Windstream 2014 Annual Report Download - page 35

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In February of 2014, based on their performance and anticipated future contributions, and considering the
market data described above, the Compensation Committee increased Messrs. Fletcher and Works’ salaries from
$500,000 to $515,000 and from $430,000 to $465,000, respectively.
Short-Term Cash Incentive Payments. Windstream maintains short-term cash incentive plans which are
designed primarily to motivate executives to achieve Company-wide performance goals over annual or quarterly
periods. Under these plans, the Compensation Committee sets different target payout amounts (as a percentage of
base salary) for all executive officers in order to reflect such individual’s contributions to Windstream and the market
level of compensation for such position. The Compensation Committee believes these short-term incentive plans are
a key part of its goal to make a substantial portion of total direct compensation at-risk.
During 2014, the named executive officers participated in a short-term cash incentive plan based on Windstream’s
achievement of certain Adjusted OIBDA, total revenue and payout ratio levels. The Compensation Committee
selected these financial measures because it believes successful performance against these measures promotes the
creation of long-term stockholder value. Set forth below is more detail regarding these financial measures:
Performance Measure Description Reason Selected by Compensation Committee
Adjusted OIBDA  2SHUDWLQJLQFRPHEHIRUHLW
is reduced by depreciation
and amortization
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integration expense, pension
(income) expense, share-based
compensation, and restructuring
charges
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Measure
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ensures Windstream’s ability to generate
sustainable cash flows over a long period
of time
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Windstream to communicate its financial
performance in its quarterly earnings
releases
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measures because it is believed to be more
closely related to stockholder value
Total revenue  *$$3PHDVXUHLQFOXGHGLQRXU
audited financial statements
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performance year-over-year and overall
financial condition
Payout ratio  'LYLGHQGV3DLG$GMXVWHG)UHH
Cash Flow
 $GMXVWHGIUHHFDVKIORZLVD
Non-GAAP measure and is
defined as Adjusted OIBDA less
cash interest, cash taxes and
capital expenditures (excluding
integration capital)
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dividend payments
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stockholders and the capital markets
Under the short-term incentive plan, executive officers are eligible to receive payments in proportion to
Windstream’s achievement of certain levels of each performance measure set at minimum (or threshold), target and
maximum levels. The Compensation Committee sets each performance goal at levels it believes to be difficult but
achievable and designed to drive industry-leading results. No payout is made if performance is below the threshold
levels, and performance between threshold, target and maximum levels results in prorated payouts. The table below
sets forth the 2014 performance goal levels:
Performance Goal Levels
(dollars in billions)
Performance Measure Component of Total Award Threshold Target Maximum
Adjusted OIBDA 60% $2.155 $2.271 $2.387
Total revenue 20% $5.741 $5.980 $6.220
Payout ratio 20% 78% 73% 68%