Windstream 2013 Annual Report Download - page 33

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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 2013, 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 2013, PM&P conducted a competitive review of Windstream’s executive pay
levels and executive pay program designs, with such data and information being used by the Committee, along with
all other relevant information, to inform the Committee’s decisions regarding the executive compensation program.
PM&P provided a self-assessment to the Compensation Committee in 2013 relative to the independence standards
required by the stock exchanges. The self-assessment included the following information:
• PM&P performs no other services for Windstream, other than the engagement with the Compensation
Committee;
• Fees paid by Windstream to PM&P are less than 0.5% of PM&P’s total revenue;
• PM&P has policies and procedures to prevent conflicts of interest;
• The individual advisor to the Compensation Committee does not own any Windstream stock;
• There is no business or personal relationship between the individual advisor and a Committee member;
• There is no business or personal relationship between the individual advisor or PM&P and an executive
officer of Windstream.
Competitive Market Analysis. As part of the process of approving executive compensation levels and plan
designs, the Compensation Committee regularly reviews and considers competitive market data. This competitive
market analysis generally takes place in the fall of each year and is used as part of the decision-making process for
the following year. During 2012, PM&P provided, and the Compensation Committee reviewed, competitive market
data as part of its process for approving 2013 executive compensation levels and plan designs.
Given the limited number of direct industry peers with a similar business model and of comparable size, the
competitive market analysis focuses on compensation survey data from reputable surveys that are size-adjusted
using regression formulas. The 2012 market analysis used compensation surveys from Watson Wyatt, Mercer, and
PM&P, and all data was size-adjusted to reflect annual revenues of $6 billion. In considering the survey data, the
Committee does not request the identity of or review the specific companies that are included in any of the surveys
reference above.
In addition to compensation levels, the Committee often requests that PM&P provide proxy data with respect
to compensation plan designs and company performance. Because these elements are less impacted by company
size, PM&P’s 2012 market analysis included plan design and company performance data from a specific group of
companies which included DISH Network Corp., ADP, VISA, Cablevision, Charter Communications, CenturyLink,
Mastercard, NII Holdings, Western Union, Fidelity Information Services, TDS, Metro PCS, Frontier, and Level 3.
The Committee believes that the consideration of plan designs and performance levels among these companies
provides an additional useful reference point for the plan designs and degree of pay and performance alignment at
Windstream. Examples of plan design include the number and weighting of performance metrics and the types of
performance metrics used in incentive plans, the allocation of cash and equity in total direct compensation, and the
allocation of fixed compared to performance based compensation. This group of companies represents a broad group
of FORTUNE 500 companies in telecom, technology and services industry.
While consideration is given to the competitive market data, the Compensation Committee uses it primarily as
a reference point and does not specifically target compensation to any market percentile. In addition to competitive
market data, the Committee reviews and considers factors such as company performance, individual executive
performance, the critical nature of an individual’s role to organizational success, internal pay equity among
colleagues, and retention risks. Only after careful consideration of all relevant facts and circumstances does the
Committee exercise judgment and make compensation decisions.