Windstream 2012 Annual Report Download - page 49

Board Recommendation
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE “AGAINST”
PROPOSAL NO. 5.
PROXIES SOLICITED BY THE BOARD OF DIRECTORS WILL BE VOTED “AGAINST” PROPOSAL
NO. 5 UNLESS STOCKHOLDERS SPECIFY A CONTRARY VOTE.
PROPOSAL NO. 6
STOCKHOLDER PROPOSAL
The stockholder proposal, which follows, is a verbatim submission by Mr. Kenneth Steiner (who has notified
Windstream that he is beneficial owner of Windstream Common Stock valued at more than $2,000), whose address is 14
Stoner Ave., 2M, Great Neck, NY 11021, for consideration by Windstream stockholders. All statements therein are the sole
responsibility of the proponent.
Proposal 6 – Simple Majority Vote Right
RESOLVED, Shareholders request that our board take the steps necessary so that each voting requirement in our charter and
bylaws that calls for a greater than simple majority vote be eliminated, and replaced by a requirement for a majority of the
votes cast for and against applicable proposals, or a simple majority in compliance with applicable laws. If necessary this
means the closest standard to a majority of the votes cast for and against such proposals consistent with applicable laws.
Shareowners are willing to pay a premium for shares of corporations that have excellent corporate governance. Supermajority
voting requirements have been found to be one of six entrenching mechanisms that are negatively related to company
performance according to "What Matters in Corporate Governance" by Lucien Bebchuk, Alma Cohen and Allen Ferrell of
the Harvard Law School.
This proposal topic won from 74% to 88% support at Weyerhaeuser, Alcoa, Waste Management, Goldman Sachs,
FirstEnergy, McGraw-Hill and Macy's. The proponents of these proposals included James McRitchie and Ray T. Chevedden.
Currently a 1%-minority can frustrate the will of our 66%-shareholder majority. Supermajority requirements are arguably
most often used to block initiatives supported by most shareowners but opposed by management.
This proposal should also be evaluated in the context of our Company's overall corporate governance as reported in 2012:
GMI/The Corporate Library, an independent investment research firm, expressed concern regarding the pay of our executives
including $9 million for our CEO Jeffery Gardner.
GMI said annual cash incentives pay for our highest paid executives was based on a single financial performance measure.
In most cases, a mix of performance metrics is more appropriate, not just to prevent executives from being tempted to game
results, but to ensure that they do not take actions to achieve one end that might ultimately damage another. Furthermore,
long-term incentives were split even between performance- and time-based equity pay. To be effective, all equity pay given
as a long-term incentive should include performance requirements.
Please encourage our board to respond positively to this proposal to protect shareholder value: Simple Majority Vote Right
– Proposal 6.
BOARD OF DIRECTORS' STATEMENT
IN OPPOSITION TO THE STOCKHOLDER PROPOSAL
The Board of Directors has carefully considered this proposal and believes that the existing voting standards under
Windstream’s Amended and Restated Certificate of Incorporation (the “Windstream Certificate”) and Amended and Restated
Bylaws (the “Windstream Bylaws”) are appropriate and necessary. The Board believes that extraordinary transactions and
matters concerning Windstream’s corporate governance structure should have the support of a broad consensus of our
stockholders in order to be approved, and our voting standards, some of which exceed the simple majority voting standard
advocated by the proponent, ensure that such support exists when these matters are voted upon.
The Delaware General Corporation Law permits supermajority voting requirements, and a number of publicly traded
companies incorporated in Delaware have adopted these provisions to preserve and maximize long-term value for all
stockholders. Our supermajority voting standards, each of which was carefully selected, apply to a small number of important
corporate governance matters, including:
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