EarthLink Holdings Corp.
EarthLink Holdings Corp. (Form: DEF 14A, Received: 03/13/2014 15:00:32)

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No.          )

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Definitive Proxy Statement

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Definitive Additional Materials

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Soliciting Material under §240.14a-12

 

EARTHLINK HOLDINGS CORP.

(Name of Registrant as Specified In Its Charter)

 

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EARTHLINK HOLDINGS CORP.
1375 Peachtree Street
Atlanta, Georgia 30309
(404) 815-0770

March 13, 2014

Dear Stockholders:

        You are cordially invited to attend the 2014 Annual Meeting of Stockholders of EarthLink Holdings Corp., which will be held at 4:00 p.m. (local time) on Tuesday, April 29, 2014, at our offices at 1375 Peachtree Street, Atlanta, Georgia.

        The principal business of the 2014 Annual Meeting of Stockholders will be (1) the election of the eight directors nominated by the Board of Directors as set forth in the Proxy Statement; (2) the approval of a non-binding advisory resolution approving the compensation of our named executive officers; (3) the amendment to our Certificate of Incorporation to revise the advance notice requirements for shareholder nominations of directors; and (4) the ratification of the appointment by the Audit Committee of the Board of Directors of Ernst & Young LLP as our independent registered public accounting firm for the year ending December 31, 2014.

        As permitted by rules adopted by the Securities and Exchange Commission, we are making our Proxy Statement and 2013 Annual Report available to our stockholders electronically over the Internet. You may read, print and download our Proxy Statement and 2013 Annual Report at www.proxyvote.com. On or about March 13, 2014, we mailed our stockholders a notice containing instructions on how to access our Proxy Statement and 2013 Annual Report and vote online or by telephone. The notice also provides instruction on how you can request a paper copy of these documents if you desire.

        If you do not attend the 2014 Annual Meeting of Stockholders, you may vote your shares by mail, by telephone or by Internet. If you received a paper copy of the proxy card by mail, you may sign, date and mail the proxy card in the envelope provided. The proxy card materials provide you with details on how to vote by these three methods. Whether or not you plan to attend the 2014 Annual Meeting of Stockholders, we encourage you to vote in the method that suits you best so that your shares will be voted at the 2014 Annual Meeting of Stockholders. If you decide to attend the 2014 Annual Meeting of Stockholders, you may revoke your proxy and personally cast your vote.

        Thank you, and we look forward to seeing you at the 2014 Annual Meeting of Stockholders or receiving your proxy vote.


 

 

By order of the Board of Directors

 

 


GRAPHIC

Joseph F. Eazor
Chief Executive Officer and President

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EARTHLINK HOLDINGS CORP.
1375 Peachtree Street
Atlanta, Georgia 30309
(404) 815-0770


NOTICE OF ANNUAL MEETING OF STOCKHOLDERS

        The 2014 Annual Meeting of Stockholders of EarthLink Holdings Corp. will be held at 4:00 p.m. (local time) on Tuesday, April 29, 2014, at 1375 Peachtree Street, Atlanta, Georgia. The meeting is called for the following purposes:

        The Board of Directors has fixed the close of business on March 5, 2014 as the record date for the purpose of determining the stockholders who are entitled to notice of and to vote at the meeting and any adjournment or postponement thereof.


 

 

By order of the Board of Directors

 

 


GRAPHIC

Samuel R. DeSimone, Jr.
Corporate Secretary

Atlanta, Georgia
March 13, 2014

         IT IS IMPORTANT THAT PROXIES BE RETURNED PROMPTLY. IF YOU ARE UNABLE TO BE PRESENT AT THE MEETING, PLEASE VOTE YOUR SHARES BY TELEPHONE OR BY INTERNET SO THAT YOUR SHARES WILL BE REPRESENTED. IF YOU RECEIVED A COPY OF THE PROXY CARD BY MAIL, YOU MAY SIGN, DATE AND MAIL THE PROXY CARD IN THE ENVELOPE PROVIDED. IF YOU WISH, YOU MAY REVOKE YOUR PROXY AT ANY TIME PRIOR TO THE TIME IT IS VOTED.

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TABLE OF CONTENTS

PROXY STATEMENT SUMMARY

  iv

2014 ANNUAL MEETING OF STOCKHOLDERS

 
1

PROPOSAL 1 ELECTION OF DIRECTORS

 
3

CORPORATE GOVERNANCE

 
8

AUDIT COMMITTEE REPORT

 
16

EXECUTIVE OFFICERS

 
20

BENEFICIAL OWNERSHIP OF COMMON STOCK

 
22

EXECUTIVE COMPENSATION

 
24

PROPOSAL 2 NON-BINDING ADVISORY RESOLUTION TO APPROVE THE COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS

 
43

PROPOSAL 3 AMENDMENT OF OUR AMENDED AND RESTATED CERTIFICATE OF INCORPORATION

 
44

PROPOSAL 4 RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

 
48

OTHER MATTERS

 
49

SOLICITATION OF PROXIES

 
49

STOCKHOLDER PROPOSALS FOR 2015 ANNUAL MEETING

 
50

ANNUAL REPORT ON FORM 10-K

 
50

BENEFICIAL OWNERS

 
50

ANNEX A—RECONCILIATION OF NON-GAAP FINANCIAL MEASURES

 
A-1

ANNEX B—PROPOSED AMENDMENT TO AMENDED AND RESTATED CERTIFICATE OF INCORPORATION

 
B-1

ANNEX C—AUDIT COMMITTEE CHARTER

 
C-1

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PROXY STATEMENT SUMMARY

        This summary highlights information contained elsewhere in this Proxy Statement. It does not contain all information you should consider, and you should read the entire Proxy Statement carefully before voting.

2014 Annual Meeting of Stockholders

 
   
Time and Date:   4:00 p.m. local time, Tuesday April 29, 2014

Place:

 

EarthLink's offices at 1375 Peachtree Street, Atlanta, Georgia

Record Date:

 

March 5, 2014

Voting:

 

Stockholders as of the record date are entitled to vote.

Attendance:

 

Only stockholders as of the record date will be entitled to attend the Annual Meeting of Stockholders. Proof of stock ownership as of this date and some form of government issued photo identification (such as a valid driver's license or passport) will be required for admission to the Annual Meeting of Stockholders. If you hold your shares of common stock in a brokerage account or through another nominee, you are the beneficial owner of those shares but not the record holder and you will need to obtain a "legal proxy" from the record holder to attend the Annual Meeting of Stockholders.

Agenda and Voting Recommendations

Item
 
Description
  Board Recommendation   Page  
  1   Election of eight directors   FOR each nominee     3  

 

2

 

Approval of a non-binding advisory resolution approving the compensation of named executive officers

 

FOR

 

 

43

 

 

3

 

Amendment of Certificate of Incorporation to revise the advance notice requirements for shareholder nominations of directors

 

FOR

 

 

44

 

 

4

 

Ratification of Ernst & Young LLP as independent registered public accounting firm for 2014

 

FOR

 

 

48

 

 

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Board of Director Nominees

        The following table provides summary information about each director nominee. Each director is elected annually by a majority of the votes cast. All of the director nominees for 2014 are current directors. All non-employee directors are independent.

Nominee
  Director
Since
  Principal Occupation   Committees
Susan D. Bowick     2008   Retired Executive Vice President, Hewlett-Packard Company   Corporate Governance and Nominating and Leadership and Compensation

Joseph F. Eazor

 

 

2014

 

President and CEO, EarthLink Holdings Corp.

 

 

David A. Koretz

 

 

2008

 

Corporate Vice President, Security Products and General Manager, Counter Security, Juniper Networks, Inc.; former Chief Executive Officer of Mykonos Software, Inc.

 

Audit

Kathy S. Lane

 

 

2013

 

Retired executive, TJX Companies, Inc.

 

Audit and Corporate Governance and Nominating

Garry K. McGuire

 

 

2011

 

Retired CFO and Senior Vice President, Avaya, Inc.

 

Audit and Leadership and Compensation

R. Gerard Salemme

 

 

2013

 

Chief Strategy Officer and Executive Vice President at Pendrell Corporation

 

Corporate Governance and Nominating

Julie A. Shimer Ph.D

 

 

2013

 

Private investor; former CEO and President of Welch Allyn, Inc.

 

Audit, Corporate Governance and Nominating and Leadership and Compensation

M. Wayne Wisehart

 

 

2008

 

Retired CFO, aQuantive, Inc. and Western Wireless Corporation

 

Audit and Corporate Governance and Nominating

Holding Company Reorganization

        On December 31, 2013, EarthLink completed its holding company reorganization (the "Reorganization"). As a result of the Reorganization, each outstanding share of EarthLink, Inc. common stock was automatically converted into one share of EarthLink Holdings Corp. common stock. EarthLink Holdings Corp. is incorporated in the State of Delaware, as was EarthLink, Inc. The rights of shareholders of EarthLink Holdings Corp. are generally governed by Delaware law and EarthLink Holdings Corp.'s certificate of incorporation and bylaws, which are the same in all material respects as those for EarthLink, Inc. prior to the Reorganization.

        In connection with the Reorganization, pursuant to an Assignment and Assumption Agreement, dated as of December 30, 2013, EarthLink Holdings Corp. assumed EarthLink, Inc.'s equity incentive plans, equity awards and employment agreements. Outstanding awards under all of EarthLink, Inc.'s equity incentive plans continued in effect in accordance with the terms and conditions of the applicable plan and award, except that EarthLink Holdings Corp. common stock was substituted for EarthLink, Inc. common stock. In addition, EarthLink Shared Services, LLC, an indirect wholly-owned subsidiary, assumed certain of EarthLink, Inc.'s employee benefit plans under the Assignment and Assumption Agreement.

        Information presented in this Proxy Statement for the period on and prior to December 31, 2013 refers to EarthLink, Inc. and information for the period after December 31, 2013 refers to EarthLink Holdings Corp.

 

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PROXY STATEMENT
For the Annual Meeting of Stockholders
to be held April 29, 2014

2014 ANNUAL MEETING OF STOCKHOLDERS

General

        This Proxy Statement is furnished by and on behalf of the Board of Directors of EarthLink Holdings Corp. in connection with the solicitation of proxies for use at the 2014 Annual Meeting of Stockholders of EarthLink to be held at 4:00 p.m. (local time) on Tuesday, April 29, 2014, at our offices at 1375 Peachtree Street, Atlanta, Georgia, and at any adjournments or postponements thereof. This Proxy Statement and the proxy card are being made available to our stockholders of record on March 5, 2014, the record date. We are making these materials available to you on the Internet or, upon your request, are delivering printed versions of these materials to you by mail. On or about March 13, 2014, we mailed a notice to stockholders containing instructions on how to access the Proxy Statement and 2013 Annual Report and vote.

         THE BOARD OF DIRECTORS URGES YOU TO VOTE YOUR SHARES BY ANY OF THE THREE AVAILABLE METHODS—BY MAIL, BY TELEPHONE OR BY INTERNET. IF YOU VOTE BY MAIL, PLEASE COMPLETE, SIGN, DATE AND RETURN THE PROXY CARD.

YOUR VOTE IS IMPORTANT!

Voting Instructions and Board of Directors Recommendation

        Proxies will be voted as specified by the stockholder or stockholders granting the proxy. Stockholders can vote in person at the 2014 Annual Meeting of Stockholders or by proxy. There are three ways to vote by proxy:

        Internet and telephone facilities for stockholders of record will be available 24 hours a day and close at 11:59 p.m. (Eastern time) on April 28, 2014.

        Unless contrary instructions are specified, if the proxy card is executed and returned (and not revoked) prior to the 2014 Annual Meeting of Stockholders, the shares of our common stock, $0.01 par value per share, or Common Stock, represented thereby will be voted (1) FOR the election of the eight director nominees named in this Proxy Statement; (2) FOR the non-binding advisory resolution approving the compensation of our named executive officers; (3) FOR the amendment of our Certificate of Incorporation; and (4) FOR the ratification of the appointment of Ernst & Young LLP as our independent registered public accounting firm for the year ending December 31, 2014. A stockholder who submits a proxy may change or revoke it at any time before it is voted by filing with our Corporate Secretary either a written revocation or an executed proxy bearing a later date, by attending and voting in person at the 2014 Annual Meeting of Stockholders or granting a subsequent proxy through the Internet or by telephone.

        Only holders of record of Common Stock as of the close of business on March 5, 2014 will be entitled to vote at the 2014 Annual Meeting of Stockholders. Holders of shares authorized to vote are entitled to cast one vote per share on all matters voted upon at the 2014 Annual Meeting of Stockholders. As of the

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close of business on the record date, there were 102,641,807 shares of Common Stock issued and outstanding.

        If your shares are held in the name of a bank, broker or other holder of record, you will receive instructions from the holder of record. You must follow the instructions of the holder of record in order for your shares to be voted. Telephone and Internet voting also will be offered to stockholders owning shares through certain banks and brokers. If your shares are not registered in your own name and you plan to vote your shares in person at the 2014 Annual Meeting of Stockholders, you should contact your broker or agent to obtain a legal proxy or broker's proxy card and bring it to the 2014 Annual Meeting of Stockholders in order to vote.

Attendance at Annual Meeting

        Only stockholders who own EarthLink Common Stock as of the close of business on March 5, 2014 will be entitled to attend the 2014 Annual Meeting of Stockholders. Proof of stock ownership as of this date and some form of government issued photo identification (such as a valid driver's license or passport) will be required for admission to the 2014 Annual Meeting of Stockholders. If you hold your shares of Common Stock in a brokerage account or through another nominee, you are the beneficial owner of those shares but not the record holder and you will need to obtain a "legal proxy" from the record holder to attend the 2014 Annual Meeting of Stockholders.

Quorum Required

        According to our Amended and Restated Bylaws ("Bylaws"), the holders of a majority of the shares entitled to be voted must be present or represented by proxy to constitute a quorum. Each outstanding share is entitled to one vote on all matters. For purposes of the quorum and the discussion below regarding the vote necessary to take stockholder action, the stockholders who are present at the 2014 Annual Meeting of Stockholders in person or by proxy and who abstain from voting are considered stockholders who are present and entitled to vote and they count toward a quorum. Abstentions and shares of record held by a broker or its nominee that are voted on any matter are included in determining whether a quorum is present. Broker shares that are not voted on any matter will not be included in determining whether a quorum is present.

Vote Required

        Under rules of self-regulatory organizations governing brokers, your bank, broker or other nominee may vote your shares in its discretion on "routine" matters. These rules also provide, however, that when a proposal is not a "routine" matter and your bank, broker or other nominee has not received your voting instructions with respect to such proposal, your bank, broker or other nominee cannot vote your shares on that proposal. When a bank, broker or other nominee does not cast a vote for a routine or a non-routine matter, it is called a "broker non-vote." Your bank, broker or other nominee may not vote your shares with respect to the election of nominees for director, the non-binding advisory proposal regarding the compensation of our named executive officers or the amendment to the Certificate of Incorporation in the absence of your specific instructions as to how to vote with respect to these matters, because under such rules these matters are not considered "routine" matters. The ratification of the appointment of Ernst & Young LLP is considered a routine matter.

        Under our Certificate of Incorporation, directors are elected by the vote of the majority of the votes cast. Only votes actually cast will be counted for the purpose of determining whether a particular nominee received the affirmative vote of a majority of votes cast in an uncontested election. Abstentions and broker non-votes will have no effect on the outcome of the election of directors. Our Corporate Governance Guidelines currently contain a policy that requires any incumbent nominee for director in an uncontested election (i.e., an election where the number of nominees is not greater than the number of directors to be

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elected) who does not receive a majority of affirmative votes for his or her election to tender his or her resignation to the Board of Directors. The Board of Directors then would consider whether to accept this resignation in accordance with the procedures set forth in our Corporate Governance Guidelines. The policy is available for review at the following website, www.earthlink.net. The policy may be reviewed by clicking "About Us," then "Investor Relations," then "Corporate Governance" and then "Corporate Governance Guidelines."

        Approval of the non-binding advisory proposal regarding the compensation of our named executive officers requires the affirmative vote of the majority of the votes cast on the proposal at the 2014 Annual Meeting of Stockholders. Abstentions will have the same effect as a vote against this proposal. Broker non-votes will have no effect on the outcome of this proposal. Because your vote on this proposal is advisory, it will not be binding on us or the Board of Directors. However, the Leadership and Compensation Committee of the Board of Directors will review the voting results and take them into consideration when making future decisions regarding executive compensation as it deems appropriate.

        Approval of the amendment to our Certificate of Incorporation requires the affirmative vote of at least two-thirds of our outstanding shares of Common Stock. Abstentions and broker non-votes will have the same effect as a vote against this proposal.

        Approval of the ratification of the appointment by the Audit Committee of Ernst & Young LLP for the year ending December 31, 2014 requires the affirmative vote of a majority of the shares present or represented and entitled to vote at the 2014 Annual Meeting of Stockholders to be approved. Abstentions will have the same effect as a vote against this proposal. Broker non-votes will have no effect on the outcome of this proposal.

        Our Bylaws provide that the Chairman of the Board, in addition to making any other determinations that may be appropriate to the conduct of the meeting, may determine that a matter or business was not properly brought before the 2014 Annual Meeting of Stockholders and if the Chairman of the Board should so determine, any such matter or business not properly brought before the meeting shall not be transacted or considered.

        With respect to any other matters that may come before the 2014 Annual Meeting of Stockholders, including consideration of a motion to adjourn the 2014 Annual Meeting of Stockholders to another time or place (including for the purpose of soliciting additional proxies), if proxies are returned, such proxies will be voted in a manner deemed by the proxy representatives named therein in their discretion to be in our best interests and the best interests of our stockholders.


PROPOSAL 1

ELECTION OF DIRECTORS

The Board of Directors

        Our Certificate of Incorporation provides that we shall have at least two and not more than 17 directors, with the exact number to be fixed by resolution of the Board of Directors from time to time or by a majority vote of the stockholders entitled to vote on directors. The current size of the Board of Directors is fixed at nine, and we currently have nine directors. Current director Marce Fuller has notified the Board that she is not standing for reelection at the 2014 Annual Meeting of Stockholders. Accordingly, the Board has reduced the size of the Board of Directors from nine directors to eight directors effective as of the 2014 Annual Meeting of Stockholders.

        The Board of Directors held 15 meetings during the year ended December 31, 2013. During 2013, all incumbent members of the Board of Directors attended at least 75% of the aggregate number of (i) meetings of the Board of Directors and (ii) meetings held by all committees of the Board of Directors on which the director served at the time the director was a member of the Board of Directors or the

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committee. In connection with the Reorganization, each of the members of the board of directors of EarthLink, Inc. were elected as members of the board of directors of EarthLink Holdings Corp.

Nominees Standing for Election

        The Corporate Governance and Nominating Committee has recommended and the Board of Directors has nominated the following individuals for director: Susan D. Bowick, Joseph F. Eazor, David A. Koretz, Kathy S. Lane, Garry K. McGuire, R. Gerard Salemme, Julie A. Shimer Ph.D, and M. Wayne Wisehart. All of the nominees are current members of our Board of Directors and, with the exception of Mr. Eazor, have been determined to be independent. As our Chief Executive Officer and President, Mr. Eazor is not independent. Our Corporate Governance and Nominating Committee has reviewed each nominee's qualifications and has recommended to our Board of Directors that each nominee be submitted to a vote of our stockholders at the 2014 Annual Meeting of Stockholders, each to serve until the 2015 Annual Meeting of Stockholders or until his or her successor is duly elected and qualified. If a nominee is unavailable to serve as a director, full discretion is reserved to the persons named as proxies to vote for another nominee proposed by the Corporate Governance and Nominating Committee and the Board of Directors, or the Board of Directors may reduce the number of directors to be elected at the 2014 Annual Meeting of Stockholders. Proxies cannot be voted for a greater number of persons than the number of nominees named in the proxy statement.

        Set forth below is certain biographical information furnished to us by the directors standing for election at the 2014 Annual Meeting of Stockholders:

Susan D. Bowick

Age: 65

        Ms. Bowick has served on our Board of Directors since May 2008. Currently, Ms. Bowick also serves on the Board of Directors of Comverse Network Systems, Inc. and is chairperson of that company's Compensation and Leadership Committee. Previously, Ms. Bowick was a member of the Boards of Directors of Comverse Technology, Inc. and Verint Systems Inc. She served as the chairperson of the Leadership and Compensation Committee of both of these companies. Ms. Bowick has served as a consultant to several global technology companies, including IBM, SAP, Nokia and Nokia Siemens Networks. From 1977 to 2004, Ms. Bowick served in various executive positions with Hewlett-Packard Company, most recently as Executive Vice President, Human Resources and Workforce Development and as a member of the management executive committee.

        Ms. Bowick's previous senior leadership positions at Hewlett Packard have given her experience and global expertise which are valuable to our Board of Directors. Her service there and on the Comverse Technology, Inc. and Verint Systems Inc. Boards of Directors has given her significant experience with corporate governance and other matters important to public companies. Her extensive background in executive compensation and human resources issues is essential for our Leadership and Compensation Committee. In addition, given our recent, and possible future, acquisition activity, her business development experience at Hewlett Packard, which included evaluating potential mergers and acquisitions and leading integration activities, and global operations experience, is of importance to our Board of Directors.

Joseph F. Eazor

Age: 51

        Mr. Eazor has served on our Board of Directors and as our Chief Executive Officer and President since January 2014. Prior to joining the Company, Mr. Eazor worked as a consultant. From August 2011 until February 2013, he was Executive Vice President and COO of Global Sales and Customer Operations

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at EMC Corporation, a global leader in IT and business transformation. Beginning in 2003 he held executive level positions at Electronic Data Systems Corporation, an information technology equipment and services company, until Hewlett-Packard's acquisition of Electronic Data Systems Corporation in August 2008. Mr. Eazor went on to serve as Senior Vice President and General Manager of HP Enterprise Services at Hewlett-Packard, an information technology corporation, from August 2008 to July 2010. From September 2010 to August 2011 he was a Director at McKinsey & Company, Inc., a management consulting firm. From 1999 to 2002 Mr. Eazor served as President, Chief Executive Officer and Director of Springbow Solutions, Inc., a company that developed and provided portal-based internet solutions to companies.

        As our Chief Executive Officer and President, Mr. Eazor's extensive experience in technology and IT services is valuable to the Board of Directors in directing our future. Mr. Eazor's experience as a senior technology executive at other IT services companies, as well as his prior consulting experience, provides the Board with substantial sales, strategic planning, and operational experience and industry insight as we continue to develop as a leading edge technology company.

David A. Koretz

Age: 34

        Mr. Koretz has served on our Board of Directors since May 2008. Mr. Koretz has had various positions at Juniper Networks, Inc., a networking and security provider, since February 2012 and is currently Corporate Vice President, Security Products and General Manager, Counter Security. Previously, Mr. Koretz was the President and Chief Executive Officer of Mykonos Software, Inc., a web application security software company, from December 2009 until February 2012 when Mykonos Software was acquired by Juniper Networks. From 1999 to December 2009 he was President and Chief Executive Officer of BlueTie Inc., a SaaS provider with more than 1.5 million users. Mr. Koretz is a member of the Board of Directors of BlueBox Security, an enterprise mobile security provider, Adventive, Inc., an online advertising software provider, and of the Rochester Institute of Technology School of Computing.

        Mr. Koretz has gained valuable knowledge of the cyber security, enterprise, software, SaaS, managed services and cloud industries as a result of his work with Juniper Networks, Mykonos Software, BlueTie and Adventive, which is important to our Board of Directors in providing insight into the future direction of our business. This knowledge will assist us in our focus on managed IT services. In addition, his work with privately-held companies has given him an understanding of venture capital, private equity and smaller businesses, providing an entrepreneurial perspective that is important to our Board of Directors.

Kathy S. Lane

Age: 56

        Ms. Lane has served on our Board of Directors since July 2013. She has 30 years of IT experience, including CIO roles in the consumer products, financial services, utilities and retail industries. Most recently she was EVP/CIO of TJX Companies, Inc., a specialty apparel retailer, from October 2008 until her retirement in March 2013. Previously she was Group CIO at National Grid USA and SVP/CIO of Gillette Company and before that she held positions of increasing responsibility in IT at General Electric, Pepsi-Cola International and Procter & Gamble. Ms. Lane has been active in many industry groups, including Oracle's President's Council. From 2002-2013 she was a member of the CIO Strategy Exchange, a forum sponsored by Kleiner Perkins Caulfield Byers and Ostriker von Simson to evaluate emerging, innovative technologies.

        From her multiple CIO roles, Ms. Lane provides the board with a substantial IT background. With this experience she brings to the Board a deep understanding of the IT Services market in general as well

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as the IT services desired by our customers. Her knowledge is also valuable as we optimize our core IT service platforms and capabilities.

Garry K. McGuire

Age: 67

        Mr. McGuire has served on our Board of Directors since July 2011. From September 2000 until his retirement in December 2006, Mr. McGuire served as Chief Financial Officer and Senior Vice President, Corporate Development of Avaya, Inc., a provider of unified communications, contact centers, data solutions and related services. From January 2007 until March 2007, Mr. McGuire served as a consultant to Avaya, Inc. Previously, he was President and Chief Executive Officer of Williams Communications Solutions LLC and President of NORTEL Communications Systems, Inc. Mr. McGuire had been a member of the Board of Directors of Telcordia Technologies Inc., a developer of IP, wireline and mobile communications software and services, from December 2006 until January 2012 when Telcordia was acquired by Ericsson AB. He was the Chairman of Telcordia's Board from November 2010 until January 2012.

        Mr. McGuire provides the Board of Directors extensive financial experience gained through his service as a Chief Financial Officer of a public company which provides him with the expertise to serve as our Audit Committee Chairperson and one of our Audit Committee financial experts. This experience, as well as his prior role as a Chief Executive Officer, enables Mr. McGuire to provide critical insight to our business strategy as well as to our financial reporting and risk management process.

R. Gerard Salemme

Age: 60

        Mr. Salemme has served on our board since October 2013. Since March 2011, he has served as Chief Strategy Officer and Executive Vice President at Pendrell Corporation, an investment, advisory services and asset management firm. Mr. Salemme also is a member of the Board of Directors of Pendrell Corporation. He also serves as Chairman of the Board of Directors for RECON Dynamics, LLC, a privately held company offering wireless asset management solutions. Since 1997, he has been a partner in Eagle River Holdings, Inc., a private investment firm formed by Craig McCaw. Mr. Salemme has been involved in telecommunications investment, strategy and regulatory policy for McCaw Cellular, and for Eagle River portfolio companies, including XO Communications, Clearwire and Pendrell. In the public sector, Mr. Salemme has served as Senior Telecommunications Policy Analyst for the U.S. House of Representatives Subcommittee on Telecommunications and Finance and as Chief of Staff to Congressman Ed Markey of Massachusetts.

        Mr. Salemme brings to the Board of Directors nearly 30 years of telecommunications experience in both the private and public sectors. His broad range of experience in industry strategic planning and investments as well as in regulatory policy provide the Board of Directors with important skill sets.

Julie A. Shimer

Age: 61

        Dr. Shimer has served on our Board of Directors since July 2013. She is currently a private investor and has 30 years of product development experience, including many years with major communications companies. From March 2007 to April 2012 she served as Chief Executive Officer of Welch Allyn, Inc., a manufacturer of frontline medical products and solutions, having served on the board of directors beginning in July 2002. Previously Dr. Shimer was President and Chief Executive Officer of Vocera Communications, Inc., a provider of wireless communications systems, also serving on the board of directors. She also has served as general manager at 3Com Corporation and Motorola and has been a

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product development leader at Motorola and AT&T Bell Laboratories. Since March 2007, Dr. Shimer has been a director of Netgear, Inc., a home and small business network solutions provider. She also has served as the Chairwoman of Empire State Development Corp., the State of New York's economic development organization.

        Dr. Shimer brings to the Board her extensive background in communications and networking product development. Additionally, her prior experiences both as Chief Executive Officer of two private companies and as a public company director and compensation committee member enable Dr. Shimer bring to the Board valuable managerial skills.

M. Wayne Wisehart

Age: 68

        Mr. Wisehart has served on our Board of Directors since July 2008. Mr. Wisehart is also a member of the Boards of Directors of Marchex, Inc., a mobile technology and advertising company, and Centri Technology, Inc., a wireless service technologies company focusing on advanced data acceleration. He serves as the chairman of the Audit Committee of both companies. Mr. Wisehart served as the Consulting Chief Financial Officer of All Star Directories, Inc., an education lead generation company, from February 2010 to November 2010. Mr. Wisehart served as Chief Financial Officer of aQuantive, Inc., a digital marketing services company, from March 2006 until September 2007. aQuantive was acquired by Microsoft in August 2007. Prior to this position, Mr. Wisehart served as Executive Vice President and Chief Financial Officer of Western Wireless Corporation, a cellular phone service provider, from January 2003 until September 2005. Western Wireless was acquired by Alltel in August 2005. Prior to that time, Mr. Wisehart served as Chief Financial Officer of iNNERHOST, Inc., a web hosting services company, from October 2000 through February 2002, and as President and Chief Executive Officer for Teledirect International, Inc., a marketing automation software company, from February 1999 through October 2000.

        Mr. Wisehart's experience with us and other public companies has provided substantial background on governance and public policy matters which is valuable in his role as Chairperson of our Corporate Governance and Nominating Committee. Additionally, Mr. Wisehart's experience as a Chief Financial Officer and on public company audit committees has given him financial expertise to serve as one of our Audit Committee financial experts. His experience with the financial and corporate development matters of telecommunications and technology companies is also valuable to our Board of Directors. He also has significant experience in risk management from his work as a public company chief financial officer and audit committee member.

         THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE "FOR" THE ELECTION AS DIRECTORS OF THE NOMINEES NAMED ABOVE.

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CORPORATE GOVERNANCE

Committees of the Board of Directors

        We have the following standing committees of our Board of Directors: Leadership and Compensation Committee, Audit Committee and Corporate Governance and Nominating Committee. Each committee has a charter which is available for review at the following website, www.earthlink.net. The charters may be found by clicking "About Us," then "Investor Relations" and then "Corporate Governance." The Audit Committee Charter is also provided as Annex C hereto.

        The Leadership and Compensation Committee presently consists of Ms. Bowick (Chairperson), Ms. Fuller, Mr. McGuire and Dr. Shimer. The Leadership and Compensation Committee met six times during the year ended December 31, 2013. The Leadership and Compensation Committee establishes and approves cash and long-term incentive compensation for our executive officers and directors. The Leadership and Compensation Committee also administers our equity-based compensation plans. The Board of Directors has determined that the members of our Leadership and Compensation Committee are independent as defined in Rule 5605(d)(2)(A) of the Nasdaq Listing Rules for Nasdaq-listed companies are "non-employee directors" as defined in SEC Rule 163-3, and are "outside directors" as defined in Internal Revenue Code Section 162(m).

        The Leadership and Compensation Committee is authorized to retain outside independent compensation consultants to provide information and advice concerning compensation. During 2013, the Leadership and Compensation Committee engaged the outside independent consulting firm of Frederic W. Cook & Co., Inc. ("Frederic Cook") as part of its review of compensation. The nature and scope of Frederic Cook's assignment is described on pages 26 to 27 of this Proxy Statement. In retaining Frederic W. Cook & Co., the Leadership and Compensation Committee considered the six factors set forth in Section 10C-1(b)(4)(i) through (vi) under the Securities Exchange Act of 1934, as amended, or the Securities Exchange Act, and based on such consideration determined that the work of Frederic Cook did not raise any conflict of interest.

        The Audit Committee presently consists of Mr. McGuire (Chairperson), Mr. Koretz, Ms. Lane, Dr. Shimer and Mr. Wisehart. The Audit Committee met 12 times during the year ended December 31, 2013. The Audit Committee is responsible for selecting our independent registered public accounting firm, reviewing the results and scope of audits and other services provided by our independent registered public accounting firm, reviewing the results and scope of audits performed by our internal auditors, and reviewing and evaluating our financial reporting and disclosure processes and internal control functions, including management's evaluation of our internal control over financial reporting in accordance with Section 404 of the Sarbanes-Oxley Act of 2002. The Board of Directors has determined that the members of our Audit Committee are independent as defined in Rule 5605(a)(2) of the Nasdaq Listing Rules for Nasdaq-listed companies and Sections 10A(m)(3)(a) and (B) of the Securities Exchange Act. In addition, the Board of Directors has determined that all members of our Audit Committee are financially literate as prescribed by the Nasdaq Listing Rules and that Mr. McGuire is an "audit committee financial expert," within the meaning of the regulations promulgated by the Securities and Exchange Commission, or SEC. No member of the Audit Committee received any payments during 2013 from us or our subsidiaries other than compensation received as a director of EarthLink.

        The Corporate Governance and Nominating Committee presently consists of Mr. Wisehart (Chairperson), Ms. Bowick, Ms. Fuller, Ms. Lane, Mr. Salemme and Dr. Shimer. The Corporate

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Governance and Nominating Committee met six times during the year ended December 31, 2013. The Corporate Governance and Nominating Committee is responsible for overseeing our corporate governance principles, guidelines and practices, overseeing our regulatory compliance and applicable public policy and legislative matters and identifying, nominating, proposing and qualifying nominees for open seats on the Board of Directors. The Board of Directors has determined that the members of our Corporate Governance and Nominating Committee are independent as defined in Rule 5605(a)(2) of the Nasdaq Listing Rules for Nasdaq-listed companies.

Corporate Governance Matters

        The Corporate Governance and Nominating Committee identifies nominees for director on its own as well as by considering recommendations from other members of the Board of Directors, our officers and employees and other sources that the Corporate Governance and Nominating Committee deems appropriate. The Corporate Governance and Nominating Committee also will consider stockholder recommendations for nominees for director subject to such recommendations being made in accordance with our certificate of incorporation and bylaws. There were no nominee recommendations from stockholders or any group of stockholders submitted in accordance with our Bylaws. In addition to the Corporate Governance and Nominating Committee's charter, we have Corporate Governance Guidelines that contain, among other matters, important information concerning the Corporate Governance and Nominating Committee's responsibilities when identifying and evaluating nominees for director. You will find the charter and the guidelines at www.earthlink.net by selecting the following links: "About Us," then "Investor Relations" and then "Corporate Governance."

        In November 2012, the Board of Directors established a Director Search Committee consisting of the chairpersons of each of our three standing committees. The purpose of the Director Search Committee was to consider the current composition of the Board, review the advisability of expanding the size of the Board, engage a search firm to recommend potential new directors, review potential new directors and make a recommendation to the Corporate Governance and Nominating Committee as to actions to take, if any. The activities of the Director Search Committee resulted in the appointment of Kathy Lane and Julie Shimer to our Board of Directors in July 2013. Later in 2013 the Board continued the process followed by the Director Search Committee and determined to add Gerard Salemme to the Board in October 2013.

        The Corporate Governance and Nominating Committee considers a number of factors, including an individual's competencies, experience, reputation, integrity, independence and potential for conflicts of interest when identifying director nominees. It also is important to the Corporate Governance and Nominating Committee that the Board of Directors works together in a cooperative fashion. When considering a director standing for re-election as a nominee, in addition to the attributes described above, the Corporate Governance and Nominating Committee also considers that individual's past contribution and future commitment to EarthLink. The Corporate Governance and Nominating Committee conducts an annual review of the skills, experience and attributes of the Board of Directors to ensure that there is a proper balance. The Corporate Governance and Nominating Committee evaluates the totality of the merits of each prospective nominee that it considers and does not restrict itself by establishing minimum qualifications or attributes. There are not specific weights given to any one factor, but among the items considered are:

senior leadership experience

 

business development/M&A expertise

financial expertise

 

public company board experience

private equity experience

 

diversity

operational expertise

 

independence

brand marketing expertise

 

innovation

governance/legal expertise

 

relevant industry expertise

risk management expertise

 

government/public policy expertise

IT/technical expertise

 

executive compensation/human resources expertise

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        Additionally, the Corporate Governance and Nominating Committee will continue to seek to populate the Board of Directors with a sufficient number of independent directors to satisfy Nasdaq listing standards and SEC requirements. The Corporate Governance and Nominating Committee will also seek to ensure that the Board of Directors, and consequently the Audit Committee, will have at least three independent members that satisfy Nasdaq financial and accounting experience requirements and at least one member who qualifies as an audit committee financial expert. There is no difference in the manner by which the Corporate Governance and Nominating Committee evaluates prospective nominees for director based on the source from which the individual was first identified.

        Our current Certificate of Incorporation requires that any stockholder recommendation for a nominee for director to be voted upon at the 2015 Annual Meeting of Stockholders must be submitted in writing to our Corporate Secretary no later than 90 days in advance of our 2015 Annual Meeting of Stockholders, which currently is scheduled for April 28, 2015. In addition, the stockholder's notice must include (i) the name and address of the stockholder who intends to make the nomination and of the person or persons to be nominated; (ii) a representation that the stockholder is a holder of record of shares entitled to vote at the applicable meeting and intends to appear in person or by proxy at the applicable meeting to nominate the person or persons specified in the notice; (iii) a description of all arrangements or understandings between the stockholder and each nominee and any other person or persons (naming them) pursuant to which the nomination or nominations are to be made by the stockholder; (iv) all other information regarding each nominee proposed by the stockholder as would be required to be included in a proxy statement filed pursuant to the then-current proxy rules of the SEC if the nominees were to be nominated by the Board of Directors; and (v) the consent of each nominee to serve as a director if elected.

        However, if Proposal 3 is approved at the 2014 Annual Meeting of Stockholders, these advance notice provisions for director nominations will be amended. Under the proposed amendment, any stockholder recommendation for a nominee for director to be voted upon at the 2015 Annual Meeting of Stockholders must be submitted in writing to our Corporate Secretary no later than 60 days, and no earlier than 90 days, in advance of the anniversary of the prior year's annual meeting, or April 29, 2015. In addition, the stockholder's notice must include the following information about the director nominee: (i) name, age and address; (ii) employer and principal occupation; (iii) biographical profile; (iv) disclosure regarding our capital stock owned by the nominee; (v) all other information as would be required to be included in a proxy statement for a contested election; (vi) the consent of each nominee to serve as a director if elected; and (vii) the completed Director Agreement described below. The stockholder's notice must also include the following information about the stockholder making the nomination: (i) name and address; (ii) employer and principal occupation; (iii) disclosure regarding our capital stock owned by the stockholder (including disclosure of derivative transactions); (iv) a description of all arrangements between the stockholder and the nominee; (v) representations whether the stockholder intends to appear in person at the annual meeting and solicit proxies in support of the nominee; and (vi) all other information as would be required to be included in a proxy statement for a contested election. The information about the nominating stockholder will also need to be updated as of the record date of the applicable annual meeting. These advance notice requirements are separate from the requirements that stockholders must meet to include proposals in the proxy materials for the 2015 Annual Meeting of Stockholders, discussed later in this Proxy Statement.

        Our Bylaws include director qualification requirements which require each director and nominee for election as a director to deliver to the Company's Secretary a written questionnaire with respect to the director's or nominee's background and qualifications as well as a representation and agreement (the "Director Agreement"). The Director Agreement requires directors and nominees to disclose certain types of voting commitments and compensation arrangements to which the director or nominee is subject. The Director Agreement also requires a representation that the director or nominee, if elected, would be in compliance with all of the Company's applicable corporate governance, conflict of interest, confidentiality, securities ownership and trading policies and guidelines, and further provides for the immediate

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resignation of a director if he or she is found by a court of competent jurisdiction to have breached the Director Agreement in any material respect. Each of the nominees for election at the 2014 Annual Meeting of Stockholders identified above has executed a Director Agreement.

        The Board of Directors considers director independence based both on the meaning of the term "independent director" set forth in Rule 5605(a)(2) of the Nasdaq Listing Rules for Nasdaq-listed companies and on an overall review of transactions and relationships, if any, between the director and us.

        In February 2014, the Board of Directors undertook its annual review of director independence. As part of its annual review, the Board of Directors considers whether there are any transactions and relationships between a director or any member of his or her immediate family and us. The purpose of this review is to determine whether any such relationships or transactions existed that were inconsistent with a determination that the director is independent. There currently are no such transactions or relationships to review.

        The Board of Directors has determined that Ms. Bowick, Ms. Fuller, Mr. Koretz, Ms. Lane, Mr. McGuire, Mr. Salemme, Dr. Shimer and Mr. Wisehart are independent. We have one director who is not independent, Mr. Eazor, because he is our Chief Executive Officer and President.

        The independent directors of the Board of Directors meet in executive session at least quarterly.

        Dr. Shimer currently serves as our interim non-executive Chairman of the Board. We believe having separate Chief Executive Officer and Chairman of the Board positions is the most appropriate structure for the Company and our stockholders at this time. This will permit our new Chief Executive Officer Mr. Eazor to be able to focus his efforts on serving as our Chief Executive Officer and President while working closely with our independent Chairman of the Board. The Board of Directors may in the future revisit this policy from time to time.

        The Board of Directors has three standing committees, Audit, Corporate Governance and Nominating and Leadership and Compensation. Each committee has a separate chairperson and each of the Audit, Corporate Governance and Nominating and Leadership and Compensation Committees are comprised solely of independent directors. Our Corporate Governance Guidelines provide that the independent directors will meet in executive session at least quarterly, and the Chairman of the Board (or the chairperson of an independent committee, if appropriate) presides at these sessions. The Corporate Governance and Nominating Committee annually evaluates whether a rotation of committee chairpersons would be advisable.

        Our Audit Committee charter provides that the Audit Committee is responsible for monitoring material financial and operating risks of the Company. On a quarterly basis, management reports to the Audit Committee regarding our various risk areas. On a quarterly basis, the Audit Committee receives a report from the Chief Financial Officer and the Director of Internal Audit regarding risk management in which we identify our significant risk areas and oversight responsibility and evaluate each risk in terms of the likelihood and impact. The risks that are identified as probable to have the highest impact and are the most likely to occur are discussed in detail by the Board of Directors, including a review of the mitigation activities taken by us. The Board of Directors also engages in periodic discussions with the Chief Financial Officer and other members of management regarding risks as appropriate. Our Insider Trading Policy as approved by our Audit Committee includes policies prohibiting hedging transactions in our common stock and the pledging of our common stock to secure loans.

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        In addition, each of the other committees of the Board of Directors considers risks within its area of responsibility. The Leadership and Compensation Committee considers succession planning, human resources risks and risks that may result from our executive compensation programs on a regular basis. In this regard, our Leadership and Compensation Committee has approved a Compensation Recoupment Policy and Share Ownership Guidelines for our Board of Directors and executive officers. Also, at the Leadership and Compensation Committee's direction, our management conducted a risk assessment of our sales incentives programs. The Leadership and Compensation Committee believes that overall the risks arising from our compensation policies and practices for employees are not reasonably likely to have a material adverse effect on us.

        Periodically, the Corporate Governance and Nominating Committee, along with the full Board of Directors, considers governance risks. The current leadership structure of the Board of Directors supports the risk oversight functions described above by providing independent leadership at the committee level, with ultimate oversight by the full Board of Directors as led by our Chairman of the Board.

        We encourage stockholders to communicate with our Board of Directors by sending written correspondence to EarthLink Holdings Corp., Attention: Chairman of the Board, 1375 Peachtree Street, Mail Stop 1A7-14, Atlanta, Georgia 30309. We do not screen correspondence for content but may screen regular incoming mail for security reasons. The Chairman of the Board and his or her duly authorized agents are responsible for collecting and organizing stockholder communications. Absent a conflict of interest, the Chairman of the Board is responsible for evaluating the materiality of each stockholder communication and determining which stockholder communications are to be presented to the full Board of Directors or other appropriate body.

        Our Corporate Governance Guidelines provide that the Board of Directors and its Committees shall conduct an annual evaluation to assess and enhance their effectiveness. The Audit Committee, Leadership and Compensation Committee and Corporate Governance and Nominating Committee are also required to each conduct an annual self-evaluation. The Board of Directors, Audit Committee, Leadership and Compensation Committee and Corporate Governance and Nominating Committee each conducted an annual self-evaluation process during 2013.

        We have a policy encouraging directors to attend annual meetings of stockholders. All of our directors were present at the 2013 Annual Meeting of Stockholders.

        We have a Code of Ethics for our Chief Executive Officer and Senior Financial Officers. We also have a Code of Business Conduct and Ethics for directors, officers and employees. Copies of each of these codes may be found at the following website, www.earthlink.net . You will find the codes by selecting the following links: "About Us," then "Investor Relations" and then "Corporate Governance."

Corporate Governance and Nominating Committee Report

        The Corporate Governance and Nominating Committee's overall purposes are to (a) oversee our corporate governance principles, guidelines and practices; (b) oversee our regulatory compliance and applicable public policy and legislative matters; and (c) identify, interview, qualify and recommend to the Board of Directors individuals to stand for election to, or fill any vacant seats on, the Board of Directors.

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The Corporate Governance and Nominating Committee of the Board of Directors is comprised entirely of independent directors.

        Among the Corporate Governance and Nominating Committee's activities during 2013 and to date in 2014 were the following:

        In connection with the 2013 Annual Meeting of Stockholders, the Corporate Governance and Nominating Committee reviewed the independence of each director at that time and affirmed that, other than Mr. Huff, each was independent based on the independence standards outlined in the Nasdaq Listing Rules for Nasdaq-listed companies and other standards considered by the Corporate Governance and Nominating Committee. Additionally, the Corporate Governance and Nominating Committee reviewed the qualifications of the directors nominated and determined that each of the nominees other than Mr. Eazor is independent and that all of the nominees qualified for election at the 2014 Annual Meeting of Stockholders.

         The Corporate Governance and Nominating Committee Report does not constitute solicitation material and should not be deemed filed or incorporated by reference into any of our other filings under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, except to the extent that we specifically incorporate this report by reference therein.

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Director Compensation

        The following table presents information relating to total compensation of our directors for the year ended December 31, 2013. The following table does not present information for Rolla P. Huff, our former Chairman of the Board, Chief Executive Officer and President, who did not receive additional compensation as a director in 2013 and whose compensation is included in the Summary Compensation Table elsewhere in this Proxy Statement.

Name
  Fees
Earned
or Paid
in Cash
($)
  Stock
Awards(1)
($)
  Option
Awards(2)
($)
  Non-Equity
Incentive Plan
Compensation
($)
  Change in
Pension
Value and
Nonqualified
Deferred
Compensation
Earnings
($)
  All Other
Compensation
($)
  Total
($)
 

Susan D. Bowick

  $ 120,000   $ 130,000 (3)                 $ 250,000  

Marce Fuller

    122,500     130,000 (3)                   252,500  

David A. Koretz

    95,000     130,000 (3)                   225,000  

Kathy S. Lane

    79,167     108,333 (3)                   187,500  

Garry K. McGuire

    115,833     130,000 (3)                   245,833  

R. Gerard Salemme

    55,417     75,833 (3)                   131,250  

Julie A. Shimer Ph.D

    79,167     108,333 (3)                   187,500  

Thomas E. Wheeler(4)

    70,000     130,000 (3)                   200,000  

M. Wayne Wisehart

    111,667     130,000 (3)                   241,667  

(1)
Compensation for stock awards represents the aggregate grant date fair value of the stock award, computed based on the number of stock awards granted and the closing stock price of EarthLink, Inc. Common Stock on the date of grant. Assumptions used in the calculation of these award amounts are included in Note 13 to the consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2013 and incorporated by reference into this Proxy Statement. The aggregate number of stock awards outstanding as of December 31, 2013, were as follows: Ms. Bowick, 23,091, Ms. Fuller, 23,091, Mr. Koretz, 23,091, Ms. Lane, 17,077, Mr. McGuire, 23,091, Mr. Salemme, 14,555, Dr. Shimer, 17,007, Mr. Wheeler, 0 and Mr. Wisehart, 23,091.

(2)
The aggregate number of option awards outstanding as of December 31, 2013, were as follows: Ms. Fuller, 37,500 and Mr. Wheeler, 37,500. Mr. Wheeler's awards have subsequently expired.

(3)
Pursuant to the Board of Directors Compensation Plan, on April 24, 2013 we granted restricted stock units valued at $130,000 to each independent director serving on our Board of Directors on that date. The number of restricted stock units granted to each of these directors was 23,091. Additionally, on July 23, 2013 and October 22, 2013, we granted restricted stock units at a prorated value to Ms. Lane and Dr. Shimer, and Mr. Salemme, respectively. Ms. Lane and Dr. Shimer received 17,007 restricted stock units valued at $108,333, and Mr. Salemme received 14,555 restricted stock units valued at $75,833. The number of restricted stock units granted to each director was based on the closing price of EarthLink Common Stock on the grant dates. The restricted stock units vest and become exercisable one year from the date of grant.

(4)
On November 1, 2013, Mr. Wheeler resigned from EarthLink's Board of Directors following the U.S. Senate's confirmation of his appointment to serve as Chairman of the Federal Communications Commission (the "FCC"). In connection with his appointment, Mr. Wheeler was required to divest the 88,280 shares of EarthLink common stock he owned. In order to prevent these shares from having to be sold into our public trading market, we agreed to purchase these shares from Mr. Wheeler, with the purchase price being the EarthLink common stock closing price on November 5, 2013.

        During 2013, the annual cash retainer for independent directors was $95,000 for serving on the Board of Directors (or a pro rata amount for an independent director who joined the Board during the year). We paid our Lead Director an additional annual cash retainer of $25,000. We paid the Chairperson of the Audit Committee and the Chairperson of the Leadership and Compensation Committee an additional annual cash retainer of $25,000 for serving in such capacity. We paid the Chairperson of the Corporate Governance and Nominating Committee an additional annual cash retainer of $15,000 for serving in such capacity.

        During 2013, we reimbursed directors for the expenses they incurred in attending meetings of the Board of Directors or committees thereof.

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        Under the Board of Directors Compensation Plan effective April 2013, independent directors receive a grant of restricted stock units once each year covering stock valued at $130,000 at the time of the grant (or a pro rata amount for an independent director who joined the Board during the year). The grants are to be made on the first business day immediately following the annual stockholder meeting. The restricted stock units vest after one year or upon an earlier change in control, and upon vesting the director will receive shares of Common Stock.

        Our Chief Executive Officer and President does not receive additional compensation for serving as a director.

        We pay program fees and associated travel expenses for each director to participate in relevant director education programs.

        We do not pay additional compensation to directors who are not independent for their service as directors but do reimburse such directors for expenses incurred in attending meetings of the Board of Directors and its committees.

        The Leadership and Compensation Committee periodically considers our Board of Directors compensation policy with a primary objective of matching compensation levels to the relative demands associated with serving on the Board of Directors and its various committees. The Leadership and Compensation Committee also periodically reviews the compensation policies of other public company boards of directors by reviewing market surveys of director compensation data prepared by third party consulting firms, including a survey of technology companies. Following the review conducted in July 2013, the Leadership and Compensation Committee determined to increase directors' cash compensation from a $70,000 annual retainer to a $95,000 annual retainer. Additionally, the Leadership and Compensation Committee determined to increase the Lead Director's additional annual retainer, the Audit Committee Chairperson's additional annual retainer and the Leadership and Compensation Committee Chairperson's additional annual retainer from $20,000 to $25,000. The Leadership and Compensation Committee also determined to increase the Corporate Governance and Nominating Committee Chairperson's annual retainer from $10,000 to $15,000. The Leadership and Compensation Committee did not increase the value of the annual grant of restricted stock units for each director.

        In February 2014, the Leadership and Compensation Committee determined that our independent Chairman of the Board would receive an annual retainer of $75,000.

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AUDIT COMMITTEE REPORT

         Pursuant to SEC rules for proxy statements, the Audit Committee of the Board of Directors has prepared the following Audit Committee Report. The Audit Committee intends that this report clearly describe our current audit program, including the underlying philosophy and activities of the Audit Committee.

General

        The primary function of the Audit Committee of the Board of Directors is to assist the Board of Directors in fulfilling its oversight responsibilities by overseeing: (a) our accounting and financial reporting processes; (b) the integrity of our financial reports provided by us to any governmental body or the public; (c) our systems of internal auditing and controls; (d) our finance, auditing, accounting, legal and financial reporting compliance as established by us; and (e) maintenance of an effective and efficient audit of our annual financial statements by a qualified and independent auditor. The Audit Committee operates under a written charter. The charter is available on our website as described earlier in this Proxy Statement. The Audit Committee also determined that the charter adequately and effectively defines the duties and responsibilities of the Audit Committee. Consistent with this function, the Audit Committee encourages continuous improvement of, and fosters adherence to, our policies, procedures and practices at all levels. The Audit Committee is accountable and responsible to the full Board of Directors. The Audit Committee's primary duties and responsibilities are to:

Composition and Qualifications of Audit Committee

        The Audit Committee presently consists of Mr. McGuire (Chairperson), Mr. Koretz, Ms. Lane, Dr. Shimer and Mr. Wisehart. Each member of the Audit Committee is independent, financially literate and is free from any relationship that, in the judgment of the Board of Directors, would interfere with the exercise of independent judgment as a member of the Audit Committee. The Board of Directors has determined that Messrs. McGuire and Wisehart are audit committee financial experts, as defined by SEC regulations. The Audit Committee is, and will continue to be, composed of members that meet the independence, knowledge and experience requirements of Nasdaq as set forth in the Nasdaq Listing Rules for Nasdaq-listed companies.

Election and Meetings

        The Board of Directors annually elects the members of the Audit Committee to serve for a term of one year or other length of term, in the discretion of the Board of Directors, and shall otherwise serve until their successors are duly elected and qualified. Each member of the Audit Committee serves at the pleasure and discretion of the Board of Directors and may be replaced or removed by the Board of Directors at any time and from time to time in its discretion. At the time of each annual election of the Audit Committee members, or at other times in the discretion of the Audit Committee or the Board of Directors, the Audit Committee designates one member of the Audit Committee to be its Chairperson; in the absence of such designation, the Board of Directors designates the Chairperson.

        The Audit Committee meets at least quarterly. The Audit Committee met 12 times during 2013. The Audit Committee meets at least annually with representatives from our executive management and independent registered public accounting firm in separate sessions to discuss any matters that the Audit

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Committee or either of these groups believes should be discussed. In addition, the Audit Committee or its Chairperson meets with representatives of the independent registered public accounting firm and our management at least quarterly to review our quarterly financial statements consistent with the provisions of Statement of Auditing Standards No. 114 (Codification of Statements on Auditing Standards, AU Sect. 380).

Responsibilities and Duties

        To fulfill its responsibilities and duties, the Audit Committee performed the following during the year ended December 31, 2013:

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        Based on the Audit Committee's discussions with management and Ernst & Young LLP and the Audit Committee's review of the representation of management and report of Ernst & Young LLP to the Audit Committee, the Audit Committee recommended that the Board of Directors include the audited

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consolidated financial statements and management's report on internal control over financial reporting in our Annual Report on Form 10-K for the year ended December 31, 2013.

         The Audit Committee Report does not constitute solicitation material and should not be deemed filed or incorporated by reference into any of our other filings under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, except to the extent that we specifically incorporate this report by reference therein.

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EXECUTIVE OFFICERS

         Our executive officers serve at the discretion of the Board of Directors, and serve until they resign, are removed or are otherwise disqualified to serve, or until their successors are elected and qualified. Our executive officers presently include: Joseph F. Eazor, Samuel R. DeSimone, Jr., Bradley A. Ferguson, Brian P. Fink, Stacie S. Hagan, and Michael D. Toplisek. The following sets forth biographical information for our executive officers who are not directors. Biographical information for Joseph F. Eazor, who is also a director, is provided in the section entitled "Proposal 1—Election of Directors—Directors Standing for Election" of this Proxy Statement.

Samuel R. DeSimone, Jr.—Executive Vice President, General Counsel and Secretary

Age: 54

        Mr. DeSimone has served as our Executive Vice President, General Counsel and Secretary since February 2000. Prior to that, Mr. DeSimone served in such capacities at MindSpring Enterprises Inc. since November 1998 prior to its merger with EarthLink Network, Inc. in February 2000. From September 1995 to August 1998, Mr. DeSimone served as Vice President of Corporate Development with Merix Corporation, a printed circuit board manufacturer. From June 1990 to August 1995, he was an associate attorney and a partner with Lane Powell Spears Lubersky of Portland, Oregon.

Bradley A. Ferguson—Executive Vice President, Chief Financial Officer

Age: 43

        Mr. Ferguson has served as our Executive Vice President, Chief Financial Officer since August 2009. He also serves as our Principal Accounting Officer. From September 2005 to August 2009, Mr. Ferguson served as our Vice President, Controller. From September 2002 to September 2005, Mr. Ferguson served as our Vice President—Commercial Finance. Mr. Ferguson has been an officer of our Company since the merger of EarthLink Network, Inc. and MindSpring Enterprises, Inc. in February 2000 and was an officer of MindSpring Enterprises, Inc. prior to that time. Prior to joining MindSpring, Mr. Ferguson was a member of the audit practice at Arthur Andersen LLP.

Brian P. Fink—Executive Vice President, Chief Technology Officer

Age: 51

        Mr. Fink has served as our Executive Vice President, Chief Technology Officer since January 2012. Previously he was our Executive Vice President, Managed Services and our Senior Vice President, Strategic Planning and Program Delivery. From May 2009 to January 2011, Mr. Fink served as the Managing Partner of IntegraTouch, LLC, a company he founded which operates as a development, operations and integration solutions company; from December 2002 to May 2007, he served IntegraTouch, LLC as Chief Executive Officer, Managing Partner and member of the Board of Directors. From May 2007 to May 2009 Mr. Fink served as Executive Vice President and Chief Information Officer of One Communications, a regional telecommunications provider. From 1994 to 2002, Mr. Fink served in officer positions, including Senior Vice President of Product and Systems, with Global Crossing / Frontier Communications, an IP solutions provider. Prior to 1994, Mr. Fink held the Chief Information Officer position for a regional telecommunications company, Schneider Communications, and development and strategic planning roles for AT&T Bell Labs. Mr. Fink continues to serve as a member of the Board of Directors at IntegraTouch, LLC. Previously, he served as a member of the Board of Directors of Worldgate Communications, Inc.

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Stacie S. Hagan—Executive Vice President, Customer Service Delivery and Care

Age: 47

        Ms. Hagan has served as our Executive Vice President, Customer Service Delivery and Care since January 2014. Previously she had served as our Executive Vice President, Customer Operations and Corporate Processes and as our Executive Vice President, People and Corporate Processes. Prior to that she served as our Executive Vice President, Chief People Officer since March 2007. Ms. Hagan joined us in September 2002 and has served in several capacities, including Vice President, Human Resources. Prior to joining us, Ms. Hagan served as President/Principal at SynerChange International, Inc. from 1993 until 2002.

Michael D. Toplisek—Executive Vice President, Sales and Marketing

Age: 44

        Mr. Toplisek has served as our Executive Vice President, Sales and Marketing since January 2012. Previously he was our Executive Vice President, Products and Marketing and our Executive Vice President, IT Services. From February 2011 until May 2012, Mr. Toplisek served as Chief Marketing Officer of XO Communications, a communications service provider. Prior to this he served as President of Concentric Cloud Solutions, LLC, an XO Communications company and a communications service provider, from February 2009 until February 2011. From December 2006 until January 2009, Mr. Toplisek served as Senior Vice President, Global Enterprise and Collaboration at Global Crossing Limited, a telecommunications company, and served in other leadership positions at Global Crossing from January 1997 until December 2006. Prior to joining Global Crossing, Mr. Toplisek held positions at Frontier Communications and MCI Telecommunications.

Section 16(a) Beneficial Ownership Reporting Compliance

        Section 16(a) of the Securities Exchange Act of 1934, as amended, requires our directors, executive officers and persons who own beneficially more than 10% of our Common Stock to file reports of ownership and changes in ownership of such stock with the SEC. These persons are also required by SEC regulations to furnish us with copies of all such forms they file. To our knowledge, based solely on a review of the copies of such reports furnished to us and written representations that no other reports were required, all persons subject to the reporting requirements of Section 16(a) filed the required reports on a timely basis during the year ended December 31, 2013.

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BENEFICIAL OWNERSHIP OF COMMON STOCK

        The following table sets forth information concerning the beneficial ownership of our issued and outstanding Common Stock by (i) those persons known by management to own beneficially more than 5% of our issued and outstanding Common Stock, (ii) our directors, (iii) the executive officers identified as "Named Executive Officers" in the Summary Compensation Table on page 36 of this Proxy Statement, and (iv) all of our directors and officers as a group. Except as otherwise indicated in the footnotes below, such information is provided as of February 14, 2014. According to SEC rules, a person is the "beneficial owner" of securities if he or she has or shares the power to vote them or to direct their investment or has the right to acquire beneficial ownership of such securities within 60 days through the exercise of an option, warrant or right, the conversion of a security or otherwise.

Name and Address of Beneficial Owners(1)
  Amount and
Nature of
Beneficial
Ownership(2)
  Percent
of Class(3)
 

Susan D. Bowick

    56,369     *  

Kevin F. Brand

    66,985 (4)   *  

Joseph F. Eazor

        *  

Bradley A. Ferguson

    311,650 (5)   *  

Brian P. Fink

    102,557 (6)   *  

Marce Fuller

    112,657 (7)   *  

Rolla P. Huff

    2,627,885 (8)   2.6 %

David A. Koretz

    56,936     *  

Kathy S. Lane

        *  

Garry K. McGuire

    26,949     *  

R. Gerard Salemme

        *  

Julie A. Shimer Ph.D

        *  

Michael D. Toplisek

    75,895 (9)   *  

M. Wayne Wisehart

    53,950     *  

Artisan Partners Holdings LP

    8,478,845 (10)   8.3 %

Dimensional Fund Advisors LP

    7,756,911 (11)   7.6 %

BlackRock, Inc. 

    7,014,133 (12)   6.9 %

TriOaks Capital Management L.P. 

    5,886,100 (13)   5.8 %

The Vanguard Group

    5,864,230 (14)   5.7 %

Renaissance Technologies LLC

    4,650,100 (15)   4.5 %

All directors and executive officers as a group (16 persons)

    4,036,875 (16)   3.9 %

*
Represents beneficial ownership of less than 1.0% of our Common Stock.

(1)
Except as otherwise indicated by footnote below or in any applicable Schedule 13D, Schedule 13G or Form 13F, (i) the named person has sole voting and investment power with respect to all shares of Common Stock shown as beneficially owned, and (ii) the address of the named person is that of EarthLink.

(2)
Beneficial ownership is determined in accordance with the rules of the SEC based on factors such as voting and investment power with respect to shares of Common Stock.

(3)
Calculated based on 102,219,481 shares of Common Stock outstanding as of February 14, 2014.

(4)
Mr. Brand previously served as our Executive Vice President, Customer Delivery and Care.

(5)
Includes options to purchase 136,547 shares of Common Stock.

(6)
Includes options to purchase 83,546 shares of Common Stock.

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(7)
Includes options to purchase 37,500 shares of Common Stock.

(8)
Mr. Huff previously served as our Chief Executive Officer and President. Includes options to purchase 1,953,371 shares of Common Stock. Pursuant to Mr. Huff's succession agreement, Mr. Huff's stock options became immediately vested upon his retirement date.

(9)
Includes options to purchase 75,895 shares of Common Stock.

(10)
Represents beneficial ownership as of December 31, 2013, according to the Schedule 13G filed by Artisan Partners Holdings LP ("Artisan Holdings") on January 30, 2014. Artisan Holdings, Artisan Investment Corporation, Artisan Partners Limited Partnership, Artisan Investments GP LLC, ZFIC, Inc., Andrew A. Ziegler and Carlene M. Ziegler (collectively, the "Artisan Entities") are each deemed to beneficially own 8,478,845 shares of Common Stock and each have shared voting power over 7,764,132 shares and shared dispositive power over 8,478,845 shares. The address for the Artisan Entities is 875 East Wisconsin Avenue, Suite 800, Milwaukee, WI 53202.

(11)
Represents beneficial ownership as of December 31, 2013, according to the Schedule 13G filed by Dimensional Fund Advisors LP on February 10, 2014. Dimensional Fund Advisors LP has sole voting power over 7,618,677 of these shares and sole dispositive power over 7,756,991 of these shares. The address for the Dimensional Fund Advisors LP is Palisades West, Building One, 6300 Bee Cave Road, Austin, TX 78746.

(12)
Represents beneficial ownership as of December 31, 2013, according to the Schedule 13G filed by BlackRock, Inc. on January 29, 2014. BlackRock, Inc. has sole voting power over 6,617,527 of these shares and sole dispositive power over 7,014,133 of these shares. The address for BlackRock, Inc. is 40 East 52 nd  Street, New York, NY 10022.

(13)
Represents beneficial ownership as of December 31, 2013, according to the Schedule 13G filed by TriOaks Capital Management L.P. on February 14, 2014. The address for TriOaks Capital Management L.P. is One Bryant Plaza, 39th Floor, New York, NY 10036.

(14)
Represents beneficial ownership as of December 31, 2013, according to the Schedule 13G filed by The Vanguard Group on February 14, 2014. Vanguard Group has sole voting power over 160,356 of these shares, sole dispositive power over 5,709,474 of these shares and shared dispositive power over 154,756 of these shares. The address for The Vanguard Group is 10 Vanguard Blvd., Malvern, PA 19355.

(15)
Represents beneficial ownership as of December 31, 2013, according to the Schedule 13G filed by Renaissance Technologies LLC ("Renaissance Technologies") and Renaissance Technologies Holdings Corporation ("Renaissance Holdings") February 14, 2014. The address for Renaissance Technologies and Renaissance Holdings is 800 Third Avenue, New York, NY 10022.

(16)
Includes options to purchase an aggregate of 2,590,691 shares of Common Stock.

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EXECUTIVE COMPENSATION

Compensation Discussion and Analysis

        Our primary executive compensation goals have been to:

        To achieve these goals, we have historically used a "Total Rewards" approach establishing a compensation package of separate, but integrated components, including: base salary, short-term annual incentives (or STI), long-term compensation incentives (or LTI) and health and welfare and other benefits. Using this Total Rewards approach allows us to create leverage from a combination of incentives with the objective of serving in the aggregate to drive behaviors that build stockholder value. This "Compensation Discussion and Analysis" describes the executive compensation programs we have implemented in recent periods in order to advance our business strategy at the time, with an emphasis on our 2013 executive compensation and business strategy.

        In 2013, we continued our transition into an IT services and communications provider and continued to develop a compensation strategy that would help us achieve this business strategy. The performance objectives in our 2013 short-term incentive plan continued to be tied 50% to revenue and 50% to Adjusted EBITDA ("Adjusted EBITDA" refers to net income (loss) before interest expense and other, net, income taxes, depreciation and amortization, stock-based compensation expense, impairment of goodwill and intangible assets, restructuring, acquisition and integration-related costs, and loss from discontinued operations, net of tax). The performance objectives were weighted the same in 2013 to reflect the dual emphasis on increasing revenue from our growth products and managing churn and increasing the cost efficiency of our traditional network and consumer products. The plan also included a 20% individual performance factor. Our LTI program included restricted stock units ("RSUs") containing performance-based vesting provisions and stock option grants.

        During 2013, we continued to transform into a nationwide provider of IT and communications services for the business customer. We completed the roll-out of four new data centers, launched our next generation cloud hosting platform in five of our eight data centers and expanded our fiber network with additional unique routes. We also made significant progress in the integration of our operating support systems and began to leverage some of these new capabilities in pursuing our business strategy. We also generated significant cash. We generated approximately $227.1 million in Adjusted EBITDA for 2013. In addition, we generated approximately $83.5 million of Unlevered Free Cash Flow and returned to stockholders approximately $26.9 million through dividends and share repurchases. ("Unlevered Free Cash Flow" refers to Adjusted EBITDA less cash used for purchases of property and equipment). (See Annex A for a reconciliation of Adjusted EBITDA and Unlevered Free Cash Flow to the most comparable measures reported in accordance with U.S. generally accepted accounting principles.) We also improved our debt profile by redeeming the 10.5% Senior Secured Notes due 2016 we had assumed in the ITC^DeltaCom acquisition and replacing these notes with a new issue of 7.375% Senior Secured Notes due 2020.

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        However, we also experienced disappointingly higher churn levels in 2013 and slower sales than expected in the fourth quarter of 2013, which contributed to our stock price performance in 2013.

        We believe our compensation results are consistent with this mixed 2013 performance and that incentive awards earned by our executives reflected our performance in 2013. As summarized below, the awards earned under both the annual and long-term incentive plans with performance periods ending in 2013 were below target.

        The Leadership and Compensation Committee (the "Committee") engages in an ongoing review of our executive compensation programs to ensure they support our compensation philosophy and objectives. In connection with this ongoing review, the Committee continues to implement and maintain best practices for executive compensation. These best practices include the following, each of which reinforces our compensation philosophy:

        We held our annual "say on pay" vote on our executive compensation policies at our 2013 Annual Meeting of Stockholders in April 2013. Over 94% of the shares cast on the proposal at the Annual Meeting

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were voted for the non-binding advisory resolution approving the compensation of our Named Executive Officers. Accordingly, the Committee believes that the voting results indicate our stockholders' approval of our Named Executive Officer compensation objectives, program and rationale.

    Overview of 2013 Executive Compensation Program

        The Committee's objective for the 2013 executive compensation program was to incentivize the accomplishment of key company objectives as follows:

Key Corporate Objective
  Incentive Used
Deliver target cash generation  

50% 2013 STI tied to Adjusted EBITDA

Deliver target revenue

 

50% 2013 STI tied to revenue generation

Continue to transform the business from a network-centric product set to network and managed IT services

 

50% 2013 LTI in Performance-Based RSUs earned upon completion of integration, growth, customer service, reporting and planning objectives in 2013

Manage the business to drive long-term stockholder value

 

50% 2013 LTI in Stock Options to create stock price appreciation incentives aligned with stockholders

        As detailed below, the Committee believes total direct compensation for our Named Executive Officers, both on a targeted and actual basis, was reasonable and within the range of compensation offered by comparison companies and reflected our financial performance in 2013 and our continuing progress in transforming our company into an IT services and communications provider. The Committee also believes the 2013 compensation design was effective in providing for meaningful rewards for achieving business objectives that our Board of Directors believes will lead to future overall stockholder value creation and by limiting compensation when performance objectives were not fully achieved in the established time periods.

        Leadership and Compensation Committee.     Our Leadership and Compensation Committee of the Board of Directors currently consists of Ms. Bowick (Chairperson), Ms. Fuller, Mr. McGuire and Dr. Shimer. While the Committee's charter does not specify qualifications required for Committee members, Ms. Bowick is a former executive officer of human resources at a large technology company and is currently the compensation committee chairperson for another public company's board of directors; Ms. Fuller is a former chief executive officer of a public company and is the chairperson of the compensation committee of another public company; and Mr. McGuire is a member of other public company boards of directors and is a former chief financial officer of a public company. Mr. McGuire is also a member of the Audit Committee, which not only permits direct continuity between these two committees but also facilitates the Committee's review of whether our compensation programs pose any material risks for the Company. Dr. Shimer has served on the compensation committee of another public company.

        The Committee uses Frederic W. Cook & Co., Inc. as its independent compensation consultant. The role of the consultant is to provide advice and counsel. In 2013, the consultant performed work at the direction and under the supervision of the Committee, and the Committee does not delegate authority to consultants or to other parties. The Committee confers with its outside consultant without management present to discuss Chief Executive Officer compensation. The Committee's consultant at times works directly with management on behalf of the Committee, but under direction and approval of the Committee. The Committee's consultant provides no other services to the Company.

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        The table below outlines the roles and responsibilities related to executive compensation:

Leadership and Compensation Committee  

Designs, evaluates and approves our executive compensation plans, policies and programs

 

Approves the total compensation for our executive officers

 

Determines the compensation programs for the members of our Board of Directors and its committees

 

Administers our equity-based compensation plans

 

Reviews whether the work performed for the Committee by Frederic W. Cook & Co., Inc. raises any conflict of interest

 

Conducts a review of our management personnel and conducts management succession planning at least annually

 

Reviews and evaluates the goals and objectives relevant to the compensation of our Chief Executive Officer annually

 

Evaluates the performance of our Chief Executive Officer in light of his goals and objectives annually

Independent Board Members

 

Provides final review of our Chief Executive Officer's compensation

Frederic W. Cook & Co., Inc. (Independent Consultant to the Committee)

 

Participates in substantially all Committee meetings

 

Reviews materials in advance, and provides to the Committee additional information on market trends

 

Provides advice, research and analytical services on a variety of subjects, including compensation of our Named Executive Officers, nonemployee director compensation, employment agreements, change in control and severance plans and adoption of stock ownership guidelines as well as general executive compensation trends

Chief Executive Officer

 

Proposes compensation for our other executive officers

 

Works with the Committee to determine the business performance targets in our bonus plans

 

Attends Committee meetings, except for executive sessions related to his compensation

 

Our Chief Executive Officer does not make recommendations to the Committee regarding his annual base salary, his equity compensation awards or other long-term incentives or his annual bonus plan target payment and does not participate in Committee meetings when his compensation is discussed

Other Members of Management

 

Our Vice President, Human Resources together with the Committee's external consultant prepares materials for the Committee using market data from both broad-based and targeted national compensation surveys

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        In determining compensation, the Committee generally takes into account our business strategy, internal pay equity, external market competitiveness in light of general economic trends, and individual and business performance.

        Competitive Market Information.     To ensure that our compensation programs are competitive, the Committee compares our compensation practices to the competitive market using published proxy and survey data. For 2013, the Committee referred to a comparison group that reflects our shift in business strategy to an IT services and communications company. The companies included in this group were as follows:

AOL Inc.   Level 3 Communications, Inc.

Cbeyond, Inc.

 

Ntelos Holdings Corp.

Cincinnati Bell Inc.

 

Premiere Global Services, Inc

Cogent Communications Group, Inc.

 

Rackspace Hosting, Inc.

Equinix Inc.

 

TW Telecom Inc.

FairPoint Communications, Inc.

 

Vonage Holdings Corp.

Frontier Communications Corp.

 

Windstream Holdings, Inc.

        The Committee also continued to use established data bases as a "check and balance" for the comparison group. These databases were Equilar's Executive Insight Database of telecom companies with annual revenue of $1 billion to $3 billion, the Radford Global Technology Executive Survey of companies with annual revenue of $1 billion to $3 billion, and the Towers Watson 2012 CDB Executive Compensation Survey—U.S. of telecom companies with approximately $1 billion to $3 billion in annual revenues. The Committee reviewed these databases because they contain a sufficient number of comparator companies to provide reliable benchmarks for each of our executive positions.

        The Committee used data from these sources to evaluate base salary, target annual incentive levels and total direct compensation for our Named Executive Officers. Management provided the Committee with comparisons for base salary, total annual cash compensation (base salary plus annual incentives at both target incentive levels and actual performance-based incentive levels) and total direct compensation (base salary, annual incentives and long-term incentives).

        Based on the information available to the Committee for the comparison group and the established data bases prior to establishing base salaries and annual incentives for 2013, average target total cash compensation for the Named Executive Officers was 94% of the market median. The average target total direct compensation for the Named Executive Officers was 89% of the median.

        Executive Performance.     In 2013, the Committee also took into consideration individual performance so that executive compensation reflects past performance as well as future potential and adequately differentiates between executive officers, based on scope and complexity of the executive officer's job position, market comparisons and individual performance.

        The Chief Executive Officer's performance is reviewed annually by the Committee and the Board of Directors prior to considering changes in base salary, short-term incentive payouts and total compensation. In February 2013, the Committee and the independent directors reviewed Mr. Huff's annual performance in light of Company performance and leadership objectives designated by the Board of Directors as essential to the role of the Company's Chief Executive Officer. In this review the Board of Directors also established Mr. Huff's 2013 performance objectives.

        The compensation policies with respect to our Named Executive Officers in 2013 did not differ materially between these officers, other than that Mr. Huff had an employment agreement. Other than with respect to the Named Executive Officers' individual performance objectives, our targets and compensation philosophy were consistent across all Named Executive Officers.

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        The elements of executive compensation in 2013 included base salary, short-term incentives, long-term incentives and health and welfare and other benefits. In 2013, the Committee did not allocate specific weight to each of the compensation components, but its intent was to:

        We evaluated each component of compensation in comparison to our past practice, competitive benchmarks and performance goals.

        In determining base salary levels for our Named Executive Officers, the Committee takes into consideration individual performance roles and responsibilities, internal equity, and the results of a competitive review of our executive officers' base salaries compared to the market median. Taking into account the competitive market review, in February 2013 the Committee determined that the 2013 base salaries for Messrs. Ferguson, Toplisek and Brand would be increased by 13%, 17% and 8%, respectively. These increases were made for better positioning relative to the market and to reflect overall changes in their positions' scope and responsibility as a result of 2012 organizational changes. The base salaries for the remaining Named Executive Officers remained unchanged from their respective 2012 base salaries.

        In setting Mr. Huff's annual base salary for 2013, the Committee took into account compensation information for chief executive officers within the comparison and survey groups referenced above, Mr. Huff's leadership in our continuing shift in our business strategy, and Mr. Huff's and our performance during 2012. The Committee did not increase Mr. Huff's base salary for 2013, which was 109% of the median for the comparison group. The Committee believed this 2013 base salary was reasonable in light of our performance under Mr. Huff's leadership.

        The following table summarizes the 2013 base salaries for our Named Executive Officers:

Name and Title
  2013 Base Salaries  
Rolla P. Huff   $825,000  

Former President and Chief Executive Officer

     

Bradley A. Ferguson

 

370,000

 

Executive Vice President, Chief Financial Officer

     

Kevin F. Brand

 

330,000

 

Former Executive Vice President, Customer Delivery and Care

     

Brian P. Fink

 

340,000

 

Executive Vice President, Chief Technology Officer

     

Michael D. Toplisek

 

350,000

 

Executive Vice President, Sales and Marketing

     

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        In February 2013, the Committee approved our 2013 annual incentive plan for our executive officers. This plan had two components:

Additionally, our performance on the corporate objectives establishes the maximum individual payout opportunity.

        Summarized in the table below are the applicable corporate performance objectives, weights and the rationale for these objectives.

Performance Measure
  Weight   Rationale for Inclusion

Adjusted EBITDA

  50%  

Reflects profitability and cash generation to incentivize efficient operations in both consumer and business segments

Revenue

 

50%

 

Incentivizes growth of business segment

        Our Named Executive Officers' target incentive opportunity as a percentage of eligible earnings is identified in the "2013 Incentive Payments" table below. The target incentive opportunities as a percentage of eligible earnings were increased for Messrs. Ferguson, Toplisek and Brand 10%, 15% and 10%, respectively, to reflect a change in their scope of responsibility and increased experience as well as to maintain a competitive cash opportunity. The target opportunity was increased for Mr. Fink 5% to maintain a competitive cash opportunity relative to the market.

        In February 2014, the Committee reviewed our actual operating performance for 2013 against the incentive plan goals and approved the blended achievement level of 81% of the target incentive potential for the corporate performance objectives. The incentive plan performance targets and achievement are summarized below:


2013 Incentive Plan Performance Targets and Achievement
(dollars in millions)

 
  50% Payout
Threshold
  100% Payout
Target
  200% Payout
Maximum
  Actual
Performance
  Achievement  

Adjusted EBITDA (50%)

  $ 195   $ 225   $ 285   $ 227.1     103 %

Revenue (50%)

  $ 1,233   $ 1,273   $ 1,293   $ 1,240.6     59 %

Total Blended Payout

                            81 %

        In February 2014 the Committee also evaluated the 2013 individual performance of the Named Executive Officers.

        2013 Incentive Payments.     In light of our performance against the Adjusted EBITDA and revenue targets under our 2013 incentive plan, and taking into account the individual performance of each

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executive, the Committee approved the incentive payments earned under the 2013 incentive plan for the following Named Executive Officers with incentive payments being paid in cash in February 2014.

Name
  Target
Corporate
Incentive
Payment
  Actual
Corporate
Incentive
Payment
  Target
Individual
Incentive
Payment
  Actual
Individual
Incentive
Payment
  2013 Total
Annual
Incentive Plan
Payment
 

Rolla P. Huff

    660,001     534,600     165,000     133,650 * $ 668,251 *

Bradley A. Ferguson

    199,058     161,237     49,765     30,232   $ 191,469  

Kevin F. Brand

    167,100     135,351     41,775     20,303   $ 155,654  

Brian P. Fink

    176,800     143,208     44,200     35,802   $ 179,010  

Michael D. Toplisek

    186,308     150,909     46,577     37,727   $ 188,637  

*
Determined in accordance with the terms of Mr. Huff's succession agreement.

    Long-Term Incentive Compensation

        The Committee's objectives for its 2013 long-term incentive compensation program were to utilize a mix of performance-based RSUs and stock options to create strong incentives to grow the business, drive completion of critical integration milestones and align the interests of our executives and stockholders. The value of the 2013 long-term incentive grants reflected 50% performance-based RSUs and 50% stock options.

        After considering the factors above and a competitive market review of total compensation, in February 2013 the Committee granted 2013 long-term incentive compensation equity awards to the Named Executive Officers as set forth in the table below. The equity awards to the Named Executive Officers, other than Mr. Huff, were generally in line with the market. Mr. Huff's award was set above the market median for long term incentives to provide more of his compensation in equity and to reflect the foundation for future growth being developed under Mr. Huff's leadership.

Name
  Number of
RSUs Granted
  Number of Stock
Options Granted
 

Rolla P. Huff

    276,316     941,176  

Bradley A. Ferguson

    49,342     168,067  

Kevin F. Brand

    44,408     151,261  

Brian P. Fink

    44,408     151,261  

Michael D. Toplisek

    59,211     201,681  

        The performance-based RSUs were designed to incentivize and reward the completion of corporate objectives relating to sales productivity, customer services, competitive readiness and operations. The RSUs granted to the Named Executive Officers could be earned based on the level of successful completion during 2013 of certain company performance objectives related to building our platform for strategic growth, with full vesting on the third anniversary of the grant date (assuming continued

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employment) of any RSUs that are earned. The Committee established four performance objectives, and the RSUs will be earned based on aggregate achievement across all objectives.

Objective 1:   Achieve 2013 net sales plan of $10 million covering MRR-based sales, new metered usage, equipment sales and conversions.

Objective 2:

 

Develop and implement effective metrics to monitor and improve customer service quality.

Objective 3:

 

Continue to establish our company as a recognized premier provider of innovative IT and communications services with specific initiatives to be accomplished in 2013.

Objective 4:

 

Complete critical systems integration objectives and establish key management reporting capabilities.

In February 2014, the Committee determined that Objectives 1-4 were achieved in 2013 to the extent permitting 90% of the RSUs to be earned.

        Also, the performance-based RSUs granted to the Named Executive Officers in 2012 had an objective of establishing a fully operational, consolidated billing platform by December 31, 2013. In February 2014 the Committee determined that this objective was achieved on a 50% basis.

        As a result, the following number of RSUs were earned for the Named Executive Officers with full vesting on the third anniversary of the grant date (assuming continued employment): Mr. Huff, 261,167; Mr. Ferguson, 46,455; Mr. Brand, 41,840; Mr. Fink 39,967; and Mr. Toplisek 54,954. In accordance with their severance agreements, the RSUs earned by Mr. Huff and Mr. Brand are fully vested.

        The stock options granted in February 2013 have an exercise price of $6.08 per share and an exercise period of 10 years and vest ratably over four years.

    Benefits and Other Compensation

        We provide the Chief Executive Officer and his direct reports the opportunity for financial and tax planning services of up to an aggregate of $10,000 per year per person and annual executive physicals up to $2,000 per year per person. In addition, in 2013 we provided our executive officers with the same benefit package available to all of our employees. This package includes:

    Health and dental insurance (portion of costs);

    Basic life insurance;

    Long-term disability insurance; and

    Participation in our 401(k) plan, including Company matching.

        Relocation benefits are also reimbursed under a corporate policy when they occur.

        We had previously compensated Mr. Huff for temporary living expenses. In light of our expanded national footprint following our acquisitions of companies outside of Atlanta, we contracted for fractional ownership in corporate aircraft available for business travel by our Chief Executive Officer pursuant to our use of corporate jet policy. We terminated this contract in 2014.

    Employment Agreements

        We had an employment agreement with Mr. Huff since he commenced employment with us in 2007. In addition, in connection with Mr. Huff's retirement as of January 13, 2014 we entered into an agreement with Mr. Huff which sets forth the terms of his departure, which were consistent with his former employment agreement.

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        In December 2013, we also entered into an employment agreement with Mr. Eazor in connection with his employment as our Chief Executive Officer and President beginning on January 13, 2014.

        See "Agreement with our Chief Executive Officer" on pages 40 to 41 of this Proxy Statement for a description of the agreement with Mr. Eazor.

    Change in Control and Severance Payments

        Our executive officers are eligible for benefits and payments if employment terminates if there is a change in control or due to position elimination. We believe that we should provide reasonable severance benefits to employees in the event their positions are eliminated. With respect to our Named Executive Officers, these severance benefits should reflect the fact that it may be difficult for executives to find comparable employment within a short period of time. Such arrangements also should disentangle us from the former executive as soon as practicable.

        We have a Change-In-Control Accelerated Vesting and Severance Plan, or CIC Plan, which provides our Named Executive Officers other than Mr. Huff with change in control protection as described below. We provided Mr. Huff prior to January 13, 2014 with change-in-control protections under his employment agreement. We believe that by providing our Named Executive Officers with this change in control protection, we allow our senior management to focus on running our company to maximize long-term stockholder value and mitigate the necessity for management's attention to be diverted toward finding new employment in the event a change in control occurs. We also believe our arrangement facilitates the recruitment of talented executives through the provision of guaranteed protection in the event we are acquired after accepting an employment offer.

    Compensation Recoupment Policy

        The Committee has adopted a Compensation Recoupment Policy as an additional means for the Committee to manage our risk profile. The policy provides that in the event the Board of Directors determines that a significant restatement of our financial results or other Company metrics for any of the three prior fiscal years is required and such restatement is the result of fraud or willful misconduct, the Board has the authority to obtain reimbursement from our executive officers and any employees responsible for the fraud or willful misconduct resulting in the restatement if such individuals would have received less compensation had the results or metrics been properly calculated. In connection with the adoption of this policy, the Committee included in the 2013 annual incentive plan a "clawback" provision that would require a participant to reimburse incentive compensation to us to the extent required by the Compensation Recoupment Policy.

    Stock Ownership Guidelines; Prohibition of Hedging and Pledging

        The Committee has adopted Common Stock Ownership and Retention Guidelines for our directors and executive officers. Our Board of Directors believes that these individuals should own and hold Common Stock to emphasize the link between the directors and the executive officers and the long-term interests of stockholders and to communicate to investors, market analysts and the public that these individuals are tied directly to our long-term success through personal capital investment in our Common Stock. The guidelines require that each director own a minimum number of shares of our Common Stock having a fair market value equal to or exceeding five times the annual cash retainer for directors. The guidelines require that the Chief Executive Officer own a minimum number of shares of our Common Stock having a fair market value equal to or exceeding five times the Chief Executive Officer's base salary and our other executive officers two times their base salaries. "Fair market value" as of any measurement date is calculated as the average of the closing Common Stock price on Nasdaq for the trading days in the 30-calendar-day period immediately prior to such date. Until such time as the director or executive officer reaches his or her stock ownership guideline, such individual will be required to hold 50% of the net shares

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of Common Stock received upon lapse of the restrictions on restricted stock units and upon exercise of stock options. The Committee will review these stock ownership guidelines periodically and, if changes are deemed appropriate, submit such recommended changes to the Board of Directors for consideration and approval.

        Our Insider Trading Policy prohibits our officers from engaging in hedging transactions. Additionally, our Insider Trading Policy prohibits our officers from pledging shares of our common stock to secure a loan.

    Limitations on Deductibility of Compensation

        Under Section 162(m) of the Internal Revenue Code, a portion of annual compensation payable to any of our Chief Executive Officer and three other highest paid executive officers (other than our Chief Financial Officer) generally would not be deductible by us for federal income tax purposes to the extent such officer's overall compensation exceeds $1,000,000 for the year. Qualifying performance-based incentive compensation (including performance-based compensation awards under our 2006 and 2011 Equity and Cash Incentive Plans), however, would be excluded for purposes of determining if the executive's compensation exceeded the $1,000,000 cap. The rules and regulations promulgated under Section 162(m) are complicated and subject to change from time to time, sometimes with retroactive effect. There can be no guarantee, therefore, that amounts potentially subject to Section 162(m) limitations will be treated by the Internal Revenue Service as qualified performance-based compensation under Section 162(m) and deductible by us. A number of requirements must be met under Section 162(m) in order for particular compensation to so qualify such that there can be no assurance that qualified performance-based compensation under our 2011 Equity and Cash Incentive Plan will be fully deductible under all circumstances. The Committee addresses this issue when considering compensation arrangements for our executive officers. However, the Committee still believes that it is important that it have the flexibility to offer compensation that may not be deductible because of the Section 162(m) cap if deemed appropriate in attracting and retaining qualified executive officers. In this regard the Committee is aware that certain of the compensation paid to Mr. Huff for 2013 will be non-deductible. In approving this compensation, the Committee considered that the Company has accumulated large net operating loss carry forwards to offset or reduce our future income tax obligations and, therefore, the deduction limitations imposed by Section 162(m) would not significantly impact our financial results at this time.

Leadership and Compensation Committee Report

        The Leadership and Compensation Committee has reviewed and discussed the "Compensation Discussion and Analysis" section of this Proxy Statement with management and, based on such review and discussion, the Leadership and Compensation Committee recommends that it be included in this Proxy Statement.

         The Leadership and Compensation Committee Report does not constitute solicitation material and shall not be deemed filed or incorporated by reference into any of our other filings and/or the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, except to the extent that we specifically incorporate this report by reference therein.

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Leadership and Compensation Committee Interlocks and Insider Participation

        The Leadership and Compensation Committee currently consists of Ms. Bowick (Chairperson), Ms. Fuller, Mr. McGuire and Dr. Shimer. No member of the Leadership and Compensation Committee was an employee of EarthLink during the last fiscal year or an officer of EarthLink in any prior period. There are no Leadership and Compensation Committee interlocks between us and other entities involving our executive officers and members of the Board of Directors who serve as an executive officer or board member of such other entities.

Certain Relationships and Related Transactions

        Our Board of Directors has adopted a written policy that generally provides that we may enter into a related party transaction only if the Audit Committee shall approve or ratify such transaction in accordance with the guidelines set forth in the policy and if the transaction is on terms comparable to those that could be obtained in arm's length dealings with an unrelated third party; the transaction is approved by the disinterested members of the Board of Directors; or the transaction involves compensation approved by our Leadership and Compensation Committee.

        Our Audit Committee Charter provides that the Audit Committee shall approve in advance all transactions between us and any of our affiliates as well as all "related party" transactions required to be disclosed by applicable SEC disclosure rules. For 2013, there were no transactions that were required to be approved by the Audit Committee, other than a purchase of our common stock in November 2013 from former director Thomas E. Wheeler. Following Mr. Wheeler's resignation from the Board of Directors after U.S. Senate confirmation of his appointment as Chairman of the Federal Communications Commission, Mr. Wheeler was required to divest his 88,280 shares of our common stock. In order to prevent these shares from having to be sold into our public trading market, we purchased these shares in November 2013, with a purchase price equal to the closing price of our common stock on Nasdaq at the time of purchase. In addition, management will routinely notify the Audit Committee of any proposed transaction between us and a company where a member of our Board of Directors serves as an outside director of that company even if this notification is not required by the Audit Committee Charter.

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Executive Officer Compensation


Summary Compensation Table

        The following table presents certain information required by the SEC relating to various forms of compensation awarded to, earned by or paid during the years set forth below to persons who served as our Chief Executive Officer and our Chief Financial Officer in 2013 and the three other most highly compensated executive officers, other than the Chief Executive Officer and Chief Financial Officer, serving at December 31, 2013. Such executive officers collectively are referred to as the "Named Executive Officers."

Name and
Principal Position
  Year   Salary
($)
  Bonus
($)
  Stock
Awards(1)
($)
  Option
Awards(1)
($)
  Non-Equity
Incentive Plan
Compensation(2)
($)
  Change in
Pension
Value and
Nonqualified
Deferred
Compensation
Earnings
($)
  All
Other
Compensation
($)
  Total(3)
($)
 

Rolla P. Huff

    2013   $ 825,001   $   $ 1,680,001   $ 1,118,211   $ 668,251   $   $ 34,643 (7) $ 4,326,107  

Former President

    2012     825,000         1,250,002     1,253,125     669,900         26,072 (7)   4,024,099  

and Chief Executive Officer

    2011     805,288         2,160,001         814,100         284,760 (7)   4,064,149  

Bradley A. Ferguson

   
2013
   
355,461
   
   
299,999
   
199,680
   
191,469
   
   
20,750

(8)
 
1,067,359
 

Executive Vice President,

    2012     328,000         205,000     205,513     170,232         34,725 (8)   943,470  

Chief Financial Officer

    2011     318,923     38,000     409,500         193,395         77,111 (8)   1,036,929  

Kevin F. Brand(4)

   
2013
   
321,346
   
   
270,001
   
179,713
   
155,654
   
   
10,516

(9)
 
937,230
 

Former Executive Vice

    2011     298,365         380,100         165,922         54,855 (9)   899,242  

President, Customer

                                                       

Delivery and Care

                                                       

Brian P. Fink(5)

   
2013
   
340,000
   
   
270,001
   
179,713
   
179,010
   
   
18,199

(10)
 
986,923
 

Executive Vice President,

    2012     340,000         399,998     150,374     176,460         10,014 (10)   1,076,846  

Chief Technology Officer

                                                       

Michael D. Toplisek(6)

   
2013
   
332,692
   
   
360,003
   
239,617
   
188,637
   
   
7,500

(11)
 
1,128,449
 

Executive Vice President,

                                                       

Sales and Marketing

                                                       

(1)
Compensation for stock awards and option awards represents the aggregate grant date fair value of the award, computed based on the number of awards granted and the fair value of the award on the date of grant. Assumptions used in the calculation of these award amounts are included in Note 13 to the consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2013 and incorporated by reference into this Proxy Statement.

(2)
Non-equity incentive plan compensation for 2013 represents bonuses earned in 2013 under our 2013 Annual Bonus Plans. For 2013, our bonus plan payouts under those plans for the Named Executive Officers were 81% of target for the Named Executive Officers. The 2013 Annual Bonus Plan payments were made in cash in February 2014.

Non-equity incentive plan compensation for 2012 represents bonuses earned in 2012 under our 2012 Annual Bonus Plans. For 2012, our bonus plan payouts under those plans for the Named Executive Officers were 86.52% of target for the Named Executive Officers. The 2012 Annual Bonus Plan payments were made in cash in February 2013.

Non-equity incentive plan compensation for 2011 represents bonuses earned in 2011 under our 2011 Annual Bonus Plans. For 2011, our bonus plan payouts under those plans for the Named Executive Officers were a blended 108% of target for the bonus plan for the first six months of 2011 and 95.4% of target for the bonus plan for the second six months of 2011. The 2011 Annual Bonus Plan payments were made in cash in February 2012.

(3)
Salary, bonus and non-equity incentive plan compensation as a percentage of total compensation for each of our Named Executive Officers for 2013 is as follows: Mr. Huff, 35%; Mr. Ferguson 51%; Mr. Brand, 51%; Mr. Fink, 53%; and Mr. Toplisek, 46%.

Salary, bonus and non-equity incentive plan compensation as a percentage of total compensation for each of our Named Executive Officers for 2012 is as follows: Mr. Huff, 37%; Mr. Ferguson, 53%; and Mr. Fink, 48%.

Salary, bonus and non-equity incentive plan compensation as a percentage of total compensation for each of our Named Executive Officers for 2011 is as follows: Mr. Huff, 40%; Mr. Ferguson 53%; and Mr. Brand 52%.

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(4)
Mr. Brand was not a Named Executive Officer in 2012. Summary compensation information for Mr. Brand is only required for 2011 and 2013.

(5)
Mr. Fink was not a Named Executive Officer in 2011. Summary compensation information for Mr. Fink is only required for 2012 and 2013.

(6)
Mr. Toplisek was not a named Executive Officer in 2011 or 2012. Summary compensation information for Mr. Toplisek is only required for 2013.

(7)
For 2013, other compensation consists of $10,000 of financial planning services, $7,500 in matching contributions made to Mr. Huff's account under our 401(k) Plan and $17,143 in dividend-like payments on stock awards. For 2012, other compensation consists of $10,000 of financial planning services, $7,500 in matching contributions made to Mr. Huff's account under our 401(k) Plan and $8,572 in dividend-like payments made on stock awards. For 2011, other compensation consists of $10,000 of financial planning services, $7,350 in matching contributions made to Mr. Huff's account under our 401(k) Plan and $267,410 in dividend-like payments made on stock awards.

(8)
For 2013, other compensation consists of $10,000 of financial planning services, $7,500 in matching contributions made to Mr. Ferguson's account under our 401(k) Plan and $3,250 in dividend-like payments on stock awards. For 2012, other compensation consists of $10,000 of financial planning services, $7,500 in matching contributions made to Mr. Ferguson's account under our 401(k) Plan and $17,225 in dividend-like payments made on stock awards. For 2011, other compensation consists of $2,250 of financial planning services, $7,350 in matching contributions made to Mr. Ferguson's account under our 401(k) Plan and $67,511 in dividend-like payments made on stock awards.

(9)
For 2013, other compensation consists of $7,500 in matching contributions made to Mr. Brand's account under our 401(k) Plan and $3,016 in dividend-like payments on stock awards. For 2011, other compensation consists of $7,350 in matching contributions made to Mr. Brand's account under our 401(k) Plan and $47,505 in dividend-like payments on stock awards.

(10)
For 2013, other compensation consists of $5,671 of financial planning services, $7,500 in matching contributions made to Mr. Fink's account under our 401(k) Plan and $5,028 in dividend-like payments on stock awards. For 2012, other compensation consists of $7,500 in matching contributions made to Mr. Fink's account under our 401(k) Plan and $2,514 in dividend-like payments on stock awards.

(11)
For 2013, other compensation consists of $7,500 in matching contributions made to Mr. Toplisek's account under our 401(k) Plan.

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Grants of Plan-Based Awards

        The following table presents information regarding grants of plan-based awards to the Named Executive Officers during the year ended December 31, 2013.

 
   
   
   
   
   
   
   
   
  All Other
Option
Awards:
Number
of
Securities
Underlying
Options (#)
  Exercise
or
Base
Price
of
Option
Awards
($/Sh)
   
 
 
   
  Estimated Future Payouts
Under Non-Equity
Incentive Plan Awards(1)($)
  Estimated Future Payouts
Under Equity
Incentive Plan Awards(#)
  All Other
Stock
Awards:
Number
of Shares
of Stock
of Units (#)
  Grant
Date Fair
Value of
Stock and
Option
Awards(2)
($)
 
Name
  Grant
Date
  Threshold
($)
  Target
($)
  Maximum
($)
  Threshold
(#)
  Target
(#)
  Maximum
(#)
 

Rolla P. Huff

    N/A   $ 412,500   $ 825,000   $ 1,650,000                       $   $  

    2/20/2013 (3)                           276,316     941,176     6.08     2,798,212  

Bradley A. Ferguson

   

N/A

   
129,500
   
259,000
   
518,000
   
   
   
   
   
   
   
 

    2/20/2013 (3)                           49,342     168,067     6.08     499,680  

Kevin F. Brand

   

N/A

   
107,250
   
214,500
   
429,000
   
   
   
   
   
   
   
 

    2/20/2013 (3)                           44,408     151,261     6.08     449,714  

Brian P. Fink

   

N/A

   
110,500
   
221,000
   
442,000
   
   
   
   
   
   
   
 

    2/20/2013 (3)                           44,408     151,261     6.08     449,714  

Michael D. Toplisek

   

N/A

   
122,500
   
245,000
   
490,000
   
   
   
   
   
   
   
 

    2/20/2013 (3)                           59,211     201,681     6.08     599,620  

(1)
Estimated future payouts under non-equity incentive plan awards represents bonuses earned under our 2013 Annual Bonus Plans. For 2013, our bonus plan payouts for our Named Executive Officers under those plans were 81% of target for the Named Executive Officers. The following amounts were earned in 2013 under the 2013 Annual Bonus Plans: Mr. Huff, $688,251; Mr. Ferguson, $191,469; Mr. Brand, $155,654; Mr. Fink, $179,010; and Mr. Toplisek, $188,637.

(2)
The grant date fair value for stock awards was based on the closing price of the underlying shares on the date of grant.

(3)
In February 2013, we granted RSUs to our Named Executive Officers. The RSUs granted to the Named Executive Officers could be earned based on the level of success during 2013 of certain company performance objectives related to building our platform for strategic growth, with full vesting on the third anniversary of the grant date (assuming continued employment) of any RSUs that are earned.

The stock options have an exercise price of $6.08 per share and an exercise period of 10 years and vest ratably over four years.

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Outstanding Equity Awards at Fiscal Year-End

        The following table presents information concerning the number and value of unexercised options, restricted stock units and incentive plan awards for the Named Executive Officers outstanding as of the end of the year ended December 31, 2013.

 
  Option Awards   Stock Awards  
Name
  Number of
Securities
Underlying
Unexercised
Options
Exercisable
  Number of
Securities
Underlying
Unexercised
Options
Unexercisable
  Equity
Incentive
Plan Awards:
Number of
Securities
Underlying
Unexercised
Unearned
Options
  Option
Exercise
Price
  Option
Expiration
Date
  Number of
Units That
Have Not
Vested
  Value of
Units That
Have Not
Vested
  Equity
Incentive
Plan
Awards:
Number of
Unearned
Units That
Have Not
Vested
  Equity
Incentive
Plan Awards:
Market
Value of
Unearned
Units That
Have Not
Vested
 

Rolla P. Huff

    250,000           $ 7.31     6/25/2017     42,857 (1) $ 217,285     536,378 (5) $ 2,719,436  

    190,548     571,647         7.51     2/16/2022                          

        941,176         6.08     2/20/2013                          

Bradley A. Ferguson

   
8,750
   
   
   
9.01
   
7/21/2014
   
8,125

(2)
 
41,194
   
95,282

(6)
 
483,080
 

    10,000             9.51     5/4/2015                          

    10,000             10.36     9/12/2015                          

    3,281             6.90     10/24/2016                          

    31,250     93,750         7.51     2/16/2022                          

        168,067         6.08     2/20/2023                          

Kevin F. Brand

   
18,000
   
   
   
9.01
   
7/21/2014
   
7,542

(3)
 
38,238
   
86,757

(7)
 
439,858
 

    20,000             9.51     5/4/2015                          

    8,000             10.36     9/12/2015                          

    28,582     85,747         7.51     2/16/2022                          

        151,261         6.08     2/20/2023                          

Brian P. Fink

   
22,865
   
68,598
   
   
7.51
   
2/16/2022
   
12,572

(4)
 
63,740
   
105,385

(8)
 
534,302
 

        151,261         6.08     2/20/2013                          

Michael D. Toplisek

   
25,475
   
76,427
   
   
8.45
   
5/15/2022
   
   
   
81,400

(9)
 
412,698
 

        201,681         6.08     2/20/2013                          

(1)
Mr. Huff's last day of employment was January 13, 2014. At that time 42,857 restricted stock units vested in accordance with his succession agreement.

(2)
Mr. Ferguson's restricted stock units vested on February 7, 2014.

(3)
Mr. Brand's last day of employment was January 3, 2014. At that time 7,542 restricted stock units vested in accordance with his severance agreement.

(4)
Mr. Fink's restricted stock units vested on February 7, 2014.

(5)
Mr. Huff's restricted equity incentive plan awards vested as follows: (a) 170,182 vested on Mr. Huff's last day of employment in accordance with his succession agreement; (b) 326,081 vested in February 2014 due to satisfaction of performance objectives in accordance with his succession agreement; and (c) 40,115 were forfeited in February 2014 due to performance objectives not being met.

(6)
Mr. Ferguson's restricted equity incentive plan awards vest as follows: (a) 24,375 vested on February 7, 2014 due to satisfaction of performance objectives; (b) 12,693 will vest on February 16, 2015 due to satisfaction of performance objectives; (c) 6,824 are eligible for vesting on February 16, 2015 if performance criteria are met; (d) 44,408 will vest on February 20, 2016 due to satisfaction of performance objectives; and (e) 6,982 were forfeited in February 2014 due to performance objectives not being met.

(7)
Mr. Brand's restricted equity incentive plan awards vest as follows: (a) 21,019 vested on Mr. Brand's last day of employment in accordance with his severance agreement; (b) 41,840 vested in February 2014 due to satisfaction of performance objectives; and (c) 23,898 were forfeited in February 2014 due to performance objectives not being met.

(8)
Mr. Fink's restricted equity incentive plan awards vest as follows: (a) 7,715 vested on February 7, 2014 due to satisfaction of performance objectives; (b) 33,289 will vest on February 16, 2015 due to satisfaction of performance objectives; (c) 19,973 are eligible for vesting on February 16, 2015 if performance criteria are met; (d) 39,967 will vest on February 20, 2016 due to satisfaction of performance objectives; and (e) 4,441 were forfeited in February 2014 due to performance objectives not being met.

(9)
Mr. Toplisek's restricted equity incentive plan awards vest as follows: (a) 10,318 will vest on May 15, 2015 due to satisfaction of performance objectives; (b) 5,547 are eligible for vesting on February 16, 2015 if performance criteria are met; (c) 53,290 will vest on February 20, 2016 due to satisfaction of performance objectives; and (d) 12,245 were forfeited in February 2014 due to performance objectives not being met.

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Option Exercises and Stock Vested

        The following table presents information concerning the exercise of stock options and the vesting of restricted stock units for the Named Executive Officers during the year ended December 31, 2013.

 
  Option Awards   Stock Awards  
Name
  Number of
Shares
Acquired on
Exercise
(#)
  Value
Realized on
Exercise
($)
  Number of
Shares
Acquired on
Vesting
(#)
  Value
Realized on
Vesting(1)
($)
 

Rolla P. Huff

      $     42,857     296,142  

Bradley A. Ferguson

            8,125     56,144  

Kevin F. Brand

            7,541     52,108  

Brian P. Fink

            12,571     86,866  

Michael D. Toplisek

                 

(1)
The value realized on vesting for stock awards represents the number of shares acquired on vesting multiplied by the closing price of our Common Stock on the vesting date.

Agreement with our Chief Executive Officer

        We entered into an employment agreement with Mr. Eazor in connection with his appointment as our Chief Executive Officer and President. Our employment agreement with Mr. Eazor has an initial term which expires on January 13, 2017 and may be terminated on 90 days notice prior to the end of a term. If not terminated prior to the end of a term, the employment agreement renews for an additional year. However, upon a "change in control," the term automatically extends until 24 months following the change in control. Our providing a notice of nonrenewal would permit Mr. Eazor to terminate the employment agreement for "good reason." The employment agreement also incorporates into one document all benefits that Mr. Eazor would receive upon termination of employment, including upon a change in control, and, as a result, Mr. Eazor does not participate in our CIC Plan. The employment agreement provides for a minimum annual base salary of $750,000 per year and a target bonus opportunity of 100% of his eligible earnings, which will be paid if the bonus criteria, as set by the Leadership and Compensation Committee, for the applicable annual period, are met.

        As provided in the employment agreement, Mr. Eazor was granted on his employment date (i) 300,000 stock options which will vest 25% a year commencing on the first anniversary of the grant date, assuming his continued employment and (ii) 125,000 restricted stock units, 62,500 of which would vest upon the third anniversary of the grant date and 62,500 of which would vest if the average closing price of our Common Stock for 20 consecutive trading days is at least 125% of the closing price on the last trading day prior to the employment date. If the performance condition is not met in three years, the shares are forfeited. He also received a $250,000 sign-on payment. He was granted $2.3 million in value of equity awards at the time of our annual 2014 equity award grant in February 2014, which equity awards will have terms consistent with the equity awards granted to other executive officers. We also agreed to pay reasonable costs and expenses associated with moving Mr. Eazor to Atlanta, Georgia and provide temporary living expenses until such relocation.

        In addition, if Mr. Eazor is terminated for any reason other than for "cause" (as defined in the employment agreement), or Mr. Eazor terminates his employment for "good reason" (as defined in the employment agreement), Mr. Eazor will receive an amount equal to (i) 200% of the sum of his base salary and his target bonus payment for the year in which the termination occurs less (ii) the amount of his non-compete payment (which is the sum of his base salary and annual target bonus for the year in which the termination of employment occurs). This amount would be payable in a lump sum. Mr. Eazor also would receive the non-compete payment. The employment agreement also contains provisions for the

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treatment of outstanding equity awards that are substantially similar to the provisions in the CIC Plan described below. If Mr. Eazor terminates employment on death or a total disability (as defined in the employment agreement), he will receive an amount equal to his base salary in a lump sum and his target bonus payment for the year in which he dies or is disabled in accordance with the bonus plan.

        The employment agreement restricts Mr. Eazor from competing, directly or indirectly, with us or soliciting certain of our employees and officers during the term of the employment agreement and for a period of 12 months following his termination of employment.

Potential Payments upon Termination or Change in Control

    Change-In-Control Payments

        Our CIC Plan provides change in control protection as described below.

        The CIC Plan contains two different benefit categories based on the employee's position with EarthLink, one for our executive officers and one for other plan participants. All of our executive officers participate in the CIC Plan other than Mr. Eazor who receives change in control benefits under his employment agreement as described above in "Agreement with our Chief Executive Officer."

        If at any time within 24 months after a Change in Control occurs, (i) the employment of an executive officer is terminated by EarthLink for any reason other than Cause (as defined in the CIC Plan), disability or death or (ii) an executive officer voluntarily terminates his employment for Good Reason (as defined in the CIC Plan), the executive officer is entitled to receive the following benefits: (a) a lump sum payment equal to 150% of the sum of the executive officer's salary plus bonus target less the amount of a non-compete payment (which is 66 2 / 3 % of the sum of the executive officer's base salary and annual target bonus); (b) the non-compete payment and (c) payment of all amounts payable with respect to the executive officer's elected COBRA coverage (including for spouse and dependents) for 18 months from termination.

        The CIC Plan also provides for equity award accelerated vesting benefits. If an executive officer's stock options are assumed or continued after a Change in Control, all outstanding stock options granted on or before the Change in Control will vest and be exercisable in full, if not already fully vested, on termination of the employee's employment for any reason after the Change in Control occurs; however, if his or her stock options are not assumed or continued after the Change in Control, all outstanding stock options will vest and be exercisable in full contemporaneously with the Change in Control, if not already fully vested. If an executive officer's restricted stock units are assumed or continued after a Change in Control, generally all outstanding restricted stock units granted on or before the Change in Control will vest and be earned and payable in full, if not already fully vested, on termination of the employee's employment for any reason after the Change in Control occurs; however, if his or her restricted stock units are not assumed or continued after the Change in Control, generally all outstanding restricted stock units will vest and be earned and payable in full contemporaneously with the Change in Control, if not already fully vested.

        We have the right to amend the CIC Plan from time to time and may terminate it at any time; provided, however, that for a certain period of time before a Change in Control (as described in the CIC Plan) or after a Change in Control in EarthLink occurs, (i) no amendment may be made that diminishes any employee's rights following such Change in Control and (ii) the CIC Plan may not be terminated.

        For purposes of the CIC Plan, "Change in Control" generally means a transaction pursuant to which any person acquires more than 50% of the voting power of EarthLink or any merger, reorganization or similar event where the owners of the voting stock of EarthLink before the event do not own voting stock representing at least 50% of the voting power of EarthLink or our successor after the event. Accelerated vesting of RSUs and options also is provided for under the term of our equity award agreements.

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        Based upon a hypothetical Change in Control and subsequent termination date of December 31, 2013, the benefits for our Named Executive Officers under the CIC Plan at such date and who are currently employed by us would be as follows:

Name
  Severance   Non-Compete   Stock
Options(1)
  Restricted
Stock Units(2)
  COBRA
Coverage
  Pro-Rata
Bonus(3)
  Total  

Bradley A. Ferguson

  $ 555,000   $ 419,354   $   $ 524,273   $ 25,553   $ 259,000   $ 1,783,181  

Brian P. Fink

    510,000     374,019         598,042     25,851     221,000     1,728,912  

Michael D. Toplisek

    525,000     396,687         412,698     26,328     245,000     1,605,713  

(1)
The amount of benefit for stock options represents the number of in-the-money options outstanding multiplied by the difference between the exercise price and the closing price per share of our Common Stock on December 31, 2013, or $5.07 per share. As of December 31, 2013, there were no such options outstanding for our Named Executive Officers.

(2)
The amount of benefit for restricted stock units represents the number of outstanding restricted stock units multiplied by the closing price of our Common Stock on December 31, 2013, or $5.07 per share.

(3)
The bonus amounts represent the aggregate target bonus under the 2013 Annual Bonus Plan.

    Severance Plan

        We have a Severance Plan which provides for graduated levels of severance for our executive officers and other employee levels. Eligible executive officers are entitled to the following severance pay and benefits under our Severance Plan: (i) 12 months base salary paid in lump sum, (ii) an amount equal to 12 months of the employer portion of any premium (and the COBRA administrative fee) for coverage of those employees participating in our medical, dental and vision plans, (iii) 12 months, or up to $20,000, of executive-level outplacement services and (iv) for employees given notice that their positions are being eliminated after the first quarter of any calendar year, the pro-rata bonus, if any, otherwise payable under our executive bonus plans. Payments may be delayed to comply with Section 409A of the Internal Revenue Code of 1986, as amended.

        Based upon a hypothetical termination date of December 31, 2013, the benefits for our Named Executive Officers under the Severance Plan at such date and who are currently employed by us would be as follows:

Name
  Severance   COBRA
Coverage
  Pro-Rata
Bonus(1)
  Outplacement
Services
  Total  

Bradley A. Ferguson

  $ 370,000   $ 11,563   $ 259,000   $ 20,000   $ 660,563  

Brian P. Fink

    340,000     11,618     221,000     20,000     592,618  

Michael P. Toplisek

    350,000     11,576     245,000     20,000     626,576  

(1)
The bonus amounts represent the aggregate target bonus under the 2013 Annual Bonus Plans.

        With his termination date of January 3, 2014 the benefits for Mr. Brand under the Severance Plan and our equity award agreements totaled $518,420 and consisted of the following: severance—$330,000; bonus—$155,654; employee portion of benefit plan—$12,766; and outplacement services—$20,000.

        Agreement with Mr. Huff, Former President and Chief Executive Officer.     In connection with the retirement of our former President and Chief Executive Officer Rolla P. Huff effective January 13, 2014, we entered into an agreement with him setting forth the terms of his departure, which are consistent with his former employment agreement (which was most recently amended and restated October 19, 2011). Upon his departure Mr. Huff received the following benefits: (i) a severance payment equal to $1,650,000, (ii) a non-compete payment equal to $1,650,000; (iii) participation in the 2013 short-term bonus plan; (iv) COBRA benefits of $25,812 and (v) equity award accelerated vesting. Following his retirement, Mr. Huff continued to serve as the Chairman of the Board of Directors for a transition period until February 21, 2014 and was compensated at the same rate of base salary as he was receiving prior to his retirement.

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PROPOSAL 2

NON-BINDING ADVISORY RESOLUTION TO APPROVE THE COMPENSATION
OF OUR NAMED EXECUTIVE OFFICERS

        The compensation of our named executive officers is described in the Compensation Discussion and Analysis, the compensation tables and the accompany narrative on pages 24 to 42 of this Proxy Statement.

        Our primary goals with respect to executive compensation have been to offer competitive compensation to attract and retain the most talented executives, to tie annual cash incentives to achievement of performance objectives that tie directly to our strategic and operational goals, and to align executives' interests with long-term stockholder value creation. To achieve these goals, we have used a "Total Rewards" approach establishing a compensation package of separate, but integrated components, including: base salary, short-term annual cash incentives, long-term incentive compensation, retention incentives and health and welfare benefits. The Leadership and Compensation Committee of the Board of Directors generally takes into account our business strategy, internal consistency, external market competitiveness in light of general economic trends and individual and business performance.

        While maintaining our guiding philosophy of competitive and affordable Total Rewards, our compensation decisions in 2013 continued to align our compensation practices both with our new focus on being a leading IT services and communications provider as well as with our position in the highly competitive Internet access industry. The Leadership and Compensation Committee of the Board of Directors, or the Committee, designed the compensation programs for 2013 both to retain the key talent necessary to drive our performance as well as to recruit new talent consistent with our business strategy. The Committee intends for the compensation programs to provide appropriate incentives while maintaining accountability to stockholders.

        As detailed in the Compensation Discussion and Analysis, based on its review of the total compensation of our named executive officers for fiscal year 2013, the Leadership and Compensation Committee believes total compensation for each of the Named Executive Officers, both on a targeted and actual basis, was reasonable and within the range of compensation offered by comparison companies and reflects our solid financial performance in 2013 as well as our significant progress in transforming our company into an IT services and communications provider. The Leadership and Compensation Committee also believes the 2013 compensation design was effective in driving performance by generating meaningful rewards for achieving business objectives that our Board of Directors believes will lead to future overall shareholder value creation and by limiting the compensation paid as a result of performance objectives not being fully achieved in established time periods.

        The Compensation Discussion and Analysis section of this Proxy Statement and the accompanying tables and narrative provide a comprehensive review of our named executive officer compensation objectives, program and rationale. We urge you to read this disclosure before voting on this proposal.

        For the reasons stated above, we are requesting your non-binding approval of the following resolution:

        Your vote on this proposal will be non-binding on us and the Board, and it will not be construed as overruling a decision by us or the Board. Your vote will not create or imply any change to our fiduciary duties or create or imply any additional fiduciary duties for us or the Board. However, the Leadership and Compensation Committee values the opinions that our stockholders express in their votes and will

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consider the outcome of the vote when making future executive compensation decisions as it deems appropriate.

         THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE "FOR" THE NON-BINDING ADVISORY RESOLUTION APPROVING THE COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS.


PROPOSAL 3

AMENDMENT OF OUR AMENDED AND RESTATED CERTIFICATE OF INCORPORATION

        After careful consideration, in February 2014 our Board of Directors voted unanimously to approve, and to recommend to our stockholders that they approve, an amendment to our Certificate of Incorporation to revise the advance notice requirement for shareholder nominations of directors.

        Article 5, Section (4) of our Certificate of Incorporation currently incorporates basic advance notice provisions for stockholders seeking to nominate directors for election. These provisions set forth the process that a stockholder must follow in order to nominate a director for election at a stockholder meeting. The proposed amendment will make certain changes to this section that are intended to provide clear and reasonable procedures to nominate directors and full disclosure of the interests of the director nominee and the nominating stockholder.

Summary of Proposed Amendment

        The following is a summary of the material changes that will be effected by the proposed amendment to our Certificate of Incorporation:

Advance Notice Provision
for Director Nominations
  Existing Provision   Proposed Amended Provision
Deadline to Submit Nominees for Election at an Annual Meeting   90 days in advance of the annual meeting.  

At least 60 days but not more than 90 days before the anniversary date of the prior year annual meeting.

If the annual meeting is advanced by more than 30 days or delayed by more than 60 days from such anniversary, the deadline range will be at least 60 days but not more than 90 days before the actual meeting or, if later, 10 days following the public announcement of the annual meeting date.


Deadline to Submit Nominees for Election at a Special Meeting

 

Seven days following notice of the special meeting.

 

At least 60 days but not more than 90 days before the actual meeting or, if later, 10 days following the public announcement of the special meeting.

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Advance Notice Provision
for Director Nominations
  Existing Provision   Proposed Amended Provision

Disclosure of Information Regarding Potential Nominees

 

Name and address

Description of arrangements pursuant to such the nomination is being made

Other information that would be required to be included by a proxy statement

Consent to serve as a director

Completed questionnaire required by EarthLink's bylaws

 

In addition to the previously required disclosures under the Certificate of Incorporation, the nominee must disclose:

Certain employment and biographical information

Number of shares of EarthLink capital stock held by the nominee

EarthLink can also request additional information from the nominee for the purpose of determining his or her independence.

Disclosure of Information Regarding Nominating Stockholders

 

Name and address

Representation that the holder is entitled to vote and will appear at the meeting

Description of arrangements pursuant to such the nomination is being made

Other information that would be required to be included by a proxy statement

 

In addition to the previously required disclosures under the Certificate of Incorporation, the nominating stockholder must disclose:

Certain employment information

Interests in EarthLink's capital stock, including shares held, derivative positions, short interests and rights to dividends and performance related fees

Representation whether such stockholder intends to appear at the meeting to nominate the nominee and to solicit proxies in support of the nominee

The disclosure requirements applicable to the nominating stockholders will also be applicable to any beneficial owner on whose behalf the nomination is proposed to be made and certain "Associated Persons". In addition, the disclosures about the nominating stockholders must be updated as of the record date.

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Advance Notice Provision
for Director Nominations
  Existing Provision   Proposed Amended Provision
Derivative Disclosure   None.   Required disclosure of certain derivative positions in EarthLink's capital stock held by the nominating stockholder. These derivative positions are generally defined as those which have a value derived in whole or in part from the value of any shares of the capital stock.

        Extension of Deadlines to Permit Stockholders Additional Time to Submit Nominees.     The amendment provides stockholders additional time to submit nominations by extending certain of the deadlines. The deadline for stockholder nominees at an annual meeting will be at least 60 days and no more than 90 days before the anniversary date of the prior year meeting (as opposed to the current deadline of 90 days). The amendment also provides that if the annual meeting is advanced by more than 30 days or delayed by more than 60 days from such anniversary, the deadline range will be at least 60 days and no more than 90 days before the actual meeting or, if later, 10 days following the public announcement of the annual meeting date. The deadline range for stockholder nominees at a special meeting will be at least 60 days and no more than 90 days before the actual meeting or, if later, 10 days following the public announcement of the special meeting date (as opposed to the current deadline of seven days following notice of the meeting).

        Disclosure of Additional Information from Potential Director Nominees.     In addition to the information about a director nominee required by our current advance notice provisions, the amendment requires disclosure of certain employment and biographical information regarding the director nominee and the number of shares of our capital stock held by the nominee. The amendment also provides that we can request additional information from the nominee for the purpose of determining his or her independence. The proposed nominee will also remain subject to the requirement under our current bylaws to provide a completed questionnaire, representation and agreement providing additional background and qualification information.

        Disclosure of Additional Information from Nominating Stockholders.     In addition to the information about a nominating stockholder required by our current advance notice provisions, the amendment requires the following disclosures regarding the nominating stockholder: (i) certain employment information, (ii) interests in our capital stock, including shares held, derivative positions, short interests and rights to dividends and performance related fees and (iii) a representation whether such stockholder intends to appear at the meeting to nominate the nominee and to solicit proxies in support of the nominee. In addition, the amendment requires the disclosures about the nominating stockholder to be updated as of the record date. The disclosure requirements applicable to the nominating stockholder will also be applicable to any beneficial owner on whose behalf the nomination is proposed to be made and certain "Associated Persons."

        Disclosure of Derivative Positions.     As mentioned above, the amendment requires disclosure of certain derivative positions in our capital stock held by the nominating stockholder and the beneficial owner, if any, on whose behalf the nomination is proposed to be made. These derivative positions are generally defined as those which have a value derived in whole or in part from the value of any shares of our capital stock.

        The text of the revised Article 5, marked to show the proposed changes, is attached as Annex B to this Proxy Statement. If approved by our stockholders, the amendment to our Certificate of Incorporation will become effective upon the filing of a certificate of amendment with the Secretary of State of Delaware.

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Rationale for Amendment

        Our Board of Directors believes that detailed and clearly stated advance notice requirements are beneficial to both our stockholders and our Board of Directors in planning for and administering meetings of our stockholders. Following a review by our Corporate Governance and Nominating Committee and our Board of Directors of our governing documents, the committee and the Board of Directors determined that the proposed amendment is in the best interests of the Company and our stockholders to ensure our advance notice provisions fully account for the current practices and to allow for enhanced disclosure of the interests of the director nominee and the nominating stockholder.

        While the amendment enhances the disclosure requirements of a nominating stockholder, we believe these advance notice requirements will help our stockholders understand and prepare for the process that must be followed for their nominees to be considered at a meeting of stockholders. In addition, the extended deadlines will allow our stockholders to have a greater amount of time to consider nominations they desire to bring before a meeting and to comply with the applicable requirements for submitting such nominees.

        The enhanced disclosures will provide both stockholders and our Board of Directors with more information regarding the director nominees and the nominating stockholder, which will allow stockholders to make a more fully informed voting decision and assist our Board of Directors in making a recommendation or statements of its position. For example, it is important for us to determine whether or not a potential nominee is independent because it can be relevant to determining whether we satisfy continued listing requirements on Nasdaq and it affects our ability to form committees of our Board of Directors that comply with SEC and Nasdaq requirements. The enhanced ownership disclosures will provide for disclosure of derivative investment instruments, which are typically otherwise unknown to us and the stockholders. This type of disclosure will enable our stockholders and Board of Directors to better understand the potential motivation of a stockholder in submitting a nomination.

         THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE "FOR" THE AMENDMENT OF THE AMENDED AND RESTATED CERTIFICATE OF INCORPORATION.

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PROPOSAL 4

RATIFICATION OF APPOINTMENT OF
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

        The Audit Committee of the Board of Directors has appointed the firm of Ernst & Young LLP, independent registered public accounting firm, to audit and report on our financial statements for the year ending December 31, 2014. We have engaged Ernst & Young LLP as our independent registered public accounting firm since July 2000. We expect that a representative of Ernst & Young LLP will be present at the 2014 Annual Meeting of Stockholders to answer questions of stockholders and will have the opportunity, if desired, to make a statement.

        In connection with the audits of the 2012 and 2013 financial statements, we entered into engagement agreements with Ernst & Young LLP which set forth the terms by which Ernst & Young LLP will perform audit services for us. Those agreements are subject to alternative dispute resolution procedures.

        For the years ended December 31, 2012 and 2013, Ernst & Young LLP billed us the fees set forth below, including expenses, in connection with services rendered by that firm to us.

 
  Year Ended December 31,  
 
  2012   2013  

Audit fees

  $ 2,330,484   $ 2,799,375  

Audit-related fees

         

Tax fees

         

All other fees

    2,500     1,995  
           

Total

  $ 2,332,984   $ 2,801,370  
           
           

        Audit fees include fees for services rendered for the audits of our annual financial statements and the reviews of the interim financial statements included in quarterly reports. Audit fees also include fees associated with rendering an opinion on our management report on internal control over financial reporting in accordance with Section 404 of the Sarbanes-Oxley Act of 2002. This category also includes fees for review of documents filed with the SEC. Additionally, audit fees include services rendered for the audit of ITC^DeltaCom, Inc.'s annual financial statements.

        All other fees primarily included an on-line research tool subscription.

        The Audit Committee of the Board of Directors has considered whether the provision of services described above under "Audit-related fees" and "Other fees" is compatible with maintaining the independence of Ernst & Young LLP, and has concluded that it is compatible.

Audit Committee Pre-Approval Policy

        The Audit Committee's policy is that all audit and non-audit services provided by its independent registered public accounting firm shall either be approved before the independent registered public accounting firm is engaged for the particular services or shall be rendered pursuant to pre-approval procedures established by the Audit Committee. These services may include audit services and permissible audit-related services, tax services and other services. Pre-approval spending limits for audit services are established on an annual basis, detailed as to the particular service or category of services to be performed and implemented by our financial officers. Pre-approval spending limits for permissible non-audit services are established on a quarterly basis, detailed as to the particular service or category of services to be performed and implemented by our financial officers. Any audit or non-audit service fees that may be incurred by us during a quarter that fall outside the limits pre-approved by the Audit Committee for a particular service or category of services must be reviewed and approved by the Chairperson of the Audit Committee prior to the performance of services. On a quarterly basis, the Audit Committee reviews and

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itemizes all fees paid to its independent registered public accounting firm in the prior quarter (including fees approved by the Chairperson of the Audit Committee between regularly scheduled meetings and fees approved by our financial officers pursuant to the pre-approval policies described above) and further reviews and itemizes all fees expected to be paid in the upcoming quarter. The Audit Committee may revise its pre-approval spending limits and policies at any time. None of the fees paid to the independent registered public accounting firm were approved by the Audit Committee after the services were rendered pursuant to the " de minimis " exception established by the SEC for the provision of non-audit services.

Ratification of Selection of Independent Auditors

        The Audit Committee is directly responsible for the appointment, compensation, retention and oversight of the independent registered accounting firm retained to audit our financial statements. The Audit Committee has appointed Ernst & Young LLP as our independent external auditor for the year ending December 31, 2014. Ernst & Young LLP has served as our independent registered accounting firm continuously since 2000. The Audit Committee is responsible for the audit fee negotiations associated with the retention of Ernst & Young LLP. In order to assure continuing auditor independence, the Audit Committee periodically considers whether there should be a regular rotation of the independent registered accounting firm. Further, in conjunction with the rotation of the auditing firm's lead engagement partner, the Audit Committee and its chairperson will continue to be directly involved in the selection of Ernst & Young LLP's new lead engagement partner. The members of the Audit Committee and the Board believe that the continued retention of Ernst & Young LLP to serve as our independent external auditor is in the best interests of us and our stockholders.

        Stockholder ratification of the selection of Ernst & Young LLP as our independent registered public accounting firm is not required but is being presented as a matter of good corporate practice. Notwithstanding stockholder ratification of the appointment of the independent registered public accounting firm, the Audit Committee, in its discretion, may direct the appointment of a new independent registered public accounting firm if the Audit Committee believes that such a change would be in our best interests and the best interests of our stockholders. The Audit Committee has not determined what action it would take if the stockholders do not ratify the appointment, but may reconsider the appointment.

         THE BOARD OF DIRECTORS AND THE AUDIT COMMITTEE UNANIMOUSLY RECOMMEND THAT STOCKHOLDERS VOTE "FOR" THE RATIFICATION OF THE APPOINTMENT OF ERNST & YOUNG LLP AS OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR THE YEAR ENDING DECEMBER 31, 2014.


OTHER MATTERS

        The Board of Directors knows of no other matters to be brought before the 2014 Annual Meeting of Stockholders. However, if any other matters are properly brought before the 2014 Annual Meeting of Stockholders, including consideration of a motion to adjourn the 2014 Annual Meeting of Stockholders to another time or place (including for the purpose of soliciting additional proxies) the persons appointed in the accompanying proxy intend to vote the shares represented thereby in accordance with their best judgment.


SOLICITATION OF PROXIES

        The cost of the solicitation of proxies on behalf of EarthLink will be borne by us. In addition, our directors, officers and other employees may, without additional compensation except reimbursement for actual expenses, solicit proxies by mail, in person or by telecommunication. We will reimburse brokers, fiduciaries, custodians and other nominees for out-of-pocket expenses incurred in sending our proxy materials to, and obtaining instructions relating to such materials from, beneficial owners. We have retained MacKenzie Partners, Inc. to aid in the solicitation of proxies at a fee of $12,500, plus expenses.

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STOCKHOLDER PROPOSALS FOR 2015 ANNUAL MEETING

        In order for proposals of stockholders to be considered for inclusion in the proxy materials for the 2015 Annual Meeting of Stockholders pursuant to Rule 14a-8 under the Exchange Act, such proposals must be received by us at our executive offices at 1375 Peachtree Street, Atlanta, GA 30309, Attention: Corporate Secretary, on or prior to November 11, 2014.

        Stockholders may bring director nominations or other business before the annual meeting only in accordance with the provisions of our certificate of incorporation and bylaws. Our bylaws require, among other things, that written notice of a stockholder's intent to bring business before the annual meeting be given not earlier than the close of business on the 90th and not later than the close of business on the 60th day prior to the first anniversary of the preceding year's annual meeting, or April 28, 2015. Management may use its discretionary authority to vote against any such proposals. For information regarding the requirement for submitting recommendations for director nominees, see "Corporate Governance Matters—Identifying and Evaluating Nominees" on pages 9 to 11 of this Proxy Statement.


ANNUAL REPORT ON FORM 10-K

        We will provide without charge to each stockholder, on the written request of any such person, a copy of our Annual Report on Form 10-K for the year ended December 31, 2013. Requests should be directed to EarthLink Holdings Corp., 1375 Peachtree Street, Atlanta, Georgia 30309, Attention: Investor Relations. Our Annual Report on Form 10-K also may be accessed through our website at www.earthlink.net . A list of exhibits to the Annual Report on Form 10-K will be included in the copy of the Annual Report on Form 10-K. Any of the exhibits may be obtained at the SEC's website, www.sec.gov , or by written request to the above address.


BENEFICIAL OWNERS

        Unless we have received contrary instructions, we may send a single copy of our proxy materials to any household at which two or more stockholders reside if we believe the stockholders are members of the same family. Each stockholder in the household will continue to receive a separate proxy card. This process, known as "householding," reduces the volume of duplicate information received at your household and helps to reduce our expenses.

        If you would like to receive your own set of our annual disclosure documents this year or in future years, follow the instructions described below. Similarly, if you share an address with another stockholder and together both of you would like to receive only a single set of our annual disclosure documents, follow these instructions.

        If your shares are registered in your own name, please contact us at our executive offices at 1375 Peachtree Street, Atlanta, Georgia 30309, Attention: Investor Relations, to inform us of your request. If a bank, broker or other nominee holds your shares, please contact your bank, broker or other nominee directly.


 

 

By order of the Board of Directors

 

 


GRAPHIC

Samuel R. DeSimone, Jr.
Corporate Secretary

Atlanta, Georgia
March 13, 2014

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ANNEX A


RECONCILIATION OF NON-GAAP FINANCIAL MEASURES

Non-GAAP Financial Measures

        In addition to our financial information presented in accordance with U.S. generally accepted accounting principles ("GAAP"), management uses certain "non-GAAP financial measures" within the meaning of the SEC Regulation G, to clarify and enhance understanding of past performance and prospects for the future. Generally, a non-GAAP financial measure is a numerical measure of a company's operating performance, financial position or cash flows that excludes or includes amounts that are included in or excluded from the most directly comparable measure calculated and presented in accordance with GAAP. Set forth below is a discussion of the presentation and use of Adjusted EBITDA and Unlevered Free Cash Flow, the non-GAAP financial measures used by management.

        Adjusted EBITDA is defined as net income (loss) before interest expense and other, net, income tax provision (benefit), depreciation and amortization, stock-based compensation, impairment of goodwill and intangible assets, and restructuring, acquisition and integration-related costs, and loss from discontinued operations, net of tax. Unlevered Free Cash Flow is defined as net income (loss) before interest expense and other, net, income tax provision (benefit), depreciation and amortization, stock-based compensation, impairment of goodwill and intangible assets, restructuring, acquisition and integration-related costs, and loss from discontinued operations, net of tax, less cash used for purchases of property and equipment.

        These non-GAAP financial measures are commonly used in the industry and are presented because management believes they provide relevant and useful information to investors. Management uses these non-GAAP financial measures to evaluate the performance of its business. Management also uses Unlevered Free Cash Flow to assess its ability to fund capital expenditures, fund growth and service debt. Management believes that excluding the effects of certain non-cash and non-operating items enables investors to better understand and analyze the current period's results and provides a better measure of comparability.

        There are limitations to using these non-GAAP financial measures. Adjusted EBITDA and Unlevered Free Cash Flow are not indicative of cash provided or used by operating activities and may differ from comparable information provided by other companies. Adjusted EBITDA and Unlevered Free Cash Flow should not be considered in isolation, as an alternative to, or more meaningful than measures of financial performance determined in accordance with U.S. GAAP.

        The following table presents a reconciliation of Adjusted EBITDA to the most closely related financial measure reported under GAAP for the year ended December 31, 2013:

 
  Year Ended
December 31, 2013
(in thousands)
 

Net loss

  $ (538,827 )

Interest expense and other, net

    60,686  

Income tax provision

    211,231  

Depreciation and amortization

    183,114  

Stock-based compensation expense

    13,275  

Impairment of goodwill

    255,599  

Restructuring, acquisition and integration-related costs

    40,030  

Loss from discontinued operations, net of tax

    1,961  
       

Adjusted EBITDA

  $ 227,069  
       
       

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        The following table presents a reconciliation of Unlevered Free Cash Flow to the most closely related financial measure reported under GAAP for the year ended December 31, 2013:

 
  Year Ended
December 31, 2013
(in thousands)
 

Net loss

  $ (538,827 )

Interest expense and other, net

    60,686  

Income tax provision

    211,231  

Depreciation and amortization

    183,114  

Stock-based compensation expense

    13,275  

Impairment of goodwill

    255,599  

Restructuring, acquisition and integration-related costs

    40,030  

Loss from discontinued operations, net of tax

    1,961  

Purchases of property and equipment

    (143,614 )
       

Unlevered Free Cash Flow

  $ 83,455  
       
       

        The following table presents a reconciliation of Unlevered Free Cash Flow, as a liquidity measure, to net cash provided by operating activities for the year ended December 31, 2013:

 
  Year Ended
December 31, 2013
(in thousands)
 

Net cash provided by operating activities

  $ 124,156  

Income tax provision

    211,231  

Non-cash income taxes

    (212,870 )

Interest expense and other, net

    60,686  

Amortization of debt discount, premium and issuance costs

    (2,061 )

Restructuring, acquisition and integration-related costs

    40,030  

Changes in operating assets and liabilities

    5,662  

Purchases of property and equipment

    (143,614 )

Other, net

    235  
       

Unlevered Free Cash Flow

  $ 83,455  
       
       

Net cash used in investing activities

  $ (112,500 )
       
       

Net cash used in financing activities

  $ (52,641 )
       
       

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ANNEX B

PROPOSED AMENDMENT TO THE AMENDED AND RESTATED CERTIFICATE OF INCORPORATION

CERTIFICATE OF AMENDMENT
TO THE
AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF

EARTHLINK HOLDINGS CORP.

        EarthLink Holdings Corp. (the "Corporation"), a corporation duly organized and existing under the laws of the State of Delaware, hereby certifies as follows:

        1.     The original Certificate of Incorporation was filed with the Secretary of State of Delaware on December 3, 2013.

        2.     This Certificate of Amendment was duly adopted by the Board of Directors of the Corporation (the "Board") in accordance with Section 242 of the Delaware General Corporation Law (the "DGCL").

        3.     Article 5 of the Amended and Restated Certificate of Incorporation of the Corporation is hereby amended and restated to read in its entirety as follows:

ARTICLE 5. BOARD OF DIRECTORS

        The business and affairs of the Corporation shall be managed by, or under the direction of, a Board of Directors comprised as follows:

        (1)   The number of directors of the Corporation shall be not less than two (2) and not more than seventeen (17), the exact number within such minimum and maximum limits to be fixed and determined from time to time by resolution of a majority of the Board of Directors or by the affirmative vote of the holders of at least a majority of all outstanding shares entitled to be voted in the election of directors, voting together as a single class.

        (2)   The members of the Board of Directors shall be elected at each annual meeting of stockholders for a term expiring at the next succeeding annual meeting of stockholders, and in all cases as to each director until his or her successor shall be elected and shall qualify, or until his or her earlier resignation, removal from office, death or incapacity.

        (3)   Except as set forth below with respect to vacancies and newly created directorships, directors shall be elected as provided in the Bylaws of the Corporation. The directors of the Corporation shall not be required to be elected by written ballots.

        (4)   Nominations for the election of directors may be made by the Board of Directors or a committee appointed by the Board of Directors, or by any stockholder of record who (x) is entitled to vote generally in the election of directors and (y) is a stockholder of record at the time of giving of notice provided for in this Section 4 and at the time of the applicable meeting ; provided, however, that any such stockholder of record entitled to vote generally in the election of directors may nominate one or more persons for election as directors at a meeting only if written notice in proper form of such stockholder's intent to make such nomination or nominations has been given, either by personal delivery or by the United States mail, postage prepaid, to the Secretary of the Corporation not later than (i) with respect to any election to be held at the Annual Meeting of Stockholders, 90 days in advance of such meeting, an annual meeting of stockholders, not earlier than the close of business on the 90 th  and not later than the close of business on the 60 th  day prior to the first anniversary of the preceding year's annual meeting; provided, however, that in the event that the date of the annual meeting is more than thirty (30) days before or more than sixty (60) days

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after such anniversary date, notice by the stockholder in order to be timely must be delivered not earlier than the close of business on the 90 th  day prior to such annual meeting and not later than the close of business on the 60 th  day prior to such annual meeting or, if later, the close of business on the 10 th  day following the day on which public announcement of such annual meeting was made and (ii) with respect to any election for directors to be held at a Special Meeting of Stockholders, the close of business on the seventh day following the date on which notice of such meeting is first given to stockholders. Each special meeting of stockholders, not earlier than the close of business on the 90 th  day prior to such special meeting and not later than the close of business on the 60 th  day prior to such special meeting or, if later, the close of business on the 10 th  day following the day on which public announcement of such special meeting was made. In no event shall any adjournment or postponement of an annual or special meeting or the announcement thereof commence a new time period for the giving of a stockholder's notice as described above. To be in proper form, each such written notice shall must set forth:

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         Such notice must be accompanied by a written consent of each proposed nominee to be named as a nominee and to serve as a director if elected. Any such notice shall be supplemented to disclose the information referred to in clause (b) as of the record date and such supplement shall be delivered not later than five (5) business days after the record date. The Corporation may require any proposed nominee to furnish such other information as it may reasonably require to determine the eligibility of such proposed nominee to serve as an independent director of the Corporation or that could be material to a reasonable stockholder's understanding of the independence, or lack thereof, of such nominee.

         The Chairman of the meeting may refuse to acknowledge the nomination of any person No person shall be eligible for election as a director of the Corporation unless nominated in accordance with the procedures set forth in this Section 4. The Chairman of the Board of Directors shall have the power and the duty to determine whether any nomination was made in accordance with the procedures set forth in this Section 4 and, if any nomination is not made in compliance with the foregoing procedure this Section 4, to declare that such defective nomination shall be disregarded and that no action shall be taken on such nomination .

         An "Associated Person" means (i) any affiliate or person acting in concert with such stockholder or beneficial owner and (ii) each director, officer, employee, general partner, manager of such stockholder or beneficial owner or any such affiliate or person with which such stockholder or beneficial owner is acting in concert.

        (5)   Any vacancy on the Board of Directors that results from an increase in the number of directors, from the prior death, resignation, retirement, disqualification or removal from office of a director, or otherwise shall be filled by a majority of the Board of Directors then in office, though less than a quorum, or by the sole remaining director, or by the stockholders of the Corporation if the Board of Directors has not filled the vacancy and each director so chosen shall hold office for a term expiring at the next succeeding annual meeting of stockholders and until his or her successor shall be elected and shall qualify, or until his or her earlier resignation, removal from office, death or incapacity.

        (6)   At any meeting of stockholders with respect to which notice of such purpose has been given, the entire Board of Directors or any individual director may be removed, with or without cause, by the affirmative vote of the holders of a majority of all outstanding shares entitled to be voted at an election of directors, except that if less than the entire Board of Directors is to be removed, no director may be removed without cause if the votes cast against his removal would be sufficient to elect him if then cumulatively voted at an election of the entire Board of Directors.

        (7)   Notwithstanding the foregoing, whenever the holders of any one or more classes or series of Preferred Stock issued by the Corporation shall have the right, voting separately by class or series, to elect directors at an Annual or Special Meeting of Stockholders, the election, term of office, filling of vacancies and other features of such directorships shall be governed by the terms of this Amended and Restated Certificate of Incorporation or the resolutions of the Board of Directors creating such class or series, as the case may be, applicable thereto.

        The invalidity or unenforceability of this Article 5 or any portion hereof, or of any action taken pursuant to this Article 5, shall not affect the validity or enforceability of any other provision of this Amended and Restated Certificate of Incorporation, any action taken pursuant to such other provision, or any action taken pursuant to this Article 5.

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ANNEX C

EARTHLINK HOLDINGS CORP.

AUDIT COMMITTEE
of the
BOARD OF DIRECTORS

CHARTER

(As of December 31, 2013 )

I.
Charter

        This document shall be the official governing Charter (" Charter ") of the Audit Committee (the " Committee ") of the Board of Directors (the " Board ") of EarthLink Holdings Corp., a Delaware corporation (the " Company "), adopted by the Committee and the Board as of December 31, 2013 . This Charter hereby replaces and supersedes all former Charters. Definitions of certain terms used in this Charter are included in the Definitions section herein.

II.
Purpose and Scope

        The primary purpose of the Committee is to assist the Board in fulfilling its oversight responsibilities by overseeing: ( a) the accounting and financial reporting processes of the Company, (b) the integrity of the Company's financial reports provided by the Company to any governmental body or the public, ( c ) the Company's systems of internal auditing and controls, ( d ) the Company's finance, auditing, accounting, legal and financial reporting compliance as established by the Company, and (e) maintenance of an effective and efficient audit of the Company's annual financial statements by a qualified and independent auditor.

        Consistent with this purpose, the Committee should encourage continuous improvement of, and should foster adherence to, the Company's policies, procedures and practices at all levels. The Company's outside independent registered public accounting firm (" Auditor ") shall ultimately be accountable to the Committee, as representatives of the Company's stockholders. The Committee shall be accountable and responsible to the full Board.

        The Committee's primary responsibilities and duties are to:

        The Committee will primarily fulfill these responsibilities by carrying out the activities enumerated in the Responsibilities and Duties section of this Charter.

III.
Composition; Organization

        The Committee shall consist of three (3) or more Independent Directors, which number shall be determined by the Board from time to time in its discretion. The composition of the Committee shall satisfy the requirements of the Securities and Exchange Commission (" SEC ") and rules of The Nasdaq Stock Market (" NASDAQ ").

        Each member of the Committee shall be an Independent Director (as defined by the applicable NASDAQ rules) and have Financial Knowledge (as defined herein) at the time of his or her appointment to

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the Committee, and shall be free from any relationship that, in the judgment of the Board, would interfere with the exercise of his or her independent judgment as a member of the Committee. At least one (1) member of the Committee shall be an Audit Committee Financial Expert (as defined herein) at the time of his or her appointment to the Committee.

        The Board annually shall elect the members of the Committee to serve for a term of one (1) year or other length of term, in the discretion of the Board, and shall otherwise serve until their successors are duly elected and qualified. Each member of the Committee shall serve at the pleasure and discretion of the Board and may be replaced or removed by the Board at any time and from time to time in its discretion. At the time of each annual election of the Committee members, or at other times in the discretion of the Committee or the Board, the Committee shall designate one member of the Committee to be its Chairman; in the absence of such designation by the Committee, the Board shall designate the Chairman.

IV.
Meetings; Voting; Procedures

        The Committee shall meet at least four times annually or as more frequently as the discharge of its responsibilities shall require. The Chairman or a majority of the members of the Committee may call meetings of the Committee upon reasonable notice to all members of the Committee. The Committee shall meet at such times and places as shall be determined by the Chairman. At each meeting of the Committee, a majority of the members shall constitute a quorum, and a majority of the members present at any meeting at which a quorum is present may act on behalf of the Committee. When present, the Chairman will preside at all meetings of the Committee. The Committee may meet in person or by telephonic or video conference, and may take actions by unanimous written consent of all the members of the Committee. The Committee shall keep regular minutes of its proceedings and shall report to the Board in an appropriate and timely fashion.

        As an element of its duties to encourage and facilitate open communication, the Committee should meet at least annually with representatives from the Company's executive management, internal auditors and its Auditor in separate sessions to discuss any matters that the Committee or any of these groups believe should be discussed. In addition, the Committee should meet with the Company's Auditor and a representative(s) of the Company's management at least quarterly to review the Company's financial statements consistent with the provisions of Documents/Reports Review section below.

V.
Responsibilities and Duties

        To fulfill its responsibilities and duties, the Committee shall:

        1.     Review (at least annually) and, if it deems necessary or appropriate, update this Charter. If any revisions to the Charter are deemed necessary or appropriate, submit such recommended changes to the Board for its consideration and approval.

        2.     Review and discuss the annual financial statements of the Company and any certification, report, opinion or review rendered by the Company's Auditor relating to such financial statements.

        3.     Review and discuss any regular internal reports to management prepared by the Company's internal auditors and management's response to such reports. In addition, at least semi-annually, the Company's internal auditors shall report directly to the Committee as to its activities and any other matter requested of it by the Committee.

        4.     Review and discuss with the Company's financial management and its Auditor, prior to filing with the SEC or releasing to the public, all audited and unaudited financial statements, management's discussion and analysis, and other disclosures to be included in the Company's 10-Q Quarterly Reports,

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10-K Annual Reports, other reports that contain financial information and press releases that contain financial information.

        5.     Prepare the Audit Committee Report required by the SEC to be included in the Company's annual proxy statement.

        6.     Have sole authority to select the Company's Auditor, considering independence and effectiveness and other factors it deems appropriate and in the best interests of the Company, approve the fees and other compensation to be paid to such Auditor and, as the Board's representative, determine the funding from the Company therefore. The Committee shall have the sole authority to retain, remove and replace the Company's Auditor and approve all audit and permissible non-audit engagements of such Auditor.

        7.     The Committee shall oversee the independence of such Auditor. The Committee shall obtain from the Auditor and review (at least annually) all information it deems appropriate and necessary to assess the independence and performance of the Auditor. On at least an annual basis, the Committee should receive from the Auditor a formal written statement delineating and describing all relationships between the Company and such firm, consistent with Public Company Accounting Oversight Board (PCAOB) Rule 3526. The Committee should review and discuss with the Auditor all such identified relationships or services to examine and determine the independence and objectivity of the Auditor.

        8.     Periodically consult with the Auditor out of the presence of the Company's management regarding internal controls and the fullness and accuracy of the Company's financial statements.

        9.     In consultation with the Auditor and the Company's internal personnel/auditors, review the integrity of the Company's financial reporting process, both internal and external, and oversee the Company's: (a) procedures for compliance with the "disclosure control and procedures," (b) Code of Ethics for Chief Executive Officer/Senior Financial Officers, and (c) various certification obligations, all as required pursuant to federal securities laws.

        10.   Consider any significant judgments made in management's preparation of the financial statements and management's view of each as to the appropriateness of such judgments.

        11.   Consider the Auditor's judgments about the quality and appropriateness of the Company's accounting principles as applied to its financial reporting.

        12.   Review the Company's material accounting policies and practices in the light of the requirements of the Financial Accounting Standards Board (FASB), the SEC, the PCAOB and the American Institute of Certified Public Accountants (AICPA); review at least annually the Company's descriptions of these critical accounting policies in its 10-K Annual Reports; consider and approve, if appropriate, significant changes to the Company's material accounting policies and practices as suggested by the Auditor, management of the Company and/or its internal auditors.

        13.   Following completion of the annual audit, review separately with each of management, the Auditor and the Company's internal auditors any problems and difficulties encountered during the course of the audit, including any restrictions on the scope of work or access to required information, and management's response.

        14.   Review and resolve any significant disagreement among management and the Auditor or the Company's internal auditors in connection with the preparation of the financial statements.

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        15.   Review with the Auditor, the Company's internal auditors and management the extent to which changes or improvements in financial or accounting practices, as approved by the Committee, have been implemented.

        16.   Review and discuss with management, the internal auditors and the Auditor the quality and adequacy of the Company's internal audit functions, organization, responsibilities, budget and staffing and recommend any appropriate changes to management.

        17.   Review, with the Company's internal and/or outside legal counsel, legal compliance matters, including corporate securities trading policies, and any legal matter that could have a material impact on the Company's financial statements. In addition, at least annually, the Company's General Counsel shall report directly to the Committee as to the status of all legal compliance matters that could have a material impact on the Company's financial statements and any other matter requested of the General Counsel by the Committee.

        18.   Review and discuss with management the Company's material financial and operating risks and exposures and the steps management has taken to monitor and control such risks and exposures, including the Company's risk assessment and risk management policies.

        19.   Review and discuss with management information technology matters relating to the Company, including cyber security risks and controls.

        20.   Approve in advance all transactions between the Company and any of its Affiliates and all Related Party Transactions; and the Committee shall be provided all pertinent information and data regarding any such proposed transaction.

        21.   Establish and oversee the Company's procedures for handling the receipt, retention and treatment of complaints received by the Company regarding material violations of applicable law, unethical conduct, breaches of the Company's Code of Business Conduct and Ethics and the Code of Ethics for Chief Executive Officer/Senior Financial Officers, and accounting, internal accounting controls or auditing matters, including procedures for the confidential, anonymous submission by employees of concerns regarding questionable accounting or auditing matters, as such may be required by the Sarbanes-Oxley Act of 2002 or other applicable law (collectively, "Compliance Matters") . The Committee shall have the authority to oversee, investigate and take remedial action with respect to any and all complaints regarding Compliance Matters. At least quarterly, the Company's General Counsel shall report directly to the Committee as to the receipt by the Company of any complaints relating to Compliance Matters. In addition, at least annually, the General Counsel shall report to the Board as to the status of all complaints relating to Compliance Matters of which the Committee has been made aware.

        22.   Consider in advance the potential impact of potential material Company financing and other capital structuring activities, acquisitions and investments on the Company's consolidated financial statements and internal control processes.

        23.   Receive periodic updates from management as to the status of management's assessment of the effectiveness of its internal control over financial reporting and review the related reports of management and the Auditor to be contained in the Company's Form 10-K Annual Reports.

        24.   Annually perform an evaluation of itself.

        25.   Perform any other activities consistent with this Charter, the Company's Bylaws and governing law, as the Committee or the Board may request or deems necessary or appropriate, including retention of outside counsel, experts, consultants and other advisors and to agree to fees and other terms of engagement of such retention.

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VI.
Definitions

        In the event the applicable rules and requirements of the SEC or NASDAQ are amended from time to time to revise their defined terms, the corresponding definitions herein shall be automatically amended to conform to such definitions as revised by the SEC or NASDAQ, as applicable.

         Audit Committee Financial Expert means a person who has the following attributes: (i) an understanding of generally accepted accounting principles and financial statements, (ii) the ability to assess the general application of such principles in connection with the accounting for estimates, accruals and reserves, (iii) experience preparing, auditing, analyzing or evaluating financial statements that present a breadth and level of complexity of accounting issues that are generally comparable to the breadth and complexity of issues that can reasonably be expected to be raised by the Company's financial statements, or experience actively supervising one or more persons engaged in such activities, (iv) an understanding of internal control over financial reporting, and (v) an understanding of audit committee functions. In addition, the person shall have acquired such attributes through: (i) education and experience as a principal financial officer, principal accounting officer, controller, public accountant or auditor or experience in one or more positions that involve the performance of similar functions, (ii) experience actively supervising a principal financial officer, principal accounting officer, controller, public accountant, auditor or person performing similar functions, (iii) experience overseeing or assessing the performance of companies or public accountants with respect to the preparation, auditing or evaluation of financial statements, or (iv) other relevant experience.

         Financial Knowledge means a working familiarity with basic finance and accounting practices, including the ability to read and understand fundamental financial statements,

         Related Party Transaction means any transaction required to be disclosed pursuant to Securities and Exchange Commission Regulation S-K, Item 404.

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EARTHLINK HOLDINGS CORP.

1375 PEACHTREE STREET, NE

ATLANTA, GA 30309

 

ELECTRONIC DELIVERY OF FUTURE STOCKHOLDER COMMUNICATIONS
If you would like to reduce the costs incurred by EarthLink Holdings Corp. 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 below to vote using the Internet and, when prompted, indicate that you agree to receive or access stockholder communications electronically in future years.

 

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 Time the day before the cut-off date or meeting date. Have your proxy card in hand when you access the web site and follow the instructions to obtain your records and to create an electronic voting instruction form.

 

VOTE BY PHONE— 1-800-690-6903
Use any touch-tone telephone to transmit your voting instructions up until 11:59 P.M. Eastern Time the day before the cut-off date or 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 EarthLink Holdings Corp. c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717.

 

TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:

KEEP THIS PORTION FOR YOUR RECORDS

 

 

 

DETACH AND RETURN THIS
PORTION ONLY

 

THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.

 

EARTHLINK HOLDINGS CORP.

 

THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ITEMS 1, 2, 3, 4 AND 5 BELOW.

 

 

 

 

For

 

Against

 

Abstain

 

 

 

 

 

 

 

 

1.

The election of the eight directors nominated by the Board of Directors.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1a.    Susan D. Bowick

 

o

 

o

 

o

 

 

 

 

 

 

 

 

 

1b.    Joseph F. Eazor

 

o

 

o

 

o

 

 

 

 

 

 

 

 

 

1c.    David A. Koretz

 

o

 

o

 

o

 

 

 

 

 

 

 

 

 

1d.    Kathy S. Lane

 

o

 

o

 

o

 

 

 

 

 

 

 

 

 

1e.    Garry K. McGuire

 

o

 

o

 

o

 

 

 

 

 

 

 

 

 

1f.     R. Gerard Salemme

 

o

 

o

 

o

 

 

 

 

 

 

 

 

 

1g.    Julie A. Shimer, Ph.D

 

o

 

o

 

o

 

 

 

 

 

 

 

 

 

1h.    M. Wayne Wisehart

 

o

 

o

 

o

 

 

 

 

 

 

 

 

2.

The approval of a non-binding advisory resolution approving the compensation of our named executive officers.

 

o

 

o

 

o

 



 

 

 

 

For

 

Against

 

Abstain

 

 

 

 

 

 

 

 

3.

The approval of an amendment to our Amended and Restated Certificate of Incorporation to revise the advance notice requirements for shareholder nominations of directors.

 

o

 

o

 

o

 

 

 

 

 

 

 

 

4.

Ratification of the appointment by the Audit Committee of the Board of Directors of Ernst & Young LLP as our independent registered public accounting firm for the year ending December 31, 2014.

 

o

 

o

 

o

 

 

 

 

 

 

 

 

5.

To act in their discretion, upon such other matter or matters that may properly come before the meeting or any adjournment(s) or postponement(s) thereof.

 

o

 

o

 

o

 

PLEASE COMPLETE, DATE, SIGN AND RETURN THIS PROXY PROMPTLY.

 

Please sign exactly as your name appears hereon and date. If the shares are held jointly, each holder should sign. When signing as an attorney, executor, administrator, trustee or guardian or as an officer signing for a corporation or other entity, please give full title under signature.

 

 

 

 

 

 

 

 

 

Signature [PLEASE SIGN WITHIN BOX]

 

Date

 

Signature (Joint Owners)

 

Date

 

 

 

 

 

 

 

 

 

 

Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting:

 

The Notice and Proxy Statement, Annual Report/Form 10-K are available at www.proxyvote.com.

 

THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF

 

EARTHLINK HOLDINGS CORP.

 

The undersigned stockholder(s) of EarthLink Holdings Corp., a Delaware corporation (“EarthLink”), hereby acknowledges receipt of the Notice of Annual Meeting of Stockholders and Proxy Statement for EarthLink’s 2014 Annual Meeting of Stockholders, and hereby appoints Joseph F. Eazor and Bradley A. Ferguson, or either of them, proxies and attorneys-in-fact, with full power of substitution, on behalf and in the name of the undersigned, to represent the undersigned at the 2014 Annual Meeting of Stockholders of EarthLink to be held at 4:00 p.m. (local time) on Tuesday, April 29, 2014, at EarthLink’s offices at 1375 Peachtree Street, NE, Atlanta, GA 30309, or at any adjournment(s) or postponement(s) thereof, and to vote all shares of Common Stock which the undersigned would be entitled to vote if then and there personally present, on the matters set forth on the reverse side of this proxy card.

 

THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS. THE VOTES ENTITLED TO BE CAST BY THE UNDERSIGNED WILL BE CAST IN ACCORDANCE WITH THE SPECIFICATIONS MADE. IF THIS PROXY IS EXECUTED BUT NO SPECIFICATIONS ARE MADE, THE VOTES ENTITLED TO BE CAST BY THE UNDERSIGNED WILL BE CAST “FOR” PROPOSALS 1, 2, 3, 4 AND 5 AND OTHERWISE IN THE DISCRETION OF THE PROXIES AT THE ANNUAL MEETING OR ANY ADJOURNMENT(S) OR POSTPONEMENT(S) THEREOF.

 

Please date, sign and mail your proxy card back as soon as possible!

 

(CONTINUED AND TO BE SIGNED ON REVERSE SIDE.)