Windstream 2014 Annual Report Download - page 36

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2014 Actual Results. Windstream’s actual Adjusted OIBDA for 2014 was $2.140 billion, which was below
the threshold amount. Actual Total Revenue for 2014 was $5.830 billion, which reflected an approximate 68.5%
achievement level against the target performance goal. The Payout Ratio for 2014 was 75.8%, which reflected an
approximate 71.6% achievement level against the target performance goal. The overall achievement level calculated
based on the 2014 financial results was approximately 28%. The following table shows the target payouts and actual
payouts (in each case, expressed as a percentage of base salary) for each NEO under the short-term incentive plan
for 2014:
Named Executive Officer Target Payout Percentage Actual Payout Percentage
Anthony W. Thomas 80% 22%
Robert E. Gunderman 40% 11%
John P. Fletcher 80% 22%
J. David Works, Jr. 80% 22%
John C. Eichler 40% 11%
Jeffery R. Gardner 135% 38%
Brent Whittington 80% 0%
The Compensation Committee set the target payout percentages for the NEOs at the beginning of the fiscal
year based on such individual’s contributions to Windstream and the market level of compensation for such position
without benchmarking against a specific percentile. The Compensation Committee set Mr. Gardner’s target payout
percentage level while he was President and Chief Executive Officer of the Company. The Committee set his level
above the other NEOs given his position and ability in that role to affect stockholder value relative to other NEOs.
Messrs. Thomas and Gunderman’s participation amounts were set before they were promoted in the fourth
quarter of 2014 and were not adjusted during the 2014 performance cycle to reflect their new positions. Mr. Thomas’s
2015 participation level in the short-term incentive plan will be 125%, which will be higher than all other executive
officers. The Compensation Committee set this amount when Mr. Thomas was promoted to President and Chief
Executive Officer and believes it is consistent with the Committee’s view of the level of responsibility and ability to
affect stockholder value of the Company’s principal executive officer.
Mr. Whittington was not employed by Windstream at the end of 2014 and, therefore, did not receive a payout
under the short-term incentive plan.
Long-Term Equity-Based Incentive Awards. Windstream maintains an equity-based compensation program to
provide long-term incentives to executive officers, to better align the interests of executives with stockholders and to
provide a retention incentive. The equity-based compensation program also furthers the Compensation Committee’s
goal to make a substantial portion of executive officers’ total direct compensation at-risk.
Each year NEOs receive a portion of their total direct annual compensation in the form of long-term equity-based
incentive compensation. All Windstream equity compensation awards are issued as either time-based restricted stock
or performance-based restricted stock units (PBRSUs) under the Windstream Amended and Restated 2006 Equity
Incentive Plan (“Equity Plan”). Windstream has not issued any stock options or other forms of equity compensation
to its directors, executive officers or other employees. The Compensation Committee believes that restricted stock or
PBRSU awards are a preferred mechanism of equity compensation compared to stock options or other devices that