Windstream 2013 Annual Report Download - page 65

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PROPOSAL NO. 5
AMENDMENT TO THE WINDSTREAM CERTIFICATE AND WINDSTREAM BYLAWS
TO ENABLE STOCKHOLDERS TO CALL SPECIAL MEETINGS
The Windstream Board of Directors is asking stockholders to approve amendments to the Amended and
Restated Certificate of Incorporation of Windstream Holdings, Inc. (the “Windstream Certificate”) and the Amended
and Restated Bylaws of Windstream Holdings, Inc. (the “Windstream Bylaws”) to enable stockholders holding 20%
or more of our outstanding common stock to call a special meeting under certain circumstances.
Background. The Windstream Certificate currently provides that special meetings of stockholders “may be
called only by the Board of Directors.” The Windstream Board of Directors has carefully considered the implications
of amending the Windstream Certificate to allow stockholders to call a special meeting of stockholders. The ability
of stockholders to call special meetings is increasingly considered an important aspect of good corporate governance.
The Board supports the practice of permitting stockholders to request special meetings, provided that the meeting
is called by stockholders owning a significant percentage of the shares of the Company. After careful discussion
and consideration, including feedback it has received from stockholders on this subject matter, the Windstream
Board of Directors determined that it is consistent with best corporate governance practices and in the best interests
of Windstream and our stockholders to amend the Windstream Certificate to permit stockholders who have held
at least a 20% “net long position” in our outstanding capital stock for at least one year to call a special meeting of
stockholders, subject to the conditions set forth in the Windstream Bylaws, as amended and described below.
The Board believes that special meetings should only be called to consider extraordinary events that are of interest
to a broad base of stockholders and that cannot be delayed until the next annual meeting. The Board believes that
establishing a 20% ownership threshold to request a special meeting strikes a reasonable balance between enhancing
stockholder rights and protecting against the risk that a small minority of stockholders, including stockholders with
special interests, could call one or more special meetings that could result in unnecessary financial expense and
disruption to our business. For every special meeting, Windstream is required to provide each stockholder a notice
of meeting and proxy materials, which results in significant legal, printing and mailing expenses, as well as other
costs normally associated with holding a stockholder meeting. Additionally, preparing for stockholder meetings
requires significant attention of the Company’s directors, officers and certain employees, diverting their attention
away from performing their primary function, which is to operate the Company’s business in the best interests of
the stockholders.
Additionally, the proposed amendments would require that stockholders requesting a special meeting hold
the requisite stock ownership percent in a “net long position.” A stockholder’s “net long position” is the amount of
Windstream shares of common stock in which the stockholder holds a positive (also known as “long”) economic
interest, reduced by the amount of Windstream shares of common stock which the stockholder holds a negative
(also known as “short”) economic interest. Taking into account the extent to which stockholders requesting a special
meeting hedge their shares (or otherwise reduce or offset their economic exposure in their shares) and how long
they have held those shares ensures that on balance, stockholders seeking to call a special meeting share the same
economic interest in the Company as the majority of stockholders. Requiring that stockholders have held their shares
for at least one year helps to ensure that their economic interest in the Company’s affairs is more than transitory.
Text and Legal Effect of Proposed Amendments. The proposed amendment to the Windstream Certificate
would permit a special meeting to be called by the holders of record of at least 20% of Windstream’s outstanding
common stock, subject to the procedures and other requirements as provided in the Windstream Bylaws. Under the
proposed amendments to the Windstream Bylaws, a special meeting may be called upon the request of stockholders
under the following circumstances:
• Subject to the notice, information and other requirements set forth in the Windstream Bylaws, a special
meeting of stockholders may be called upon receipt by Windstream’s Corporate Secretary of a written
request from one or more stockholders of record who have continuously held at least a 20% “net long
position” of our outstanding common stock for at least one year prior to the date such request is delivered
to Windstream’s Corporate Secretary.