Windstream 2015 Annual Report Download - page 32

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• Successful Outcome with Respect to CAF Phase II — providing an additional $1.2 billion in funding over
a 7-year period to support and expand internet broadband services
These financial results were aligned with expectations for the year set by the Board, and the strategic
accomplishments position the Company for continued success.
2015 Compensation Results
These financial results and strategic accomplishments resulted in the following compensation results for the
NEOs:
• Short-term incentive payout equal to 100% of target for Thomas, Gunderman, Fletcher, and Eichler
(based on consolidated Total Service Revenue and Adjusted OIBDAR)
• Short-term incentive payout equal to 96% of target for Works (based on consolidated Adjusted OIBDAR
and Enterprise Business Unit Contribution Margin)
• Performance-based stock unit payout equal to 100% of target for all NEOs (based on consolidated
Adjusted OIBDAR performance)
The Compensation Committee believes that these “near or at target” payout results are well aligned with the
Company’s financial performance and strategic accomplishments during 2015.
2016 Compensation
With the organizational, operational, and leadership changes completed during 2015, the Compensation
Committee used the second half of the year to review and consider more substantive changes to the executive
compensation program for 2016 that would be responsive to the following primary considerations:
• Prior and ongoing stockholder outreach expressing the desire for more substantive change, especially
with respect to the long-term incentive program design
• The recapitalization of the Company following the REIT spin-off, which limits the amount of equity-
based compensation that can be provided within reasonable parameters for equity plan dilution and
annual equity grant rates
In light of these considerations, the Compensation Committee approved the following plan design changes to
the executive compensation program for 2016:
• Shift the pay mix — Reduce long-term incentive grant values and increase short-term incentive
opportunities by a commensurate amount to retain approximately the same total compensation opportunity
while creating more focus on near-term financial results (this is a temporary shift in pay mix until the
Company’s market cap improves)
• Simplify and improve “line of sight” in the short-term incentive plan — Corporate executives to be
based100%onAdjustedOIBDARand Business Unitexecutives to bebased100% on Business Unit
Contribution Margin
• Create focus and accountability for long-term performance in the long-term incentive plan — With
respect to the performance-based restricted stock units (PBRSUs), lengthen the measurement period from
1 year to 3 years, change the measure from Adjusted OIBDAR to Adjusted Free Cash Flow, and eliminate
the Relative Total Shareholder Return measure
• Decrease the size and level of equity-based participation — The long-term incentive program remains
equity-based, but the size and level of participation has been greatly reduced, with only 83 employees
receiving approximately $14 million in annual equity awards in 2016, down from 852 employees receiving
approximately $37 million in annual equity awards in 2015
The Compensation Committee believes that these changes are responsive to stockholders, reflective of the new
organizational structure and priorities, and will continue to align pay and performance.