UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934
Filed by the Registrant S
Filed by a Party other than the Registrant £
Check the appropriate box:
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Preliminary Proxy Statement |
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Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) |
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Soliciting Material Under Rule 14a-12 |
FRONTIER COMMUNICATIONS CORPORATION
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
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£ Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
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Three High Ridge Park, Stamford, CT 06905
(203) 614-5600 March 26, 2012 Dear Fellow Stockholder: On behalf of the board of directors of Frontier Communications Corporation, I am pleased to invite you to attend our 2012 Annual Meeting of Stockholders. The meeting will be held at our offices located at Three High Ridge Park, Stamford, Connecticut 06905, on Wednesday, May 9, 2012, at 10:00 a.m., Eastern Daylight Savings
Time. At this meeting, you will be asked:
To elect 11 directors; To consider and vote upon an advisory proposal to approve executive compensation; To consider and vote upon two stockholder proposals, if presented at the meeting; To ratify the selection of KPMG LLP as our independent registered public accounting firm for 2012; and To transact any other business that may properly be brought before the meeting or any adjournment or postponement of the meeting. It is important that your shares be represented, whether or not you attend the meeting. You may vote by telephone or via the Internet. If you received a paper copy of the proxy card by mail, you may vote by completing, dating and signing the proxy card and returning it in the envelope provided. No postage is required if the proxy
card is mailed in the United States. If present at the meeting, you may revoke your proxy and vote in person. Attendance at the meeting will be limited to stockholders as of the record date, or their authorized representatives, and our guests. If you are planning to attend the meeting please mark the appropriate box on the proxy card. We look forward to seeing you at the meeting.
Cordially,
Mary Agnes Wilderotter
Chairman of the Board of Directors,
President and Chief Executive Officer
Three High Ridge Park, Stamford, CT 06905
(203) 614-5600 March 26, 2012 NOTICE OF ANNUAL MEETING OF STOCKHOLDERS To the Stockholders of NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of Frontier Communications Corporation will be held at the companys offices, Three High Ridge Park, Stamford, Connecticut 06905, on Wednesday, May 9, 2012, at 10:00 a.m., Eastern Daylight Savings Time, for the following purposes:
To elect 11 directors; To consider and vote upon an advisory proposal to approve executive compensation; To consider and vote upon two stockholder proposals, if presented at the meeting; To ratify the selection of KPMG LLP as our independent registered public accounting firm for 2012; and To transact any other business that may properly be brought before the meeting or any adjournment or postponement of the meeting. The board of directors fixed the close of business on March 13, 2012 as the record date for determining stockholders entitled to notice of and to vote at the meeting or any adjournment or postponement of the meeting. At the close of business on March 13, 2012, there were 998,511,956 shares of our common stock entitled to vote at
the meeting. A complete list of stockholders entitled to vote at the meeting will be open to the examination of stockholders on the meeting date and for a period of ten days prior to the meeting at our offices at Three High Ridge Park, Stamford, Connecticut 06905, during ordinary business hours.
By Order of the Board of Directors
Nancy S. Rights Important Notice Regarding the Availability of The proxy statement and 2011 Annual Report are available at www.proxyvote.com.
To Be Held May 9, 2012
FRONTIER COMMUNICATIONS CORPORATION:
Senior Vice President, Deputy General Counsel and Secretary
Proxy Materials for the Annual Meeting of Stockholders to be held on May 9, 2012.
TABLE OF CONTENTS
1
5
7
12
14
20
20
33
34
35
35
36
37 Employment Arrangements; Potential Payments Upon Termination or Change-in-Control
37
40
40
41 SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS
41
42
42 Stockholder Proposal Regarding Arbitration of Stockholder Suits
44
46
47 RATIFICATION OF SELECTION OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
48
48
48
FRONTIER COMMUNICATIONS CORPORATION PROXY STATEMENT 2012 Annual Meeting of Stockholders Introduction This proxy statement is being furnished to the stockholders of Frontier Communications Corporation, a Delaware corporation, in connection with the solicitation of proxies by our board of directors for use at our 2012 annual meeting of stockholders and at any adjournments thereof. Date, Time and Place The meeting will be held on May 9, 2012, at 10:00 a.m., Eastern Daylight Savings Time, at our offices located at Three High Ridge Park, Stamford, Connecticut 06905. Internet Availability of Proxy Materials This proxy statement and our Annual Report for the fiscal year ended December 31, 2011, containing financial and other information concerning our company, are available on the Investor Relations page of our website, www.frontier.com. Additionally, and in accordance with Securities and Exchange Commission (SEC)
rules, you may access our proxy statement at www.proxyvote.com. Under rules adopted by the SEC, we have elected to furnish the proxy statement and Annual Report to many of our stockholders via the Internet, instead of mailing printed materials to each stockholder. We believe this is in the best interests of our stockholders as it will enable us to provide our stockholders with the information they
need, while lowering the cost of delivery and reducing the environmental impact. On or about March 26, 2012, we began mailing to holders of our common stock (other than those who previously requested electronic or paper delivery and certain other stockholders) a Notice of Internet Availability of Proxy Materials (the Notice). If you received the Notice by mail, you will not automatically receive a printed
copy of this proxy statement and our Annual Report in the mail. Instead, the Notice instructs you on how to access and review all of the important information contained in the proxy materials online. The Notice also instructs you on how you may submit your proxy via the Internet. If you previously requested electronic delivery, you will
receive an email providing you with the Notice, and if you previously requested paper delivery, you will receive a paper copy of the proxy materials by mail. We encourage you to receive all proxy materials in the future electronically to help us save printing costs and postage fees, as well as natural resources in producing and distributing
these materials. If you wish to receive these materials electronically next year, please follow the instructions on the proxy card or on the Investor Relations page of our website, www.frontier.com. You can receive a copy of our proxy materials by following the instructions (contained in the Notice) regarding how you may request to receive your materials electronically or in printed form on a one-time or ongoing basis. Requests for printed copies of the proxy materials can be made by Internet at www.proxyvote.com,
by telephone at 1-800-579-1639 or by email at sendmaterial@proxyvote.com by sending a blank email with your control number (the 12 digit identifying number in the box on the Notice) in the subject line.
Three High Ridge Park
Stamford, Connecticut 06905
Matters to be Considered At the meeting, stockholders will be asked to elect 11 directors, to consider and vote upon an advisory proposal to approve executive compensation, to consider and vote upon two stockholder proposals, if presented, and to ratify the selection of our independent registered public accounting firm. See ELECTION OF DIRECTORS,
ADVISORY VOTE TO APPROVE EXECUTIVE COMPENSATION, STOCKHOLDER PROPOSALS and RATIFICATION OF SELECTION OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM. The board of directors does not know of any matters to be brought before the meeting other than as set forth in the
notice of meeting. If any other matters properly come before the meeting, the persons named in the form of proxy or their substitutes will vote in accordance with their best judgment on such matters. Record Date; Shares Outstanding and Entitled to Vote; Quorum Stockholders as of the record date, i.e., the close of business on March 13, 2011, are entitled to notice of and to vote at the meeting. As of the record date, there were 998,511,956 shares of common stock outstanding and entitled to vote, with each share entitled to one vote. Holders of a majority of the outstanding shares entitled to
vote must be present in person or represented by proxy in order for action to be taken at the meeting. Required Votes Election of Directors. Under our by-laws, the affirmative vote of the holders of a majority of the shares of common stock present or represented by proxy and entitled to vote at the meeting is required to elect each director. Consequently, only shares that are voted in favor of a particular nominee will be counted toward the nominees
achievement of a majority. Shares present at the meeting that are not voted for a particular nominee or shares present by proxy where the stockholder properly withholds authority to vote for the nominee will have the same effect as a vote against the nominee. Brokers are not permitted to vote shares on the election of directors if they do
not receive voting instructions from the beneficial owners of such shares. Such broker non-votes will be considered present for purposes of establishing a quorum, but will not be considered in determining the number of votes necessary for approval and will have no effect on the outcome of the vote on election of directors. Under Delaware law, an incumbent director who fails to receive the required vote holds over, or continues to serve as a director until his or her successor is elected and qualified. To address this hold-over issue, we have adopted a policy under which, in non-contested elections, if a director fails to win a majority of affirmative
votes for his or her election, the director must immediately tender his or her resignation from the board, and the board will decide, through a process managed by the Nominating and Corporate Governance Committee and excluding the nominee in question, whether to accept the resignation at its next regularly scheduled meeting. Advisory Proposal on Executive Compensation. Approval of the advisory proposal on executive compensation requires the affirmative vote of the holders of a majority of the common stock present or represented by proxy and entitled to vote at the meeting. Abstentions will have the same effect as a vote against approving the
advisory proposal. Brokers are not permitted to vote shares on this matter if they do not receive voting instructions from the beneficial owners of such shares. Such broker non-votes will be considered present for purposes of establishing a quorum, but will not be considered in determining the number of votes necessary for approval and
will have no effect on the outcome of the vote on the advisory proposal. Because the vote is advisory, it will not be binding upon the board of directors. However, the Compensation Committee will take into account the outcome of the vote when considering future executive compensation arrangements. Stockholder Proposals. Approval of each stockholder proposal requires the affirmative vote of the holders of a majority of the common stock present or represented by proxy and entitled to vote at the meeting. Abstentions will have the same effect as a vote against approving a stockholder proposal. Brokers are not permitted to vote
shares on these matters if they do not receive voting instructions from the beneficial owners of such shares. Such broker non-votes will be considered present for purposes of establishing a quorum, but will not be considered in determining the number of votes necessary for approval and will have no effect on the outcome of the votes
on the stockholder proposals. 2
Selection of Auditors. The ratification of the selection of KPMG LLP as our independent registered public accounting firm is being submitted to stockholders because we believe that this action follows sound corporate practice and is in the best interests of the stockholders. If the stockholders do not ratify the selection by the
affirmative vote of the holders of a majority of the common stock present or represented by proxy and entitled to vote at the meeting, the Audit Committee of the board of directors will reconsider the selection of the independent registered public accounting firm, but such a vote will not be binding on the Audit Committee. If the
stockholders ratify the selection, the Audit Committee, in its discretion, may still direct the appointment of a new independent registered public accounting firm at any time during the year if they believe that this change would be in our and our stockholders best interests. Abstentions will have the same effect as a vote against ratification
of the auditors. Voting Recommendations The board of directors recommends that you vote FOR each nominee for director named, FOR the advisory proposal on executive compensation, AGAINST the stockholder proposals and FOR ratification of the selection of our independent registered public accounting firm for 2012. Voting and Revocation of Proxies Stockholders who hold shares in their own name are requested to vote by proxy in one of three ways:
By InternetYou can vote via the Internet by following the instructions in the Notice or by visiting the Internet website at www.proxyvote.com and follow the on-screen instructions; By TelephoneIn the United States and Canada you can vote by telephone by following the instructions in the Notice or by calling 1-800-690-6903 (toll-free) and following the instructions; or By MailYou can vote by mail if you received a printed proxy card by dating, signing and promptly returning your proxy card in the postage prepaid envelope provided with the materials. Common stock represented by properly executed proxies, received by us or voted by telephone or via the Internet, which are not revoked will be voted at the meeting in accordance with the instructions contained therein. Subject to the broker non-vote rules discussed above under Required Votes, if instructions are not given,
proxies will be voted FOR election of each nominee for director named, FOR the advisory proposal on executive compensation, AGAINST the stockholder proposals and FOR ratification of the selection of our independent registered public accounting firm. Voting instructions, including instructions for both telephonic and Internet voting, are provided in the Notice or, if you received a printed proxy card, on the proxy card. The Internet and telephone voting procedures are designed to authenticate stockholder identities, to allow stockholders to give voting instructions and to confirm that
stockholders instructions have been recorded properly. A control number, located on the Notice and proxy card, will identify stockholders and allow them to vote their shares and confirm that their voting instructions have been properly recorded. Stockholders voting via the Internet should understand that there may be costs associated
with electronic access, such as usage charges from Internet access providers and telephone companies, which must be borne by the stockholder. If you do vote by Internet or telephone, it will not be necessary to return a proxy card. If your shares are held in the name of a bank or broker, follow the voting instructions on the form you receive from your record holder. The availability of Internet and telephone voting will depend on their voting procedures. If a stockholder neither returns a signed proxy card, votes by the Internet or by telephone, nor attends the meeting and votes in person, his or her shares will not be voted. Any proxy signed and returned by a stockholder or voted by telephone or via the Internet may be revoked at any time before it is exercised by giving written notice of revocation to our Secretary, at our address set forth herein, by executing and delivering a later-dated proxy, either in writing, by telephone or via the Internet, or by
voting in person at the meeting. Attendance at the meeting will not alone constitute revocation of a proxy. 3
Householding of Annual Report and Proxy Materials We have adopted a procedure approved by the SEC called householding. Under this procedure, stockholders of record who have the same address and last name will receive only one copy of our Annual Report and proxy statement unless one or more of these stockholders notifies us that they wish to continue receiving individual
copies. This procedure will reduce our printing costs and postage fees. Stockholders who participate in householding will continue to receive separate proxy cards. Also, householding will not in any way affect dividend check mailings. If you are eligible for householding, but you and other stockholders of record with whom you share an address currently receive multiple copies of the Annual Report and/or the proxy statement, or if you hold in more than one account, and in either case you wish to receive only a single copy of each of these documents for your
household, please contact our transfer agent, Computershare Investor Services (in writing: P.O. Box 43078, Providence, RI 02940-3078; by telephone: in the U.S., Puerto Rico and Canada, 1-877-770-0496; outside the U.S., Puerto Rico and Canada, 1-781-575-2382). If we are householding materials to your address and you wish to receive a separate copy of the Annual Report or this proxy statement, or if you do not wish to participate in householding and prefer to receive separate copies of these documents in the future, please contact Computershare Investor Services as indicated above. Beneficial stockholders can request information about householding from their banks, brokers or other holders of record. Proxy Solicitation We will bear the costs of solicitation of proxies for the meeting. In addition to solicitation by mail, directors, officers and our regular employees may solicit proxies from stockholders by telephone, personal interview or otherwise. These directors, officers and employees will not receive additional compensation, but may be
reimbursed for out-of-pocket expenses in connection with this solicitation. In addition to solicitation by our directors, officers and employees, we have engaged The Proxy Advisory Group, LLC to assist in the solicitation of proxies and provide related advice and informational support, for a base fee of $15,000, plus customary
disbursements. Brokers, nominees, fiduciaries and other custodians have been requested to forward soliciting material to the beneficial owners of common stock held of record by them, and these custodians will be reimbursed for their reasonable expenses. Independent Registered Public Accounting Firm We have been advised that representatives of KPMG LLP, our independent registered public accounting firm for 2011, will attend the meeting, will have an opportunity to make a statement if they desire to do so and will be available to respond to appropriate questions of stockholders. Transfer Agent Our transfer agent is Computershare Investor Services. You should contact the transfer agent, at the phone number or addresses listed below, if you have questions concerning stock certificates, dividend checks, transfer of ownership or other matters pertaining to your stock account. If By First Class Mail: Computershare Investor Services If By Overnight Courier: Computershare Investor Services e-mail: www.computershare.com/investor Telephone: (877) 770-0496 (in the U.S., Puerto Rico and Canada) 4
P.O. Box 43078
Providence, RI 02940-3078
250 Royall Street
Canton, MA 02021
or (781) 575-2382 (outside the U.S., Puerto Rico and Canada)
Set forth below is certain information as of March 13, 2012 with respect to the beneficial ownership of our common stock (as determined under the rules of the SEC) by (1) each person who, to our knowledge, is the beneficial owner of more than 5% of our outstanding shares of common stock, which is our only class of voting
securities, (2) each director and nominee for director, (3) each of the executive officers named in the Summary Compensation Table under Executive Compensation, and (4) all of our directors and executive officers as a group. Except as otherwise stated, the business address of each person listed is c/o Frontier Communications
Corporation, Three High Ridge Park, Stamford, Connecticut 06905. Except as otherwise described below, each of the persons named in the table has sole voting and investment power with respect to the common stock beneficially owned and has not pledged such common stock as security for any obligations.
Name and Address
Number of Shares
Percent The Vanguard Group, Inc. (a)
53,109,796
5.3
% BlackRock, Inc. (b)
50,509,096
5.1
% Kathleen Q. Abernathy
305,706
(c)
* Leroy T. Barnes, Jr.
68,616
(d)
* Peter C.B. Bynoe
64,892
(e)
* Jeri B. Finard
164,652
(f)
* Edward Fraioli
35,497
(g)
* James S. Kahan
29,882
(h)
* Daniel J. McCarthy
688,991
(i)
* Cecilia K. McKenney
458,444
(j)
* Pamela D.A. Reeve
29,598
(k)
* Howard L. Schrott
93,665
(l)
* Larraine D. Segil
107,009
(m)
* Mark Shapiro
54,798
(n)
* Donald R. Shassian
817,555
(o)
* Myron A. Wick, III
125,140
(p)
* Mary Agnes Wilderotter
3,009,694
(q)
* All directors and executive officers as a group (18 persons)
6,834,765
(r)
*
*
Less than 1%. (a) The business address of this beneficial owner is 100 Vanguard Blvd., Malvern, PA 19355. Based on a Schedule 13G filed on February 10, 2012 by The Vanguard Group, Inc. (Vanguard). Such Schedule 13G discloses that of the shares beneficially held by Vanguard, 1,380,645 shares are beneficially held by a wholly-owned
subsidiary and that Vanguard has the sole power to vote and has shared dispositive power of such shares. (b) The business address of this beneficial owner is 40 East 52nd Street, New York, NY 10022. Based on a Schedule 13G filed on February 9, 2012 by BlackRock, Inc. Such Schedule 13G discloses that the shares beneficially owned by BlackRock, Inc. are held by subsidiaries of BlackRock, Inc. (c) Includes 10,000 shares that may be acquired upon the exercise of stock options as of March 13, 2011 or within 60 days thereafter. We refer to these stock options as currently exercisable. Also, includes 207,300 restricted shares over which Ms. Abernathy has sole voting power but no dispositive power. (d) Includes 10,000 shares that may be acquired upon the exercise of currently exercisable stock options and 53,316 shares that may be acquired upon the redemption of stock units. Directors may elect to redeem stock units upon termination of service in the form of cash or shares of our common stock. See Director CompensationNon-
Employee Director Compensation Program below. (e) Includes 10,000 shares that may be acquired upon the exercise of currently exercisable stock options and 51,042 shares that may be acquired upon the redemption of stock units. 5
of Beneficial Owner
and Nature of
Beneficial Ownership
of Class
(f) Includes 10,000 shares that may be acquired upon the exercise of currently exercisable stock options and 134,152 shares that may be acquired upon the redemption of stock units. (g) Includes 10,000 shares that may be acquired upon the exercise of currently exercisable stock options and 20,747 shares that may be acquired upon the redemption of stock units. (h) Includes 24,882 shares that may be acquired upon the redemption of stock units. (i) Includes 431,302 restricted shares over which Mr. McCarthy has sole voting power but no dispositive power and 14,707 shares held in a 401(k) plan. (j) Includes 266,556 restricted shares over which Ms. McKenney has sole voting power but no dispositive power. (k) Includes 19,598 shares that may be acquired upon the redemption of stock units. (l) Includes 5,000 shares that may be acquired upon the exercise of currently exercisable stock options and 83,665 shares that may be acquired upon the redemption of stock units. (m) Includes 10,000 shares that may be acquired upon the exercise of currently exercisable stock options and 93,009 shares that may be acquired upon the redemption of stock units. (n) Includes 10,000 shares that may be acquired upon the exercise of currently exercisable stock options and 19,598 shares that may be acquired upon the redemption of stock units. (o) Includes 534,025 restricted shares over which Mr. Shassian has sole voting power but no dispositive power. (p) Consists of 10,000 shares that may be acquired upon the exercise of currently exercisable stock options, 107,140 shares that may be acquired upon the redemption of stock units and 8,000 shares held in the Myron A. Wick, III Trust U/A/D 2/21/56. (q) Includes 1,659,777 restricted shares over which Mrs. Wilderotter has sole voting power but no dispositive power and 1,254,513 shares held by a family trust. (r) Includes 3,538,881 restricted shares over which executive officers have sole voting power but no dispositive power, 75,000 shares that may be acquired pursuant to the exercise of currently exercisable stock options by directors, 10,000 shares that may be acquired pursuant to the exercise of currently exercisable stock options by
executive officers and 607,149 shares that may be acquired upon the redemption of stock units. Section 16(a) Beneficial Ownership Reporting Compliance Section 16(a) of the Securities Exchange Act of 1934 requires our directors and officers, and persons who beneficially own more than 10% of our common stock to file reports of ownership and changes in ownership with the SEC. Such directors, officers and greater than 10% stockholders are also required to furnish us with copies of
all such filed reports. Based solely upon a review of the copies of such reports furnished to us, or representations that no reports were required, we believe that during the year ended December 31, 2011, all persons subject to the reporting requirements of Section 16(a) filed the required reports on a timely basis. 6
ELECTION OF DIRECTORS At the meeting, 11 directors are to be elected to serve until the next annual meeting or until their successors have been elected and qualified. All of the following nominees are currently serving as directors. Directors will be elected by a majority of the votes of the holders of shares of common stock present in person or represented
by proxy at the meeting and entitled to vote at the meeting. The persons named in the enclosed form of proxy have advised that, unless contrary instructions are received, they intend to vote FOR the 11 nominees named by the board of directors and listed on the following table. In case any of these nominees should become unavailable for any reason, the persons named in the
enclosed form of proxy have advised that they will vote for such substitute nominees as the board of directors may propose..
Name and Present Position,
Age, Period Served as Director, Other Business Experience
Leroy T. Barnes, Jr.
Mr. Barnes, 60, has served as a Director since May 2005. Prior to his retirement, he was Vice President and Treasurer of PG&E Corp., a holding company for energy-based businesses, from 2001 to 2005 and Vice President and Treasurer of Gap Inc., a clothing retailer, from 1997 to 2001. Mr.
Barnes has been a Director of The McClatchy Company since September 2000, a Director of Herbalife Ltd. since December 2004 and a Director of Principal Funds, Inc. and Principal Variable Contracts, Inc. since March 2012. He was a Director of Longs Drugs Stores Corporation from February
2002 to October 2008.
Mr. Barnes is a skilled financial leader with an extensive background in finance and treasury from his career as treasurer of several public companies, including the Gap and PG&E. Mr. Barnes experiences have provided him with a wealth of knowledge in dealing with complex financial issues and
an understanding of financial strategy in challenging economic environments. Mr. Barnes also has extensive experience serving on public company audit, nominating, governance and pension committees which he can bring to bear as a member of our board and committees.
Peter C.B. Bynoe
Mr. Bynoe, 61, has served as a Director since October 2007. Since January 2008, Mr. Bynoe has served as a Senior Counsel in the Chicago office of the international law firm DLA Piper US LLP. Since February 2008, he has been associated with Loop Capital Markets LLP, most recently as a partner.
From March 1995 until December 2007, Mr. Bynoe was a senior Partner at DLA Piper US LLP and served on its Executive Committee. He is also Chairman of Telemat Ltd., a business consulting firm that he founded in 1982. Mr. Bynoe has been a Director of Covanta Holding Corporation since July
2004. He was a Director of Rewards Network Inc. from 2003 to May 2008.
Mr. Bynoe brings a varied business, legal and public policy background to the board. Mr. Bynoe served as the Executive Director of the Illinois Sports Facilities Authority, a joint venture of the City of Chicago and State of Illinois created to develop the new Comiskey Park for the Chicago White Sox
and was Managing General Partner of the National Basketball Associations Denver Nuggets. Mr. Bynoe also served as a consultant to the Atlanta Fulton County Recreation Authority and the Atlanta Committee to Organize the Olympic Games in preparation for the 1996 Summer Olympic Games. Mr.
Bynoe also has experience serving on boards of directors of public companies, including as a nominating and governance committee member and chair and as a compensation committee member.
7
(Item 1 on the Proxy Card)
if any, with the Company
during the Last Five Years and Family Relationships, if any
Name and Present Position,
Age, Period Served as Director, Other Business Experience
Jeri B. Finard
Ms. Finard, 52, has served as a Director since December 2005. Since January 2012, she has served as a Senior Advisor to Catterton Partners, a private equity firm providing equity capital to small to middle market consumer companies in North America. Ms. Finard was Senior Vice President,
Global Brand President of Avon Products, Inc., a global beauty products company, from December 2008 to January 2012. She was Executive Vice President and Chief Marketing Officer of Kraft Foods, Inc., a manufacturer and marketer of packaged foods and beverages, from April 2006 to May
2007. Prior to that time, Ms. Finard was Executive Vice President, Global Category Development of Kraft Foods, Inc. from April 2005 to April 2006, Group Vice President and President of N.A. Beverages Sector of Kraft Foods, Inc. from October 2004 to April 2005, Executive Vice President of
Kraft Foods North America from 2000 to 2004 and General Manager of Krafts Coffee Division in 2004 and of Kraft Foods Desserts Division from 2000 to 2003.
Ms. Finard has extensive experience in marketing and leading large organizations from her career as a marketing executive at Kraft Foods and Avon Products. Her marketing acumen brings a unique customer perspective to the board as the company seeks to compete in an increasingly competitive
environment while always putting the customer first.
Edward Fraioli
Mr. Fraioli, 65, has served as a Director since July 2010 following his retirement from Ernst & Young LLP, a public accounting firm, where he had been a partner since 1983. Since that time, he has served as a business consultant to other companies. He had served as Professional Practice Director
for Ernst & Youngs Private Equity practice from 2008 to July 2010, where he was responsible for support of engagement teams on accounting and auditing matters. From 2005 through 2008, Mr. Fraioli served as Ernst & Youngs Global Vice Chairman for Independence matters within Global
Quality and Risk Management, where he was responsible for the Ernst & Youngs global independence organization. Prior to 2005, he served as lead audit partner on a number of public and global companies.
Mr. Fraioli was with Ernst & Young for over 35 years. As such, his public accounting and financial expertise provides the board with a valuable resource.
James S. Kahan
Mr. Kahan, 64, has been a Director since May 2011. He was an executive of AT&T Inc. (formerly SBC Communications Inc.), where he spent nearly 38 years, most recently as Senior Executive Vice President of Corporate Development from July 1993 until his retirement in June 2007. Mr. Kahan
has been a Director of Amdocs Ltd. since April 1998 and a Director of Live Nation Entertainment, Inc. since September 2007.
8
if any, with the Company
during the Last Five Years and Family Relationships, if any
Name and Present Position,
Age, Period Served as Director, Other Business Experience
Mr. Kahan has over three decades of senior executive level experience at telecommunications companies, including AT&T, Western Electric, Bell Laboratories, South Central Bell and Southwestern Bell Telephone. At AT&T and SBC, he oversaw approximately $300 billion of acquisitions, including
the acquisitions of Pacific Telesis (1997), Southern New England Telecommunications (1998), Ameritech (1999) and the former AT&T Corp. (2005), as well as Cingular Wireless acquisition of AT&T Wireless (2004). He was also responsible for AT&Ts acquisition of BellSouth Corp. in 2006.
Mr. Kahan also brings experience serving on boards of directors of public companies, including as a compensation committee chair, audit committee member and nominating and corporate governance committee member.
Pamela D.A. Reeve
Ms. Reeve, 62, has been a Director since July 2010. She has also served as a director of American Tower Corporation since March 2002 and serves as the Lead Director and a member of the compensation and nominating and corporate governance committees of the American Tower board. From
November 1989 to August 2004, Ms. Reeve was the founder and a director of Lightbridge, Inc., a global provider of mobile business software and technology solutions, offering products and services for the wireless telecommunications industry, where she held various executive positions, including
President and Chief Executive Officer. Ms. Reeve served on the board of directors of LiveWire Mobile, Inc. from 1997 until November 2009.
Ms. Reeve has leadership, operational and financial expertise, particularly in the communications and technologies industries, and has extensive corporate governance experience, having served on public company audit, compensation and nominating and corporate governance committees.
Howard L. Schrott
Mr. Schrott, 57, has served as a Director since July 2005. Since February 2006, Mr. Schrott has been a Principal in Schrott Consulting, a division of AMMC, Inc., a management consulting firm, for which he also serves as Chief Financial Officer. Prior to that time, he was Chief Financial Officer
of Liberty Corporation, a television broadcaster, from 2001 to February 2006. Mr. Schrott was a Director of Time Warner Telecom Holdings Inc. from 2004 to 2006.
Mr. Schrott brings a wealth of financial and operational experience to the board, having served as the Chief Financial Officer of three different companies in the media and technology space and running his own management consulting firm. He has also served as the chairman of the audit committee of
Time Warner Telecom Holdings Inc. In addition, Mr. Schrott serves on the boards of directors of several private companies involved in media and technology, including Maverick Media, LLC, a radio broadcasting company, and Weather Central Holdings, Inc., a software and technology company, and
previously served on the boards of Wide Orbit, Inc. and Gannaway Web Holding, LLC. Mr. Schrott also serves as a trustee of Butler University.
Larraine D. Segil
Ms. Segil, 63, has served as a Director since March 2005. Ms. Segil has been Chief Executive Officer of Larraine Segil Inc. (formerly Larraine Segil Productions, Inc.) since 1987 and of Little Farm Company, an agricultural holding company, since 2009. She has also been a senior research fellow at the
IC2 Institute at the University of Texas, Austin on strategy and alliances, since 1991, a member of the Entrepreneurs Board of Advisors for the UCLA Anderson School of Management since 1991 and a member of the board of LARTA, the Los Angeles Technology Alliance from 1994 to 2008. In
January 2009, Ms. Segil was appointed to the board of Strategic Alliances Advisory Group for the Tropical Diseases Group of the World Health Organization in
9
if any, with the Company
during the Last Five Years and Family Relationships, if any
Name and Present Position,
Age, Period Served as Director, Other Business Experience
Geneva, Switzerland. From 2003 until December 2006, Ms. Segil was a Partner of Vantage Partners, a business strategy consulting group. Ms.
Segil was a Partner and Co-Founder of The Lared Group, a business strategy consulting group, until its acquisition by Vantage in 2003.
Ms. Segil has extensive experience in the area of strategic alliances. In addition, she is a former partner of a business strategy consulting group. Ms. Segils unique experience is a valuable asset to the board, particularly in light of the acquisition activity engaged in by the company over the past
several years.
Mark Shapiro
Mr. Shapiro, 41, has served as a Director since July 2010. Mr. Shapiro is a limited partner in Dick Clark Productions and has served as its Chief Executive Officer since May 2010. Prior to that, he served as President, Chief Executive Officer and a director of Six Flags Entertainment Corporation
(formerly Six Flags, Inc.), a theme park company, from December 2005 until May 2010. In June 2009, Six Flags and certain of its subsidiaries filed voluntary petitions for relief under chapter 11 of the United States Bankruptcy Code. In April 2010, Six Flags emerged from chapter 11. Prior to
joining Six Flags, Mr. Shapiro spent 12 years at ESPN, Inc., where he served as Executive Vice President, Programming and Production and in various other capacities. Mr. Shapiro has been a director of Live Nation Entertainment, Inc. since November 2008, a trustee on the board of Equity
Residential since January 2010, a Director of Papa Johns International, Inc. since February 2011 and a member of the Advisory Board of NeuMedia, Inc. since June 2011.
Coupling his board service with experience in executive-level positions at large organizations facing complex business challenges, Mr. Shapiro brings business acumen and front-line operations know-how to many of the issues and challenges facing public companies, along with innovation and
critical insight in the areas of content creation, marketing and branding.
Myron A. Wick, III
Mr. Wick, 68, has served as a Director since March 2005. Mr. Wick has been Managing Director of McGettigan & Wick, Co., an investment banking firm, since 1988 and a Principal of Proactive Partners, L.P., a merchant banking fund, since 1989. He has also been Managing Director of Hola
Television Group, a private Spanish media company, since September 2009. He was a Director of Modtech Holdings, Inc. from 1994 to 2008.
Mr. Wick has over two decades of investment banking experience with an extensive knowledge of operational and financial transactions. Mr. Wick has served as chairman, chief executive officer and chief operating officer of a variety of enterprises spanning aquaculture, biotech, education,
television broadcasting and investment banking. Mr. Wick is a co-founder of an investment banking firm that provides financial services to small private and public companies and a merchant banking fund, investing in and providing advisory services to micro cap public companies. Mr. Wicks
background provides the board with an experienced lead director during a time of significant acquisition activity by the company. He also has experience serving on the boards of directors of public companies, including as an audit and compensation committee member.
10
if any, with the Company
during the Last Five Years and Family Relationships, if any
Name and Present Position,
Age, Period Served as Director, Other Business Experience
Mary Agnes Wilderotter, Chairman
of the Board, President and Chief
Executive Officer
Mrs. Wilderotter serves as the companys Chairman of the Board and Chief Executive Officer and President and is a 30-year veteran of the cable and communications and information technology industries. She is a recognized leader in these fields and was selected as one of Fortune magazines 50
Most Powerful Women in 2009, 2010 and 2011 and among The Financial Times Top 50 Women in World Business in 2011. In October 2010, President Obama appointed her as Vice Chair of the Presidents National Security Telecommunications Advisory Committee. Her career has given her in-
depth knowledge and placed her in leadership positions of companies at the convergence of communications and information technology. Early in her career at Cabledata (now DST), she ran the largest management information systems and billing company in the cable industry. Thereafter, she
was Regional President managing McCaw Cellular Communications California, Nevada, and Hawaii regions and then Senior Vice President of McCaw. Following McCaws acquisition by AT&T, she was Chief Executive Officer of AT&Ts Aviation Communications Division and later Executive
Vice President of National Operations for AT&T Wireless Services, Inc. After seven years in the wireless industry, Mrs. Wilderotter became President and CEO of Wink Communications, which provided cable operators with a cost-effective technology to deliver interactive television services. After
taking Wink public and negotiating its sale to Liberty Media, Mrs. Wilderotter joined Microsoft in 2002 as Senior Vice President-World Wide Public Sector and Senior Vice PresidentWorldwide Business Strategy. During her career, Mrs. Wilderotter has sat on the boards of more than 20 public
companies and now serves on the boards of Procter & Gamble and Xerox Corporation. Her board experience includes chair and membership on audit committees; chair and membership on compensation committees; and membership on finance committees and governance and public responsibility
committees. Mrs. Wilderotters industry and leadership experience provides the board with industry knowledge, vision, innovation and strategy. The board of directors recommends that you vote FOR the election of all nominees for director. 11
if any, with the Company
during the Last Five Years and Family Relationships, if any
Mrs. Wilderotter, 57, has served as a Director since September 2004. She has served as our President and Chief Executive Officer since November 2004 and as our Chairman of the Board since December 2005. Prior to joining our company, she was Senior Vice PresidentWorld Wide Public Sector
of Microsoft Corp. from February 2004 to November 2004 and Senior Vice PresidentWorldwide Business Strategy of Microsoft Corp. from 2002 to 2004. From 1997 to 2002, she was President and Chief Executive Officer of Wink Communications, an interactive telecommunications and media
company. Mrs. Wilderotter has been a Director of Xerox Corporation since May 2006 and a Director of The Procter & Gamble Company since August 2009. She was a Director of The McClatchy Company from January 2001 to August 2007 and a Director of Yahoo!, Inc. from July 2007 to
December 2009.
The following table sets forth compensation information for 2011 for each person who served as a non-employee member of our board of directors during 2011. Mary Agnes Wilderotter, our Chairman, President and Chief Executive Officer, is not included in this table as she is an employee of the company and thus receives no
compensation for her services as a director. The compensation received by Mrs. Wilderotter as an employee of the company is shown in the Summary Compensation Table elsewhere in this proxy statement. 2011 Director Compensation Name
Fees Earned or
Stock
Total Leroy T. Barnes, Jr. $
82,500
$
88,000
$
170,500 Peter C.B. Bynoe $
85,000
$
88,000
$
173,000 Jeri B. Finard
$
176,000
$
176,000 Edward Fraioli
$
75,000
$
88,000
$
163,000 James S. Kahan
$
110,300
$
110,300 William M. Kraus (2)
$
28,125
$
33,000
$
61,125 Pamela D.A. Reeve
$
87,500
$
88,000
$
175,500 Howard L. Schrott
$
95,000
$
88,000
$
183,000 Larraine D. Segil
$
75,000
$
88,000
$
163,000 Mark Shapiro
$
75,000
$
88,000
$
163,000 David H. Ward (2)
$
28,125
$
33,000
$
61,125 Myron A. Wick, III
$
75,000
$
120,350
$
195,350
(1)
The amounts shown in this column represent the grant date fair value in accordance with Financial Accounting Standards Board ASC Topic 718 (Topic 718) of the stock units granted to directors in 2011. For a discussion of valuation assumptions, see Note 11 to the Consolidated Financial Statements included in our Annual Report
on Form 10-K for the year ended December 31, 2011. The dollar amount of dividends on stock units is reflected in such amounts. Dividends are paid on stock units held by directors at the same rate and at the same time as we pay dividends on shares of our common stock. No above-market or preferential dividends were paid with
respect to any stock units. Dividends on stock units are paid in the form of additional stock units. The following table sets forth the aggregate number of stock options held by directors at year-end. Name
Number of Leroy T. Barnes, Jr.
10,000 Peter C.B. Bynoe
10,000 Jeri B. Finard
10,000 Edward Fraioli
10,000 James S. Kahan
William M. Kraus
Pamela D.A. Reeve
Howard L. Schrott
5,000 Larraine D. Segil
10,000 Mark Shapiro
10,000 David H. Ward
21,079 Myron A. Wick, III
10,000
(2)
Messrs. Kraus and Ward retired from the board of directors on May 11, 2011.
Non-Employee Director Compensation Program Directors who are also our employees receive no remuneration for service as a member of our board of directors or any committee of the board. Each non-employee director is entitled to receive an annual retainer of (1) $75,000 in cash, which he or she may elect to receive in the form of stock units, as described below, and (2)
$75,000 in the form of stock units, in each case payable in advance in quarterly installments on the first business day of each quarter. In addition, the Lead Director, the chair of the Audit Committee and the chair of 12
Paid in Cash
Awards (1)
Stock Options
Held at
Year-End
the Compensation Committee each receives an additional annual cash stipend of $20,000, the chair of the Nominating and Corporate Governance Committee receives an additional annual cash stipend of $10,000 and the chair of the Retirement Plan Committee receives an additional annual cash stipend of $7,500, which in each case he or
she may elect to receive in the form of stock units. The annual stipend paid to the Lead Director and each of the committee chairs is payable in arrears in equal quarterly installments on the last business day of each quarter. Each director is required to irrevocably elect by December 31 of the prior year whether to receive the cash portion
of his or her retainer and/or his or her stipend in stock units. Stock units are issued under the Non-Employee Directors Equity Incentive Plan (the Directors Plan). Prior to the adoption of the Directors Plan on May 25, 2006, stock units were issued under the Non-Employee Directors Deferred Fee Equity Plan (the Predecessor Plan).
Directors are also entitled to reimbursement for reasonable expenses they incur in connection with meetings of the board of directors they attend in person. Prior to October 1, 2010, upon commencement of services as a director, each non-employee director was granted options to purchase 10,000 shares of common stock at an exercise price equal to the closing price of our common stock on the date the director was elected to the board. The option grants were made under the Directors
Plan and prior to adoption of the Directors Plan, under our Amended and Restated 2000 Equity Incentive Plan. These options became exercisable six months after the grant date and expire on the tenth anniversary of the grant date or, if earlier, on the first anniversary of a directors termination of service with respect to options granted
after May 25, 2006. Since October 1, 2010, directors are no longer eligible to receive stock option grants upon joining the board. In addition, each member of the board of directors and his or her spouse is eligible to participate in our medical, dental and vision plans at the same contribution rates as our management employees. Retired directors and their spouses who were participating in these plans at the time of their retirement from our board may continue to
participate in the plans, but generally are required to pay 100% of the cost. Commencing August 1, 2015, neither active nor retired directors will be eligible to participate in our medical, dental or vision plans. Stock units are credited in an amount that is equal to the cash payment the director otherwise would have received, based upon a formula where the cash payment amount is the numerator and the Initial Market Value of our common stock is the denominator. The Initial Market Value is equal to 85% of the closing price of the
common stock on the grant date of the units. Stock units for fees and stipends are earned quarterly and credited to the directors account on the last business day of the quarter in which the fees and stipends are earned; stock units for the retainer are earned quarterly and credited to the directors account on the first business day of the
quarter in which the retainer is earned. We hold all stock units until a directors termination of service, at which time the units are redeemable, at the directors election, in either cash or in shares of our common stock. Messrs. Kraus and Ward retired from the board on May 11, 2011. Mr. Kraus elected to receive cash in settlement of his stock unit account. Accordingly, he received cash equal to the fair market value of the stock units in his stock unit account. Fair market value of a stock unit is equal to the fair market value of a share of our
common stock (a) on the date of retirement, with respect to stock units awarded under the Directors Plan and (b) on the tenth day following the date of retirement, with respect to stock units awarded under the Predecessor Plan. Mr. Ward elected to receive company common stock in settlement of his stock unit account. Accordingly, he
received a number of shares of company common stock equal to the number of stock units in his stock unit account. 13
We maintain corporate governance policies and practices that reflect what the board of directors believes are best practices, as well as those that we are required to comply with pursuant to the Sarbanes-Oxley Act of 2002 and the rules of the SEC and the NASDAQ Stock Market (NASDAQ) on which our common stock has been
listed since December 16, 2011. Our common stock was previously listed on the New York Stock Exchange. A copy of our Corporate Governance Guidelines is available upon request to our Secretary, or may be viewed or downloaded from the Investor Relations page of our website, www.frontier.com. Leadership Structure Our Corporate Governance Guidelines provide that we will have a Chairman who will chair board meetings and perform such other duties as set forth in our charter and in the Corporate Governance Guidelines or as are otherwise assigned to him or her by the board. The Chairman and the CEO may be the same person; however, the
board may separate these two positions if it deems it to be in the best interests of our company and our stockholders to do so. The Corporate Governance Guidelines provide for a Lead Director if the Chairman and CEO is the same person and the Lead Director will perform such duties as are assigned to him or her by the independent
directors, including those set forth below. The independent directors as a group, acting through a resolution approved by a majority of all independent directors, will determine, based upon the recommendation of the Nominating and Corporate Governance Committee, which one of the independent directors will serve as Lead Director. A
director must have served on the board for a minimum of one year in order to be eligible to be a Lead Director. At any time when the Chairman is an independent director, the Chairman can be the Lead Director if the independent directors, acting through a resolution approved by a majority of all independent directors, determine to have
a Lead Director under such circumstances. As set forth in our Corporate Governance Guidelines, the Lead Director will:
preside at all meetings of non-management directors (including those to be attended only by independent directors) and meetings of the board where the Chairman is not present; coordinate the flow of information to and among independent and other non-management directors and review and approve information sent to the board by the Chairman/CEO or management of our company; review and approve all board meeting agendas; periodically solicit from independent and other non-management directors comments or suggestions related to board operations, including the flow of information to directors, the setting of meeting agendas and the establishment of the schedule of board meetings, and communicate those suggestions to the Chairman/CEO. The Lead
Director will also seek to ensure that there is (a) an efficient and adequate flow of information to the independent and other non-management directors; (b) adequate time for the independent and other non-management directors to consider all matters presented to them for action; and (c) appropriate attention paid to all matters
subject to oversight and actions by the independent and other non-management directors; serve as the liaison between the independent and other non-management directors and the Chairman/CEO and as the representative of the independent and other non-management directors in communications with the Chairman and management outside of regular board meetings; serve as liaison and provide direction to advisers and consultants retained by the independent and other non-management directors; have the authority to call meetings of non-management directors (including those to be attended only by independent directors) when appropriate; and be available for consultation and direct communication with major stockholders of our company if requested by any such stockholder in accordance with the Corporate Governance Guidelines. Mary Agnes Wilderotter currently serves as our Chairman of the Board and Chief Executive Officer and Myron A. Wick, III currently serves as our Lead Director. The board of directors has given careful consideration to separating the roles of Chairman and Chief Executive Officer and has determined that our company and our
stockholders are best served at this time by having Mrs. Wilderotter serve as both Chairman and Chief Executive Officer. The board of directors believes that our Chief Executive Officer is best situated to 14
serve as Chairman because she is the director most familiar with our companys business and industry, and most capable of effectively identifying strategic priorities and leading the discussion and execution of strategy. Independent directors and management have different perspectives and roles in strategy development. Our independent
directors bring experience, oversight and expertise from outside the company and industry. The board of directors also believes that the combined role of Chairman and Chief Executive Officer promotes information flow between management and the board of directors and strikes the appropriate balance between strategy development and
independent oversight of management, which are essential to effective governance. Director Independence The board of directors is required to affirmatively determine that a majority of our directors is independent under NASDAQ listing standards. The board of directors undertakes an annual review of director independence. As a result of this review, the board of directors affirmatively determined that, other than Mrs. Wilderotter, all of
the current directors are independent under NASDAQ rules and were independent under the rules of the NYSE and NASDAQ, as applicable, during the periods in 2011 that the company was listed on such exchanges. The board of directors also affirmatively determined that each of Mr. Kraus and Mr. Ward, who retired from the board in
May 2011, was independent under the rules of the NYSE while serving on the board during 2011. In determining director independence, the board of directors reviewed not only relationships between the director and our company, but also relationships between our company and the organizations with which the director is affiliated. After
considering the relevant facts and circumstances, the board of directors determined that none of these individuals has a material relationship with our company (either directly or as a partner, shareholder or officer of an organization that has a relationship with our company), other than as a director of our company, and that each of these
directors is free from any relationship with our company that would impair the directors ability to exercise independent judgment. The board determined that the following relationships are not material relationships and therefore do not affect the independence determinations: Ms. Segils son is President of EdgeCast Networks, Inc. In
2011, we purchased an immaterial amount of communications products and services from EdgeCast in the ordinary course of business. Ms. Segil was not involved in the negotiations of the terms of the purchases and did not receive any special benefits as a result of the transactions. In addition, Ms. Segil is a director of Women In
America, a charitable organization. In 2011, the company made an immaterial donation to the organization. Risk Management and Board Oversight Management is responsible for the companys risk management activities, including the annual enterprise risk management (ERM) process which is jointly administered by our Chief Financial Officer and Vice President, Internal Audit. The ERM process has been in place since 2005 and currently entails having each member of
senior management and their direct reports participate in an annual identification, assessment and evaluation of risks. The individual risks are aggregated across the company to help management determine our enterprise level risks. For each such risk, one or more mitigation strategies are developed and implemented to minimize that risk.
During the course of the year, periodic monitoring, self-assessment and reporting to the Audit Committee are performed by senior management to:
Update the trending of each risk compared to the latest annual ERM review; Identify/consider new and emerging risks; Assess the implementation status/effectiveness for each mitigation strategy; and Identify changes to mitigation strategies, if necessary. Our Corporate Governance Guidelines specify that the board of directors maintains overall responsibility for risk management oversight and may delegate a portion of that responsibility to specific board committees to enhance the effectiveness of their review. The board of directors has delegated the review and monitoring of risk
management exposures, guidelines and policies, as well as the ERM process, to the Audit Committee, as set forth in the Audit Committee Charter. 15
Meetings of the Board of Directors In 2011, the board of directors held eight meetings and committees of the board held 16 meetings for a total of 24 meetings. Average attendance at these meetings by members of the board in 2011 exceeded 97%. Each incumbent director attended at least 93.7% of the aggregate of these board meetings (during the period that he or
she served as a director) and the total number of meetings held by all committees of the board on which he or she served. It is our policy that the directors attend the annual meeting of stockholders. All of the directors who were members of the board of directors at the time of last years annual meeting of stockholders attended that
meeting. Committees of the Board The board of directors has four standing committees: Audit, Compensation, Nominating and Corporate Governance, and Retirement Plan. Audit Committee. The Audit Committee is composed of three independent directors and operates under a written charter adopted by the board of directors. A copy of the Audit Committee Charter is available upon request to our Secretary, or may be viewed or downloaded from the Investor Relations page of our website, www.frontier.com. The Audit Committee currently consists of Mr. Schrott, as Chair, and Mr. Barnes and Mr. Fraioli. Each member of the Audit Committee meets the financial literacy requirements of the NASDAQ Listing Rules. In addition, the board of directors has determined that each of Messrs. Barnes. Fraioli and Schrott meets the
standard of an audit committee financial expert under the rules of the SEC. Mr. Barnes is a member of four public company audit committees, including our Audit Committee. We do not limit the number of audit committees on which our Audit Committee members may serve. However, our board of directors considered Mr. Barnes
ability to serve on the Audit Committee and determined that his service on the other audit committees would not impair his ability to effectively serve on our Audit Committee. The Audit Committee met six times in 2011. The Audit Committee selects our independent registered public accounting firm. Management is responsible for our internal controls and financial reporting process. The Audit Committee assists the board of directors in undertaking and fulfilling its responsibilities in monitoring (i) the integrity of our consolidated financial
statements, (ii) our compliance with legal and regulatory requirements, (iii) the qualifications of our internal auditors and the independence and qualifications of our independent registered public accounting firm and (iv) the performance of our internal audit function and independent registered public accounting firm. In accordance with the Sarbanes-Oxley Act of 2002, the rules of the SEC and the Audit Committee Charter, the Audit Committee pre-approves all auditing and permissible non-auditing services that will be provided by KPMG LLP, our independent registered public accounting firm. In accordance with the rules of the SEC, the Audit Committee has established procedures to receive, retain and treat complaints received regarding accounting, internal accounting controls or auditing matters and to allow for the confidential and anonymous submission by employees of concerns regarding questionable accounting or
auditing matters. Compensation Committee. The Compensation Committee is composed of four independent directors and operates under a written charter adopted by the board of directors. A copy of the Compensation Committee Charter is available upon request to our Secretary, or may be viewed or downloaded from the Investor Relations page of
our website, www.frontier.com. Each member of the Compensation Committee is an outside director under Section 162(m) of the Internal Revenue Code and a non-employee director for purposes of Rule 16b-3 of the Securities Exchange Act of 1934. The Compensation Committee reviews our general compensation
strategies; acts as the committee for our incentive compensation plans; and reviews and approves compensation for the Chief Executive Officer and other executive officers. The Compensation Committee also oversees and approves compensation policy and incentive plan design, costs and administration. The Compensation Committee,
which met five times and took action on one other occasion in 2011, currently consists of Ms. Reeve, as Chair, and Mr. Bynoe, Ms. Finard and Ms. Segil. The Compensation Committees responsibilities, which are set forth in its charter, include, among other duties, the responsibility to:
evaluate at least annually the performance of the CEO and other senior executives of the company against corporate goals and objectives, determine and approve the compensation level (including any 16
discretionary incentive awards) based on this evaluation, report, in the case of the CEO, on the same to the other non-management directors, and review, as appropriate, any agreement or understanding relating to the CEOs or such other senior executives employment, incentive compensation, or other benefits based on this
evaluation; review periodically and recommend to the board, the compensation of all directors; review the companys incentive compensation plans and equity-based plans and recommend to the board changes in such plans as needed. The Committee has and shall exercise all authority of the board with respect to the administration of such plans; and review and approve all grants of awards, including the award of shares or options to purchase shares, pursuant to our incentive and equity-based compensation plans. The compensation for the other senior officers is determined by the Compensation Committee taking into account the recommendation of Mrs. Wilderotter. The Committee may form, and delegate any of its responsibilities to, a subcommittee so long as such subcommittee is solely comprised of one or more members of the Committee. The Compensation Committee engages compensation consultants from time to time to assist the Committee in evaluating the design and assessing the
competitiveness of its executive compensation program and for individual benchmarking. For more detailed information on the role of compensation consultants, see Compensation Discussion and AnalysisRoles and Responsibilities and Market and Peer Group Reviews elsewhere in this proxy statement. Nominating and Corporate Governance Committee. The Nominating and Corporate Governance Committee is composed of four independent directors and operates under a written charter adopted by the board of directors. A copy of the Nominating and Corporate Governance Committee Charter is available upon request to our
Secretary, or may be viewed or downloaded from the Investor Relations page of our website, www.frontier.com. One of the committees functions is to recommend candidates for election to the board of directors. The Nominating and Corporate Governance Committee uses a variety of means of identifying nominees for
director, including recommendations from current board members and from stockholders. In determining whether to nominate a candidate, the Nominating and Corporate Governance Committee will consider the current composition and capabilities of serving board members, as well as additional capabilities considered necessary or
desirable in light of our existing needs and then assess the need for new or additional members to provide those capabilities. In addition, the Nominating and Corporate Governance Committee takes a leadership role in shaping our corporate governance, including making recommendations on matters relating to the composition of the
board of directors and its various committees and our Corporate Governance Guidelines. The Nominating and Corporate Governance Committee, which met three times and took action on one other occasion in 2011, currently consists of Mr. Bynoe, as Chair, and Mr. Schrott, Ms. Segil and Mr. Shapiro. Stockholders may propose director candidates for consideration by the Nominating and Corporate Governance Committee. Any such recommendations should include the nominees name and qualifications for membership to the board of directors and should be directed to our Secretary at the address of our principal executive
offices. To nominate an individual for election at an annual stockholder meeting, the stockholder must give timely notice to our Secretary in accordance with our bylaws, which, in general, require that the notice be received by our Secretary not less than 90 days nor more than 120 days before the anniversary date of the immediately prior
annual stockholders meeting, unless the annual meeting is moved by more than 30 days before or after the anniversary of the prior years annual meeting, in which case the notice must be received not less than a reasonable time, as determined by our board, prior to the printing and mailing of proxy materials for the applicable annual
meeting. The notice should include a description of the qualifications of the suggested nominee and any information that is required by the regulations of the SEC concerning the suggested nominee and his or her direct or indirect securities holdings or other interests in our company. See Proposals by Stockholders for the deadline for
nominating persons for election as directors for the 2013 annual meeting. Each candidate for nomination as a director, including each person recommended by stockholders, is evaluated in accordance with our Corporate Governance Guidelines. In addition, the board of directors has adopted guidelines to be used by the Nominating and Corporate Governance Committee in selecting candidates for
membership to the board of directors. These guidelines set forth general criteria for selection, including that 17
the background and qualifications of the directors, as a group, should be diverse, and a nominee should possess a depth of experience, knowledge and abilities that will enable him or her to assist the other directors in fulfilling the boards responsibilities to our company and our stockholders. In addition, a nominee must be willing to
commit that he or she will comply with our director stock ownership guidelines, as discussed below. The guidelines also include the following special criteria for the selection of director nominees:
A nominee must have a reputation for integrity, honesty, fairness, responsibility, good judgment and high ethical standards. A nominee should have broad experience at a senior, policy-making level in business, government, education, technology or public interest. A nominee should have the ability to provide insights and practical wisdom based on the nominees experience and expertise. A nominee should have an understanding of a basic financial statement. A nominee should comprehend the role of a public company director, particularly the fiduciary obligation owed to our company and our stockholders. A nominee should be committed to understanding our company and its industry and to spend the time necessary to function effectively as a director. A nominee should neither have nor appear to have a conflict of interest that will impair the nominees ability to fulfill his or her responsibilities as a director. A nominee should be independent, as defined by the SEC and NASDAQ. To the extent permitted by applicable law and our bylaws, nominees who do not qualify as independent may be nominated when, in the opinion of the Nominating and Corporate Governance Committee, such action is in our best interests. Although we do not have a formal policy regarding board diversity, when evaluating candidates for nomination as a director, the Nominating and Corporate Governance Committee does consider diversity in its many forms, including among others, experience, skills, ethnicity, race and gender. We believe a diverse board, as so
defined, provides for different points of view and robust debate among our board members and enhances the effectiveness of the board. We believe we have a very diverse board of directors, which includes one or more current and/or former CEOs, CFOs, investment bankers, experts in communications, marketing and strategy, auditors
and business people and individuals of different race, gender, ethnicity and background. Decisions regarding the renomination of directors for additional terms on the board of directors are governed by the general and specific criteria described above and by the Nominating and Corporate Governance Committees evaluation of the directors performance and contribution to the board. In addition, as a general rule, a non-
employee director will not be renominated if he or she has served 15 years as a member of the board of directors. The Nominating and Corporate Governance Committee reserves the right to renominate any director regardless of the length of his or her service if, in the judgment of the Nominating and Corporate Governance Committee,
such renomination is in our companys and our stockholders best interests. In February 2012, the board of directors approved revised stock ownership guidelines for non-management directors. Each non-management director is now expected to own shares of our common stock having a minimum value of five (5) times the cash portion of the annual non-management director retainer (which currently equates
to $375,000) by the later of February 15, 2017 and five years after joining the Board. Stock unit grants are counted for purposes of fulfilling this guideline. The information contained in this proxy statement with respect to the Audit Committee Charter, the Compensation Committee Charter, the Nominating and Corporate Governance Committee Charter and the independence of the non-management members of the board of directors shall not be deemed to be soliciting material or to
be filed with the Securities and Exchange Commission, nor shall the information be incorporated by reference into any filing under the Securities Act of 1933 or the Securities Exchange Act of 1934, except to the extent that we specifically incorporate it by reference in a filing. Retirement Plan Committee. The Retirement Plan Committee is composed of three independent directors and operates under a written charter adopted by the board of directors. The Retirement Plan Committee oversees our companys retirement plans, including reviewing the investment strategies and asset performance of the plans,
compliance with the plans and the overall quality of the asset managers, plan administrators and 18
communications with employees. The Retirement Plan Committee, which met two times and took action on one other occasion in 2011, currently consists of Mr. Barnes, as Chair, and Mr. Fraioli and Mr. Kahan. Executive Sessions of the Board of Directors Our independent directors have regularly scheduled executive sessions in which they meet outside the presence of management. Myron A. Wick, III has been elected as the Lead Director by our independent directors. Mr. Wick presides at executive sessions of the board. Communications with the Board of Directors Any stockholder or interested party who wishes to communicate with the board of directors or any specific director, including the Lead Director, any non-management director, the non-management directors as a group, any independent director or the independent directors as a group, may do so by writing to such director or directors
at: Frontier Communications Corporation, Three High Ridge Park, Stamford, Connecticut 06905. This communication will be forwarded to the director or directors to whom it is addressed. This information regarding contacting the board of directors is also posted on the Investor Relations page of our website, www.frontier.com. Code of Business Conduct and Ethics We have a Code of Business Conduct and Ethics (the Code of Conduct) to which all employees, executive officers and directors, which for purposes of the Code of Conduct we collectively refer to as employees, are required to adhere in addressing the legal and ethical issues encountered in conducting their work. The Code of
Conduct requires that all employees avoid conflicts of interest, comply with all laws and other legal requirements, conduct business in an honest and ethical manner, and otherwise act with integrity. Employees are required to report any conduct that they believe, in good faith, is an actual or apparent violation of the Code of Conduct and
may do so anonymously by using our Ethics Hotline. The Code of Conduct includes specific provisions applicable to our principal executive officer and senior financial officers. We disclose on our website any amendment to, or waiver of, any provision of our Code of Conduct that is required to be disclosed pursuant to securities laws. A
copy of the Code of Conduct is available upon request to our Secretary, or may be viewed or downloaded from the Investor Relations page of our website, www.frontier.com. Related Person Transactions Policy The board of directors adopted a policy addressing our procedures with respect to the review, approval and ratification of related person transactions that are required to be disclosed pursuant to SEC regulations. The policy provides that any transaction, arrangement or relationship, or series of similar transactions, in which we are
involved, with a related person (as defined in the SEC regulations) who has or will have a direct or indirect material interest and which exceeds $120,000 in the aggregate shall be subject to review, approval or ratification by the Nominating and Corporate Governance Committee. In its review of related person transactions, the
Nominating and Corporate Governance Committee shall review the material facts and circumstances of the transaction and shall take into account certain factors, where appropriate, based on the particular facts and circumstances, including (i) the nature of the related persons interest in the transaction, (ii) the significance of the
transaction to us and to the related person and (iii) whether the transaction is likely to impair the judgment of the related person to act in the best interest of our company. No member of the Nominating and Corporate Governance Committee may participate in the review, approval or ratification of a transaction with respect to which he or she is a related person provided that such person can be counted for purposes of a quorum and shall provide such information with respect to the transaction as
may be reasonably requested by other members of the committee or the board. 19
Compensation Discussion and Analysis This section provides information regarding the 2011 compensation program in place for our Chairman, President and Chief Executive Officer (our CEO), our Chief Financial Officer (our CFO) and our three most highly-compensated executive officers other than our CEO and CFO. These are the executive officers named in the
Summary Compensation Table presented in this proxy statement (the named executive officers or NEOs). This section includes information regarding our executive compensation philosophy, the overall objectives of our compensation program and each component of compensation that we provide. This section also describes the key
factors the Compensation Committee considered in determining the compensation for the named executive officers in 2011. Company and compensation-related highlights for 2011 were as follows:
On July 1, 2010, the company completed its acquisition of approximately 4.0 million access lines across 14 states and related business assets from Verizon Communications Inc., which tripled the size of the company. During 2011, the company made significant progress on the integration of the acquisition and began to improve
financial metrics and customer retention. In 2011, we lowered access line churn by 8.3%, delivered $5.2 billion in revenues and $1.7 billion in operating cash flow, achieved $552 million in acquisition synergies, built-out High-Speed Internet availability to over 415,000 additional homes and added 45,200 new high speed customers. In October 2011, we converted the entire acquired business to the companys legacy financial and human resources systems and four of the thirteen states of the acquired business to our legacy customer and operating systems. In March 2012, the company commenced the conversion of the remaining nine states of the acquired
business onto the companys legacy customer and operating systems. The completion of the conversions will significantly enhance the companys ability to effectively manage the business and reduce costs. Despite the ongoing challenging economic environment, we continued to deliver solid operating performance, both on an absolute and a relative basis. Our performance against the financial metrics we use to measure our executives was 93.9% of the targets, on average, established by the board of directors in February 2011.
However, as this was below target, compensation payouts were reduced accordingly. See Cash CompensationAnnual Bonus below. For 2011, we modified the Frontier Bonus Plan, the companys annual cash incentive bonus plan, to more strongly align executive compensation with annual performance. We instituted a performance threshold below which no incentive cash bonuses will be awarded. In addition, we incorporated performance leverage into the
bonus plan. As a result, we increased upside potential for above-target performance and decreased bonus payouts for below-target performance. This design increases the incentive for executives to exceed targets. See Cash CompensationAnnual Bonus below. Consistent with our compensation philosophy, 82% of our CEOs 2011 compensation was at risk and contingent upon performance against specified company and individual goals, and of that amount, 74% was in the form of restricted stock. Similarly, for the other named executive officers as a group, 76% of their total
compensation was at risk, and of that amount, 72% was paid in restricted stock. See Compensation Mix below. Consistent with executive compensation best practices, we amended our stock ownership guidelines to increase the amount of stock our Senior Leadership Team members are expected to own. See Equity CompensationStock Ownership Guidelines below. At our 2011 Annual Meeting of Stockholders held on May 12, 2011, stockholders voted in favor of our executive compensation program, with over 93% approving our executive compensation program, philosophy and disclosure. In addition to the above, in 2010 we entered into an amended and restated employment agreement with Maggie Wilderotter, our CEO. The amended agreement incorporates a variety of best practices. Mrs. Wilderotter is no longer entitled to guaranteed minimum equity awards or gross-up payments on amounts she may receive in
connection with a change in control and she is no longer eligible for severance payments if we decide not to renew her employment agreement. See Post-Employment CompensationTermination of Employment and Change-in-Control Arrangements below. 20
In February 2012, we adopted the Frontier Long-Term Incentive Plan (LTIP), which will further promote the alignment of stockholder and executive interests by setting aggressive targets for operating cash flow over a three-year time horizon and taking into account the performance of our stock relative to a peer group. Executive Compensation Philosophy The companys executive compensation philosophy is designed to achieve a number of objectives: Establish clear alignment between the interests of our executives and those of our stockholders. Our executive compensation program is designed to align the interests of our executives with those of our stockholders by rewarding performance measured by certain key financial metrics, including revenue; earnings before interest,
taxes, depreciation and amortization, excluding certain non-cash items (EBITDA); and operating cash flow (EBITDA less capital expenditures for business operations), and specific operating goals. In the case of annual awards, these metrics and goals are derived from the companys annual business plan and are discussed in more detail
below. Additionally, the executives interests are aligned with our stockholders interests through the use of restricted stock awards rather than cash as a significant component of annual compensation. This encourages our executives to focus their attention on decisions that emphasize long-term returns for our stockholders. We also have
established and maintain minimum stock ownership guidelines for our CEO and her direct reports who are members of our Senior Leadership Team. As mentioned above, in 2012 we adopted the LTIP, which will further align stockholder and executive interests by incenting executives to achieve financial goals during a multi-year period, thus balancing the focus on short- and long-term financial performance and taking into account our Total Shareholder Return relative to a peer
group. Reinforce our performance culture. Given the intensely competitive environment in the communications services industry, we believe that it is important that we have a culture that rewards performance with respect to critical strategic, financial and operational goals. Our executive compensation program is designed to reward
superior performance over both the short- and long-term. We accomplish this goal by making a majority of our named executive officers compensation at risk, i.e., contingent upon achievement of specified company and individual performance goals, and by not having any executive employment arrangements with guaranteed
minimum provisions, other than base salary. See Compensation Mix below. The following components of executive compensation are at risk:
Annual cash bonuses are paid based upon achievement of specified company-level financial and non-financial targets and individual performance. Restricted stock is awarded annually to executives based on achievement of specified company-level financial targets and individual performance. Failure to attain threshold performance goals results in forfeiture of the award opportunity. Once earned based on performance, the ultimate value derived from the restricted stock
award itself is tied to both changes in Frontier stock price as well as dividends paid during the multi-year vesting period. This design links the value of the awards to the companys long-term performance, as well as continued service, further reinforcing our performance culture and supporting our retention objective. Commencing in 2012, the LTIP is designed to promote long-term performance by rewarding the achievement of specified annual operating cash flow goals during three-year performance periods. LTIP awards are denominated and payable in shares of the companys common stock at the end of the applicable three-year
performance period based on achievement of operating cash flow targets and specified relative-to-peer levels of Total Shareholder Return. Failure to attain threshold operating cash flow goals over a three-year Measurement Period will result in forfeiture of the corresponding LTIP award. We did not offer a long-term incentive
opportunity in 2011 due to the difficulty of setting multi-year performance goals during the transition period following the Verizon transaction, which closed in July 2010. Now that we are nearing the completion of the integration of the acquired business into the company, we have gained greater precision in forecasting future
performance goals and have introduced a new long-term incentive plan. As a result of the adoption of the new LTIP in February 2012, we reduced restricted stock award targets to maintain current targeted compensation level and mix. 21
The company reinforces its performance culture by avoiding entitlement-based benefits and perquisites that are not performance-based. Our executives are eligible to participate in a comprehensive healthcare benefit plan, but we require the executives to pay a higher percentage of the costs than other employees. The only retirement
benefit the company offers to executives is a 401(k) match, which is available on the same basis to all non-union, full-time employees who participate in the companys 401(k) plan. The company does not offer any active pension benefits or post-retirement medical benefits to executive officers. The company does not believe in rewarding
its executives with tenure-based benefits such as pension plans or post-retirement medical benefits. Hire and retain talented executives. The quality of the individuals we employ at all levels of the organization is a key
driver of our performance as a company, both in the short-term and in the long-term. We employ utility players or athletesexecutives with an interdisciplinary set of skills who can fill many roles and whose
responsibilities often extend beyond the traditional scope indicated by their titles. Accordingly, it is critical for us to be able to hire and retain the best executive talent in the marketplace and one of the important tools to do so is to pay competitive total compensation. In order for us to hire and retain high performing executives with the skills critical to the long-term success of our company, we have implemented a compensation program that is competitive in comparison to comparable companies based on size, overall complexity and the nature of our business. We differentiate compensation
opportunities among our named executive officers to reflect a variety of factors, including market compensation rates as well as the individual executives tenure in the position, experience and skill set, importance to the company, sustained performance over time and readiness for promotion to a higher level and role in the overall
succession planning process. We have also established multi-year vesting schedules for restricted stock and LTIP awards that are designed to help us retain valuable executives notwithstanding the competition for talent. Ensure company goals are fully aligned throughout the organization. Each year, we establish goals in three broad categories that we refer to as the 3Ps (People, Product and Profit) to achieve the companys business plan for the year. These goals reflect the performance objectives that we have established for the relevant year for
all employees, including the named executive officers. In the fourth quarter of 2010, our CEO and top company leaders developed the companys business plan for 2011, which was adopted by the board of directors. The 3Ps for 2011, which were reviewed by the Compensation Committee and adopted by our board of directors, were
derived from the 2011 business plan. Following their approval, the 3P goals were communicated to all employees in the first quarter of 2011. The named executive officers are accountable for leading the company to achieve the 3P goals each year and are rewarded based on achieving specified 3P goals that are the key priorities for our
business. Compensation Program Design To achieve the objectives described above, we offer a straightforward executive compensation program that rewards our executives for both short-term (one year) and long-term performance. For 2011, three primary components of compensation were available to our executives: base salary, an annual cash bonus opportunity and
restricted stock awards. In 2012, a fourth component was added, the LTIP. Of these components, only base salary represents fixed compensation. Each of the other components is variable based on the performance of both the company and the individual executive, measured against specific pre-established goals and targets. The Compensation Committee considers many factors in determining the amount of total compensation and the individual components of that compensation for each named executive officer, including the executives experience level, value to the organization and scope of responsibility. Since the market for talented executives is
highly competitive, the Compensation Committee also considers the compensation that is paid to executives in comparable companies with whom we compete for talent, which we refer to as our peer group. For more information about our peer group, see Market and Peer Group Reviews below. The peer group information provides
valuable comparative insights and is one of many factors considered by the Compensation Committee in setting executive compensation. In general, it is our aim to offer total compensation to our executives that would place them, on average, at the 50th percentile rank relative to the peer group. Under this approach, newly promoted
executives and those new to their role may be placed below the median to reflect their limited experience and evolving skill set. Similarly, executives with significant experience and, therefore, above-market skills, or those executives who have sustained high performance and are most critical to the 22
companys long-term success, may be placed above the median. We believe that this strategy enables us to successfully hire, motivate and retain talented executives while simultaneously ensuring a reasonable overall compensation cost structure relative to our peers. In making its compensation decisions, the Compensation Committee reviews tally sheets setting forth all components of compensation paid to the named executive officers for the past five years, along with targeted compensation for those years, including base salary, bonus, grant date values of restricted stock awards, the special
transaction and retention bonuses paid in 2010 and the value of dividends paid on unvested restricted shares. These tally sheets also show the executives holdings of unvested restricted stock from prior years awards and the current value of those shares. The Compensation Committee uses these tally sheets to (i) review the total annual
compensation of the named executive officers over the past five years, (ii) assess the executive officers compensation against their individual and company performance over that period and (iii) assure that the Committee has a comprehensive view of our compensation programs. Impact of 2011 Say-on-Pay Vote The Compensation Committee considers the results of the annual stockholder vote on our executive compensation program when evaluating and determining compensation policies and the compensation for the CEO and the other named executive officers. The 2011 stockholder vote affirmed the Compensation Committees decisions
for 2010, given the 93% shareholder approval of our executive compensation program. The Compensation Committee recognizes the importance of continuing to align executive compensation with stockholders. Consistent with best practice, it determined to make additional changes to the executive compensation program to achieve this
goal, including enhancing stock ownership requirements and adopting the LTIP. Roles and Responsibilities The Compensation Committee of the board of directors is responsible for overseeing and approving our executive compensation philosophy and compensation programs, as well as determining and approving the compensation for our CEO and other key senior executives. At the beginning of each year, the Compensation Committee
reviews and approves the 3Ps that apply to the senior executives, as well as individual performance goals for the named executive officers, and approves the target levels for each of the compensation components that apply to the named executive officers for the upcoming year. Each year, at its February committee meeting, the
Compensation Committee assesses our CEOs performance for the year just ended to determine the appropriate award for each component of her total compensation. The Compensation Committee then reviews its recommendations for our CEO with the other non-management directors and considers any additional input from them before
finalizing its decision. Our CEO annually reviews the performance of the other key senior executives for the year just ended, including the named executive officers, and presents to the Compensation Committee her performance assessments and compensation recommendations, including the award for each component of the executives total
compensation. Mrs. Wilderotters review consists of an assessment of the executives performance against company-level and individual goals and targets. The Compensation Committee then follows a review process with respect to these executives similar to that undertaken for Mrs. Wilderotter. After review and any adjustments, as
appropriate, the Compensation Committee approves the compensation decisions for these executives. The Compensation Committee has the authority to retain outside counsel, compensation consultants and other advisors to assist it in carrying out its responsibilities. The Committee has the sole authority to retain, compensate, direct, oversee and terminate counsel, compensation consultants and other advisors hired to assist the
Committee, who are accountable ultimately to the Committee. The Compensation Committee retains an independent executive compensation consultant to assist in the development of compensation programs, evaluation of compensation practices and the determination of compensation awards. The role of the compensation consultant is to
provide objective third-party data, advice and expertise in executive compensation matters. The decisions made by the Compensation Committee are the responsibility of the Compensation Committee and reflect factors and considerations in addition to the information and recommendations provided by the compensation consultant and
outside counsel. 23
In 2011, the Compensation Committee re-engaged Frederic W. Cook & Co. Inc. as its independent executive compensation consultant for 2012. Frederic W. Cook & Co. has been engaged by the Compensation Committee as its independent executive compensation consultant since 2010. In 2011, Frederic W. Cook & Co. provided to the
Compensation Committee advice and insights on compensation matters, including the peer group, the companys bonus plan and the LTIP design, and reviewed this Compensation Discussion and Analysis. Frederic W. Cook & Co. provides no other services to the company. The Compensation Committee reviews on a periodic basis the companys management compensation programs, including any management incentive compensation plans, to determine whether they are appropriate, properly coordinated and achieve their intended purposes(s), and recommends to the board any modifications or new
plans or programs. Compensation Mix Consistent with our philosophy of having a majority of the named executive officers compensation at risk and contingent upon specified company and individual performance goals, the following charts show the proportion of each of the principal compensation components to total compensation for the CEO and for the other
named executive officers as a group for 2011. We refer to this ratio as performance-based pay or variable pay. For Mrs. Wilderotter, 82% of her 2011 total compensation was variable and 76% was variable for the other named executive officers as a group. The variable percentage of total compensation is greater for the CEO than for
the other named executive officers because the CEOs duties are substantially more extensive. Therefore, to ensure alignment with stockholders interests, a larger portion of the CEOs total compensation is variable or, at risk.
* The named executive officers other than the CEO Components of the Executive Compensation Program The following describes the components that comprise our executive compensation program and post-employment compensation, the rationale for each component and how awards were determined for 2011. Cash Compensation Base Salary. Base salary levels for our executives, on average, are set at approximately the 50th percentile for comparable executives within our peer group. We believe a salary scale set at this level, when considered together with the other components of compensation, is sufficient to attract and retain talented executives. We
conduct an annual merit review of our executives, generally held in February of each year, where each executives performance for the year just ended is reviewed against his or her individual and company goals. The overall budget for merit increases is set by management using an average of the merit increase percentages 24
in national compensation surveys in each year and consideration of the companys performance. Executives are eligible for increases to their base salary based on individual performance. An executive may also receive an increase in base salary when promoted, if the executive is given increased responsibility or if the executives base salary is determined to be below the 50th percentile of our peer group. The Compensation Committee determines all changes to the base salary of Mrs. Wilderotter. Changes to the base
salary for our other named executive officers are determined by the Compensation Committee, taking into account the recommendations of Mrs. Wilderotter. Base salary is targeted to represent between 15 and 20 percent of total compensation for 2011 for the CEO and between 20 and 30 percent of each other named executive officer (for
this purpose, total compensation consists of base salary, the annual cash bonus payment and the grant date fair market value of restricted stock awards). This is consistent with our philosophy of having a majority of the named executive officers compensation at risk and contingent upon specified company and individual performance
goals. The Compensation Committee determined not to award merit increases to base salary for 2012 to the Senior Leadership Team, including the CEO and the other named executive officers, and the Regional Presidents and Senior Vice Presidents based on the companys 2011 revenue decline. Annual Bonus. The named executive officers participate in the Frontier Bonus Plan, which is the same bonus plan in which all eligible non-union employees participate (although the executive officers performance is measured against the weighted 3Ps, as described below). This component of executive compensation is designed to
incent and reward our executives for achieving pre-established and measurable annual performance goals. Target bonuses are established at the beginning of each year and are set as a percentage of the named executive officers base salary. The target bonus for each named executive officer, other than Mrs. Wilderotter, is 100% of the
officers base salary. Under the terms of her employment agreement, Mrs. Wilderotters target bonus is 135% of her base salary. The terms of Mrs. Wilderotters employment agreement are described below under Employment Arrangements; Potential Payments upon Termination or Change-in-Control. The annual cash bonus is targeted
to represent between 15 and 20 percent of total compensation for 2011 for the CEO and between 20 and 30 percent for each other named executive officer. The performance goals for the Frontier Bonus Plan are based on our 3P goals (which, as previously stated, are our company-wide People, Product and Profit goals) and also include individual goals for each executive, which are consistent with our overall 3P goals. The performance goals are stretch goals that are designed to incent
our executives to drive high performance and achieve the companys strategic, operational and financial objectives. As a result, we believe the goals will be difficult to achieve but are attainable with significant effort. In the last three years, the company has performed at varying levels of the established 3P goals, but in each year the
bonus pool has been less than 100% of the target. Bonuses may be paid upon partial or full achievement of company and individual goals. For 2011, the goals and corresponding weightings used in determining bonus payouts for the named executive officers are shown in the following table and narrative. The weightings used reflect the relative importance of the goals to the overall
success of the company. We refer to the first three goals shown in the table below, namely achievement of financial targets, achievement of acquisition-related objectives and achievement of key 3P deliverables, as the weighted 3Ps. 25
2011 Bonus Goals
Weighting to Set
Payout (1) Achievement of financial targets
50
%
43
% Revenue, EBITDA, Operating Cash Flow (equally weighted) (2) Achievement of acquisition-related objectives
25
%
21
% Acquisition synergies and integration (40%) Four state conversion (60%) (3) Achievement of key 3P deliverables
25
%
21
% Broadband build-out (20%) Wireless data and voice plans (20%) Performance/Culture reviews (10%) Net residential customers (25%) Net commercial customers (25%) (4) Leadership and individual performance
15
%
100
%
100
% We use the above financial goals to measure executive performance because management uses them to assist in analyzing the companys underlying financial performance from period to period, to evaluate the financial performance of our business units, to analyze and evaluate strategic and operational decisions and to assist
management in understanding the companys ability to generate cash flow and, as a result, to plan for future capital operational decisions. We included the achievement of acquisition-related objectives because of the magnitude and importance of these objectives to the company. These objectives consist of achieving $479 million of
annualized cost synergies and integration objectives, and the successful conversion of four acquired states from acquired systems to legacy systems. We use the achievement of the key 3P deliverables in order to more closely align the executives performance with the companys objectives. The key 3P deliverables consist of targets for
broadband build-out, wireless data and voice plans and residential and commercial customers, as well as results from the implementation of a performance management process into the new properties and the culture integration of our employees into one company. All of these goals were identified by the Compensation Committee as
critical to the success of the company and the integration of the acquired business. The number of goals for 2011 has been reduced from prior years to strengthen executive focus on critical performance objectives. In addition, 15% of the executives bonus is based on the assessment of the executives leadership and performance against
individual goals that are tailored to the specific executive based on the executives role and responsibilities and are directly linked to the overall company 3P goals. The bonus pool for 2011 was funded based on the companys performance on the weighted 3Ps. The bonus pool (and the maximum individual allocations established under the plan) represents the maximum amount of bonus awards that the Compensation Committee may approve under the Frontier Bonus Plan as qualified
performance-based compensation for tax purposes pursuant to Section 162(m), but is not a guarantee of payment to any individual. The bonus payout can be from 0%, for below-threshold performance, to up to 130%, for outstanding performance, of each executives target bonus opportunity. The Compensation Committee set a minimum performance threshold of 85% of the weighted 3P goals and a maximum performance threshold of 111% of the weighted 3P
goals. We employ an approximately 2 to 1 linear interpolation for results between 85% and 106% and an approximately 4 to 1 linear interpolation for results between 106% and the maximum 111%. The remainder of the bonus opportunity (15%) is based on the assessment of the executives leadership and performance against the
executives individual goals, subject to the same payout factor used for the weighted 3P payout. The Compensation Committee may use discretion to decrease, but not increase, the actual bonus payout for Mrs. Wilderotter (subject to the same 0-130% range), which is known as negative discretion. Bonus payouts for the other named executive officers are determined by the Compensation Committee, taking into account the
recommendations of Mrs. Wilderotter, and any negative discretion employed by the Compensation Committee. In determining bonus payouts for the named executive officers for 2011, the companys performance against the financial targets were as follows (dollars in millions): 26
Bonus Pool
Weighting
2011
Financial Targets Threshold Target Maximum Actual Performance ($) ($) ($) ($) (%) Revenue $ 5,116 $ 5,450 $ 5,672 $ 5,243 96.2 % EBITDA
(1) $ 2,228 $ 2,646 $ 2,952 $ 2,486 94.0 % Operating
cash flow (2) $ 1,528 $ 1,896 $ 2,205 $ 1,737 91.6 %
(1)
Defined as operating income, as adjusted, plus depreciation and amortization. (2) Defined as EBITDA less capital expenditures for business operations. For the acquisition-related objectives and key 3P deliverables, the companys performance against the quantifiable goals was measured as a percentage of achievement versus the targets for those goals. The Compensation Committee determined the performance against other acquisition-related objectives and key 3P deliverables
based on its qualitative evaluation of the companys progress against these objectives. The Compensation Committee assessed the performance against the goal to achieve estimated cost synergies and integration, weighted 40% and 60%, respectively, at 108.0%. This was based on $552 million of synergies achieved versus the target of
$479 million, and the successful four state conversion to legacy operating and customer systems completed ahead of schedule and the additional conversion of the entire acquired business to legacy financial and human resources systems. The Compensation Committee assessed the performance of the key 3P deliverables based on the
performance against each goal as shown in the table below. The broadband build-out goal was 476,000 households and the actual build out was to 415,500 homes. The wireless data and voice plans goal was assessed to be below-target. The performance/culture reviews were assessed to be at target based on the strong employee survey
results, the culture committee results and the implementation of a performance management process into the acquired properties. The Compensation Committee assessed the net residential and commercial customer goals based on the performance of the companys customer acquisitions versus deactivations. The performance against the weighted 3P goals was as follows: Weighted 3P Goals
2011 Financial Targets (43%) (equally weighted) Revenue
96.2
% EBITDA
94.0
% Operating Cash Flow
91.6
% Performance
93.9
% Acquisition-Related Goals (21%) Acquisition synergies and integration (40%)
110.0
% Four state conversion (60%)
105.0
% Performance
108.0
% Key 3P Deliverables (21%) Broadband build-out (20%)
87.3
% Wireless data and voice plans (20%)
50.0
% Performance/culture reviews (10%)
100.0
% Net residential customers (25%)
100.4
% Net commercial customers (25%)
91.1
% Performance
85.3
% Total Weighted 3P Performance (85%)
95.3
% Applying the payout factor applicable to a 95.3% total weighted 3P performance, the total weighted 3P payout was 90.0%. However, Mrs. Wilderotter recommended to the Committee that the payout for senior leadership, including the Senior Leadership Team, Senior Vice Presidents and Regional Presidents, be reduced to 87%
because the payout for the rest of the bonus eligible employees was 87% based on the overall 3P results, and she did not want senior leadership to have a higher percentage payout. The Compensation Committee concurred with Mrs. Wilderotters recommendation and determined to use negative discretion to reduce the total weighted 3P
payout to 87%, consistent with the payout for all other bonus eligible leaders in the company using the overall 3P scorecard. 27
Against Goal
Performance
After the determination of the amount an executive has earned pursuant to the weighted 3Ps, the executives individual performance is then assessed, which accounts for 15% of the executives total bonus opportunity. For each named executive officer (other than Mrs. Wilderotter), the Compensation Committee takes into account a
performance evaluation provided by Mrs. Wilderotter against the executives individual goals, including a qualitative assessment of the executives contributions and effectiveness on an individual basis and as a leader in the organization. For Mrs. Wilderotter, the Compensation Committee performed a similar assessment. The amount of
the bonus payout for each named executive officer was determined using the executives base salary as of December 31, 2011. The payouts for these individual goals, subject to the same payout factor used for the weighted 3P payout, and total bonus payouts (i.e., the sum of the total weighted 3P payout and individual goal payout), as a
percentage of the executives targets were as follows: Name
Individual Goal
Total Mary Agnes Wilderotter
15.0
%
89.0
% Donald R. Shassian
14.4
%
88.3
% Daniel J. McCarthy
17.0
%
90.9
% Cecilia K. McKenney
17.0
%
90.9
% Kathleen Q. Abernathy
14.4
%
88.3
% For 2012, the goals and corresponding weightings to be used in determining bonus payouts for the named executive officers are shown in the following table and narrative. 2012 Bonus Goals
Weighting to Set
Payout (1) Achievement of financial targets
50
%
43
% Revenue, EBITDA, Operating Cash Flow (equally weighted) (2) Achievement of acquisition-related objectives
25
%
21
% Deliver on synergies and integration (40%) Complete nine state conversion (60%) (3) Achievement of key 3P deliverables
25
%
21
% Launch two new revenue businesses (20%) Performance reviews (10%) Net residential customers (20%) Net commercial customers (20%) Residential customers on price protection plans (15%) Small/ROHO customers on price protection plans (15%) (4) Leadership and individual performance
15
%
100
%
100
% The bonus pool for 2012 for the Senior Leadership Team will be established based on the companys performance on the first three categories shown in the table above, namely achievement of financial targets, achievement of acquisition-related objectives and achievement of key 3P deliverables, using the weightings shown. Under
the bonus plan for 2012, the bonus payout can be from 0%, for below threshold performance, to 130%, for outstanding performance, of target of each executives target bonus opportunity. Equity Compensation For 2011, equity compensation consisted solely of restricted stock awards. Beginning in 2012, equity compensation will be a combination of restricted stock and LTIP awards. With the introduction of LTIP awards, we reduced restricted stock award targets to maintain current targeted compensation level and mix. Starting in 2012,
restricted stock awards will comprise approximately 75% and LTIP awards will comprise approximately 25% of total annual target equity compensation value, except in certain cases where an executives total compensation is below the 50th percentile or as otherwise approved by the Compensation Committee. Restricted Stock Awards. We use restricted stock awards to achieve three primary objectives:
(1)
to incent and reward the executives for annual company performance; (2) to enable us to hire and retain talented executives; and 28
Payout x
Payout Factor
Bonus Payout
Bonus Pool
Weighting
(3) to align the interests of our executives with those of our stockholders through long-term executive ownership of common stock. Restricted stock awards are granted each year to the Senior Leadership Team, including the CEO and the other named executive officers, and Regional Presidents, Senior Vice Presidents, Vice Presidents and approximately 35% of Regional Vice Presidents, Assistant Vice Presidents, Directors and General Managers based on
performance. In 2011, annual restricted stock awards were granted to 246 employees. For the named executive officers, restricted stock awards for 2011 were targeted at the 75th percentile of our peer group for long-term compensation consistent with our philosophy of targeting the 50th75th percentile for total compensation. As mentioned
above, commencing in 2012, 25% of annual equity award targets will consist of LTIP awards. See Long-Term Incentive Plan below. The Compensation Committee sets a target dollar range for restricted stock awards for each named executive officer. The ranges, however, do not imply a minimum guaranteed level of equity awarded. In February 2011, the Compensation Committee set the following target dollar ranges for restricted stock awards for 2011
performance for each named executive officer: Name
2011 Target Range
($) Mary Agnes Wilderotter
$3,000,000$5,000,000 Donald R. Shassian
$1,000,000$1,800,000 Daniel J. McCarthy
$750,000$1,400,000 Cecilia K. McKenney
$500,000$900,000 Kathleen Q. Abernathy
$500,000$900,000 The value of the restricted stock awards is targeted to represent between 60 and 70 percent of total compensation for 2011 for the CEO and between 45 and 60 percent for each other named executive officer, which is consistent with our philosophy of having a majority of the named executive officers compensation at risk and
contingent upon specified company and individual performance goals. The restricted stock plan has a minimum financial performance threshold in order for any restricted stock grants to be awarded. The Compensation Committee set a minimum performance threshold of 90% of each of the three financial targets, revenue, EBITDA and operating cash flow. This ensures that the company only rewards
executives for performance at or near approved target levels. The actual dollar value of restricted stock that is awarded to each executive is based on the midpoint of each executives range and the company performance against the weighted 3Ps, as adjusted for individual performance, except in cases where an executives total
compensation is below the 50th percentile. This dollar amount is then converted to a number of shares of restricted stock based on the market price of the companys common stock on the date of grant. All annual restricted stock awards for named executive officers vest in 25% increments over four years. Because the initial grant of
restricted stock awards is performance conditioned, these awards have no market or performance conditions to vesting. The Compensation Committee assesses Mrs. Wilderotters individual performance and determines the actual amount of the restricted stock award. Restricted stock awards for the other executives, including the other
named executive officers, are determined by the Compensation Committee, taking into account the recommendations of Mrs. Wilderotter. For 2011, restricted stock awards were subject to the same payout factor used for the weighted 3P payout. In February 2012, the Compensation Committee granted restricted stock awards to the named
executive officers as set forth below under 2011 Named Executive Officer Compensation. The Compensation Committee follows a general practice of making all restricted stock awards to our executives, including the named executive officers, on a single date each year, with the exception of awards to eligible new hires, which are awarded as of the date of hire. Typically, the Compensation Committee makes these
restricted stock grants at its regular meeting in February based on the prior years results. Long-Term Incentive Plan Awards. In February 2012, the Compensation Committee, in consultation with the other non-management directors and the Committees independent executive compensation consultant, adopted a new LTIP in order to further align the interests of our stockholders and our executives. We believe the use of
LTIP awards as a component of compensation is consistent with best practices, balancing the focus on short- and long-term financial performance and reinforcing our performance culture by subjecting a portion of targeted compensation to long-term performance and taking into account the performance of our stock 29
for Restricted
Stock Awards
relative to a peer group, all as more fully discussed below. The companys existing long-term incentive plan has been inactive since 2009 and no awards have been paid out under that plan since its adoption in 2008. The LTIP is offered under the 2009 Equity Incentive Plan and participants consist of senior vice presidents and above,
including the named executive officers. The LTIP is designed to incent and reward our senior executives if they achieve operating cash flow goals over three-year performance periods, which we refer to as Measurement Periods, and specified relative levels of Total Shareholder Return over the three-year periods. LTIP awards are granted
in the form of performance shares. Like restricted stock awards, which are granted based on prior year performance and then time-vested, LTIP awards have both performance and time-vesting conditions. Beginning in 2012, during the first 90 days of a three-year Measurement Period, a target number of performance shares will be awarded to each LTIP participant with respect to the Measurement Period. The performance metrics under the LTIP are (1) annual targets for operating cash flow based on a goal set during the first 90 days
of each year in the three-year Measurement Period and (2) an overall performance modifier set during the first 90 days of the Measurement Period, based on our companys total return to stockholders (i.e., Total Shareholder Return or TSR) relative to the Diversified Telecommunications Services Group (GICS Code 501010) for the
three-year Measurement Period. LTIP awards will be paid out in the form of common stock shortly following the end of the three-year Measurement Period. Operating cash flow performance will be determined at the end of each year and the annual results will be averaged at the end of the three-year Measurement Period to determine the
preliminary number of shares earned under the LTIP award. For the 2012-2014 Measurement Period, the Compensation Committee determined that the payout of each participants LTIP award can be from 0%, for below-threshold performance, to 130%, for outstanding performance. Additionally, the Compensation Committee set a minimum average-performance threshold of 70% of targeted
operating cash flow and a maximum average-performance limit of 130%. Average operating cash flow performance between these ranges will be interpolated on a straight-line basis. The TSR performance measure adds another performance threshold and is applied to decrease or increase payouts based on the companys three-year
relative TSR performance (earned shares will be reduced 25% for 25th percentile or less relative TSR performance, no change to earned shares for 50th percentile relative TSR performance, and earned shares will be increased 25% for 75th percentile and above relative TSR performance). Relative TSR performance between these ranges
will be interpolated on a straight-line basis. As a result, depending on the average annual operating cash flow results over the three-year Measurement Period and the three-year relative TSR performance, executives will earn shares of common stock at the end of the 2012-2014 Measurement Period ranging from 0% to 162.5% (130% of
the maximum performance award increased by 25% for 75th percentile or above relative TSR performance) of the number of performance shares awarded. Shares awarded under the LTIP are intended to be qualified performance-based compensation for tax purposes pursuant to Section 162(m). Dividends on performance shares will be accrued and paid out at the end of the three-year Measurement Periods only with respect to the performance shares that are earned by the participant. Stock Options. We do not make stock option awards to executive officers and have not done so since 2002. Given the historical price range of our common stock, the stocks volatility characteristics and our common stock dividend, we believe selective restricted stock grants and LTIP awards are more valuable and appropriate than
option grants and, therefore, stronger hiring and retention tools. Further, restricted stock and LTIP awards result in the issuance of fewer shares. Stock Ownership Guidelines. To further align our executives interests with those of our stockholders, our board of directors established stock ownership guidelines for the CEO and the other members of the Senior Leadership Team. Previously, the CEO was expected to own shares of the companys common stock having a minimum
value of two times her base salary and each other member of the Senior Leadership Team was expected to own shares of the companys common stock having a minimum value of one times his or her base salary, in each case including unvested restricted stock awards. After reviewing a survey of similar policies among the companies in
our peer group, the Compensation Committee determined to increase the stock ownership guidelines effective April 1, 2011 to five times (5x) base salary for our CEO and two and one-half times (2.5x) base salary for each other member of the Senior Leadership Team. Unvested restricted stock awards are not counted for purposes of
fulfilling this requirement. At such times as a member of the Senior Leadership Team does not meet his or her ownership guideline, the executive will be required to hold 50% of 30
the companys stock that the executive acquires after that date through the companys equity compensation programs, excluding shares sold to pay related taxes. The Compensation Committee administers these stock ownership guidelines. Other Compensation Perquisites and Other Benefits. There were no reportable perquisites in 2011 for the CEO or the other named executive officers. We provide other benefits to our named executive officers on the same basis as all of our non-union, full-time employees. These benefits consist of medical, dental and vision insurance, basic life and disability insurance and matching contributions to our 401(k) plan for employees who participate in the plan. Post-Employment Compensation Frontier Pension Plan. This defined benefit pension plan was frozen for all non-union participants in 2003 (and, for some participants, earlier than 2003 depending on the participants employment history). The plan was frozen both with respect to participation and benefit accruals. Daniel McCarthy, Executive Vice President and
Chief Operating Officer, is the only named executive officer who has vested benefits under the Frontier Pension Plan, as all other named executive officers joined the company after the plan was frozen. Termination of Employment and Change-in-Control Arrangements. To attract talented executives, support retention objectives and ensure that executives review potential transactions with objectivity and independence, we provide certain post-employment benefits to the named executive officers. These benefits vary among the
named executive officers depending on the arrangements negotiated with the individual executive upon his or her joining the company. The companys change-in-control arrangements promote the unbiased and disinterested efforts of our executives to maximize stockholder value before, during and after a change-in-control of the
company that may impact the employment status of the executives. The benefits for the named executive officers are described below under Employment Arrangements; Potential Payments upon Termination or Change-in-Control. Market and Peer Group Reviews In 2011, the Compensation Committee directed Frederic W. Cook & Co., its independent executive compensation consultant, to develop a peer group to assess the competitiveness of our executive compensation program to reflect the size and scale of the company following the Verizon transaction and then conduct a comprehensive
study with respect to the compensation of the Senior Leadership Team. The study included comparing the compensation of certain senior executives to the compensation of executives holding comparable positions at companies in the peer group as reported in publicly-available documents. The peer group was developed using companies
in our industry, our competitors for customers, executive talent and investor capital, and other companies of our size (based on revenue and market capitalization). Taking into account the advice of its compensation consultant, the Compensation Committee determined that the size of the peer group should include between 12 to 20
companies to ensure data reliability and stability. The 2010 peer group was updated for 2011 and the following changes were made:
Automatic Data Processing, General Cable Corp., Pitney Bowes Inc., and Visa Inc. were removed from the peer group because they did not meet the industry/business model criteria. Qwest Communications International Inc. was removed from the peer group because it was acquired by CenturyLink, Inc. in 2011. Cablevision Systems Corporation, DIRECTV, Global Crossing Ltd., Leap Wireless International, Inc., MetroPCS Communications Inc., Time Warner Cable Inc., and United States Cellular Corporation were added based on the criteria described above. With all of the above changes, the peer group size increased from thirteen to fifteen companies which provided a broader competitive benchmark. When comparing the financial metrics (i.e., revenue, net income, market capitalization, EBITDA, total shareholder return, employee count) of the peer group below, the company was
positioned in the 59th percentile or higher across all metrics. The peer group companies included in this study were: 31
Cablevision Systems
Corporation Level 3 Communications
Inc. CenturyLink, Inc. MetroPCS Communications,
Inc. Charter Communications
Inc. Telephone & Data
Systems Inc. Cincinnati Bell
Inc. Time Warner Cable
Inc. DIRECTV tw telecom inc. DISH Network,
Inc. United States
Cellular Corporation Global Crossing
Ltd Windstream Corporation Leap Wireless
International, Inc. General industry survey data, as described below, was also considered in determining the executive compensation levels of the named executive officers and other senior officers. In the case of executives for whom there was no publicly available data or no comparable position at the companies in the peer group, the results from
proprietary general industry executive compensation surveys were analyzed to assess competitiveness. To determine the best job match for the positions evaluated, the survey data was size-adjusted to approximately $5.6 billion in revenues. The analysis included examining how each executives compensation compared to the results in the surveys for base salary, total cash compensation, long term incentives and total direct
compensation. Many of our named executive officers have responsibilities that extend beyond the traditional scope indicated by their titles. As a result, it was difficult to match comparable roles in the survey data (e.g., Ms. McKenney is responsible for both Human Resources and Call Centers Sales & Service). In these cases, the
Compensation Committee took into account data from these third-party surveys and the importance of additional responsibilities to the company when determining the commensurate total compensation levels for the named executive officer. In considering the survey data, the Compensation Committee did not review nor is it aware of the
specific companies that are included in the surveys. The peer review study indicated that the total compensation for all of the named executive officers was consistent with the lower end of the 50th and 75th percentile. However, total direct compensation (i.e., base salary, target bonus and annualized grant date present value for long term awards) for Mr. McCarthy, Mr. Shassian and Ms.
McKenney was below the median for the proxy data and, for Mr. McCarthy, was below the median survey data as well. The Compensation Committee reviewed and considered the results of the study and other factors as described above under Compensation Program Design in determining our CEOs compensation and that of the
Senior Leadership Team for performance in 2011. 2011 Named Executive Officer Compensation In February 2012, the Compensation Committee met to evaluate the performance of our CEO and the other named executive officers, and to determine annual cash bonus payouts and restricted stock awards related to 2011 performance. For Mrs. Wilderotter, the Compensation Committee reviewed our financial performance (as measured by revenue, EBITDA and operating cash flow), our performance on the weighted 3P goals and her performance against her 2011 individual goals, including developing a strong executive team, strategic leadership for the company,
achieving integration goals for the acquisition, cultivating new revenue opportunities and board leadership. The Committee also took into account competitive market data provided by its independent executive compensation consultant. Based on this review and the factors discussed above under Components of the Executive
Compensation Program, the Committee, in consultation with the other non-management directors, approved for Mrs. Wilderotter an annual cash incentive bonus payout and a restricted stock award (each in the amount set forth below) for 2011 performance. The bonus and restricted stock awards relating to 2011 performance were
awarded to Mrs. Wilderotter in February 2012. These compensation decisions place her total compensation for 2011 in the 50th75th percentile of our peer group. As shown in the Summary Compensation Table on page 34, Mrs. Wilderotters 2011 total compensation is approximately 22% less than her 2010 total compensation. For the other named executive officers whose performance was judged based on the same 3P criteria as Mrs. Wilderotter, the Compensation Committee reviewed Mrs. Wilderotters performance assessments for each 32
executive and her recommendations with respect to annual cash incentive bonus payouts and restricted stock awards. The Committee then discussed their assessments of each named executive officer and approved the base salaries for 2012, the annual cash bonus payouts and restricted stock awards set forth below. Name 2012
Base Salary (1) Increase 2011
Incentive Grant
Date (%) Mrs.
Wilderotter $ 1,000,000 0 % $ 1,200,926 $ 3,558,435 Mr.
Shassian $ 535,000 0 % $ 472,432 $ 1,245,452 Mr.
McCarthy $ 450,000 0 % $ 409,118 $ 1,112,010 Ms.
McKenney $ 325,000 0 % $ 295,474 $ 622,726 Ms.
Abernathy $ 400,000 0 % $ 353,220 $ 622,726
(1)
No merit increases were awarded to the named executive officers in 2012. Mmes. Abernathy, McKenney and Wilderotter have not received base salary increases since August 1, 2010. Messrs. McCarthy and Shassian received market adjustments to their base salary effective April 1, 2011. (2) The amounts in this column represent the grant date fair value, pursuant to Financial Accounting Standards Board ASC Topic 718, of restricted stock awards made in February 2012 in recognition of 2011 performance. Internal Revenue Code Section 162(m) Policy Section 162(m) of the Internal Revenue Code generally disallows a tax deduction to public companies for compensation over $1,000,000 paid to the chief executive officer or any of the four most highly compensated executive officers (other than the chief executive officer). Section 162(m) provides that qualified performance-based
compensation will not be subject to the tax deduction limit if certain requirements are met. The Compensation Committee believes it is important to maximize the corporate tax deduction, thereby minimizing the companys tax liabilities. Accordingly, the Frontier Bonus Plan, the LTIP, the 2009 Equity Incentive Plan and amended the
2000 Equity Incentive Plan, as designed by the Compensation Committee, are intended to make compensation awarded under these plans deductible under Section 162(m) as qualified performance-based compensation. We may award amounts that are not deductible under Section 162(m) if the Compensation Committee determines that it is in the best interests of the company and our stockholders to do so. Compensation Committee Report The Compensation Committee of our board of directors has submitted the following report for inclusion in this proxy statement: Our Committee has reviewed and discussed the Compensation Discussion and Analysis contained in this proxy statement with management. Based on our Committees review of and the discussions with management with respect to the Compensation Discussion and Analysis, our Committee recommended to the board of directors
that the Compensation Discussion and Analysis be included in this proxy statement and incorporated by reference into the Companys Annual Report on Form 10-K. The foregoing report is provided by the following directors, who constitute the Committee: Submitted by: Pamela D.A. Reeve, Chair The information contained in the foregoing report shall not be deemed to be soliciting material or to be filed with the Securities and Exchange Commission, nor shall the information be incorporated by reference into any filing under the Securities Act of 1933 or the Securities Exchange Act of 1934, except to the extent that the
company specifically incorporates it by reference in a filing. 33
over 2011
Base Salary
Bonus Payout
Fair Value of
Restricted Stock Award (2)
Peter C.B. Bynoe
Jeri B. Finard
Larraine D. Segil
The following table sets forth the compensation awarded to, earned by, or paid to our Chief Executive Officer, our Chief Financial Officer and each of our other three most highly compensated executive officers in 2011, 2010 and 2009. Name
and Year Salary
(1) Bonus
(2) Stock Non-Equity All
Other Total Mary
Agnes Wilderotter 2011 $ 1,000,000 $ 4,517,291 $ 1,200,926 $ 2,646 $ 6,720,863 Chairman
of the Board 2010 $ 974,167 $ 750,100 $ 5,645,694 $ 1,172,063 $ 41,978 $ 8,584,002 of
Directors, President 2009 $ 882,308 $ 3,028,406 $ 910,200 $ 26,626 $ 4,847,540 and
Chief Executive Donald
R. Shassian 2011 $ 526,250 $ 1,521,615 $ 472,432 $ 7,883 $ 2,528,180 Executive
Vice President 2010 $ 478,333 $ 500,100 $ 1,279,090 $ 479,750 $ 7,399 $ 2,744,672 and
Chief Financial 2009 $ 429,231 $ 933,754 $ 439,200 $ 7,804 $ 1,809,989 Officer Daniel
J. McCarthy 2011 $ 437,500 $ 1,046,108 $ 409,118 $ 7,801 $ 1,900,527 Executive
Vice President 2010 $ 372,667 $ 400,100 $ 1,031,490 $ 391,400 $ 7,753 $ 2,203,410 and
Chief Operating 2009 $ 317,826 $ 504,737 $ 330,456 $ 7,694 $ 1,160,713 Officer Cecilia
K. McKenney 2011 $ 325,000 $ 713,257 $ 295,474 $ 7,681 $ 1,341,412 Executive
Vice President, 2010 $ 308,750 $ 300,100 $ 704,348 $ 316,469 $ 7,681 $ 1,637,348 Human
Resources and 2009 $ 276,616 $ 454,257 $ 213,911 $ 7,650 $ 952,434 Call
Center Sales & Kathleen
Q. Abernathy 2011 $ 400,000 $ 527,014 $ 353,220 $ 7,753 $ 1,287,987 Chief
Legal Officer
(1)
For 2009, reflects salary reduction equivalent to 12 unpaid days pursuant to a furlough program in effect during the last nine months of 2009. (2) For 2010, reflects cash transaction bonuses awarded in connection with the closing of the Verizon transaction. Also includes a $100 award made in 2010 to all eligible employees. (3) The stock awards referred to in this column consist of grants of restricted stock and, for Mrs. Wilderotter, a grant of 32,404 shares of common stock in July 2010 as part of the retention and transaction bonus award in connection with the closing of the Verizon transaction. The amounts shown in this column represent the grant date
fair value, pursuant to Topic 718, of the stock awards granted in the applicable year. For a discussion of valuation assumptions, see Note 11 to the Consolidated Financial Statements included in our Annual Report on Form 10-K for the year ended December 31, 2011. For additional details regarding the stock awards, see the Grant of
Plan-Based Awards table below and the accompanying narrative. For Mrs. Wilderotter, stock awards in 2010 consisted of grants of restricted stock with a grant date fair value of $5,396,183 and a grant of common stock with a grant date fair value of $249,511. (4) The amounts shown in this column represent cash awards made under the Frontier Bonus Plan. Awards for each year are paid in March of the following year. (5) The All Other Compensation column includes, among other things, premiums for life insurance coverage paid for by the company and a 401(k) match. The SEC requires us to identify and quantify any individual item of compensation exceeding $10,000, except as discussed below under Perquisites and Other Personal Benefits. Perquisites and Other Personal Benefits. Disclosure of perquisites and other personal benefits is omitted for a named executive officer if they aggregate less than $10,000 in the fiscal year. Accordingly, no perquisites or personal benefits are included for 2011. (6) Information for Ms. Abernathy is not provided for 2010 and 2009 because she was not a named executive officer for those years. 34
Principal Position(s)
Awards (3)
Incentive Plan
Compensation (4)
Compensation (5)
Officer
Service
and Executive Vice
President,
Regulatory and
Government Affairs (6)
The following table sets forth information concerning cash awards under our non-equity incentive compensation plan (the Frontier Bonus Plan) for 2011 and grants of stock made during 2011 to the named executive officers. Name Grant
Date Estimated
Possible Payouts All Grant
Date Threshold Target Maximum ($) ($) ($) (#) ($) Mary Agnes Wilderotter $ 0 $ 1,350,000 $ 1,755,000 February
17, 2011 479,034 $ 4,517,291 Donald R. Shassian $ 0 $ 535,000 $ 695,500 February
17, 2011 161,359 $ 1,521,615 Daniel J. McCarthy $ 0 $ 450,000 $ 585,000 February
17, 2011 110,934 $ 1,046,108 Cecilia K. McKenney $ 0 $ 325,000 $ 422,500 February
17, 2011 75,637 $ 713,257 Kathleen Q. Abernathy $ 0 $ 400,000 $ 520,000 February
17, 2011 55,887 $ 527,014 Awards under the Frontier Bonus Plan for 2011 shown under the Estimated Possible Payouts Under Non-Equity Incentive Plan Awards columns were paid in March 2012 based on performance metrics set for 2011 and achievement of individual goals, as described above under Compensation Discussion and Analysis. Target awards
under the Frontier Bonus Plan are set as a percentage of base salary. Targets for 2011 were set at 100% of base salary for each of the named executive officers other than Mrs. Wilderotter. In accordance with her amended employment agreement, Mrs. Wilderotters target award was set at 135% of base salary for 2011. Payouts can be up
to 130% of the target. The actual amounts of these awards for 2011 for the named executive officers are reported above in the Summary Compensation Table in the column entitled Non-Equity Incentive Plan Compensation. The stock awards referred to in the above table are grants of restricted stock. The grants represent annual restricted stock awards and vest in four equal annual installments commencing one year after the grant date. All such grants of restricted stock were made under our 2009 Equity Incentive Plan in 2011. Each of the named
executive officers is entitled to receive dividends on shares of restricted stock at the same rate and at the same time we pay dividends on shares of our common stock. The annual common stock dividend rate for 2011 was $0.75 per share, paid quarterly. No above-market or preferential dividends were paid with respect to any restricted
shares. Outstanding Equity Awards at Fiscal Year-End The following table sets forth information regarding outstanding shares of restricted stock held by the named executive officers at year-end. None of the named executive officers held any options to purchase common stock at year-end. Name Option Stock
Awards Number
of Number
of Option Option Number
of Market
Value (#) (#) ($) (#) ($) Mary
Agnes Wilderotter 1,247,069 $ 6,422,405 Donald
R. Shassian 358,790 $ 1,847,769 Daniel
J. McCarthy 246,442 $ 1,269,176 Cecilia
K. McKenney 177,144 $ 912,292 Kathleen
Q. Abernathy 10,000 $ 13.25 4/10/2016 81,788 $ 421,208 35
Under Non-Equity
Incentive Plan Awards
Other
Stock
Awards:
Number of
Shares of
Stock
Fair Value
of Stock
Awards
Awards (1)
Securities
Underlying
Unexercised
Options –
Exercisable
Securities
Underlying
Unexercised
Options –
Unexercisable
Exercise
Price
Expiration
Date
Shares of
Stock That Have
Not Vested (2)
of Shares of
Stock That Have
Not Vested (3)
(1)
The options held by Ms. Abernathy were awarded to her upon joining the companys board of directors on April 10, 2006. The options vested on October 10, 2006. Ms. Abernathy resigned from the board of directors on January 28, 2010 and joined the company as Chief Legal Officer and Executive Vice President, Regulatory and
Government Affairs on March 1, 2010. (2) The shares of restricted stock held by the named executive officers as of December 31, 2011 vest as follows:
Mrs. Wilderotter: 177,515 restricted shares vest in two equal annual installments commencing February 6, 2012; 352,202 restricted shares vest in three equal annual installments commencing February 17, 2012; 479,034 restricted shares vest in four equal annual installments commencing February 17, 2012; 86,997 restricted shares
vest on February 26, 2012; 151,221 restricted shares vest in two equal annual installments commencing July 29, 2012; and 100 restricted shares vest on July 1, 2013. Mr. Shassian: 54,733 restricted shares vest in two equal annual installments commencing February 6, 2012; 80,047 restricted shares vest in three equal annual installments commencing February 17, 2012; 161,359 restricted shares vest in four equal annual installments commencing February 17, 2012; 19,345 restricted shares vest on
February 21, 2012; 43,206 restricted shares vest in two equal annual installments commencing July 29, 2012; and 100 restricted shares vest on July 1, 2013. Mr. McCarthy: 29,586 restricted shares vest in two equal annual installments commencing February 6, 2012; 60,955 restricted shares vest in three equal annual installments commencing February 17, 2012; 110,934 restricted shares vest in four equal annual installments commencing on February 17, 2012; 10,302 restricted shares
vest on February 21, 2012; 34,565 restricted shares vest in two equal annual installments commencing July 29, 2012; and 100 restricted shares vest on July 1, 2013. Ms. McKenney: 26,627 restricted shares vest in two equal annual installments commencing February 6, 2012; 39,012 restricted shares vest in three equal annual installments commencing February 17, 2012; 75,637 restricted shares vest in four equal annual installments commencing February 17, 2012; 9,845 restricted shares vest on
February 21, 2012; 25,923 restricted shares vest in two equal annual installments commencing July 29, 2012; and 100 restricted shares vest on July 1, 2013. Ms. Abernathy: 55,887 restricted shares vest in four equal annual installments commencing February 17, 2012; 15,000 restricted shares vest in three equal annual installments commencing March 2, 2012; 10,801 restricted shares vest in two equal annual installments commencing July 29, 2012; and 100 restricted shares vest on July
1, 2013.
(3)
The market value of shares of common stock reflected in the table is based upon the closing price of the common stock on December 30, 2011, which was $5.15 per share.
Option Exercises and Stock Vested The following table sets forth information regarding the shares of restricted stock that vested for each of the named executive officers in 2011. No named executive officer acquired any shares upon the exercise of stock options in 2011. The value of restricted stock realized upon vesting is based on the closing price of the shares on
the vesting date. Name Stock
Awards Number
of Shares Value
Realized (#) ($) Mary
Agnes Wilderotter 440,764 $ 3,941,062 Donald
R. Shassian 104,998 $ 956,641 Daniel
J. McCarthy 71,446 $ 646,900 Cecilia
K. McKenney 56,102 $ 508,793 Kathleen
Abernathy 10,401 $ 84,562 36
Acquired on Vesting
on Vesting
Name
Plan Name
Number of Years
Present
Payments During
(#)
($)
($)
($) Mary Agnes Wilderotter
Donald R. Shassian
Daniel J. McCarthy
Frontier Pension Plan
10.0
$132,670
Cecilia K. McKenney
Kathleen Q. Abernathy
We have a noncontributory, qualified retirement plan, the Frontier Pension Plan, covering certain of our employees. The plan provides benefits that, in most cases, are based on formulas related to base salary and years of service. The plan was amended to provide that, effective February 1, 2003, no further benefits will be accrued
under the plan by most non-union participants (including all executive officers), and is referred to as frozen. Mr. McCarthy is the only named executive officer with vested benefits under the plan. The estimated annual pension benefits (assumed to be paid in the normal form of an annuity) for Mr. McCarthy is $22,641. This amount is
calculated under the plan based on his 10 years of service credit at the time the plan was frozen and the compensation limits established in accordance with federal tax law in the computation of retirement benefits under qualified plans. Benefits are not subject to reduction for Social Security payments or other offset amounts. For a
discussion of valuation assumptions, see Note 17 to the Consolidated Financial Statements included in our Annual Report on Form 10-K for the year ended December 31, 2011. Employment Arrangements; Potential Payments Upon Termination or Change-in-Control Mary Agnes Wilderotter We are party to an employment agreement, originally dated as of November 1, 2004, with Mary Agnes Wilderotter, our Chairman of the Board, President and Chief Executive Officer. The agreement was amended in December 2008 in connection with the deferred compensation rules imposed by Section 409A of the Internal
Revenue Code (Section 409A) and amended and restated in March 2010 (the 2010 Amendment). The employment agreement had an initial term of five years, which expired in November of 2009. The 2010 Amendment extended the term of the employment agreement for three years to April 2013. The agreement automatically
renews at the end of the new term or any renewal term for an additional one-year term, unless either party provides prior notice of non-renewal. Pursuant to the 2010 Amendment, Mrs. Wilderotters base salary was $1,000,000 upon the closing of the Verizon transaction on July 1, 2010. Mrs. Wilderotters base salary can be increased by
the Compensation Committee, although it has not yet done so. Mrs. Wilderotter is also eligible to earn a target bonus equal to 135% of her base salary. Pursuant to the 2010 Amendment, Mrs. Wilderotter no longer is entitled to guaranteed minimum equity awards; however, she is eligible to participate in the companys equity incentive
plans and receive awards at the discretion of the Compensation Committee. If Mrs. Wilderotters employment is terminated without cause or by Mrs. Wilderotter with good reason (each as defined in the employment agreement), we would be required to pay Mrs. Wilderotter an amount equal to her base salary through the date of termination and any bonus earned but unpaid as of the date of termination
for any previously completed fiscal year, plus the sum of three times her base salary and two times her target bonus (payable in equal installments over 36 months) and one times her target bonus (payable in a lump sum within 2-1/2 months following the end of the calendar year of termination), and all of her restricted shares will vest.
Mrs. Wilderotter is also entitled to receive reimbursement for any unreimbursed business expenses, any accrued but unpaid vacation and continued medical, dental and life insurance and other health benefits until the end of the severance period or the date on which Mrs. Wilderotter becomes eligible to receive comparable benefits from
any subsequent employer, whichever is earlier, for which we will provide a lump sum to her for the cost to her of such benefits. As a director, Mrs. Wilderotter may continue to participate in these plans following the severance period at her cost. Mrs. Wilderotter is not entitled to the above severance benefits if we do not renew the
agreement at the end of a term. If Mrs. Wilderotters employment is terminated due to her death or in connection with a disability, she or her estate will be entitled to payment of base salary for six months following the termination and a prorated portion of the target bonus, and all restricted shares will vest. 37
Credited Service
Value of
Accumulated
Benefit
Last Fiscal Year
In the event of a constructive termination following a change in control (as defined in the employment agreement), Mrs. Wilderotter will be entitled to the amounts she would receive in connection with a termination by us without cause or by her with good reason. To the extent Mrs. Wilderotter would be subject to any excise
taxes under Section 280G of the Internal Revenue Code, the amounts she would be entitled to receive will be capped to avoid any excise tax unless the total payments to be received by her would result in a higher after-tax benefit. Mrs. Wilderotter is responsible to pay any required excise taxes. Mrs. Wilderotter is also entitled to receive reimbursement for any unreimbursed business expenses, any accrued but unpaid vacation, medical, dental and life insurance and other employee benefit plans to which Mrs. Wilderotter is entitled upon termination of her employment for a period of two years, for which we will provide a
lump sum to her for the cost to her of such benefits. The following table sets forth the amounts Mrs. Wilderotter would have been entitled to from us under the terms of her employment agreement had her employment been terminated as of December 31, 2011. Termination
Event Base
Salary (1) Bonus
(1) Value
of Benefits
(3) Total Without
cause or for good reason $ 3,000,000 $ 4,050,000 $ 6,422,405 $ 48,472 $ 13,520,877 Death $ 500,000 $ 675,000 $ 6,422,405 $ 13,900 $ 7,611,305 Disability $ 500,000 $ 675,000 $ 6,422,405 $ 31,893 $ 7,629,298 Change-in-control $ 3,000,000 $ 4,050,000 $ 6,422,405 $ 48,472 $ 13,520,877 With
cause, without good reason
(1)
Base salary and two-thirds of the bonus amount payable in equal installments over 36 months. The remaining bonus amount payable in a lump sum within 2-1/2 months following the end of the calendar year of termination. (2) Dollar value of 1,247,069 shares of restricted stock held by Mrs. Wilderotter on December 31, 2011 based on the closing sales price of $5.15 per share of our common stock on December 30, 2011. (3) Value of continued medical, dental, vision and life insurance benefits for Mrs. Wilderotter and her spouse, as applicable, under the terms of her employment agreement as described above. Donald R. Shassian We are party to a letter agreement with Donald R. Shassian, our Executive Vice President and Chief Financial Officer, dated March 7, 2006 and amended in December 2008 in connection with the deferred compensation rules imposed by Section 409A. The letter agreement provides for a target annual incentive bonus of 100% of his
base salary. Additionally, Mr. Shassian is eligible to receive a grant of restricted shares of common stock in an amount to be determined by the Compensation Committee. If, within one year following a change in control (as defined in the letter agreement) of the company, (a) Mr. Shassian is terminated by the company without cause or (b) he terminates his employment as a result of (i) a material decrease in his base salary, target bonus or long term incentive compensation target from those in effect
immediately prior to the change in control for any reason other than cause, (ii) a material relocation of his principal office (with greater than 50 miles from our Stamford, Connecticut headquarters deemed to be material), or (iii) a material decrease in his responsibilities or authority for any reason other than cause, subject to certain notice
and cure provisions, Mr. Shassian will be entitled to two years of base salary and target bonus and all restrictions on restricted shares held by him will immediately lapse and his restricted shares shall become non-forfeitable. The following table sets forth the amounts Mr. Shassian would have been entitled to from us had his employment been terminated as of December 31, 2011 following a change in control. Mr. Shassian would not be entitled to any severance amounts upon termination for any other reason. 38
Accelerated
Restricted
Stock (2)
or non-renewal of agreement
Termination
Event Base
Salary (1) Bonus
(1) Value
of Total Change
in control $
1,070,000 $
1,070,000 $
1,847,769 $
3,987,769
(1)
Payable in a lump sum upon termination. (2) Dollar value of 358,790 shares of restricted stock held by Mr. Shassian on December 31, 2011 based on the closing sales price of $5.15 per share of our common stock on December 30, 2011. Daniel J. McCarthy In July 2007, we agreed with Daniel J. McCarthy, our Executive Vice President and Chief Operating Officer, that all restrictions on restricted shares held by him will lapse and become non-forfeitable if, within one year following a change in control (as defined in the memorandum of understanding) of the company, (a) Mr.
McCarthy is terminated by the company without cause or (b) he terminates his employment as a result of (i) a material decrease in his base salary, target bonus or long term incentive compensation target from those in effect immediately prior to the change in control for any reason other than cause, (ii) a relocation of his principal office
more than 50 miles from Stamford, Connecticut, or (iii) a material decrease in his responsibilities, title or authority for any reason other than cause. Had Mr. McCarthys employment been terminated as of December 31, 2011 following a change in control, the value of his accelerated restricted shares would have been $1,269,176, which is
the dollar value of 246,442 shares of restricted stock held by him on December 31, 2011 based on the closing sales price of $5.15 per share of our common stock on December 30, 2011. Mr. McCarthy would not be entitled to any severance amounts upon termination for any other reason. In addition, Mr. McCarthy is also entitled to his
pension benefit as set forth under Pension Benefits. Cecilia K. McKenney We are party to a letter agreement with Cecilia K. McKenney, our Executive Vice President, Human Resources and Call Center Sales & Service, dated January 13, 2006 and amended in December 2008 in connection with the deferred compensation rules imposed by Section 409A. The letter agreement provides for a target annual
incentive bonus of 60% of her base salary, which was increased to 75% commencing in 2008 and to 100% commencing in 2010. Additionally, Ms. McKenney is eligible to receive a grant of restricted shares of common stock in an amount to be determined by the Compensation Committee. If, within one year following a change in control (as defined in the letter agreement) of the company, (a) Ms. McKenney is terminated by the company without cause or (b) she terminates her employment as a result of (i) a material decrease in her base salary, target bonus or long term incentive compensation target from those in
effect immediately prior to the change in control for any reason other than cause, (ii) a material relocation of her principal office (with greater than 50 miles from our Stamford, Connecticut headquarters deemed to be material), or (iii) a material decrease in her responsibilities or authority for any reason other than cause, subject to certain
notice and cure provisions, Ms. McKenney will be entitled to one year of base salary and target bonus and all restrictions on restricted shares held by her will immediately lapse and her restricted shares shall become non-forfeitable. The following table sets forth the amounts Ms. McKenney would have been entitled to from us had her employment been terminated as of December 31, 2011 following a change in control. Ms. McKenney would not be entitled to any severance amounts upon termination for any other reason. Termination
Event Base
Salary (1) Bonus
(1) Value
of Total Change
in control $
325,000 $
325,000 $
912,292 $
1,562,292
(1)
Payable in a lump sum upon termination. (2) Dollar value of 177,144 shares of restricted stock held by Ms. McKenney on December 31, 2011 based on the closing sales price of $5.15 per share of our common stock on December 30, 2011. Kathleen Q. Abernathy We are party to a letter agreement with Kathleen Q. Abernathy, our Chief Legal Officer and Executive Vice President, Regulatory and Government Affairs, dated January 20, 2010. The letter agreement provides for a target annual incentive bonus of 75% of her base salary, which was increased to 100% commencing in 2011. 39
Accelerated
Restricted
Stock (2)
Accelerated
Restricted
Stock (2)
If, within one year following a change in control (as defined in the letter agreement) of the company, (a) Ms. Abernathy is terminated by the company without cause or (b) she terminates her employment as a result of (i) a material decrease in her base salary, target bonus or long term incentive compensation target from those in
effect immediately prior to the change in control for any reason other than cause, (ii) a relocation of her principal office more than 50 miles from Stamford, Connecticut, or (iii) a material decrease in her responsibilities title or authority for any reason other than cause, subject to certain notice and cure provisions, Ms. Abernathy will be
entitled to one year of base salary and 100% of her bonus target prorated for the plan year and all restrictions on restricted shares held by her will immediately lapse and her restricted shares shall become non-forfeitable. The following table sets forth the amounts Ms. Abernathy would have been entitled to from us had her employment been terminated as of December 31, 2011 following a change in control. Ms. Abernathy would not be entitled to any severance amounts upon termination for any other reason. Termination Event
Base Salary (1)
Bonus (1)
Value of
Total Change in control
$ 400,000
$ 400,000
$ 421,208
$ 1,221,208
(1)
Payable in a lump sum upon termination. (2) Dollar value of 81,788 shares of restricted stock held by Ms. Abernathy on December 31, 2011 based on the closing sales price of $5.15 per share of our common stock on December 30, 2011. Compensation Committee Interlocks and Insider Participation The Compensation Committee currently consists of Ms. Reeve, as Chair, and Mr. Bynoe, Ms. Finard and Ms. Segil. None of our executive officers served as: (i) a member of the compensation committee (or other board committee performing equivalent functions or, in the absence of any such committee, the entire board of directors)
of another entity, one of whose executive officers served on our Compensation Committee; (ii) a director of another entity, one of whose executive officers served on our Compensation Committee; or (iii) a member of the compensation committee (or other board committee performing equivalent functions or, in the absence of any such
committee, the entire board of directors) of another entity, one of whose executive officers served as one of our directors. Compensation Policy Risk Analysis Management reviewed our compensation policies and practices applicable to all of our employees, including the named executive officers, for the purpose of evaluating the risks to our company arising from such policies and practices. Each component of the companys compensation program was evaluated for any risks to the
company associated with such compensation. Included in this evaluation was an analysis of the likelihood that such compensation components would influence behaviors or decision-making and impact the companys risk profile. Risk controls, both entity-level and compensation-related, were identified and evaluated. These controls
included:
Corporate governance and Enterprise Risk Management policies; Oversight of the companys compensation practices and policies by the Compensation Committee, including the use of negative discretion with respect to payouts; The companys compensation program design, including the mix of cash and equity compensation, short- and long-term incentive compensation, fixed and variable compensation and company-wide and individual goals and targets, the use of multiple performance metrics based on the companys 3P goals (People, Product and
Profit), which include financial and other quantitative and qualitative measurements, the use of modest leverage multipliers, and maximum payout limits (in terms of dollars and percentages of base salary); and Stock ownership guidelines for the companys executive officers. Management then reviewed its findings with the Compensation Committee at a meeting at which the Compensation Committee and management engaged in an in-depth discussion of the findings. Based on its review of managements risk assessment of our companys compensation policies, practices and controls and the
Compensation Committees evaluation of managements assessment, the Compensation Committee determined that such policies and practices are not reasonably likely to have a material adverse effect on our company. 40
Accelerated
Restricted
Stock (2)
ADVISORY VOTE ON EXECUTIVE COMPENSATION The company and its board of directors are committed to excellence in governance and recognize the interests that our stockholders have expressed in our executive compensation program. As part of our commitment, in 2009, the board of directors voluntarily adopted a Corporate Governance Guideline, commonly known as Say-
on-Pay, to annually provide stockholders with the opportunity to endorse or not endorse compensation paid to the companys named executive officers through consideration of the following non-binding advisory resolution: Resolved, that the compensation paid to the companys named executive officers, as disclosed in this proxy statement pursuant to the compensation disclosure rules of the Securities and Exchange Commission, including the Compensation Discussion and Analysis, compensation tables and accompanying narrative
discussion, is hereby approved. We believe that our executive compensation philosophy and programs reinforce our pay for performance culture and are strongly aligned with the long-term interests of our stockholders. The Compensation Committee, which oversees and approves the compensation philosophy and programs, engages in an extensive process to align
executive pay, both short- and long-term, with the companys performance and the interests of stockholders. The Compensation Discussion and Analysis section of this proxy statement provides a comprehensive review of the companys executive compensation philosophy and programs and the rationale for executive compensation
decisions, and the accompanying tables and narrative provide details on the compensation paid to the companys named executive officers. We urge you to read this disclosure prior to voting on this proposal. Our existing say on pay policy is consistent with Section 14A of the Securities Exchange Act of 1934 adopted in July 2010 as part of Title IX of the Dodd-Frank Wall Street Reform and Consumer Protection Act, which now requires the proposal. Because your vote is advisory, it will not be binding upon the board. However, the
Compensation Committee will take into account the outcome of the vote when considering future executive compensation arrangements. Stockholders who want to communicate with our board or any specific director, including the Lead Director, any non-management director, the non-management directors as a group, any independent
director or the independent directors as a group, on executive compensation or any other matter of stockholder concern, can do so by writing to such director or group of directors at: Frontier Communications Corporation, Three High Ridge Park, Stamford, Connecticut 06905. Any communication will be forwarded to the director or
directors to whom it is addressed. In accordance with the wishes of our stockholders and best practices, we will provide a say on pay vote annually and the next say on pay vote will be included in our 2013 proxy statement. The board of directors recommends a vote FOR this proposal. SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS The following table provides information as of December 31, 2011 regarding compensation plans (including individual compensation arrangements, but not including qualified employee benefit plans and plans available to stockholders in a pro rata basis) under which our equity securities are authorized for issuance. Plan
Category (a) (b) (c) Number
of securities to be issued Weighted-average
exercise Number
of securities remaining Equity
compensation plans approved by security holders 1,593,298 $
8.38 7,027,877 Equity
compensation plans not approved by security holders Total 1,593,298 $
8.38 7,027,877 41
(Item 2 on the Proxy Card)
upon exercise of outstanding
options, warrants and rights
price of outstanding options,
warrants and rights
available for future issuance under
equity compensation plans
(excluding securities reflected in
column (a))
We have received two stockholder proposals for inclusion in this proxy statement. The proponents of these proposals have requested that we include the following proposals and supporting statements in our proxy statement for the meeting, and if properly presented at the meeting, these proposals will be voted on at the meeting. The
stockholder proposals and supporting statements are quoted verbatim in italics below. Our management does not support the adoption of the resolutions proposed below and asks stockholders to consider managements response, which follows each stockholder proposal. The board of directors recommends a vote AGAINST
these proposals. Stockholder Proposal Regarding Independent Chairman We have received a stockholder proposal from the AFL-CIO Reserve Fund, or AFL-CIO, 815 Sixteenth Street, N.W. Washington, DC 20006. The AFL-CIO has requested that we include the following proposal and supporting statement in our proxy statement for the meeting, and if properly presented at the meeting, this proposal
will be voted on at the meeting. The AFL-CIO owned 726 shares of our common stock as of the date they submitted their proposal. The stockholder proposal and supporting statement are quoted verbatim in italics below. Our management does not support the adoption of the resolution proposed below and asks stockholders to consider managements response, which follows the stockholder proposal. The board of directors recommends a vote AGAINST this proposal. RESOLVED: Shareholders of Frontier Communications Corporation (the Company) urge the Board of Directors (the Board) to take the steps necessary to modify the Companys Corporate Governance Guidelines to require that an independent director (as defined by the rules of the New York Stock Exchange) be its Chairman.
The policy should be implemented so as not to violate any contractual obligations. The policy should also specify the process for selecting a new independent Chairman if the current Chairman ceases to be independent between annual meetings of shareholders; or if no independent director is available and willing to serve as Chairman. Supporting Statement We believe that it is the responsibility of the Board to protect shareholders long-term interest by providing independent oversight of management in directing the Companys business and affairs. In our opinion, the designation of a lead independent director is not an adequate substitution for an independent Board Chairman. We
believe an independent Chairman can enhance investor confidence in our Company and strengthen the independent leadership of the Board. Company President and CEO Maggie Wilderotter has also served as Chairman of the Board since December 20, 2005. During the six year period that she has served as Chairman of the Board, our Companys stock price has declined over 50 percent as of the date that this proposal was submitted to the Company. We believe that
our Company could have benefited from having an independent director rather than Ms. Wilderotter serve as Chairman during this period. The Chairmens Forum, an organization of non-executive board chairmen, has called on North American public companies to voluntarily adopt independent chairmanship as the default model. An independent chairman curbs conflicts of interest, promotes oversight of risk, manages the relationship between the board and the CEO,
serves as a conduit for regular communication with shareowners, and is a logical next step in the development of an independent board. (Millstein Center for Corporate Governance and Performance, Yale School of Management, Chairing the Board: The Case of Independent Leadership in Corporate North America, 2009). In our view, when the CEO serves as Chairman, this arrangement may hinder the ability of the Board to monitor the CEOs performance and to provide the CEO with objective feedback and guidance. Andrew Grove, former Chairman and CEO of Intel Corporation, has stated: The separation of the two jobs goes to the heart of the
conception of a corporation. Is a company a sandbox for the CEO, or is the CEO an employee. If hes an employee, he needs a boss, and that boss is the board. The chairman runs the board. How can the CEO be 42
(Item 3 on the Proxy Card)
his own boss? (Jeffrey E. Garten, Dont Let the CEO Run the Board, Too, Business Week, November 11, 2002.) For these reasons, we urge you to vote FOR this resolution. Management Statement in Opposition to Stockholder Proposal The board of directors recommends that you vote AGAINST this stockholder proposal for the following reasons:
Our super-majority independent board of directors provides for strong independent leadership and accountability to stockholders; Our Lead Director structure, as described under Corporate Governance-Leadership Structure earlier in this proxy statement, is a recognized viable corporate governance structure having benefits very similar to the proposal; Our independent directors have regularly scheduled executive sessions in which they meet outside the presence of management; and If adopted, the proposal would unnecessarily reduce the boards flexibility in corporate governance matters. The board strongly disagrees with the proposal because it believes that its existing corporate governance practices already provide for strong independent leadership on the board, as well as direct accountability to stockholders. As provided in our Corporate Governance Guidelines, the board believes that a substantial majority of the
board should consist of independent directors and that at least 75% of the members of the board should be independent at any time. As determined by the board, in accordance with NASDAQ rules, approximately 91% of the members of the board are currently independent directors (i.e., all directors other than the Chairman). Each of the
members of the Audit Committee, Compensation Committee and Nominating and Corporate Governance Committee is an independent director. In addition, our independent directors meet regularly outside the presence of management. The boards independent leadership is further enhanced by the existence of a Lead Director. The Lead Director is selected by the independent directors and has clearly delineated duties. As set forth in the Corporate Governance Guidelines, the Lead Director, among other things, works independently to assist the Chairman of the
Board in setting the agenda for Board meetings, acts as liaison between the Chairman and the independent and non-management directors and serves as the chair for executive sessions of the board. A list of the Lead Directors responsibilities is set forth above under Corporate GovernanceLead Director Structure. The board understands
that corporate governance experts recognize that having a Lead Director is a viable corporate governance structure, providing independent board decision-making and oversight. The board believes that it should maintain the flexibility to determine the board leadership of Frontier. As provided in our Corporate Governance Guidelines, the Chairman and the Chief Executive Officer may be separated if the board deems it in the best interests of the company and the stockholders. The stockholder proposal would
unnecessarily eliminate the flexibility of the board to consider whether a current or former member of management is best suited to serve as Chairman of the Board at a given time. The board believes that our company and our stockholders benefit from the boards current ability to freely select the Chairman of the Board based on criteria
it deems to be in the best interests of the company and the stockholders. The board believes that a board comprised of a super-majority of independent directors and the existence of the Lead Director ensures the independent exchange of information among our independent directors and provides the company and our stockholders with the same benefits that the proposal suggests may only be obtained by
requiring that an independent director serve as Chairman of the Board. In the boards view, our stockholders have benefited from the board of directors current sound corporate governance practices and strong independent board leadership, and there is no need to require that an independent director serve as Chairman of the Board. For the reasons described above, the board of directors recommends a vote AGAINST the stockholder proposal. 43
Stockholder Proposal Regarding Arbitration of Stockholder Suits We have received a stockholder proposal from Donald and Susan Vuchetich, 2525 Hickory Road, Ann Arbor, Michigan 48103-2174. The Vuchetichs have requested that we include the following proposal and supporting statement in our proxy statement for the meeting, and if properly presented at the meeting, this proposal will be
voted on at the meeting. The Vuchetichs owned 2,850 shares of our common stock as of the date they submitted their proposal. The stockholder proposal and supporting statement are quoted verbatim in italics below. Our management does not support the adoption of the resolution proposed below and asks stockholders to consider managements response, which follows the stockholder proposal. The board of directors recommends a vote AGAINST this proposal. Shareholder Arbitration Proposal Resolved, that the bylaws are amended to add the following article: (a) Any controversy or claim brought directly or derivatively by any present or former shareholder of the Corporation as a present or former stockholder, whether against the Corporation, in the name of the Corporation or otherwise, arising out of or relating to any acts or omissions of the Corporation or any of its officers,
directors, agents, affiliates, associates, employees or controlling persons, shall be settled by arbitration under the Federal Arbitration Act in accordance with the commercial arbitration rules of the American Arbitration Association, and judgment upon the award rendered by the arbitrators may be entered in any court having jurisdiction.
In the arbitration proceedings, the parties shall be entitled to all remedies that would be available in the absence of this Article and the arbitrators, in rendering their decision, shall follow the substantive laws that would otherwise be applicable and shall state the basis of their decision. This Article shall apply, without limitation, to an
action arising under any federal or state securities law. (b) The arbitration of any dispute pursuant to this Article shall be held in Stamford, Connecticut, except that arbitration of disputes involving an amount in controversy of less than $25,000 shall be held in the jurisdiction in which the claimant stockholder resides. (c) This Article shall not apply to appraisal proceedings or to a claim for damages in excess of $3,000,000. Any claim brought derivatively will be subject to requirements and procedures applicable to derivative proceedings in Delaware. (d) Any party, upon submitting a matter to arbitration as required by this Article, may seek a temporary restraining order or preliminary injunction on an individual basis from a court of competent jurisdiction pending the outcome of the arbitration. (e) No controversy or claim subject to arbitration under this Article may be brought in a representative capacity on behalf of a class of stockholders or former stockholders, (f) The parties to any proceeding may agree not to arbitrate all or part of any controversy or claim, on the selection of arbitrators, and the location and procedures applicable to any proceeding. (g) This Article shall be effective 30 days after it is adopted (the Effective Date). This Article shall not apply to controversies or claims relating to (i) shares acquired by the claimant prior to the Effective Date or (ii) claims arising out of actions or omissions occurring prior to the Effective Date. (h) The board of directors may adopt reasonable alternative methods of selecting arbitrators or arbitration procedures with respect to future controversies or claims. Supporting Statement Lawyer driven class actions impose large burdens on corporations without meaningful benefits to shareholders. Suits commonly are filed soon after merger announcements or stock price changes to generate legal fees in settlements. Shareholders bear the ultimate costs of defending court class actions, funding settlements, and
indemnifying officers and directors. Requiring arbitration on an individual basis should reduce such abuses. The proposed bylaw would affect only future purchasers of shares. 44
(Item 4 on the Proxy Card)
Management Statement in Opposition to Stockholder Proposal The board of directors recommends that you vote AGAINST this stockholder proposal. The board of directors recognizes that class action lawsuits can be abusive. However, at this time the board does not believe that a bylaw arbitration provision of the type proposed (the Arbitration Provision) is the proper way to deal with class action suits for the following reasons: 1. No Other Company has an Arbitration Provision and the Board of Directors Believes such a Provision Could Negatively Impact our Stock Price. No other U.S. public company has adopted an Arbitration Provision. If adopted, it is possible that such a provision could have a negative impact on the price of our stock if investors perceive the Arbitration Provision as a limit on their rights. Investors have many options to choose from when making an investment. They may choose
not to invest in our stock if they believe their rights as a Frontier stockholder are more limited than at other companies, none of which have such limits. 2. The Arbitration Provision Would Reduce the Flexibility of the Company. While there are many instances where arbitrating claims would be in the best interests of the company and its stockholders, there are cases where it may to the companys benefit to defend a claim in court. Taking that decision out of the companys hands would reduce its flexibility and could subject the company to more extensive
and costly proceedings, which would ultimately be paid for by the companys stockholders. 3. The SEC has Stated that an Arbitration Provision Would be Contrary to the Public Interest. The Staff of the Securities and Exchange Commission has in the past stated that it would be contrary to the public interest to require investors who want to participate in the nations equity markets to waive access to a judicial forum for vindication of federal or state law rights, where such a waiver is made through a corporate
charter rather than through an individual investors decision.... Riesenberg, INSIGHTS, August, 1990 Vol. 4, No. 8 at 31. If the Arbitration Provision is adopted, it is possible that the SEC may not declare registration statements that we file effective and, as a result, we would not be able to issue stock or debt in the public markets. For these reasons, the company believes this proposal is undesirable at this time and could have adverse consequences for stockholders. Accordingly, the board of directors recommends a vote AGAINST the stockholder proposal. 45
The Audit Committee is responsible, under its charter, for oversight of our independent registered public accounting firm, which reports directly to the Audit Committee. The Audit Committee has the authority to retain and terminate the independent registered public accounting firm, to review the scope and terms of the audit and to
approve the fees to be charged. The Audit Committee monitors our system of internal control over financial reporting, and managements certifications as to disclosure controls and procedures and internal controls for financial reporting. Our management and independent registered public accounting firm, not the Audit Committee, are
responsible for the planning and conduct of the audit of our consolidated financial statements and determining that the consolidated financial statements are complete and accurate and prepared in accordance with U.S. generally accepted accounting principles. The Audit Committee has met and held discussions with management, our senior internal auditor and our independent registered public accounting firm (with and without management and our senior internal auditor present) and has reviewed and discussed the audited consolidated financial statements and related internal control over
financial reporting with management and our independent registered public accounting firm. The Audit Committee has also discussed with our independent registered public accounting firm the matters required to be discussed by Statement on Auditing Standards No. 61 (Codification of Statements on Auditing Standards, AU Section 380). Our independent registered public accounting firm also provided the Audit Committee with the written disclosures and the letter required by the applicable requirements of the Public Company Accounting Oversight Board regarding the independent registered public accounting firms communications with the Audit Committee
concerning independence, and the Audit Committee discussed with our independent registered public accounting firm that firms independence. Based upon the review and discussions referred to above, the Audit Committee recommended to the board of directors that the audited consolidated financial statements be included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2011, for filing with the SEC. The Audit Committee selected KPMG LLP as
our independent registered public accounting firm for the fiscal year ended December 31, 2012, which is being presented to stockholders at the meeting for ratification. Submitted by: Howard L. Schrott, Chair The information contained in the foregoing report shall not be deemed to be soliciting material or to be filed with the Securities and Exchange Commission, nor shall the information be incorporated by reference into any filing under the Securities Act of 1933 or the Securities Exchange Act of 1934, except to the extent that the
company specifically incorporates it by reference in a filing. 46
Leroy T. Barnes, Jr.
Edward Fraioli
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FEES In accordance with the Sarbanes-Oxley Act of 2002, the rules of the SEC and the Audit Committee Charter, the Audit Committee pre-approves all auditing and permissible non-auditing services that will be provided by KPMG LLP, our independent registered public accounting firm. The following table sets forth the fees for professional audit services paid by us to KPMG LLP, our independent registered public accounting firm:
2011
2010 Audit Fees
$
4,700,000
$
4,750,000 Audit-Related Fees
341,000
425,000 Tax Fees
All Other Fees
14,175 Total
$
5,041,000
$
5,189,175 Audit Fees Audit fees relate to professional services rendered in connection with the audit of our annual consolidated financial statements included on Form 10-K and internal control over financial reporting, the review of our quarterly financial statements included in our Quarterly Reports on Form 10-Q, and audit services provided in
connection with other subsidiary audit reports. These fees were approved by the Audit Committee. Audit-Related Fees Fees for 2011 were for work performed by KPMG LLP in connection with a regulatory audit required in connection with the Broadband Technology Opportunities Program and accounting consultations. Fees for 2010 were for work performed by KPMG LLP in connection with the Verizon transaction and registration statements. All Other Fees Other fees for 2010 were for services related to a license fee. 47
RATIFICATION OF SELECTION OF INDEPENDENT The board of directors recommends that the stockholders ratify the selection of KPMG LLP, registered public accounting firm, as the independent registered public accounting firm to audit our accounts and those of our subsidiaries for 2012. The Audit Committee approved the selection of KPMG LLP as our independent registered
public accounting firm for 2011. KPMG LLP is currently our independent registered public accounting firm. The board of directors recommends a vote FOR this proposal. ANNUAL REPORT AND COMPANY INFORMATION A copy of our 2011 Annual Report to Stockholders is being furnished to stockholders concurrently herewith. Stockholders may request another free copy of our 2011 Annual Report from: Frontier Communications Corporation Proposals that stockholders wish to include in our proxy statement and form of proxy for presentation at our 2012 annual stockholders meeting must be received by us no later than November 28, 2012. Such proposals also must comply with SEC regulations under Rule 14a-8 regarding the inclusion of stockholder proposals in
company-sponsored proxy materials. Proposals should be addressed to: Secretary For a stockholder proposal that is not intended to be included in our 2013 proxy statement under Rule 14a-8, our bylaws require the stockholders written proposal be submitted to our Secretary at the address above:
On or after the close of business on January 9, 2013; and On or before the close of business on February 8, 2013. In such a case, the notice of proposal must meet certain requirements set forth in our bylaws. Such proposals are not required to be included in our proxy materials. If the date of the stockholder meeting is moved more than 30 days before or after the anniversary of our annual meeting for the prior year, then notice of a stockholder proposal that is not intended to be included in our proxy statement under Rule 14a-8 must be received not less than a reasonable time, as determined by our board,
prior to the printing and mailing of proxy materials for the applicable annual meeting. 48
REGISTERED PUBLIC ACCOUNTING FIRM
(Item 5 on the Proxy Card)
Attn: Investor Relations Department
Three High Ridge Park
Stamford, Connecticut 06905
Telephone: (866) 491-5249
e-mail: ir@ftr.com
Frontier Communications Corporation
Three High Ridge Park
Stamford, Connecticut 06905
Fax: (203) 614-4651
Frontier Communications Corporation 2012 Annual Meeting of Stockholders ADVANCE REGISTRATION Attendance at the meeting is limited to our stockholders, or their authorized representatives, and our guests. If you plan to attend or send a representative to the meeting, please notify us by marking the Advance Registration box on your proxy. You may view this proxy statement and our Annual Report at the following Internet web site: www.proxyvote.com. An advance registration form may be submitted (for registered stockholders only) by selecting the proxy statement, the advance registration form and then clicking on the submit button once you have
completed the form.
Three High Ridge Park
Stamford, Connecticut 06905
10:00 a.m., Eastern Daylight Savings Time, May 9, 2012
Three High Ridge Park
Stamford, Connecticut 06905
VOTE BY INTERNET
- www.proxyvote.com Use the Internet to transmit your
voting instructions and for electronic delivery of information up until 11:59
P.M. Eastern Daylight Savings Time the day before the meeting date. Have your
proxy card in hand when you access the website and follow the instructions to
obtain your records and to create an electronic voting instruction form. ELECTRONIC
DELIVERY OF FUTURE PROXY MATERIALS If you would like to reduce the
costs incurred by our company in mailing proxy materials, you can consent to
receiving all future proxy statements, proxy cards and annual reports
electronically via e-mail or the Internet. To sign up for electronic delivery,
please follow the instructions above to vote using the Internet and, when
prompted, indicate that you agree to receive or access proxy materials
electronically in future years. VOTE BY PHONE -
1-800-690-6903 Use any touch-tone telephone to
transmit your voting instructions up until 11:59 P.M. Eastern Daylight
Savings Time the day before the meeting date. Have your proxy card in hand
when you call and then follow the instructions. VOTE BY MAIL Mark, sign and date your proxy
card and return it in the postage-paid envelope we have provided or return it
to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717. TO VOTE, MARK BLOCKS BELOW IN
BLUE OR BLACK INK AS FOLLOWS: M39729-P23409 KEEP THIS PORTION FOR YOUR RECORDS DETACH AND RETURN THIS PORTION ONLY THIS PROXY CARD IS
VALID ONLY WHEN SIGNED AND DATED. FRONTIER
COMMUNICATIONS CORPORATION For Withhold For All To
withhold authority to vote for any individual nominee(s), mark For All
Except and write the number(s) of the nominee(s) on the line below. The Board of
Directors recommends that you vote FOR the
following: 1. Election of Directors o o o Nominees: 01) Leroy T. Barnes,
Jr. 07) Howard L.
Schrott 02) Peter C.B.
Bynoe 08) Larraine D.
Segil 03) Jeri B.
Finard 09) Mark
Shapiro 04) Edward
Fraioli 10) Myron A.
Wick, III 05) James S. Kahan 11) Mary Agnes
Wilderotter 06) Pamela D.A. Reeve The Board of
Directors recommends you vote FOR the following proposal: For Against Abstain The Board of Directors recommends you vote AGAINST the
following proposal: For Against Abstain 2. To consider and vote upon an
advisory proposal to approve executive compensation. o o o 4. To
consider and vote upon a stockholder proposal regarding arbitration of stockholder suits, if presented at the meeting. o o o The Board of
Directors recommends you vote AGAINST the following proposal: The Board of Directors recommends you vote FOR the
following proposal: 3. To consider and vote upon a stockholder proposal
regarding independent chairman, if presented at the meeting. o o o 5. To ratify the selection of KPMG LLP as
our independent registered public accounting firm for 2012. o o o For address changes and/or
comments, please check this box and write them on the back where indicated. o NOTE: The named proxies are authorized to vote upon such other
business as may properly come before the meeting or any adjournment thereof. Please indicate if you plan to
attend this meeting. o o Please
sign exactly as your name(s) appear(s) hereon. When signing as attorney,
executor, administrator or other fiduciary, please give full title as such.
Joint owners should each sign personally. All holders must sign. If a
corporation or partnership, please sign in full corporate or partnership
name, by authorized officer. Signature [PLEASE SIGN WITHIN
BOX] Date Signature (Joint Owners) Date Householding In an effort to minimize costs and the amount of duplicate material a
household receives, we are sending one annual report and proxy statement to
accounts sharing the same last name and address. If you would like another
copy, and/or wish to receive financial reports for each account in your
household in the future, please contact Frontiers investor relations
department by phone at 1-866-491-5249; by mail at 3 High Ridge Park, Stamford,
CT 06905; or by email at ir@ftr.com. Vote Your Proxy Online You can use the Internet to transmit your voting instructions and for
electronic delivery of information up until 11:59 P.M., Eastern Daylight
Savings Time, the day before the meeting date. Have your proxy card in hand
when you access the website (www.proxyvote.com), and follow the instructions to
obtain your records and to create an electronic voting instruction form. There
is no charge to you for this service, but there may be costs associated with
access to the Internet, such as usage charges for your Internet service
provider and/or telephone companies. Electronic Delivery of Future Proxy Material After submitting your proxy vote online, you may elect to receive
future proxy material (annual report, proxy statement, etc.) from Frontier
electronically. Before exiting www.proxyvote.com, click the button for
Electronic Delivery and enter your email address. Then click the button
indicating your consent to receive future information in an electronic format.
Next year, you will receive an email providing information about where to
locate the annual report and proxy statement online and how to vote these
shares. Important Notice Regarding the
Availability of Proxy Materials for the Annual Meeting: The Notice and Proxy Statement and Annual
Report are available at www.proxyvote.com. M39730-P23409 Proxy Solicited on Behalf of Board of
Directors The undersigned hereby appoints Leroy
T. Barnes, Jr., Howard L. Schrott and Myron A. Wick, III or any of them with full power of
substitution, proxies to vote at the Annual Meeting of Stockholders of Frontier
Communications Corporation (the Company) to be held on Wednesday, May 9, 2012,
at 10:00 a.m. Eastern Daylight Saving Time, at our offices at 3 High Ridge Park, Stamford,
CT 06905, and at any adjournments thereof, hereby revoking any proxies heretofore given,
to vote all shares of common stock of the company held or owned by the undersigned as
directed, and in their discretion upon such other matters as may come before the meeting
or any adjournment thereof. If the undersigned holds shares of
Frontier common stock under the Frontier Communications 401(k) Savings Plan, the Frontier
Communications Corporate Services Inc. Management 401(K) Plan, the Frontier Communications
Corporate Services Inc. Savings and Security Plan for West Region Hourly Employees and/or
the Frontier Communications Corporate Services Inc. Savings and Security Plan for
Mid-Atlantic Associates, this proxy represents the number of shares allocable to the
undersigned under the Plan(s) as well as other shares registered in the undersigneds
name. The undersigned hereby authorizes and directs Fidelity Investments, as the Trustee
under the Plans, to vote all shares of stock allocated to the undersigned under the
provisions of the Plans and appoints Leroy T. Barnes, Jr., Howard L. Schrott and Myron A.
Wick, III or any of them, with full power of substitution, proxies to vote at the Annual
Meeting of Stockholders of the Company to be held on Wednesday, May 9, 2012 at 10:00 a.m.
Eastern Daylight Saving Time, at our offices at 3 High Ridge Park, Stamford, CT 06905, and
at any adjournments thereof. Said Trustee is authorized and directed to execute and
deliver a written proxy appointing such individuals to act as proxies as directed, and, in
their discretion, upon such other matters as may come before the meeting or any
adjournment thereof. This proxy, when properly executed,
will be voted in the manner directed herein. If no such direction is made, this proxy will
be voted in FAVOR of the election of all directors and the adoption of Proposal 2 and
Proposal 5 and AGAINST Proposal 3 and Proposal 4. Address Changes/Comments:
FRONTIER
COMMUNICATIONS CORPORATION
3 HIGH RIDGE PARK
STAMFORD, CT 06905
All
All
Except
Yes
No
Continued and to
be signed on reverse side