Windstream 2012 Annual Report Download - page 45

PROPOSAL NO. 4
STOCKHOLDER PROPOSAL
The stockholder proposal, which follows, is a verbatim submission by the Trust for the International Brotherhood of
Electrical Workers’ Pension Benefit Fund (who has notified Windstream that it is the beneficial owner of Windstream
Common Stock valued at more than $2,000), whose address is 900 Seventh Street, N.W., Washington, D.C. 20001, for
consideration by Windstream stockholders. All statements contained in the proposal are the sole responsibility of the Fund.
RESOLVED: The shareholders ask the board of directors to adopt a policy that in the event of a change in control (as
defined under any applicable employment agreement, equity incentive plan or other plan), there shall be no acceleration of
vesting of any equity award granted to any senior executive, provided, however, that the board's Compensation Committee
may provide in an applicable grant or purchase agreement that any unvested award will vest on a partial, pro rata basis up to
the time of the senior executive's termination, with such qualifications for an award as the Committee may determine.
For purposes of this Policy, "equity award" means an award granted under an equity incentive plan as defined in Item 402 of
the SEC's Regulation S-K, which addresses executive compensation. This resolution shall be implemented so as not affect
any contractual rights in existence on the date this proposal is adopted.
SUPPORTING STATEMENT
Windstream Corporation (the "Company") allows senior executives to receive an accelerated award of unearned equity under
certain conditions after a change of control of the Company. We do not question that some form of severance payments may
be appropriate in that situation. We are concerned, however, that current practices at the Company may permit windfall
awards that have nothing to do with a senior executive's performance.
According to last year's proxy statement, a termination without cause or an voluntary termination with good reason at the end
of the 2011 fiscal year could have accelerated the vesting of $17.5 million worth of long-term equity to Windstream's five
senior executives, with Mr. Gardner, the President and CEO, entitled to $9.3 million out of a total personal severance
package worth $17.4 million.
In this regard, we note that Windstream uses a “double trigger” mechanism to determine eligibility for accelerated vesting:
(1) There must a change of control, which can occur as defined in the plan or agreement, and (2) Employment is terminated
without cause or voluntarily for “good reason” as defined in the plan.
We are unpersuaded by the argument that executives somehow “deserve” to receive unvested awards. To accelerate the
vesting of unearned equity on the theory that an executive was denied the opportunity to earn those shares seems inconsistent
with a “pay for performance” philosophy worthy of the name.
We do believe, however, that an affected executive should be eligible to receive an accelerated vesting of equity awards on a
pro rata basis as of his or her termination date, with the details of any pro rata award to be determined by the Compensation
Committee.
Other major corporations, including Apple, Chevron, Dell, ExxonMobil, IBM, Intel, Microsoft, and Occidental Petroleum,
have limitations on accelerated vesting of unearned equity, such as providing pro rata awards or simply forfeiting unearned
awards.
We urge you to vote FOR this proposal.
BOARD OF DIRECTORS' STATEMENT
IN OPPOSITION TO THE STOCKHOLDER PROPOSAL
Windstream maintains an equity-based compensation program for executive officers that is designed to provide
long-term incentives, to better align the interests of executives with stockholders, and to provide a retention incentive. For
the reasons outlined below, we believe this proposal would conflict with and potentially undermine these objectives of our
equity-based compensation program.
We believe the following design features of our equity compensation program adequately address the concerns
raised by the proponent and render adoption of the proposal unnecessary:
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