CenturyLink 2015 Annual Report Download - page 48

Overview of Pay Elements and Linkage to Compensation Philosophy and Objectives
We believe the following elements of our compensation program help us to realize our compensation
philosophy and objectives:
Pay Element Characteristics Compensation Philosophy and Objectives
Salary Annual fixed cash compensation Provides a competitive and stable
component of income to our
executives
Short-Term Incentive Bonus Annual variable cash compensation
based on the achievement of annual
performance measures. Half of these
payments are currently based on
operating cash flow and the other half
on core revenue. For each executive,
the Committee has an opportunity to
make a positive or negative adjustment
based on the executive’s performance
against individual objectives
Provides competitive short-term
incentive opportunities for our
executives to earn annual cash bonuses
based on performance objectives
that, if attained, can reasonably be
expected to (i) promote our business
and strategic objectives and (ii)
correspond to those paid to similarly-
situated and comparably skilled
executives at peer companies
Performance-Based
Restricted Stock
Annual long-term variable equity
awards that cliff vest three years from
the date of grant with half the number of
shares based on our relative three-year
performance versus our TSR custom
industry peer group and the other half
based on a three-year revenue target
Fosters a culture of ownership, aligns
the long-term interests of our
executives with our shareholders and
rewards or penalizes executives based
on our long-term relative TSR and
absolute revenue performance
Time-Based Restricted Stock Annual long-term equity awards that
vest based on years of service
Provides variable compensation that
helps to retain executives and ensures
our executives’ interests are aligned
with those of shareholders to promote
the creation of long-term value
The Committee feels our incentive programs supported our strategic and cultural priorities for 2015 as
described below:
• Our senior officers are linked to similar performance objectives for both short-term incentive
compensation and performance-based restricted shares, as our business has become more integrated.
• We believe our generation of core revenue is critical to our goal of stabilizing and ultimately
increasing our consolidated revenues with a view to attain strategic revenue growth sufficient to offset
our continuing legacy revenue losses. Core revenue is a performance measure in both our short-term
incentive bonus and performance-based restricted shares, representing 27% to 31% of our executive
officers’ 2015 target total compensation.
•Total shareholder return relative to our peers is one of the performance measures used in our
performance-based restricted shares, representing 17% to 21% of our executive officers’ 2015 target
total compensation. We believe this compensation will ultimately be realized only if we successfully
execute our strategic plans and perform satisfactorily in relation to our peers.
•Operating cash flow enables us to, among other things, (i) fund strategic capital investments designed
to expand our business opportunities, (ii) return cash to our shareholders through dividends or share
repurchases, and (iii) meet our debt and pension obligations. Operating cash flow is a performance
measure in our short-term incentive bonus, representing 9% to 11% of our executive officers’ 2015
target total compensation.
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