Windstream Firm on $1 Dividend, CEO Gardner Says

by Gwen Moritz  on Wednesday, May. 8, 2013 2:42 pm  

Jeff Gardner announced another regular 25-cent quarterly dividend at Windstream's annual shareholders meeting.

The CEO of Windstream Corp. of Little Rock repeatedly assured shareholders at Wednesday's annual meeting that the company is committed to continuing its attractive $1 per share annual dividend.

Jeffery Gardner used the standing-room-only meeting at the Capital Hotel in downtown Little Rock to announce that the board of directors had approved a regular 25-cent quarterly dividend. And one of the slides in his presentation proclaimed "Windstream's Dividend is Core to Our Investment Thesis."

The dividend, which represents an annual yield of about 12 percent at Windstream's current stock price in the neighborhood of $8.50 (NYSE: WIN), has prompted some analysts to question whether it is sustainable. On Tuesday, Motley Fool asked "Will Windstream Stay Firm on Its Supersize Dividend?"

An investor who identified himself as Benny Roark of Fordyce asked "just how stable that dividend is going to be" because his banker had offered to lend him $1 billion to buy Windstream stock at 7.5 percent interest. "Do you believe that I should get a one-year loan or a two-year loan?" Roark asked to the amusement of the audience. (Gardner, also amused, said he couldn't give investment advice.)

Shareholders re-elected all nine of Windstream's current directors and overwhelmingly approved the executive compensation package in the annual "say on pay" vote. Windstream also rehired PricewaterhouseCoopers LLP as its outside auditor.

Two shareholders proposals were rejected, just has they were last year.

One was a proposal from International Brotherhood of Electrical Workers to eliminate accelerated vesting of equity for senior executives upon a change in control of the company. The current policy would represent, for Gardner personally, $9.3 million out of a total personal severance package worth $17.4 million if the company were sold, accoding to the IBEW.

The other, from the Communications Workers of America, would have required the management to release detailed lists of Windstream's political contributions and specifics about the executives in charge of overseeing such donations.

Gardner said the Windstream board had already adopted most of the political transparency that the CWA wanted.

A third shareholder proposal — this one from an individual shareholder, Kenneth Steiner of Great Neck, N.Y. — was approved over the board's opposition with 52 percent support from shareholders. It calls for Windstream to change its charter and bylaws so that all proposals will require a simple majority vote of shareholders rather than the supermajority that certain changes currently require.

Gardner said the board would begin working on implementation of the change at its August meeting and would put specific changes to the shareholders for a vote next spring.

Bill Bates, representing the CAW union, "respectfully" asked Gardner and the board to reconsider its decision to discontinue a health care insurance subsidy paid to 21 current retirees of Valor Communications Group of Irving, Texas, one of Windstream's predecessor companies.

"Most of our competitors offer no pension and no retiree health benefits, and that's what we're competing against," Gardner said, but he also said the board would consider the request.

Bates told Arkansas Business that the subsidy has been $80 a month for the few retirees who are not yet 65 and Medicare eligible and $17 a month for those who are 65 and older. Discontinuing the subsidy, then, is saving the company something less than $6,500 a year, which Bates said Windstream would well afford to continue paying.



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