Windstream CEO Tony Thomas
Windstream Holdings Inc. of Little Rock said Thursday that Jeff Gardner has resigned as president and CEO and that Tony Thomas has been appointed to succeed him “effective immediately.”
In a statement, Gardner said he and the publicly traded telecommunications firm’s board of directors agreed that “a change in perspective” was needed “to accelerate the pace of change” at the company and to “more effectively respond to the rapidly evolving needs of our customers.”
Gardner, who was the company’s first CEO, will stay on as senior adviser to Thomas and as a member of Windstream’s board through Feb. 1 “to ensure an orderly transition,” the company said.
Thomas had been Windstream’s CFO for eight years. In the summer, the company tapped him to be the president and CEO of Windstream’s planned real estate investment trust (REIT) spinoff, set to debut early next year.
Now, Francis X. “Skip” Frantz, who will be chairman of the REIT’s board, will lead the process to select a new president and CEO for the REIT.
Neither Gardner nor Thomas were available for interviews on Thursday.
More: Gardner leaves Windstream with a $5.1 million pay package.
“I am proud to have led Windstream from its creation in 2006,” Gardner said in a news release. “It has been a privilege to work with our board, leadership team and talented associates across the organization.
“The board and I agree that a change in perspective is needed in order to accelerate the pace of change within the company and to more effectively respond to the rapidly evolving needs of our customers,” he said. “The board’s confidence in Tony is well placed. His leadership and strong financial acumen will benefit investors and customers as he leads Windstream in the future.”
Gardner earned total compensation of $7 million in fiscal 2013, ranking him 11th on Arkansas Business’ most recent list of executive compensation at Arkansas public companies. That figure was down from $7.9 million in fiscal 2012.
More: Thomas names new CFO and makes other executive appointments.
“I am honored by this appointment and by the Board’s confidence,” Thomas said in a statement. “It has been a privilege to work with Jeff Gardner throughout my career. I also remain intently focused on executing the REIT spinoff, which will enable Windstream to accelerate network investments, provide enhanced services to customers and maximize shareholder value.”
Thomas, 43, joined Windstream as controller following the company’s formation as a spinoff from Alltel Corp. in 2005. He has more than 20 years of experience in the communications industry.
In fiscal 2013, he earned total compensation of $2.1 million, up from $1.9 million in the previous year.
From August 2009 through September 2014, Thomas was Windstream’s chief financial officer. During that time, Windstream says, he played “an integral role” in the company’s expansion, completing seven acquisitions totaling more than $5.6 billion in transaction value. Thomas also led almost $10 billion in debt transactions.
In September, Thomas became president of Windstream’s real estate investment trust operations. The REIT, announced in July, is designed to lower Windstream’s debt by $3.2 billion, freeing up money to invest in its network and provide new services to customers.
Transitions
Windstream, originally the wireline division of Alltel Corp. that was spun off eight years ago, has been a company marked by transitions.
Born as a wireline telecommunications company, it has spent the last few years moving away from the shrinking telephone services business and into business services. Those strategic growth products now account for more than 70 percent of revenue.
The publicly traded (Nasdaq: WIN) Fortune 500 company has more than $6 billion in annual revenue and provides services including cloud computing and managed services, to businesses nationwide. It also offers broadband, phone and digital TV services to consumers mainly in rural areas.
Along the way, Windstream made several acquisitons, including its biggest, the $2.3 billion purchase of Paetec Holding Corp. of Fairport, New York, announced in 2011. The deal expanded Windstream’s geographic footprint and added to its fiber network, allowing the company to continue building its broadband business.
It also led to some growing pains. In May 2012, the company announced a plan to streamline management and cut about 400 positions. The move also saved the company about $40 million per year.
The company continued shedding employees in 2014. In February, it announced a plan to cut 400 workers companywide; and last month, it cut an additional 350 people.
“We continue to make progress simplifying processes, integrating Paetec systems and improving operations to drive efficiencies,” Gardner said in a news release announcing the November cuts.
Windstream’s earnings picture has also been a work in progress.
Earnings and revenue have been down each quarter this year compared to 2013. Last month, Windstream reported a 74 percent decline in third-quarter earnings and a 3 percent drop in revenue. The declines came amid a 2 percent rise in costs and expenses, which included merger and integration costs.
The report was the first issued after the company announced the REIT spinoff plans in July.
As a standalone publicly traded company, the REIT will own Windstream’s existing fiber and copper network and other fixed real estate assets and lease those assets back to Windstream. The deal will happen through a “long-term triple-net exclusive lease” with an initial estimated rent payment of $650 million per year.
Gardner and other Windstream executives touted the spinoff as a way for the company to pay down debt and invest in its network, making the company “a more nimble competitor” in the marketplace.
The deal also alter’s Windstream’s long-standing, annual $1 dividend, which has been a key selling point to investors. After the spinoff is complete, investors will see their total dividends reduced to 70 cents per share between the two companies. Gardner has said the new dividend makes sense given Windstream’s competitive environment.
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