Windstream 2015 Annual Report Download - page 31

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COMPENSATION DISCUSSION AND ANALYSIS
This Compensation Discussion and Analysis provides information regarding the compensation paid to our
Chief Executive Officer, Chief Financial Officer and certain other current and former executive officers who were
the most highly compensated in fiscal year 2015. These individuals, referred to as “named executive officers” or
“NEOs”, are identified by name in the Summary Compensation Table.
Compensation Philosophy
Windstream’s executive compensation program is designed to achieve the following objectives:
• Provide a high correlation between pay and performance;
• Align management’s interests with the long-term interests of Windstream’s stockholders; and
• Provide competitive compensation and incentives to attract and retain key executives.
Executive Summary
Heading into 2015, Windstream was undergoing leadership changes, restructuring into business units, and
pursuing a spin-off of its real estate assets. Given these changes and uncertainties, the Compensation Committee
determined that any substantive changes to the executive compensation program should be postponed until 2016,
resulting in the 2015 executive compensation program remaining similar to prior years but with the following changes
affecting the NEOs:
• No increases in compensation — base salary, short-term incentive opportunities (threshold, target, and
maximum), and long-term incentive opportunities (grant value) remained unchanged from where they
were as of December 31, 2014
• Updated the short-term incentive plan measures — changed from Adjusted OIBDA to Adjusted OIBDAR
as the consolidated earnings measure and added Total Service Revenue (for Thomas, Gunderman,
Fletcher, and Eichler) and Business Unit Contribution Margin (for Works)
• Updated the performance-based restricted stock unit award design — changed the relative performance
index from the S&P 500 to the S&P Midcap 400
• Delayed equity grants from February 2015 to May 2015 due to the real estate spin-off — avoided making
agrantthatwouldimmediatelyneedtobeconvertedandensuredthat100%ofthegrantwouldbelinked
to Windstream’s performance as opposed to the performance of the REIT
Although the changes did not completely implement all suggestions made by some stockholders during our
outreach efforts in 2014 and 2015, the Compensation Committee believes the 2015 compensation structure was
appropriate, responsive, and aligned with the Company’s strategy, structure, and priorities while not being additionally
disruptive to the leadership team.
2015 Performance Results
Despite the significant organizational, operational, and leadership changes, the Company produced strong
financial results while also accomplishing several major objectives:
• Total Service Revenue of $5.5 billion — within the budgeted target range
• Adjusted OIBDAR of $2.0 billion — within the budgeted target range
• Strong Business Unit Contribution Margins — between the threshold and target budgeted range for each
Business Unit
• Debt Reduction of Approximately $3.5 billion — significantly reducing financial leverage going forward
• Cash Returns to Shareholders of Approximately $416 million — through dividends and stock repurchases
• Successful Completion of Two Strategic Transactions — the REIT spin-off and the disposition of our data
center assets