Windstream 2007 Annual Report Download - page 35

PROPOSAL NO. 2
RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
The Audit Committee has selected PricewaterhouseCoopers LLP (“PwC”) to audit Windstream’s
consolidated financial statements for the fiscal year ending December 31, 2008. Windstream is submitting to the
stockholders for ratification at the Annual Meeting the selection of PwC as Windstream’s independent auditors
for 2008, although neither the Board of Directors nor its Audit Committee maintains a policy requiring
Windstream to seek stockholder ratification of the independent auditor selection. PwC also served as
Windstream’s independent auditor during 2006 and 2007 in connection with the audits of the 2006 and 2007
fiscal years and as Spinco’s auditor during 2006 in connection with the audit of the carve-out financial statements
that were prepared for Spinco in connection with the Alltel spin-off and Valor merger. Information regarding
PwC’s fees for 2006 and 2007 is provided below under the caption “Audit and Non-Audit Fees.” Representatives
of PwC are expected to be present at the 2008 Annual Meeting and will have an opportunity to make a statement,
if they desire to do so, and to respond to appropriate questions.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS
VOTE FOR PROPOSAL NO. 2. PROXIES SOLICITED BY THE BOARD OF DIRECTORS WILL BE
VOTED FOR PROPOSAL NO. 2 UNLESS STOCKHOLDERS SPECIFY A CONTRARY VOTE.
PROPOSAL NO. 3
STOCKHOLDER PROPOSAL – ADVISORY VOTE ON EXECUTIVE COMPENSATION
The stockholder proposal, which follows, is a verbatim submission by the International Brotherhood of
Electrical Workers’ Pension Benefit Fund (IBEW PBF) (“Fund”) of 900 Seventh Street, N.W., Washington, D.C.
20001 (who has notified Windstream that it is the beneficial owner of Windstream common stock valued at more
than $2,000), for consideration by Windstream stockholders. All statements therein are the sole responsibility of
the Fund.
RESOLVED, that shareholders of “Windstream Corporation” request the board of directors to adopt a
policy that provides shareholders the opportunity at each annual shareholder meeting to vote on an advisory
resolution, proposed by management, to ratify the compensation of the named executive officers (“NEOs”) set
forth in the proxy statement’s Summary Compensation Table (the “SCT”) and the accompanying narrative
disclosure of material factors provided to understand the SCT (but not the Compensation Discussion and
Analysis). The proposal submitted to shareholders should make clear that the vote is non-binding and would not
affect any compensation paid or awarded to any NEO.
SUPPORTING STATEMENT
In our view, senior executive compensation at Windstream has not always been structured in ways that
best serve shareholders’ interests. For example, in 2006, President and CEO Jeffery R. Gardner received a
compensation package valued at over $3.7 million including salary; bonus; stock awards; non-equity incentive
plan compensation; change in pension value and non-qualified deferred compensation earnings; and all other
compensation. This valuation, however, does not reflect restricted stock awards with a Grant Date Fair Value of
more than $7.5 million. Using this calculation, Mr. Gardner’s 2006 compensation was more than $10 million.
Mr. Gardner’s Change in Control Agreement also allows for Excise Tax Gross-Up payments estimated at more
than $3 million. In our opinion, pay has been excessive given the newness of the company and its performance to
date.
We believe that existing U.S. corporate governance arrangements, including SEC rules and stock
exchange listing standards, do not provide shareholders with sufficient mechanisms for providing input to boards
on senior executive compensation. In contrast to U.S. practices, in the United Kingdom, public companies allow
29