourages constructive dialogue on compensation and other important
governance topics with Windstream’s stockholders, to whom it is ultimately accountable. The Board of Directors requests
stockholder approval of Windstream’s overall executive compensation philosophy, policies and practices. Although your
vote is advisory and will not be binding upon Windstream or the Board of Directors, nor will it create or imply any change in
the fiduciary duties of Windstream or the Board of Directors, the Compensation Committee will take into account the
outcome of the vote when considering future executive compensation decisions.
Board Recommendation
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE “FOR”
APPROVAL OF PROPOSAL NO. 2.
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