Windstream 2014 Annual Report Download - page 58

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PROPOSAL NO. 3
AMENDMENT TO THE WINDSTREAM CERTIFICATE AND WINDSTREAM BYLAWS
TO ENABLE STOCKHOLDERS TO CALL SPECIAL MEETINGS
The Windstream Board of Directors is once again 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.
At the 2014 Annual Meeting, stockholders were presented with amendments to the Windstream Certificate
and Windstream Bylaws identical to those presented in this Proposal No. 3. As is the case with this Proposal No. 3,
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year’s amendments. While last year’s proposal failed to garner the support necessary to pass, it received the support
of 48.27% of our outstanding common stock, representing approximately 98% of the votes cast on such proposal
at last year’s annual meeting (excluding abstentions and broker non-votes). Considering the level of support for
such amendments, the Windstream Board of Directors deemed it advisable and in the best interest of Windstream
and its stockholders to once again ask stockholders to approve the amendments to the Windstream Certificate and
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 continues to support 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 consideration of the level of support received by this proposal at the 2014
Annual Meeting and feedback it has received from stockholders on this subject matter, the Windstream Board of
Directors again 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 continues to believe 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 also 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.