Windstream 2015 Annual Report Download - page 39

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The Compensation Committee sets the performance measures for PBRSUs each year during the three-year
vesting period. It is the Compensation Committee’s goal to set such amounts at levels that it believes are difficult
but achievable and designed to drive results. For 2015, the Committee selected Adjusted OIBDAR as the baseline
performance measure and included an overachievement measure (the “Overachievement Measure”) based on
Windstream total stockholder return. The reasons the Compensation Committee selected Adjusted OIBDAR are
outlined above in the section titled “Short-Term Cash Incentive Payments.” The Compensation Committee selected
total stockholder return for the Overachievement Measure because it is an objective metric that the Committee
believes will further align compensation opportunity of our NEOs to stockholder interests.
The target Adjusted OIBDAR metric for the 2015 performance period was set at $1.951 billion and the threshold
was set at $1.809 billion. No shares are awarded under these grants if actual Adjusted OIBDAR is less than the
threshold and no additional amounts are awarded if actual Adjusted OIBDAR exceeds the target.
Overachievement Measure. For the Overachievement Measure, each NEO is entitled to receive an additional
numberofsharesupto50%ofhistargetpayoutamountif(1)WindstreamachievestheTotalStockholderReturn
goal (as described below) over the three-year vesting period of the PBRSUs, and (2) at least the minimum threshold
of the Adjusted OIBDAR goal is met in each of the three fiscal performance periods covered by the vesting schedule.
If Windstream fails to achieve the minimum of the Adjusted OIBDAR goal with respect to any of the 2015, 2016, and
2017 performance periods, the additional payout opportunity will be reduced proportionately. The Total Stockholder
Return goal is measured by comparing Windstream total stockholder return against the cumulative total return of
the S&P Midcap 400 index. The Compensation Committee chose the broader S&P 400 Midcap index over the S&P
telecom index because the telecom index is comprised of only five (5) companies, including AT&T and Verizon, which
are not impacted by the same issues and environment given their larger size and their focus on wireless businesses.
PursuanttotheOverachievementMeasure,uptoanadditional50%ofshareswillbeissuedifWindstreamtotal
stockholder return is between the 50-75th percentile of the S&P Midcap 400.
2015 Performance Period Actual Results. Actual Adjusted OIBDAR for fiscal 2015 (as adjusted to eliminate
un-forecasted CAF PhaseII proceeds) was$1.951 billion,which reflecteda100% achievementlevel against the
target performance goal. As such, PBRSUs for the 2015 performance period (specifically, the 2013, 2014 and 2015
grants)vestedat100%inaccordancewiththeirterms.
Effect of CS&L Spin-off on Outstanding Equity Awards. We completed the spin-off of CS&L on April 24, 2015.
Effective with the spin-off, equitable adjustments were made with respect to outstanding equity awards related to
Windstream common stock. All such awards were adjusted into two separate awards, one relating to Windstream
common stock and one relating to CS&L common stock. The adjustment was made such that the number of shares
related to the award covering CS&L common stock was equal to the number of shares of CS&L common stock that
the award holder would have received in the spin-off had the outstanding award represented outstanding shares of
Windstream common stock on the date of the spin-off. As a result, employees of Windstream hold restricted shares
of common stock of both Windstream and CS&L and restricted stock units covering both Windstream and CS&L
common stock, with the awards covering CS&L common stock being subject to the same service- and performance-
based vesting conditions that apply to the Windstream awards to which they are attributable.
Employment Agreements, Severance Arrangements and Change-in-Control Agreements
President & CEO. Windstream entered into an employment agreement with Tony Thomas on December 11, 2014
in connection with his appointment as President & Chief Executive Officer. The employment agreement provides that
Mr. Thomas will be employed from December 11, 2014 to December 31, 2019, subject to annual renewals thereafter.
During the term of his employment, Mr. Thomas’s annual base salary will be not less than $1,000,000 and his target
annualbonusopportunity, commencingwith the2015fiscal year,willnot be less than 125%of hisbasesalary.
Under the terms of the agreement, Mr. Thomas received a time-based restricted share award with a grant date value
of $1,000,000, which award will vest in full on the third anniversary of the date of grant. Additionally, Mr. Thomas
is eligible to participate in equity incentive, employee benefits and perquisite programs and arrangements that are no
less favorable than those provided to other senior executives of Windstream. The agreement also contains change-