EarthLink Holdings Corp.
EarthLink Holdings Corp. (Form: DEF 14A, Received: 03/15/2016 16:30:12)

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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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Preliminary Proxy Statement

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Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))

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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)

 

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

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Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
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Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.

 

 

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GRAPHIC

EARTHLINK HOLDINGS CORP.
1170 Peachtree Street
Suite 900
Atlanta, Georgia 30309
(404) 815-0770

March 15, 2016

Dear Stockholders:

              You are cordially invited to attend the 2016 Annual Meeting of Stockholders of EarthLink Holdings Corp., which will be held at 4:00 p.m. (local time) on Tuesday, April 26, 2016, at our offices at 1170 Peachtree Street, Suite 900, Atlanta, Georgia.

              The principal business of the 2016 Annual Meeting of Stockholders will be (1) the election of the seven 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 approval of the EarthLink Holdings Corp. 2016 Equity and Cash Incentive Plan; 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, 2016.

              As permitted by rules adopted by the Securities and Exchange Commission, we are making our Proxy Statement and 2015 Annual Report available to our stockholders electronically over the Internet. You may read, print and download our Proxy Statement and 2015 Annual Report at www.proxyvote.com. On or about March 15, 2016, we mailed our stockholders a notice containing instructions on how to access our Proxy Statement and 2015 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 2016 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 2016 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 2016 Annual Meeting of Stockholders. If you decide to attend the 2016 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 2016 Annual Meeting of Stockholders or receiving your proxy vote.

    By order of the Board of Directors

 

 

LOGO
Julie A. Shimer Ph.D
Chairman of the Board

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GRAPHIC

EARTHLINK HOLDINGS CORP.
1170 Peachtree Street
Suite 900
Atlanta, Georgia 30309
(404) 815-0770

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS

              The 2016 Annual Meeting of Stockholders of EarthLink Holdings Corp. will be held at 4:00 p.m. (local time) on Tuesday, April 26, 2016, at 1170 Peachtree Street, Suite 900, Atlanta, Georgia. The meeting is called for the following purposes:

              The Board of Directors has fixed the close of business on March 3, 2016 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

 

 

  
LOGO
Samuel R. DeSimone, Jr.
Executive Vice President, General Counsel
and Corporate Secretary
Atlanta, Georgia
March 15, 2016
   

               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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PROXY STATEMENT SUMMARY

 
iv

2016 ANNUAL MEETING OF STOCKHOLDERS

 
1

PROPOSAL 1 ELECTION OF DIRECTORS

 
4

CORPORATE GOVERNANCE

 
10

AUDIT COMMITTEE REPORT

 
19

EXECUTIVE OFFICERS

 
23

BENEFICIAL OWNERSHIP OF COMMON STOCK

 
26

EXECUTIVE COMPENSATION

 
28

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

 
53

PROPOSAL 3 APPROVAL OF EARTHLINK HOLDINGS CORP. 2016 EQUITY AND CASH INCENTIVE PLAN

 
55

PROPOSAL 4 RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

 
70

OTHER MATTERS

 
72

SOLICITATION OF PROXIES

 
72

STOCKHOLDER PROPOSALS FOR 2017 ANNUAL MEETING

 
72

ANNUAL REPORT ON FORM 10-K

 
72

BENEFICIAL OWNERS

 
72

ANNEX A RECONCILIATION OF NON-GAAP FINANCIAL MEASURES

 
A-1

ANNEX B EARTHLINK HOLDINGS CORP. 2016 EQUITY AND CASH INCENTIVE PLAN

 
B-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.

2016 Annual Meeting of Stockholders

Time and Date:   4:00 p.m. local time, Tuesday April 26, 2016

Place:

 

EarthLink's offices at 1170 Peachtree Street, Suite 900, Atlanta, Georgia

Record Date:

 

March 3, 2016

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 2016 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 2016 Annual Meeting of Stockholders.

Agenda and Voting Recommendations

Item
  Description   Board
Recommendation
  Page  

1

  Election of seven directors   FOR each nominee     4  

2

 

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

 

FOR

   
53
 

3

 

Approval of the EarthLink Holdings Corp. 2016 Equity and Cash Incentive Plan

 

FOR

   
55
 

4

 

Ratification of the appointment of Ernst & Young LLP as independent registered public accounting firm for the year ending December 31, 2016

 

FOR

   
70
 

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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 2016 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   Leadership and Compensation

Joseph F. Eazor

   
2014
 

President and Chief Executive Officer, EarthLink Holdings Corp.

   

Kathy S. Lane

   
2013
 

Retired executive, TJX Companies, Inc.

 

Corporate Governance and Nominating and Leadership and Compensation

Garry K. McGuire

   
2011
 

Retired CFO and Senior Vice President, Avaya, Inc.

 

Audit and Leadership and Compensation

R. Gerard Salemme

   
2013
 

Partner, Eagle River Holdings, Inc.; former Chief Strategy Officer and Executive Vice President, Pendrell Corporation

 

Audit and Corporate Governance and Nominating

Julie A. Shimer Ph.D. 

   
2013
 

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

 

Audit and Corporate Governance and Nominating

Walter L. Turek

   
2015
 

Executive Chairman, Ascentis Corporation; former Senior Vice President of Sales and Marketing, Paychex, Inc.; co-founder, Mykonos Software, Inc.

 

Leadership and Compensation


* Reflects Committee assignments following the 2016 Annual Meeting of Stockholders.

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PROXY STATEMENT
For the Annual Meeting of Stockholders
to be held April 26, 2016

2016 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 2016 Annual Meeting of Stockholders of EarthLink to be held at 4:00 p.m. (local time) on Tuesday, April 26, 2016, at our offices at 1170 Peachtree Street, Suite 900, 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 3, 2016, 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 15, 2016, we mailed a notice to stockholders containing instructions on how to access the Proxy Statement and 2015 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 2016 Annual Meeting of Stockholders or by proxy. There are three ways to vote by proxy:

GRAPHIC  

By Telephone—You can vote by telephone by calling 1 (800) 690-6903 and following the instructions on the proxy card if you are located in the United States;

GRAPHIC

 

By Internet—You can vote over the Internet at www.proxyvote.com by following the instructions on the proxy card; or

GRAPHIC  

By Mail—You can vote by mail by signing, dating and mailing the enclosed proxy card if you received your proxy materials by mail.

              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 25, 2016.

              Unless contrary instructions are specified, if the proxy card is executed and returned (and not revoked) prior to the 2016 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 seven 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 EarthLink Holdings Corp. 2016 Equity and Cash Incentive Plan; 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, 2016. A stockholder who

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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 2016 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 3, 2016 will be entitled to vote at the 2016 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 2016 Annual Meeting of Stockholders. As of the close of business on the record date, there were 105,051,557 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 2016 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 2016 Annual Meeting of Stockholders in order to vote.

Attendance at Annual Meeting

              Only stockholders who own Common Stock as of the close of business on March 3, 2016 will be entitled to attend the 2016 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 2016 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 2016 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 2016 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 approval of the EarthLink Holdings

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Corp. 2016 Equity and Cash Incentive Plan 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 Amended and Restated Certificate of Incorporation ("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 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 shares present or represented and entitled to vote on the proposal at the 2016 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.

              Approvals of the 2016 EarthLink Holdings Corp. Equity and Cash Incentive Plan and ratification of the appointment by the Audit Committee of Ernst & Young LLP for the year ending December 31, 2016 require the affirmative vote of a majority of the shares present or represented and entitled to vote on the proposal at the 2016 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 2016 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 2016 Annual Meeting of Stockholders, including consideration of a motion to adjourn the 2016 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.

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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. The number of directors will be reduced to seven effective as of the 2016 Annual Meeting of Stockholders.

              The Board of Directors held nine meetings during the year ended December 31, 2015. During 2015, 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 committee.

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, Kathy S. Lane, Garry K. McGuire, R. Gerard Salemme, Julie A. Shimer Ph.D and Walter L. Turek. All of the nominees are current members of our Board of Directors. Our two other current members of our Board of Directors, David A. Koretz and M. Wayne Wisehart, are not standing for re-election at the 2016 Annual Meeting of Stockholders.

              With the exception of Mr. Eazor, all of the nominees 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 2016 Annual Meeting of Stockholders, each to serve until the 2017 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 2016 Annual Meeting of Stockholders. Proxies cannot be voted for a greater number of persons than the number of nominees named in the proxy statement.

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              Set forth below is certain biographical information furnished to us by the directors standing for election at the 2016 Annual Meeting of Stockholders:


 

 

Nominee Standing
for Election





 


 

    Susan D. Bowick
  
Director
     

Ms. Bowick (age 67) has served on our Board of Directors since May 2008. Currently, Ms. Bowick also serves on the Board of Directors of Xura, Inc., a digital communications company, and is chairperson of this 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 Compensation and Leadership 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, a global information technology 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 valuable to our Board of Directors. Her service at Hewlett Packard and on the Xura, Inc., 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, her business development experience at Hewlett Packard, which included evaluating potential mergers and acquisitions and leading integration activities, and global operations experience, is valuable to our Board of Directors.

   

 

 

Joseph F. Eazor
 
Director

 

 

 


Mr. Eazor (age 53) 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 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. Mr. Eazor also serves on the Board of Directors of Commvault Systems, Inc. and Discover Financial Services.

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 transform our Company and restructure our operations.


 

 

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Kathy S. Lane
  
Director

 

 

 


Ms. Lane (age 58) has served on our Board of Directors since July 2013. Ms. Lane also serves on the Board of Directors of Bob Evans Farms, Inc. and serves on this company's Audit and Nominating and Corporate Governance Committees. 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.

In her multiple CIO roles, Ms. Lane had extensive experience with technical strategy, ecommerce technologies, and cyber security, in addition to computer and communications deployment, operations and support. From these CIO roles, Ms. Lane provides the board with a substantial IT background, which is valuable as we optimize our core IT service platforms and capabilities. Ms. Lane's experience on the Board of Directors, Audit Committee and Nominating and Governance Committee of another public company also provides us with substantial governance experience.


 

 

 

 

Garry K. McGuire
 
Director

 

 

 


Mr. McGuire (age 69) 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 prior service as a Chief Financial Officer of a public company which provides him with the expertise to serve as our Audit Committee Chairperson and financial expert. This experience, as well as his prior service 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.


 

 

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R. Gerard Salemme
  
Director

 

 

 


Mr. Salemme (age 62) has served on our board since October 2013. Mr. Salemme is a private investor and consultant in the telecommunications industry. Since 1997, he has been a partner in Eagle River Holdings, Inc., a private investment firm formed by Craig McCaw, which has led to his involvement in telecommunications investment, strategy and regulatory policy for McCaw Cellular, and for Eagle River portfolio companies, including XO Communications, Clearwire and Pendrell Corporation. Mr. Salemme is a member of the Board of Directors of Pendrell, an investment, advisory services and asset management firm. From March 2011 to March 2015, he served as Chief Strategy Officer and Executive Vice President at Pendrell. Mr. Salemme also serves as Chairman of the Board of Directors for RECON Dynamics, LLC, a privately held company offering wireless asset management solutions, and as a member of the Board of Directors of Taqua, LLC, a supplier of communications systems, applications and services. 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 provides the Board of Directors with important skill sets.


 

 

 

 

Julie A. Shimer Ph.D.
 
Director

 

 

 


Dr. Shimer (age 63) has served on our Board of Directors since July 2013 and has served as our Chairman of the Board since February 2014. 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 product development leader at Motorola and AT&T Bell Laboratories. Dr. Shimer also serves as a director of Netgear, Inc., a home and small business network solutions provider, and Halyard Health, Inc., a medical technology company. 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.


 

 

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Walter L. Turek
  
Director

 

 

 


Mr. Turek (age 64) has served on our Board of Directors since October 2015. Mr. Turek has served as Executive Chairman at Ascentis Corporation, a provider of human resources software and solutions, since 2011. He previously served as Senior Vice President of Sales and Marketing at Paychex, Inc., a publicly-traded, leading provider of payroll and human resource services solutions, from October 2002 to May 2009. In 2009, Mr. Turek co-founded Mykonos Software, Inc., a provider of fraud and theft security solutions for internet websites. Mr. Turek currently serves on the Board of Directors of Spark Networks, Inc. and BlueTie, Inc. and previously served on the Board of Directors of Greenway Medical Technologies, Inc. from 2005 to 2013 and of Mykonos Software, Inc. from 2009 to 2012.

Mr. Turek's substantial executive experience in sales and marketing and knowledge of the software industry will be invaluable to our growth as a nationwide managed network, security and cloud solutions provider. Additionally, Mr. Turek's service on other boards and in senior management positions gives him leadership and governance experience from which our Board can benefit.


 

 

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

Directors Not Standing for Election

              Set forth below is certain biographical information furnished to us by the directors not standing for election at the 2016 Annual Meeting of Stockholders:


 

 

Director Not Standing
for Election





 


 


 

 

David A. Koretz
  
Director

 

 

 


Mr. Koretz (age 36) has served on our Board of Directors since May 2008. He currently is the Chief Executive Officer of Plum, Inc., a technology company, and a private investor. From February 2012 until April 2014 he held various positions at Juniper Networks, Inc., a networking and security provider, most recently as 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 substantial work in the technology industry, including with Juniper Networks, Mykonos Software, BlueTie and Adventive, which has been important to our Board of Directors in providing insight into the future direction of our business. This knowledge has assisted us with our managed IT services business. 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 has been important to our Board of Directors.


 

 

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    M. Wayne Wisehart
  
Director
     

Mr. Wisehart (age 70) 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 also serves on the Advisory Board of Directors of BlackStratus, a SIEM solutions provider. He 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 has been 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 an Audit Committee financial expert. His experience with the financial and corporate development matters of telecommunications and technology companies has also been 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.

   

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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."

    COMMITTEE
  SUMMARY

 

 


Leadership and Compensation Committee


Current Members: Ms. Bowick
(Chairperson), Ms. Lane, Mr. McGuire, Dr. Shimer and Mr. Turek

Met six times during the year ended December 31, 2015.


 

 

 


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 Securities and Exchange Commission, or SEC, Rule 16b-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 2015, 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 32 to 33 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.


 

 

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Audit Committee

Current Members: Mr. McGuire
(Chairperson), Mr. Koretz, Ms. Lane and Mr. Wisehart.

Met seven times during the year ended December 31, 2015.


 

 

 


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 and Mr. Wisehart are each an "audit committee financial expert," within the meaning of the regulations promulgated by the SEC.

No member of the Audit Committee received any payments during 2015 from us or our subsidiaries other than compensation received as a director of EarthLink.


 

 

 

 


Corporate Governance and Nominating Committee

Current Members: Mr. Wisehart
(Chairperson), Mr. Koretz, Mr. Salemme and Dr. Shimer.

Met six times during the year ended December 31, 2015.


 

 

 


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.


 

 

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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. There were no nominee recommendations from stockholders or any group of stockholders submitted in accordance with our Certificate of Incorporation in connection with the 2016 Annual Meeting of Stockholders. 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 2015 the Board of Directors determined that it would be beneficial to add a director with sales and marketing expertise in light of our strategic focus on our Enterprise/Mid-Market business unit. Following a search led by the Corporate Governance and Nominating Committee, the Committee recommended, and the Board of Directors approved, the appointment of Walter L. Turek.

              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

finance/capital markets experience

 

public company board experience

operational expertise

 

innovation

brand marketing expertise

 

relevant industry expertise

small-medium business experience

 

government/public policy expertise

retail industry experience

 

executive compensation/human resources expertise

risk oversight expertise

 

product development/product management experience

technology expertise

   

sales and marketing experience

   

              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

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which the Corporate Governance and Nominating Committee evaluates prospective nominees for director based on the source from which the individual was first identified.

              Our Certificate of Incorporation provides that any stockholder recommendation for a nominee for director to be voted upon at the 2017 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 26, 2016. 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 2016 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 our 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 our applicable corporate governance, conflict of interest, confidentiality, securities ownership and trading policies and guidelines, and further provides for the immediate 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 2016 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 2016, 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, Mr. Koretz, Ms. Lane, Mr. McGuire, Mr. Salemme, Dr. Shimer, Mr. Turek and Mr. Wisehart are independent. We have one director who is not independent, Mr. Eazor, because he is our Chief Executive Officer and President.

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

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

              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.

      Risk Oversight

              Each of our committees considers risks within its area of responsibility and regularly reports to the Board of Directors.

    COMMITTEE

  Risk Oversight Function

 

 

Audit Committee

 

 

 

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. Additionally, 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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Leadership and Compensation Committee

 

 

 

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 conducts 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.

 

 

 

 

Corporate Governance and Nominating Committee

 

 

 

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 non-executive 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, 1170 Peachtree Street, Suite 900, 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 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 shall conduct an annual evaluation to assess and enhance its 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 2015. Additionally, our Chairman of the Board held individual discussions with each of our directors regarding their Board service during the year.

              We have a policy encouraging directors to attend annual meetings of stockholders. All of our directors who were nominated for election were present at the 2015 Annual Meeting of Stockholders.

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              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."

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 2015, there were no transactions that were required to be approved by the Audit Committee.

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. 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 2015 and to date in 2016 were the following:

              In connection with the 2015 Annual Meeting of Stockholders, the Corporate Governance and Nominating Committee reviewed the independence of each director at that time and affirmed that, other

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than Mr. Eazor, 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 2016 Annual Meeting of Stockholders.

Submitted by: Corporate Governance and Nominating Committee
M. Wayne Wisehart (Chairperson)
David A. Koretz
R. Gerard Salemme
Julie A. Shimer Ph.D

               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.

Director Compensation

              The following table presents information relating to total compensation of our directors for the year ended December 31, 2015. The following table does not present information for Mr. Eazor, our Chief Executive Officer and President, who did not receive additional compensation as a director in 2015 and whose compensation is included in the Summary Compensation Table elsewhere in this Proxy Statement.

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

Susan D. Bowick

  $120,000   $130,000           $250,000

David A. Koretz

  95,000   130,000           225,000

Kathy S. Lane

  95,000   130,000           225,000

Garry K. McGuire

  120,000   130,000           250,000

R. Gerard Salemme

  95,000   130,000           225,000

Julie A. Shimer Ph.D

  170,000   130,000           300,000

Walter L. Turek

  47,500   65,000           112,500

M. Wayne Wisehart

  110,000   130,000           240,000

(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 Holdings Corp. Common Stock on the date of grant. Assumptions used in the calculation of these award amounts are included in Note 9 to the consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2015 and incorporated by reference into this Proxy Statement. The aggregate number of stock awards outstanding as of December 31, 2015, were as follows: Ms. Bowick, 27,197, Mr. Koretz, 27,197, Ms. Lane, 27,197, Mr. McGuire, 27,197, Mr. Salemme, 27,197, Dr. Shimer, 27,197, Mr. Turek, 7,230 and Mr. Wisehart, 27,197.

(2)
Pursuant to the Board of Directors Compensation Plan, on April 29, 2015 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 27,197. Additionally, on October 28, 2015, we granted restricted stock units at a prorated value to Mr. Turek upon his appointment to the Board of Directors. Mr. Turek received 7,230 restricted stock units. The number of restricted stock units granted to each director was based on the closing price of EarthLink Common Stock on the grant date. The restricted stock units vest and become exercisable one year from the grant date.

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              During 2015, 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 non-executive Chairman of the Board an additional annual cash retainer of $75,000. 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. We reimburse directors for the expenses they incur in attending meetings of the Board of Directors or committees thereof.

              Under the Board of Directors Compensation Plan, 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.

              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. Following such a review in 2015, the Committee increased the value of the Board's annual restricted stock unit grant to $140,000 effective the first business day following the 2016 Annual Meeting of Stockholders.

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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, 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 Board of Directors, the Board of Directors designates one member of the Audit Committee to be its Chairperson.

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              The Audit Committee meets at least quarterly. The Audit Committee met seven times during 2015. The Audit Committee meets quarterly with representatives from our management and independent registered public accounting firm in separate sessions to discuss any matters that the Audit 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, 2015:

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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 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, 2015.

Submitted by: Audit Committee
Garry K. McGuire (Chairperson)
David A. Koretz
Kathy S. Lane
M. Wayne Wisehart

               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, Louis M. Alterman, Valerie C. Benjamin, Gerard Brossard, Samuel R. DeSimone, Jr., John T. Dobbins, Bradley A. Ferguson and Richard C. Froehlich. 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.


 

 

Louis M. Alterman
  
Executive Vice President, Chief
Financial Officer

 

 

 


Mr. Alterman (age 38) has served as our Executive Vice President, Chief Financial Officer since April 2015. He previously served as our Executive Vice President, Strategy, Operations and Transformation from September 2014 to April 2015. From August 2012 to September 2014, Mr. Alterman served as our Senior Vice President, Finance and Treasurer. From August 2008 to August 2012, Mr. Alterman served as our Vice President, Finance and Investor Relations. From May 2003 to August 2008, Mr. Alterman served in a number of roles across Finance, M&A and Internal Audit. Prior to joining EarthLink, Mr. Alterman held positions at BellSouth Corporation and A.G. Edwards and Sons, Inc.


 

 
                    

 

 

Valerie C. Benjamin
  
Senior Vice President, Human
Resources

 

 

 


Ms. Benjamin (age 47) has served as our Senior Vice President, Human Resources since April 2014. Ms. Benjamin previously served as our Vice President, Human Resources from 2012 to April 2014. From 2009 to 2012 she led Corporate HR and Change Management at Constellation Brands, Inc., a premium wine company. Prior to this she led the Talent Management Group at The Continuous Learning Group, Inc., a performance improvement consulting firm, from 2007 to 2009. From 1995 to 2007, she worked at Accenture, a management consulting and technology services company, in a variety of consulting and human resources roles, including as the Global Director, Leadership, Culture and Values.


 

 
                    

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Gerard Brossard
  
Executive Vice President and
Managing Director,
Enterprise/Mid-Market and
Information Technology

 

 

 


Mr. Brossard (age 51) has served as our Executive Vice President and Managing Director, Enterprise/Mid-Market and Information Technology since April 2015. Prior to joining the Company, Mr. Brossard served as Senior Vice President, Global Head of Business Planning and Operations at Visa Inc. since 2014. From 2013 to 2014, he served in a variety of advisory and consultative roles at several technology companies, including EarthLink. From 2000 to 2012, Mr. Brossard served in various executive positions with Hewlett-Packard Company, most recently as General Manager of its Rich Media Management Solutions division. From 2010 to 2012, Mr. Brossard served on the board of directors of MPhasis, an information technology solutions provider which is majority owned by Hewlett-Packard.


 

 
                    

 

 

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

 

 

 


Mr. DeSimone (age 56) 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.


 

 
                    

 

 

John T. Dobbins
  
Executive Vice President and
Managing Director, Network
Operations and Carrier

 

 

 


Mr. Dobbins (age 40) has served as our Executive Vice President and Managing Director, Network Operations and Carrier since April 2015. Previously, Mr. Dobbins served as our Executive Vice President, Network Operations since April 2014 and as our Senior Vice President, Network and Access Management from October 2013 to April 2014. Prior to joining the Company, Mr. Dobbins served as Vice President of Network and Access Optimization for XO Communications, a communications service provider, from 2011 to 2013. From 2006 to 2011, Mr. Dobbins served in a variety of sales, product management and access management roles at Global Crossing Telecommunications, a telecommunications company, prior to the sale of the company to Level 3 Communications.


 

 
                    

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Bradley A. Ferguson
  
Executive Vice President,
Corporate Development and
Managing Director, Consumer
and Small Business

 

 

 


Mr. Ferguson (age 45) has served as our Executive Vice President, Corporate Development and Managing Director, Consumer and Small Business since April 2015. Previously, he served as our Executive Vice President, Chief Financial Officer and Principal Accounting Officer from August 2009 to April 2015. 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.


 

 
                    

 

 

Richard C. Froehlich
  
Executive Vice President, Chief
Commercial Officer

 

 

 


Mr. Froehlich (age 52) has served as our Executive Vice President, Chief Commercial Officer since April 2015. He previously served as our Executive Vice President, Products and Consumer since he joined the Company in April 2014. Mr. Froehlich served as Vice President—Operating Partner in the mobile and wireless division of McWane Technology from January 2014 to April 2014. Mr. Froehlich also previously worked for EMC Corporation, where he served as the Senior Vice President/General Manager of Global OEM products and sales from June 2012 to June 2013. Mr. Froehlich held a variety of product, P&L and sales roles at Oracle Communications, from February 2011 to June 2012 and Dell, Inc., from 2000 to 2010. Prior to joining Dell, Mr. Froehlich was a principal with management consulting firm A.T. Kearney.


 

 
                    

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, 2015, except that a Form 4 for former executive officer Brian Fink was filed one day late.

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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 43 of this Proxy Statement, and (iv) all of our directors and executive officers as a group. Except as otherwise indicated in the footnotes below, such information is provided as of February 29, 2016. 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)

Louis M. Alterman

  140,267(4)    

Susan D. Bowick

  144,780(5)   *

Gerard Brossard

  24,863(6)   *

John T. Dobbins

  51,460(7)   *

Joseph F. Eazor

  437,697(8)   *

Bradley A. Ferguson

  245,674(9)   *

Richard C. Froehlich

  37,549(10)   *

David A. Koretz

  74,347(5)   *

Kathy S. Lane

  82,327(5)   *

Garry K. McGuire

  115,360(5)   *

R. Gerard Salemme

  79,875(5)   *

Julie A. Shimer Ph.D

  82,327(5)   *

Michael D. Toplisek

    *

Walter L. Turek

  7,230(11)   *

M. Wayne Wisehart

  142,361(5)   *

The Vanguard Group

  12,691,895(12)   12.1%

Renaissance Technologies LLC

  8,014,439(13)   7.6%

Dimensional Fund Advisors LP

  7,956,637(14)   7.6%

BlackRock, Inc. 

  6,074,872(15)   5.8%

All directors and executive officers as a group (17 persons)

  1,828,596(16)   1.7%

*
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 105,051,557 shares of Common Stock outstanding as of February 29, 2016.

(4)
Includes options to purchase 56,911 shares of Common Stock.

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(5)
Includes 27,197 restricted stock units that will vest within 60 days.

(6)
Represents 24,863 restricted stock units that will vest within 60 days.

(7)
Includes 9,920 restricted stock units that will vest within 60 days.

(8)
Includes options to purchase 150,000 shares of Common Stock.

(9)
Includes options to purchase 73,267 shares of Common Stock.

(10)
Includes 22,583 restricted stock units that will vest within 60 days.

(11)
Represents 7,230 restricted stock units that will vest within 60 days.

(12)
Represents beneficial ownership as of December 31, 2015, according to the Schedule 13G filed by The Vanguard Group on February 11, 2016. Vanguard Group has sole voting power over 228,597 of these shares, shared voting power over 14,200 of these shares, sole dispositive power over 12,454,698 of these shares and shared dispositive power over 237,197 of these shares. The address for The Vanguard Group is 10 Vanguard Blvd., Malvern, PA 19355.

(13)
Represents beneficial ownership as of December 31, 2015, according to the Schedule 13G filed by Renaissance Technologies LLC on February 12, 2016. Renaissance Technologies LLC has sole voting power over 8,011,700 of these shares and sole dispositive power over 8,014,439 of these shares. The address for Renaissance Technologies LLC is 800 Third Avenue, New York, NY 10022.

(14)
Represents beneficial ownership as of December 31, 2015, according to the Schedule 13G filed by Dimensional Fund Advisors LP on February 9, 2016. Dimensional Fund Advisors LP has sole voting power over 7,640,850 of these shares and sole dispositive power over 7,956,637 of these shares. The address for the Dimensional Fund Advisors LP is Building One, 6300 Bee Cave Road, Austin, TX 78746.

(15)
Represents beneficial ownership as of December 31, 2015, according to the Schedule 13G filed by BlackRock, Inc. on January 26, 2016. BlackRock, Inc. has sole voting power over 5,815,662 of these shares and sole dispositive power over 6,074,872 of these shares. The address for BlackRock, Inc. is 55 East 52 nd  Street, New York, NY 10022.

(16)
Includes options to purchase an aggregate of 320,241 shares of Common Stock and 254,975 restricted stock units.

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EXECUTIVE COMPENSATION

Compensation Discussion and Analysis

              Our primary executive compensation goals are to:

              To achieve these goals, we use 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. We believe using this Total Rewards approach allows us to create leverage from a combination of incentives which in the aggregate will drive behaviors that build stockholder value.

              This "Compensation Discussion and Analysis" describes the executive compensation programs we implemented in 2015 in order to advance our evolving business strategy.

              In 2014, we hired a new Chief Executive Officer and President and established a more focused strategy for our company in order to position our company for growth and transform into a leading managed network, security and cloud services provider. In 2015, under the leadership of our Chief Executive Officer, we continued to advance our strategy of increasing our focus on our core businesses while improving our operating efficiency and strengthening our balance sheet. Our 2015 financial results reflected our success in these objectives. In 2015, we:

              As a result of our focus on cash generation, we were also able to increase our 2015 Adjusted EBITDA financial guidance in each fiscal quarter in 2015. While our revenue continued to decline in 2015, we generated increasing revenues from our growth products which are the focus of our new business

   


1 "Adjusted EBITDA" refers to net income (loss) before interest expense and other, net, income tax benefit, depreciation and amortization, stock-based compensation expense, impairment of goodwill and long-lived assets, restructuring, acquisition and integration-related costs, and loss from discontinued operations, net of tax. "Unlevered Free Cash Flow" refers to Adjusted EBITDA less cash used for purchases of property and equipment. The Committee defines "free cash flow" as Adjusted EBITDA less cash used for purchases of property and equipment and less restructuring, acquisition and integration-related costs. See Annex A for a reconciliation of Adjusted EBITDA, Unlevered Free Cash Flow and "free cash flow" to the most comparable measures reported in accordance with U.S. generally accepted accounting principles.

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strategy. We also generated revenues in excess of our initial 2015 financial guidance. Our stock price in 2015 reflected these results, increasing from $4.39 per share on December 31, 2014 to $7.43 per share on December 31, 2015.

              In 2015, our Leadership and Compensation Committee (the "Committee") adopted a compensation strategy designed to continue to reward cash generation and operating efficiency as well as new revenue generation and customer churn management. Our 2015 short-term incentive plan was based on revenue (50%), Adjusted EBITDA (25%) and "free cash flow" (25%). 1 The plan also included an individual performance factor. In order to emphasize the importance of these performance measures to achieving our overall corporate strategy, our 2015 long-term incentive program included performance-based restricted stock units ("RSUs") with the same performance objectives as our short-term incentive plan. This emphasis on annual operating performance combined with equity award vesting requirements and executive stock ownership requirements links executives to long-term stockholder value creation.

              We believe our 2015 compensation results are consistent with our strong 2015 performance and that incentive awards earned by our executives reflected our performance in 2015. The Committee determined to pay out the portion of the awards earned under the 2015 short-term incentive plan that were based on corporate performance objectives at 183.6% of target and the 2015 performance-based RSUs at the maximum of 100% of target.

   


1  "Adjusted EBITDA" refers to net income (loss) before interest expense and other, net, income tax benefit, depreciation and amortization, stock-based compensation expense, impairment of goodwill and long-lived assets, restructuring, acquisition and integration-related costs, and loss from discontinued operations, net of tax. "Unlevered Free Cash Flow" refers to Adjusted EBITDA less cash used for purchases of property and equipment. The Committee defines "free cash flow" as Adjusted EBITDA less cash used for purchases of property and equipment and less restructuring, acquisition and integration-related costs. See Annex A for a reconciliation of Adjusted EBITDA, Unlevered Free Cash Flow and "free cash flow" to the most comparable measures reported in accordance with U.S. generally accepted accounting principles.

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      Compensation Practices and Policies

              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:

    Compensation Practice
  EarthLink Policy
    Pay for Performance       A significant portion of our compensation to our Named Executive Officers, including all of our STI and 50% of our LTI, is at risk based on performance.
   
    Stock Ownership Guidelines       We have meaningful stock ownership guidelines for our executive officers, including our Named Executive Officers, and each of our executive officers complies with these guidelines.
   
    Independent Compensation Consultation       The Committee retains an independent compensation consultant. In February 2016, the Committee determined that the work performed for the Committee by Frederic W. Cook & Co., Inc. did not raise any conflict of interest.
   
    Compensation Recoupment Policy       We may obtain the reimbursement of improperly awarded incentive compensation in the event the Company restates its financial statements.
   
    Prohibition on Hedging and Pledging Transactions       We prohibit executive officers, directors and employees from engaging in transactions involving Company securities that hedge or offset any decreases in the market value of such securities, including put or call options, pledges, any other form of hedging transactions, margin purchases of Company stock or short sales. We also prohibit pledging of our Common Stock to secure loans.
   
    No Tax Gross-Ups       We do not pay tax gross-ups for payments relating to a change in control or with respect to perquisites.
   
    Limited Executive Perquisites       We provide only limited executive perquisites.
   
    Employment Agreement with CEO Only       We have only one employment agreement, which is with our Chief Executive Officer.
   
    Benchmarking Process       The Committee reviews the external marketplace in order to set market-based pay levels and consider best practices when making compensation decisions.
   
    Annual Say-on-Pay       We value our stockholders' input on our executive compensation programs. We seek an annual non-binding vote on our executive compensation policies.
   

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              We held our 2014 annual "say on pay" vote on our executive compensation policies at our 2014 Annual Meeting of Stockholders in April 2014. Approximately 87% of the shares present or represented and entitled to vote on the proposal at the 2014 Annual Meeting of Stockholders were voted for the non-binding advisory resolution approving the compensation of our Named Executive Officers. Stockholder input on executive compensation is important to the Committee and management and, accordingly, management seeks this input in meetings with investors.

              The Committee considered the "say on pay" feedback from the 2014 Annual Meeting of Stockholders when setting the 2015 compensation programs and adjusted the program to increase the emphasis on individual performance in the short term incentive program. We held our 2015 annual "say on pay" vote on our executive compensation policies at our 2015 Annual Meeting of Stockholders in April 2015.

Over 95% of the shares present or represented and entitled to vote on the proposal at the 2015 Annual Meeting of Stockholders were voted for the non-binding advisory resolution approving the compensation of our Named Executive Officers.

The Committee believes that these voting results and the investor feedback reflect our stockholders' support for our executive compensation objectives, program and rationale.

      Overview of 2015 Executive Compensation Program

              The Committee's objective for the 2015 executive compensation program was to incentivize the accomplishment of key company objectives as follows:

Key Corporate Objective   Incentive Used
Deliver target cash generation  

25% 2015 STI and performance-based RSUs tied to Adjusted EBITDA and 25% to free cash flow

Deliver target revenue  

50% 2015 STI and performance-based RSUs tied to revenue generation

              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 strong financial performance in 2015 and our continuing progress in transforming our company. The Committee also believes the 2015 compensation design was effective in providing meaningful rewards for achieving business objectives that our Board of Directors believes should lead to future overall stockholder value creation.

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      Compensation Review Process

              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. and other Committee advisors raises any conflict of interest

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

 

Independent Board
Members

 

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

Provides final review of our Chief Executive Officer's goals and objectives and 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, Chief Executive Officer employment agreement, change in control and severance plans and 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

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 Senior 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.

              Compensation Consultant.     The Committee uses Frederic W. Cook & Co., Inc. as its independent compensation consultant. The role of the consultant is to provide advice and counsel to the Committee. In 2015, the consultant performed work at the direction and under the supervision of the Committee, and the Committee did 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.

              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 2015, the Committee referred to the following comparison group:

AOL Inc.   Premiere Global Services, Inc
Cincinnati Bell Inc.   Rackspace Hosting, Inc.
Equinix Inc.   TW Telecom Inc.
FairPoint Communications, Inc.   Vonage Holdings Corp.
Frontier Communications Corp.   Windstream Holdings, Inc.
Level 3 Communications, Inc.   Zayo Group, LLC
Ntelos Holdings Corp.    

              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 and the Radford Global Technology Executive Survey of companies with annual revenue of $1 billion to $3 billion. The Committee was provided information relating to 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).

              Executive Individual Performance.     The Committee also takes into consideration individual performance so that executive compensation reflects past performance as well as future potential and adequately differentiates between executive officers, based on the scope and complexity of the executive officer's job position, market comparisons and individual performance. As a result the Committee does not establish executive compensation levels to achieve a mathematically precise market position.

              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 2016, the members of the Committee and the other independent directors reviewed Mr. Eazor's annual performance in light of Company performance and the 2015 corporate

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priorities that had been established by the Board of Directors. The 2015 corporate priorities are set forth below.

              The Committee determined that through his leadership, the Company substantially exceeded or met each of these objectives, other than objectives relating to sales bookings and product development metrics for the Company's Enterprise/Mid-Market business segment where the Company made progress but did not reach the objectives.

              In evaluating the individual performance of each of the other Named Executive Officers in 2015 when determining payouts under the 2015 annual incentive plan, the Committee considered these officers' success in supporting Mr. Eazor in achieving the 2015 corporate priorities.

              The compensation policies with respect to our Named Executive Officers in 2015 did not differ materially between the officers, other than that Mr. Eazor has 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.

      Elements of Executive Compensation

              The elements of executive compensation in 2015 included:

               
    Base Salary

 

Short-Term Incentives
· Annual Incentive Plan


 
  Long-Term Incentives
· Performance-based
RSUs
· Service-based RSUs




  Health and Welfare and
Other Benefits
· Financial and Tax
Planning Services
· Insurance
· 401(K) Plan






               

In 2015, the Committee did not allocate specific weight to each of the compensation components, but its intent was to:

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

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              Base Salaries.     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 these factors, in February 2015 the Committee determined that the 2015 base salaries for Joseph F. Eazor, Bradley A, Ferguson, Rick C. Froehlich and Michael D. Toplisek would not change from their 2014 base salaries. The Committee determined that the salaries for Louis M. Alterman and John T. Dobbins would increase to $320,000 and $350,000, 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 prior organizational changes. The Committee approved an additional increase in Mr. Alterman's base salary in April 2015 to $350,000 in connection with his appointment as our Chief Financial Officer. This increase was made to reflect the responsibilities of his new position and to better position him relative to other chief financial officers in the market.

              The following table identifies the 2015 base salaries for our Named Executive Officers:

Name and Title   2015 Base Salaries

Current Named Executive Officers

   

Joseph F. Eazor

  $750,000

President and Chief Executive Officer

   

Louis M. Alterman

  350,000

Executive Vice President, Chief Financial Officer

   

Gerard Brossard

  440,000

Executive Vice President and Managing Director, Enterprise/Mid-Market and Information Technology

   

John T. Dobbins

  350,000

Executive Vice President, Network Operations and Carrier

   

Bradley A. Ferguson

  379,250

Executive Vice President, Corporate Development and Managing Director, Consumer and Small Business

   

Richard C. Froehlich

  340,000

Executive Vice President, Chief Commercial Officer

   

Former Named Executive Officer(1)

   

Michael D. Toplisek

  358,750

Former Executive Vice President, Managed Services

   

(1)
Mr. Toplisek left the Company in April 2015.

              Our Executive Vice President and Managing Director, Enterprise/Mid-Market and Information Technology, Mr. Brossard, joined the Company in April 2015. Taking into consideration the results of a competitive market review and his prior experience, the Committee determined that Mr. Brossard's base salary would be $440,000, his annual target bonus opportunity would be 80% of his base salary and his new hire equity grant would be the equivalent of $725,000 in RSUs. The Committee also determined to pay Mr. Brossard a sign-on bonus of $150,000 in recognition of compensation he was forfeiting by leaving his prior employer mid-year.

              Short-Term Incentives.     Our short-term annual incentive plan consists of a corporate performance payment and an individual performance payment. Under the plan, executive officers' individual payouts were budgeted to consist of a 70% corporate performance payment and a 30% individual performance payment. (In the 2014 annual incentive plan, the individual performance percentage was 20%. In February 2015 the Committee determined to increase this percentage to 30% to further emphasize individual accountability and reward individual accomplishments.) As further described below, the corporate

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performance payments and individual performance payments are determined based on (i) eligible earnings; (ii) target incentive opportunity; and (iii) corporate performance multiplier. The individual performance payment also takes into consideration an individual performance factor.

              For our annual incentive plans, the Committee determines for each of our executive officers a target incentive opportunity as a percentage of eligible earnings. "Eligible earnings" for these purposes generally consists of the Named Executive Officer's base salary earned during the bonus period. Our Named Executive Officers' target incentive opportunity is identified in the table below. The target incentive opportunities for each of the Named Executive Officers were not increased in February 2015, other than for Mr. Eazor and Mr. Dobbins. These increases were made to reflect their increased experience and accomplishments in 2014. In addition, Mr. Alterman's target bonus opportunity was increased to 70% in April 2015 when he was appointed to the position of Chief Financial Officer for the same reasons his base salary was increased.

Name   2015 Target Incentive
Opportunity

Current Named Executive Officers

   

Joseph F. Eazor

  115%

Louis M. Alterman

  70%

Gerard Brossard

  80%

John T. Dobbins

  65%

Bradley A. Ferguson

  70%

Richard C. Froehlich

  70%

Former Named Executive Officer(1)

   

Michael D. Toplisek

  70%

(1)
Mr. Toplisek left the Company in April 2015.

              In February 2015, the Committee approved our 2015 annual incentive plan for our executive officers. Under the plan, our performance for the fiscal year on revenue, Adjusted EBITDA and free cash flow would establish the maximum aggregate bonus pool that could be paid to all eligible participants. Summarized in the table below are the applicable corporate performance objectives, weights and the rationale for these objectives.

Performance Measure   Weight   Rationale for Inclusion

Revenue

    50 %

Incentivize growth and churn reduction

Adjusted EBITDA

    25 %

Incentivize profitability and cash generation and efficient operations in all business segments

Free Cash Flow

    25 %

Incentivize profitability, cash generation and efficient use of capital and management of restructuring, acquisition and integration-related costs in all business segments

              Additionally, the Committee determined that making any payouts under the 2015 plan would be conditioned on the Adjusted EBITDA performance objective being achieved at least the 50% payout target threshold. The plan also established an individual performance payout factor with a maximum payout factor of 200%.

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              In February 2016, the Committee reviewed our actual operating performance for 2015 against the incentive plan goals. The incentive plan performance targets and achievement are summarized below:

2015 Incentive Plan Performance Targets and Achievement
(dollars in millions)

 
  50% Payout
Threshold
  100% Payout
Target
  150% Payout
Target
  200% Payout
Maximum
  Actual
Performance
  Achievement

Revenue (50%)

  $1,016.9   $1,061.8   $1,076.9   $1,092.0   $1,092.3   200%

Adjusted EBITDA (25%)

  177.7   217.7   225.9   234.0   242.5   200%

Free Cash Flow (25%)

  87.6   122.6   133.8   145.0   135.7   160%

Total Blended Achievement

                      189.6%

              The Committee exercised its discretion under the 2015 incentive plan to reallocate a portion of the achievement under the plan to the Company's non-exempt employees who did not participate in the plan, with the result that there was a 183.6% payout under the plan compared to the 189.6% blended achievement level. The Committee took this action in recognition of the non-exempt employees' contribution to the Company's success in 2015.

              Based on the corporate performance described above, the corporate performance payment portion of the annual incentive payment was calculated as the product of (i) the Named Executive Officer's eligible earnings, (ii) the Named Executive Officer's target incentive opportunity percentage, (iii) 70%, and (iv) 183.6% (the corporate performance multiplier).

              In February 2016, the Committee also evaluated the 2015 individual performance of the Named Executive Officers in connection with determining their incentive payments for 2015. In making this evaluation the Committee took into account the recommendation of our Chief Executive Officer as to the performance of our other Named Executive Officers in relation to their contribution to the Company's achievement of the 2016 objectives and their individual results described above in "Executive Individual Performance". The Committee determined that the individual performance payout for each of the Named Executive Officers would be as set forth in the table below. This percentage is referred to as the individual performance multiplier.

              The individual performance payment portion of the annual incentive payment was calculated as the product of (i) the Named Executive Officer's eligible earnings, (ii) the Named Executive Officer's target incentive opportunity percentage, (iii) 183.6 % (the corporate performance multiplier), (iv) 30%, and (v) the Named Executive Officer's individual performance multiplier.

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              The table below sets out the total incentive payments earned under the 2015 incentive plan for the following Named Executive Officers, with incentive payments being paid in cash in February 2016:

Name and Title(1)   2015 Individual Performance Multiplier   2015 Corporate Performance Payment   2015 Individual Performance Payment   2015 Total Annual Incentive Plan Payment

Current Named Executive Officers

                 

Joseph F. Eazor

    110 % $1,108,485   $522,571   $1,631,056

Louis M. Alterman

    110   302,763   142,732   445,495

Gerard Brossard

    100   321,893   137,954   459,847

John T. Dobbins

    100   284,351   121,864   406,215

Bradley A. Ferguson

    100   341,189   146,223   487,412

Richard C. Froehlich

    95   305,878   124,536   430,414

(1)
Michael Toplisek left the Company in April 2015. Under the Company's severance plan, Mr. Toplisek's severance payment included the pro-rata portion of the bonus earned under the 2015 annual incentive plan for the portion of 2015 that he was with the Company, as reflected in the Summary Compensation Table appearing later in this Proxy Statement.

              In addition to the annual incentive plan, Mr. Dobbins participated in the 2015 Executive Save Sharing Plan which was established for members of our access management department. This plan provided that for each $1.00 achieved over the goal of $28 million (but with a maximum of $38 million), in access savings or other margin improvements $0.05 would be used to fund a bonus pool. The maximum that Mr. Dobbins could earn under the plan for 2015 was $325,000. In February 2016, the Committee reviewed the relevant results (which indicated an achievement of more than $42 million in savings) and determined to grant Mr. Dobbins a payout of $325,000, which the Committee determined would be paid 50% in cash and 50% in Company Common Stock in February 2016.

              Long-Term Incentive Compensation.     The Committee's objectives for the 2015 long-term incentive compensation program were to align the interests of our executives and stockholders and to drive cash generation and operating efficiency while continuing to incentivize new revenue generation and customer churn management. To accomplish these objectives, the Committee granted RSUs of which 50% were performance-based and 50% were service-based. The performance-based RSUs could be earned based on the level of achievement of the revenue, Adjusted EBITDA and free cash flow objectives set forth in the 2015 short-term incentive plan, with 100% being the maximum percentage of RSUs that could be earned. As with the 2015 short-term incentive plan, the Committee conditioned the earning of any performance-based RSUs on the Adjusted EBITDA performance objective being achieved at least the 50% payout target threshold.

              To incentivize stockholder value creation, service-based RSUs vest ratably over three years, beginning on the first anniversary of the grant date (assuming continued employment). Also to link executives to stockholders and provide retention incentives, the performance-based RSUs that are earned vest on the third anniversary of the grant date (assuming continued employment).

              After considering qualitative individual officer considerations such as experience level, together with a competitive market review of total compensation, in February 2015, the Committee granted 2015 long-term incentive compensation equity awards to the Named Executive Officers serving at that time, as set forth in the table below. While the Committee did not make its decisions in accordance with mathematical formulas, the equity awards to the Named Executive Officers were generally in line with the

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market median. Mr. Brossard's equity awards were awarded to him in connection with his hiring in April 2015.

Name   Number of
Performance-Based
RSUs Granted
  Number of
Service-Based
RSUs Granted
  2015 Total
Number of
RSUs
Granted

Current Named Executive Officers

           

Joseph F. Eazor

  269,663   269,663   539,326

Louis M. Alterman

  61,798   61,798   123,596

Gerard Brossard

  74,588   74,588   149,176

John T. Dobbins

  44,944   44,944   89,888

Bradley A. Ferguson

  56,180   56,180   112,360

Richard C. Froehlich

  61,798   61,798   123,596

Former Named Executive Officer(1)

           

Michael D. Toplisek

  61,798   61,798   123,596

(1)
Mr. Toplisek left the Company in April 2015.

              Based on our achievement of the revenue, Adjusted EBITDA and free cash flow targets, 100% of the performance-based RSUs that were granted to the Named Executive Officers in 2015 were earned, with full vesting to occur on the third anniversary of the grant date (assuming continued employment).

      Benefits and Other Compensation

              In 2015, we provided the Chief Executive Officer and our executive vice presidents 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 2015 we provided our executive officers with the same benefit package available to all of our employees.

              We compensated Mr. Eazor for temporary living expenses when traveling to Atlanta until April 27, 2015. As of that date and in accordance with his employment agreement, the Committee approved a lump sum payment of $309,750 as full satisfaction of the Company's obligation under Mr. Eazor's employment agreement to pay Mr. Eazor's expenses in relocating to Atlanta.

      Employment Agreement with CEO

              In December 2013, we 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 page 49 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.

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              We have a Change-In-Control Accelerated Vesting and Severance Plan, or CIC Plan, which provides our Named Executive Officers, other than Mr. Eazor, with change in control protection as described below under "Potential Payments upon Change in Control or Severance". We also have a Severance Plan, the "Severance Plan," which provides our Named Executive Officers, other than Mr. Eazor, with severance protections, as described below under "Potential Payments upon Change in Control or Severance." We provide Mr. Eazor with change-in-control and severance protection under his employment agreement.

              We amended the Severance Plan in February 2015 to provide executive vice presidents and senior vice presidents with severance payments equal to 18 months and 12 months, respectively, of their base salary and healthcare benefits. The Committee approved this amendment in order to be more consistent with competitive practices regarding the overall length of severance.

              We believe that by providing our Named Executive Officers with these change in control and severance protections, 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. This policy applies to both cash and equity incentive compensation.

      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 provide 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 provide 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 own a minimum number of shares of our Common Stock having a fair market value equal to or exceeding two times their base salaries. Until such time as the director or executive officer reaches his or her stock ownership guideline, such individual shall hold 50% of the net shares of Common Stock received upon lapse of the restrictions on restricted stock units and upon exercise of stock options.

              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.

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      Limitations on Deductibility of Compensation

              Under Section 162(m) of the Internal Revenue Code (the "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 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. We believe the annual cash incentive program satisfies the requirements for performance-based compensation as defined in Section 162(m) and is therefore a tax deductible expense. For payments under our annual cash incentive program to be considered performance-based compensation under Section 162(m), the Committee can only exercise negative discretion relative to actual performance when determining the amount to be paid. In order to ensure compliance with Section 162(m), the Committee has established a target in excess of the maximum individual payout allowed to Named Executive Officers under our annual cash incentive program. Reductions are made each year and are not a reflection of the performance of the Named Executive Officers but rather ensure flexibility with respect to making payments based upon performance. We believe that all of the 2015 compensation paid to these officers is so deductible by us.

              However, 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. The Committee also is aware 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.

Submitted by: Leadership and Compensation Committee
Susan D. Bowick (Chairperson)
Kathy S. Lane
Garry K. McGuire
Julie A. Shimer Ph.D
Walter L. Turek

               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

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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.

Leadership and Compensation Committee Interlocks and Insider Participation

              The Leadership and Compensation Committee currently consists of Ms. Bowick (Chairperson), Ms. Lane, Mr. McGuire, Dr. Shimer and Mr. Turek. 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.

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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 at any time in 2015 and the three other most highly compensated executive officers, other than the persons who served as our Chief Executive Officer and Chief Financial Officer, serving at December 31, 2015. In addition, the table includes an individual who would have been one of the three other most highly compensated executive officers, but who was not serving at December 31, 2015. 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
($)
  Total(3)
($)
 
Joseph F. Eazor(4)     2015   $ 750,000   $   $ 2,400,001   $   $ 1,631,056   $   $ 365,665 (5) $ 5,146,722  

President and Chief

    2014     706,731     250,000 (6)   2,884,410     442,530     1,024,759         91,136 (5)   5,399,565  

Executive Officer

                                                       

Louis M. Alterman(7)

 

 

2015

 

 

338,846

 

 

75,000

(8)

 

550,002

 

 


 

 

445,495

 

 


 

 

16,455

(9)

 

1,425,798

 

Executive Vice
President, Chief
Financial Officer

                                                       

Gerard Brossard(10)

 

 

2015

 

 

313,077

 

 

150,000

(11)

 

724,995

 

 


 

 

459,847

 

 


 

 

4,135

(12)

 

1,652,054

 

Executive Vice
President and
Managing Director,
Enterprise/Mid-
Market and
Information
Technology

                                                       

John T. Dobbins(13)

 

 

2015

 

 

342,308

 

 

125,000

(14)

 

400,002

 

 


 

 

731,215

 

 


 

 

11,528

(15)

 

1,610,053

 

Executive Vice

    2014     277,952     125,000 (14)   383,200         659,893         7,500 (15)   1,453,545  

President and
Managing Director,
Network Operations
and Carrier

                                                       

Bradley A. Ferguson

 

 

2015

 

 

379,250

 

 


 

 

500,002

 

 


 

 

487,412

 

 


 

 

25,097

(16)

 

1,391,761

 

Executive Vice

    2014     376,760         491,989         382,411         36,025 (16)   1,287,185  

President, Corporate

    2013     355,461         299,999     199,680     191,469         20,750 (16)   1,067,359  

Development and
Managing Director,
Consumer and
Small Business

                                                       

Richard C. Froehlich(17)

 

 

2015

 

 

340,000

 

 


 

 

550,002

 

 


 

 

430,414

 

 


 

 

16,180

(18)

 

1,336,596

 

Executive Vice
President, Chief
Commercial Officer

                                                       

Michael D. Toplisek(19)

 

 

2015

 

 

131,082

 

 

250,000

(20)

 

550,002

 

 


 

 

168,466

 

 


 

 

610,454

(21)

 

1,710,004

 

Former Executive

    2014     356,594     500,000 (20)   688,785         702,473         13,500 (21)   2,261,352  

Vice President,

    2013     332,692         360,003     239,617     188,637         7,500 (21)   1,128,449  

Managed Services

                                                       

(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 9 to the consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2015 and incorporated by reference into this Proxy Statement.

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(2)
Non-equity incentive plan compensation for 2015 represents cash incentive awards earned in 2015 under our 2015 annual incentive award plan. For 2015, our cash incentive awards under those plans for the Named Executive Officers were 183.6% of our corporate performance target for the Named Executive Officers. The non-equity incentive plan also included an individual performance component. The 2015 cash incentive award payments were made in cash in February 2016. Non-equity incentive plan compensation for Mr. Dobbins also includes a $325,000 incentive award earned under the 2015 Executive Save-Sharing Plan, which award was earned at 100% of the eligible award and which was paid 50% in cash and 50% in common stock.

Non-equity incentive plan compensation for 2014 represents cash incentive awards earned in 2014 under our 2014 annual incentive award plan. For 2014, our cash incentive awards under those plans for the Named Executive Officers were 145% of our corporate performance target for the Named Executive Officers. The non-equity incentive plan also included an individual performance component. Non-equity incentive plan compensation for Mr. Toplisek also included a $384,142 cash incentive award earned under an Incentive Award Agreement, which award was earned at 77% of the eligible award. Non-equity incentive plan compensation for Mr. Dobbins also includes a $500,000 cash incentive award earned under the 2014 EarthLink Access Management Save-Sharing Executive Bonus Plan, which award was earned at 100% of the eligible award. The 2014 cash incentive awards payments were made in cash in February 2015.

Non-equity incentive plan compensation for 2013 represents cash incentive awards earned in 2013 under our 2013 annual incentive award plan. For 2013, our cash incentive awards under those plans for the Named Executive Officers were 81% of target for the Named Executive Officers. The 2013 cash incentive awards payments were made in cash in February 2014.

(3)
Salary, bonus and non-equity incentive plan compensation as a percentage of total compensation for each of our Named Executive Officers who is currently employed by us for 2015 is as follows: Mr. Eazor 46%; Mr. Alterman 60%; Mr. Brossard, 56%; Mr. Dobbins, 74%; Mr. Ferguson 62%; Mr. Froehlich, 58%; and Mr. Toplisek, 32%.

Salary, bonus and non-equity incentive plan compensation as a percentage of total compensation for each of our Named Executive Officers for 2014 is as follows: Mr. Eazor, 37%; Mr. Dobbins, 73%; Mr. Ferguson, 59%; and Mr. Toplisek, 69%.

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. Ferguson, 51%; and Mr. Toplisek, 46%.

(4)
Mr. Eazor joined the Company in January 2014.

(5)
For 2015, other compensation consists of $5,290 of financial planning services, $7,500 in matching contributions made to Mr. Eazor's account under our 401(k) Plan, $22,875 in deferred dividend payments upon vesting of RSUs, $20,250 for temporary living expenses and $309,750 relocation expenses. For 2014, other compensation consists of $8,290 of financial planning services, $7,500 in matching contributions made to Mr. Eazor's account under our 401(k) Plan and $75,346 for temporary living expenses.

(6)
Represents a sign-on payment to Mr. Eazor in connection with his employment with our Company.

(7)
Mr. Alterman was not a Named Executive Officer in 2013 or 2014. Summary compensation information for Mr. Alterman is only required for 2015.

(8)
Represents a retention bonus paid to Mr. Alterman in connection with an agreement entered into with the Company in June 2014 before he became an executive officer.

(9)
For 2015, other compensation consists of $647 of financial planning services, $7,500 in matching contributions made to Mr. Alterman's account under our 401(k) Plan and $8,308 in deferred dividend payments upon vesting of RSUs.

(10)
Mr. Brossard joined the Company in April 2015. Therefore, summary compensation information for Mr. Brossard is only required for 2015.

(11)
Represents a sign-on payment to Mr. Brossard in connection with his employment with our Company.

(12)
For 2015, other compensation consists of $4,135 of financial planning services.

(13)
Mr. Dobbins was not a Named Executive Officer in 2013. Summary compensation information for Mr. Dobbins is only required for 2014 and 2015.

(14)
Represents 2014 and 2015 retention payments to Mr. Dobbins. In recognition of (i) his expertise in achieving network cost savings and (ii) compensation from his former employer he was foregoing by joining us, Mr. Dobbins received a compensation arrangement when he was hired in September 2013 providing for a continued employment bonus of $125,000 to be paid after 12 months of continuous employment and an additional continued employment bonus of $125,000 to be paid after 24 months of continuous employment.

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(15)
For 2015, other compensation consists of $7,500 in matching contributions made to Mr. Dobbins' account under our 401(k) Plan and $4,028 in deferred dividend payments upon vesting of RSUs. For 2014, other compensation consists of $7,500 in matching contributions made to Mr. Dobbins' account under our 401(k) Plan.

(16)
For 2015, other compensation consists of $6,050 of financial planning services, $7,500 in matching contributions made to Mr. Ferguson's account under our 401(k) Plan and $11,547 in deferred dividend payments upon vesting of RSUs. For 2014, other compensation consists of $9,025 of financial planning services, $7,500 in matching contributions made to Mr. Ferguson's account under our 401(k) Plan and $19,500 in deferred dividend payments upon vesting of RSUs. 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 deferred dividend payments upon vesting of RSUs.

(17)
Mr. Froehlich was not a Named Executive Officer in 2013 or 2014. Summary compensation information for Mr. Froehlich is only required for 2015.

(18)
For 2015, other compensation consists of $4,163 of financial planning services, $7,500 in matching contributions made to Mr. Froehlich's account under our 401(k) Plan and $4,517 in deferred dividend payments upon vesting of RSUs.

(19)
Mr. Toplisek's last day of employment was April 1, 2015.

(20)
Represents payments to Mr. Toplisek under an Incentive Award Agreement that was described in our 2015 Proxy Statement.

(21)
For 2015, other compensation consists of a $539,505 of severance, $16,433 of employer portion of benefit plan, $7,500 in matching contributions made to Mr. Toplisek's account under our 401(k) Plan and $47,016 in deferred dividend payments upon vesting of RSUs. For 2014, other compensation consists of $6,000 of financial planning services and $7,500 in matching contributions made to Mr. Toplisek's account under our 401(k) Plan. 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, 2015.

 
   
   
   
   
   
   
   
  All Other
Stock
Awards:
Number
of Shares
of Stock
of Units
(#)
  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)($)
  Estimated Future Payouts
Under Equity
Incentive Plan Awards(#)
  Grant
Date Fair
Value of
Stock and
Option
Awards(2)
($)
 
Name   Grant Date   Threshold
($)
  Target
($)
  Maximum
($)
  Threshold
(#)
  Target
(#)
  Maximum
(#)
 

Joseph F. Eazor

  N/A   $431,250   $ 862,500   $ 1,725,000             $—   $—  

  2/19/2015                   539,326       2,400,001  

Louis M. Alterman

 

N/A

 
118,596
   
237,192
   
474,385
 
 
 
 
 
 
 
 

  2/19/2015                   123,596       550,002  

Gerard Brossard

 

N/A

 
125,231
   
250,462
   
500,923
 
 
 
 
 
 
 
 

  2/19/2015                   149,176       724,995  

John T. Dobbins

 

N/A

 
111,250
   
222,500
   
445,000
 
 
 
 
 
 
 
 

  2/19/2015                   89,888       400,002  

Bradley A. Ferguson

 

N/A

 
132,738
   
265,475
   
530,950
 
 
 
 
 
 
 
 

  2/19/2015                   112,360       500,002  

Richard C. Froehlich

 

N/A

 
119,000
   
238,000
   
476,000
 
 
 
 
 
 
 
 

  2/19/2015                   123,596       550,002  

Michael D. Toplisek

 

N/A

 
125,563
   
251,125
   
502,250
 
 
 
 
 
 
 
 

  2/19/2015                   123,596       550,002  

(1)
Estimated future payouts under non-equity incentive plan awards represents incentive awards earned under our 2015 annual incentive award plans. For 2015, our incentive awards payouts for our Named Executive Officers under those plans were 183.6% of our corporate performance target for the Named Executive Officers. The plan also included an individual performance component. The following amounts were earned in 2015 under the 2015 annual incentive award plans: Mr. Eazor, $1,631,056; Mr. Alterman, $445,495; Mr. Brossard, $459,847; Mr. Dobbins, $406,215; Mr. Ferguson, $487,412; Mr. Froehlich, $430,414; and Mr. Toplisek, $168,466.

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

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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, 2015.

 
  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

Joseph F. Eazor

  75,000   225,000(1)     $4.97   1/13/2024   508,834(2)   $3,780,637   576,337(3)   $4,282,184

Louis M. Alterman

 
26,945
 
15,092
 
 
7.51
 
2/16/2022
 
96,092(4)
 
713,964
 
128,961(5)
 
958,180

    29,748     6.08   2/20/2023                

Gerard Brossard

 
 
 
 
 
 
74,588(6)
 
554.189
 
74,588(7)
 
554.189

John T. Dobbins

 
 
 
 
 
 
80,725 (8)
 
599,787
 
100,417(9)
 
746,098

Bradley A. Ferguson

 
 
31,250
 
 
7.51
 
2/16/2022
 
94,586(10)
 
702,774
 
158,198(11)
 
1,175,411

    84,034     6.08   2/20/2023                

Richard C. Froehlich

 
 
 
 
 
 
106,964(12)
 
794,743
 
129,548(13)
 
962,542

Michael D. Toplisek

 
 
 
 
 
 
 
 
 

(1)
Mr. Eazor's stock options vest as follows: (a) 75,000 vested on January 13, 2016; (b) 75,000 will vest on January 13, 2017; and (c) 75,000 will vest on January 13, 2018.

(2)
Mr. Eazor's restricted stock units vest as follows: (a) 89,888 vested on February 19, 2016; (b) 88,335 vested on February 20, 2016; (c) 62,500 will vest on January 13, 2017; (d) 89,887 will vest on February 19, 2017; (e) 88,336 will vest on February 20, 2017; and (f) 89,888 will vest on February 19, 2018.

(3)
Mr. Eazor's restricted equity incentive plan awards vest as follows due to satisfaction of performance objectives: (a) 20,833 vested on January 13, 2016; (b) 20,834 will vest on January 13, 2017; (c) 265,007 will vest on February 20, 2017; and (d) 269,663 will vest on February 19, 2018.

(4)
Mr. Alterman's restricted stock units vest as follows: (a) 20,600 vested on February 19, 2016; (b) 8,814 vested on February 20, 2016; (c) 8,333 will vest on each of October 28, 2016 and October 28, 2017; (d) 20,599 will vest on each of February 19, 2017 and February 19, 2018; and (e) 8,814 will vest on February 20, 2017.

(5)
Mr. Alterman's restricted equity incentive plan awards vest as follows due to satisfaction of performance objectives: (a) 15,720 vested on February 20, 2016; (b) 26,443 will vest on February 20, 2017; (c) 25,000 will vest on October 28, 2017; and (d) 61,798 will vest on February 19, 2018.

(6)
Mr. Brossard's restricted stock units vest as follows: (a) 24,863 will vest on April 28, 2016; (b) 24,862 will vest on April 28, 2017; and (c) 24,863 will vest on April 28, 2018.

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(7)
Mr. Brossard's restricted equity incentive plan awards vest as follows due to satisfaction of performance objectives: 74,588 will vest on April 28, 2018.

(8)
Mr. Dobbins' restricted stock units vest as follows: (a) 14,982 vested on February 19, 2016; (b) 7,220 vested on February 20, 2016; (c) 1,500 will vest on October 22, 2016; (d) 7,220 will vest on February 20, 2017; (e) 9,920 will vest on April 29, 2016; (f) 14,981 will vest on each of February 19, 2017 and February 19, 2018; and (g) 9,921 will vest on April 29, 2017.

(9)
Mr. Dobbins' restricted equity incentive plan awards vest as follows due to satisfaction of performance objectives: (a) 4,050 will vest on October 22, 2016; (b) 21,661 will vest on February 20, 2017; (c) 29,762 will vest on April 29, 2017; and (d) 44,944 will vest on February 19, 2018.

(10)
Mr. Ferguson's restricted stock units vest as follows: (a) 18,727 vested on February 19, 2016; (b) 19,203 vested on February 20, 2016; (c) 18,726 will vest on February 19, 2017; (d) 19,203 will vest on February 20, 2017; and (e) 18,727 will vest on February 19, 2018.

(11)
Mr. Ferguson's restricted equity incentive plan awards vest as follows due to satisfaction of performance objectives: (a) 44,408 vested on February 20, 2016; (b) 57,610 will vest on February 20, 2017; and (c) 56,180 will vest on February 19, 2018.

(12)
Mr. Froehlich's restricted stock units vest as follows: (a) 20,600 vested on February 19, 2016; (b) 22,583 will vest on each of April 29, 2016 and April 29, 2017; (c) 20,599 will vest on February 19, 2017; and (d) 20,599 will vest on February 19, 2018.

(13)
Mr. Froehlich's restricted equity incentive plan awards vest as follows due to satisfaction of performance objectives: (a) 67,750 will vest on April 29, 2017; and (b) 61,798 will vest on February 19, 2018.

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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, 2015.

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

Joseph F. Eazor

    $—   109,169   $559,260  

Louis M. Alterman

  49,577   130,815   25,279   168,532  

Gerard Brossard

         

John T. Dobbins

      18,642   93,254  

Bradley A. Ferguson

  181,064   353,931   31,898   145,969  

Richard C. Froehlich

      22,584   107,952  

Michael D. Toplisek

  113,445   23,559   134,520   863,314  

(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 or our Severance Plan. The employment agreement provides for a minimum annual base salary of $750,000 per year. The employment agreement provides that Mr. Eazor will be entitled to participate in our short term annual incentive plan with a minimum target bonus opportunity of 100% of his eligible earnings (which was increased by the Committee to 115% in 2015), which will be paid if the bonus criteria, as set by the Committee, for the applicable annual period, are met.

              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 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.

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              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 Change in Control or Severance

      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. Mr. Eazor receives severance 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, 2015, the benefits for our Named Executive Officers 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  

Joseph F. Eazor

  $1,612,500   $1,612,500   $738,000   $8,062,821   $23,474   $862,500   $12,911,795  

Louis M. Alterman

  495,813   396,687   40,160   1,672,144   17,683   245,000   2,867,487  

Gerard Brossard

  659,974   528,026     1,108,378   17,675   352,000   2,666,053  

John T. Dobbins

  481,231   385,019     1,345,885   17,560   227,500   2,457,195  

Bradley A. Ferguson

  537,250   429,838   113,446   1,878,185   17,552   265,475   3,241,746  

Richard C. Froehlich

  481,647   385,353     1,757,284   17,606   238,000   2,879,890  

(1)
The amount of benefit for stock options represents the number of in-the-money options outstanding (if any) multiplied by the difference between the exercise price and the closing price per share of our Common Stock on December 31, 2015, or $7.43 per share.

(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, 2015, or $7.43 per share.

(3)
The cash incentive award amounts assume that the bonus under the 2015 annual incentive award plan is earned at the target level.

      Severance Payments

              We have a Severance Plan which provides for graduated levels of severance for our executive officers and other employee levels. All of our executive officers participate in our Severance Plan, other than Mr. Eazor who receives severance benefits under his employment agreement as described above in "Agreement with our Chief Executive Officer".

              In February 2015, the Committee approved an amendment to the severance plan to be effective April 1, 2015. This amendment increased the amounts of severance to be paid in order to be more consistent with competitive practices. Executive Vice Presidents and Senior Vice Presidents are now entitled to the following severance pay and benefits under our Severance Plan: (i) 78 weeks and 52 weeks, respectively, of base salary paid in lump sum, (ii) an amount equal to 78 weeks and 52 weeks, respectively, 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) 78 weeks and 52 weeks, respectively, or up to $30,000 or $20,000, respectively, 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.

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              Based upon a hypothetical termination date of December 31, 2015, the benefits for our Named Executive Officers (other than Mr. Eazor) under the Severance Plan (as amended) and who are currently employed by us would be as follows:

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

Louis M. Alterman

  $525,000   $17,683   $245,000   $30,000   $817,683  

Gerard Brossard

  660,000   17,675   352,000   30,000   1,059,675  

John T. Dobbins

  525,000   17,560   227,500   30,000   800,060  

Bradley A. Ferguson

  568,875   17,552   265,475   30,000   881,902  

Richard C. Froehlich

  510,000   17,606   238,000   30,000   795,606  

(1)
The cash incentive award amounts assume that the bonus under the 2015 annual incentive award plan is earned at the target level.

              Based upon a hypothetical termination date of December 31, 2015, the benefits for Mr. Eazor under his employment agreement at such date would be as follows:

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

Joseph F. Eazor

  $1,612,500   $1,612,500   $738,000   $8,062,821   $23,474   $862,500   $12,911,795  

(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, 2015, or $7.43 per share.

(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, 2015, or $7.43 per share.

(3)
The cash incentive award amount assumes that the bonus under the 2015 annual incentive award plan is earned at the target level.

              Mr. Toplisek's employment ended on April 1, 2015. He received total benefits of $724,404 under the Severance Plan consisting of the following: severance—$539,505; bonus—$168,466; employee portion of benefit plan—$16,433.

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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 accompanying narrative on pages 28 to 52 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 2015 aligned our compensation practices with our new focus on being a leading managed network, security and cloud services provider for multi-location retail and service businesses while increasing the efficiency of our operations and capital investments and increasing our ability to generate cash. The Leadership and Compensation Committee of the Board of Directors designed the compensation programs for 2015 both to retain the key talent necessary to drive our performance as well as to recruit new talent consistent with our business strategy. The Leadership and Compensation Committee intends for the compensation programs to provide appropriate incentives while maintaining accountability to stockholders and not encouraging management to take unnecessary or excessive risks.

              As detailed in the Compensation Discussion and Analysis, based on its review of the total compensation of our named executive officers for fiscal year 2015, 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 strong financial performance in 2015 and our progress in transforming our Company and restructuring our operations. The Leadership and Compensation Committee also believes the 2015 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.

              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:

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              Your vote on this proposal will be non-binding on us and the Board of Directors, and it will not be construed as overruling a decision by us or the Board of Directors. 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 of Directors. However, the Board of Directors and the Leadership and Compensation Committee value the opinions that our stockholders express in their votes and will 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.

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PROPOSAL 3

APPROVAL OF EARTHLINK HOLDINGS CORP. 2016 EQUITY AND
CASH INCENTIVE PLAN

              Long-term equity incentive awards assist us in recruiting and retaining individuals with ability and initiative by enabling such individuals to participate in our future success and aligning their interests with our interests and the interests of our stockholders. In consideration of the benefits of long-term equity incentive awards and upon the recommendation of our Leadership and Compensation Committee, our Board of Directors adopted the EarthLink Holdings Corp. 2016 Equity and Cash Incentive Plan (the "Plan") on February 16, 2016 contingent upon its approval by our stockholders. If approved by our stockholders, the Plan will provide us with the ability to utilize equity and cash incentive awards as a part of our overall compensation structure.

              Key features of the Plan include:

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              A summary of the principal features of the Plan is included below. However, every aspect of the Plan is not addressed in this summary and stockholders are encouraged to read the full text of the Plan which is attached to this proxy statement as Annex B. We have no current plans, proposals or arrangements, written or otherwise, to grant any specific awards under the Plan or under the prior 2011 Plan except as provided for under our Board of Directors Compensation Plan (as described on pages 17 to 18 of this Proxy Statement).

Reasons for the Plan and Recommendation of the Board of Directors

              As described in more detail in this proxy statement under "Executive Compensation—Compensation Disclosure and Analysis," we believe our compensation programs are structured to attract, retain and motivate our employees, officers and directors. Our Board of Directors believes that equity incentive awards play a key role in these programs as they help align the interests of employees, officers and directors with those of our stockholders. There currently are only 387,640 shares available for grant under the 2011 Plan.

              Historical Burn Rate.     We are committed to managing the use of our equity incentives prudently to balance the benefits equity compensation bring to our compensation program with the dilution it causes our shareholders. As part of our analysis when considering the proposed share increase, we considered the

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2011 Plan's "burn rate," calculated as the number of shares subject to equity awards granted under the 2011 Plan, divided by the weighted average number of shares outstanding for that period. Our average burn rate for the three years ending December 31, 2015 was 4.8%. The total potential dilution resulting from issuing all shares authorized under our equity plans as of December 31, 2015 would be about 15.7%. We believe that our burn rate and potential dilution amounts are reasonable for our industry and market conditions. Since the 2011 Plan was adopted, we have sought to provide equity compensation to our employees who we believe are important to our organization in furthering our business strategy. In addition, we have made multiple leadership appointments and promotions to advance our strategy. We made equity grants from the 2011 Plan in connection with each of these new hires and promotions. We believe these new hires and promotions are key to the development and strengthening of the management team with the experience and talent necessary to further implement our strategy.

              Potential Economic Dilution Analysis.     When evaluating the appropriate number of shares to increase the share reserve under the Plan, we reviewed the potential economic dilution of the proposed increase, calculated as the value of available shares and plan awards as a percentage of our market capitalization, and determined that the approval of 12,000,000 shares under the Plan was reasonable and consistent with industry guidelines.

              Expected Duration.     We expect that the shares available for future awards, including the additional shares if this proposal is approved by our shareholders, will be sufficient for currently-anticipated awards under the Plan for the next two-three years. Expectations regarding future share usage could be impacted by a number of factors such as hiring and promotion activity at the executive level; the rate at which shares are returned to the Plan reserve upon awards' expiration, forfeiture or cash settlement; the future performance of our stock price; consequences of acquiring other companies; and other factors. While we believe that the assumptions we used are reasonable, future share usage may differ from current expectations.

              Qualified Performance-Based Compensation.     Stockholder approval of the Plan also will enable us to grant awards that are intended to qualify as tax-deductible "performance-based compensation" under Code Section 162(m).

              For the foregoing reasons, the Board of Directors recommends that our stockholders approve the Plan.

General Plan Information

              The Plan is intended to permit the grant of stock options (both incentive stock options ("ISOs") and non-qualified stock options ("NQSOs" (collectively "Options")), stock appreciation rights ("SARs"), restricted stock awards ("Restricted Stock Awards"), restricted stock units ("RSUs"), incentive awards ("Incentive Awards"), other stock-based awards ("Stock-Based Awards") and dividend equivalents ("Dividend Equivalents") (collectively "Awards"). "Full Value Award" means an Award other than an Option, SAR or Stock-Based Award in the nature of purchase rights. All Awards granted under the Plan will be governed by separate written or electronic agreements between EarthLink and the participants. The separate agreements will specify the terms and conditions of the Award. No right or interest of a participant in any Award will be subject to any lien, obligation or liability of the participant. The laws of the State of Delaware govern the Plan and any Awards granted thereunder. The Plan is unfunded, and we will not segregate any assets to cover grants of Awards under the Plan.

              No Awards may be granted on or after ten years following the effective date of the Plan. No Awards will be granted under the Plan unless and until the stockholders approve the Plan.

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Administration

              We will bear all expenses of administering the Plan. Our Leadership and Compensation Committee will administer the Plan and has the authority to grant Awards to such persons and upon such terms and conditions (not inconsistent with the provisions of the Plan) as it may consider appropriate. Our Leadership and Compensation Committee may act through subcommittees or, with respect to Awards granted to individuals who are not subject to the reporting and other provisions of Section 16 of the Exchange Act and who are not members of our Board of Directors or the Board of Directors of our Affiliates (as defined in the Plan), delegate to one or more of our officers all or part of its duties with respect to such Awards.

Eligibility for Participation

              Any of our employees or service providers, employees or service providers of our Affiliates (as defined in the Plan), and non-employee members of our Board of Directors or of any Board of Directors of our Affiliates is eligible to receive an Award under the Plan. However, ISOs may only be granted to employees of EarthLink or one of our Affiliates.

Shares Subject to Plan

              The maximum aggregate number of shares of our Common Stock that may be issued under the Plan pursuant to Awards is the sum of (i) 12,000,000 shares less the number of shares that are represented by Awards granted under the 2011 Plan after December 31, 2015 and (ii) the number of shares that are represented by outstanding Awards (as defined below) granted under the 2011 Plan that are outstanding after December 31, 2015 and that later become available because of the expiration or forfeiture of the Award without the issuance of the underlying shares. No further Awards will be granted under the 2011 Plan after the effective date of the Plan.

              Except as described below, each share issued in connection with an Award will reduce the number of shares available under the Plan by one, and each share covered under a stock-settled SAR will reduce the number of shares available under the Plan by one even though the share is not actually issued upon settlement of the stock-settled SAR.

              Shares relating to Awards that are terminated, settled in cash in lieu of shares, or exchanged prior to the issuance of shares for Awards not involving shares, will again be available for issuance under the Plan. Shares not issued as a result of a net settlement of an Option, SAR or other Stock-Based Award in the nature of purchase rights, tendered or withheld to pay the exercise or purchase price of an Option, SAR or other Stock-Based Award in the nature of purchase rights, or withholding taxes with respect to an Option, SAR or other Stock-Based Award in the nature of purchase rights, or purchased on the open market with the proceeds of the exercise or purchase price of any Award, will not again be available for issuance under the Plan. Shares not issued as the result of a net settlement of a Full Value Award or tendered or withheld to pay the purchase price of a Full Value Award or withholding taxes with respect to a Full Value Award shall again be available for issuance under the Plan. This treatment of Full Value Awards also applies to any full value awards which were issued under the 2011 Plan and are outstanding after December 31, 2015.

              Notwithstanding the foregoing, the maximum aggregate number of shares of our Common Stock that may be issued under the Plan, and the maximum aggregate number of shares of our Common Stock that may be issued under any specific type of Award, will not be reduced by (i) substitute Awards with respect to our shares of Common Stock that are granted to participants who become employed with EarthLink or its Affiliates in connection with a corporate transaction or other appropriate event or

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(ii) Awards with respect to shares of our Common Stock that become available for grant under a shareholder-approved plan of an acquired company (subject in both cases to applicable stock exchange requirements).

              In any consecutive rolling 36-month period, no participant may be granted Options, SARs or other Stock-Based Awards in the nature of purchase rights that relate to more than 4,500,000 shares of our Common Stock, or Full Value Awards that relate to more than 3,000,000 shares of our Common Stock if they are intended to constitute "qualified performance-based compensation" within the meaning of Code Section 162(m). The limit in such a period for a member of our Board of Directors is 300,000 shares of our Common Stock. For any Award that is intended to constitute "qualified performance-based compensation" and that is stated with reference to a specific dollar limit, the maximum amount payable with respect to any 12-month performance period to any one participant is $5,000,000 (pro-rated up or down for performance periods greater or less than 12 months), and the maximum for any Award stated with reference to a specific dollar amount is $400,000 for a member of our Board of Directors. The maximum number of shares of Common Stock that may be issued pursuant to Awards, the per individual limits on Awards and the terms of and number of shares subject to outstanding Awards will be adjusted as is equitably required in the event of corporate transactions and other appropriate events.

Awards

              An Option entitles the participant to purchase from EarthLink a stated number of shares of Common Stock. The exercise price per share of Common Stock underlying any Option may not be less than the fair market value of a share of Common Stock on the date the Option is granted. With respect to an ISO granted to a participant who, at the time of grant, beneficially owns more than 10% of the combined voting power of EarthLink or any of our Affiliates (determined by applying certain attribution rules), the exercise price per share may not be less than 110% of the fair market value of the Common Stock on the date the Option is granted. The exercise price may be paid in cash or, if the written agreement so provides, our Leadership and Compensation Committee may allow a participant to pay all or part of the exercise price by tendering shares of Common Stock, by a broker-assisted cashless exercise, by means of a "net exercise" procedure, or by any other specified medium of payment. In the case of ISOs, the aggregate fair market value (determined as of the date of grant) of the Common Stock with respect to which an ISO may become exercisable for the first time during any calendar year cannot exceed $100,000; and if this limitation is exceeded, the ISOs which cause the limitation to be exceeded will be treated as NQSOs.

              A SAR entitles the participant to receive, upon exercise, the excess of the fair market value on that date of each share of Common Stock subject to the exercised portion of the SAR over the fair market value of each such share on the date of the grant of the SAR. A SAR can be granted alone or in tandem with an Option. A SAR granted in tandem with an Option is called a Corresponding SAR and entitles the participant to exercise the Option or the SAR, at which time the other tandem Award expires with respect to the number of shares being exercised. No participant may be granted Corresponding SARs in tandem with ISOs which are first exercisable in any calendar year for shares of Common Stock having an aggregate fair market value (determined as of the date of grant) that exceeds $100,000. A Corresponding SAR may be exercised only to the extent that the related Option is exercisable, and no SAR is exercisable unless the fair market value of the Common Stock at the time of exercise exceeds the fair market value of the Common Stock as of the date of grant of the SAR. As set forth in the written agreement, the amount payable as a result of the exercise of a SAR may be settled in cash, shares of Common Stock or a combination of each.

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              A Restricted Stock Award is the grant or sale of shares of Common Stock, which may be subject to forfeiture for a period of time or subject to certain conditions. If the Restricted Stock Award is subject to forfeiture, prior to forfeiture, the participant will have all rights of a stockholder with respect to the shares of Common Stock subject to a Restricted Stock Award, including the right to vote the shares, provided, however, the participant may not transfer the shares while they are subject to forfeiture. To the extent deemed necessary by the Leadership and Compensation Committee (or as described below), dividends payable with respect to a Restricted Stock Award may accumulate (without interest) and become payable in cash or shares of our Common Stock at the time and to the extent that the portion of the Restricted Stock Award to which the dividends relate has become transferable and nonforfeitable. In lieu of retaining the certificates evidencing the shares, we may hold the certificates evidencing the shares in escrow or record the certificates evidencing the shares as outstanding by notation on our stock records. If a participant must pay for a Restricted Stock Award, the participant may pay the purchase price in cash or, if the written agreement so provides, our Leadership and Compensation Committee may allow a participant to pay all or part of the purchase price by tendering shares of Common Stock, by means of a "net exercise" procedure, or by any other specified medium of payment.

              An RSU entitles the participant to receive, upon vesting, shares of our Common Stock (or as otherwise determined by the Leadership and Compensation Committee and set for in the applicable agreement, the equivalent fair market value of one share of Common Stock in cash). We will deliver to the participant one share of Common Stock (or, if applicable, the fair market value of one share of Common Stock in cash) for each RSU that becomes earned and payable. No participant shall have any rights of a stockholder with respect to an RSU unless and until the underlying shares of Common Stock are issued, provided, however, except as described below, dividends payable with respect to shares subject to RSUs may be paid currently or may accumulate (without interest) and be paid in cash or shares of Common Stock only to the extent the related RSUs become earned and payable.

              An Incentive Award entitles the participant to receive cash or Common Stock when certain conditions are met. As set forth in the participant's separate agreement, an Incentive Award may be paid in cash, shares of Common Stock or a combination of each. No participant shall have any rights of a stockholder with respect to shares underlying an Incentive Award unless and until the underlying shares of Common Stock are issued.

              Stock-Based Awards may be denominated or payable in, valued by reference to or otherwise based on shares of Common Stock, including Awards convertible or exchangeable into shares of Common Stock (or the cash value thereof) and Common Stock purchase rights and Awards valued by reference to the fair market value of the Common Stock. The purchase price for the Common Stock under any Stock-Based Award in the nature of a purchase right may not be less than the fair market value of the shares of the Common Stock as of the date the Award is granted. Cash awards, as an element of or supplement to any other Award under the Plan, may also be granted.

              Our Leadership and Compensation Committee is also authorized under the Plan to grant shares of Common Stock as a bonus, or to grant shares of Common Stock or other awards in lieu of other

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obligations of EarthLink or any of our Affiliates to pay cash or to deliver other property under the Plan or under any other plans or compensatory arrangements of EarthLink or any of our Affiliates.

              A Dividend Equivalent is an award that entitles the participant to receive cash, shares of Common Stock, other awards or other property equal in value to all or a specified portion of dividends paid with respect to shares of our Common Stock. Except as described below, Dividend Equivalents may be paid or distributed when accrued or deemed to have been reinvested in additional shares of Common Stock, other awards or other investment vehicles, subject to restrictions on transferability, risk of forfeiture and any other terms set forth in the written agreement for the Award. However, no Dividend Equivalents may be granted in connection with Options, SARs or Stock-Based Awards in the nature of purchase rights.

Performance Objectives and Time-Based Vesting

              Our Leadership and Compensation Committee has discretion to establish objectively determinable performance conditions for when Awards will become vested, exercisable, and payable. Objectively determinable performance conditions generally are performance conditions (a) that are established in writing (i) at the time of grant or (ii) no later than the earlier of (x) 90 days after the beginning of the period of service to which they relate and (y) before the lapse of 25% of the period of service to which they relate; (b) that are uncertain of achievement at the time they are established and (c) the achievement of which is determinable by a third party with knowledge of the relevant facts.

              These performance conditions may be based on one or any combination of metrics related to our financial, market or business performance. Performance conditions may be related to a specific customer or group of customers or products or geographic region individually, alternatively or in any combination, subset or component thereof. The form of the performance conditions also may be measured on a company, Affiliate, division, business unit, service line, segment, product or geographic basis individually, alternatively or in any combination thereof. Performance goals may reflect absolute entity performance or a relative comparison of entity performance to the performance of a peer group of entities or other external measure of the selected performance conditions. Profits, earnings and revenues used for any performance conditions measurement may exclude any extraordinary or nonrecurring items.

              The performance conditions may, but need not, be based upon an increase or positive result under the aforementioned performance conditions and could include, for example and not by way of limitation, maintaining the status quo or limiting the economic losses (measured, in each case, by reference to the specific performance conditions). An Award that is intended to become exercisable, vested or payable on the achievement of performance conditions means that the Award will not become exercisable, vested or payable solely on mere continued employment or service. However, such an Award, in addition to performance conditions, may be subject to continued employment or service by the participant. Additionally, the vesting, exercise or payment of an Award can be conditioned on mere continued employment or service or on performance conditions other than those set forth above if the Award is not intended to qualify as performance-based.

              The performance conditions may, among others, include any or any combination of the following: (a) gross, operating or net earnings before or after taxes; (b) return on equity; (c) return on capital; (d) return on sales; (e) return on investments; (f) return on assets or net assets; (g) earnings per share (basic or fully diluted and/or before or after taxes); (h) cash flow (per share or otherwise); (i) book value (per share or otherwise); (j) sales; (k) "new billed revenue"; (l) "net new billed revenue"; (m) "customer acquisition costs"; (n) customers or subscribers; (o) cash flow; (p) fair market value of the Company or any Affiliate or shares of Common Stock; (q) share price or total shareholder return; (r) market share or

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market penetration; (s) level of expenses or other costs; (t) "net contributions"; (u) "adjusted after-tax GAAP profit"; (v) gross, operating or net revenue; (w) EBIT; (x) service revenue; (y) profitability or gross, operating or net margins; (z) net income; (aa) EBITDA; (bb) Adjusted EBIDTA; (cc) free cash flow; (dd) unlevered or levered free cash flow; (ee) churn or churn rate; (ff) "business churn" or "churn rate"; (gg) "consumer churn" or "churn rate"; (hh) "business bookings"; (ii) "CAPEX & restructuring"; (jj) product launches; (kk) market launches; (ll) serviceable units; (mm) net worth; (nn) productivity ratios; (oo) objective measures of customer satisfaction; (pp) working capital; (qq) competitive market metrics; (rr) peer group comparisons of any of the aforementioned business criteria; (ss) completion of acquisitions of businesses or companies or divestitures or asset sales and/or cost savings in connection with same; and (tt) for Awards that are not intended to constitute "qualified performance-based compensation" under Section 162(m) of the Internal Revenue Code, any other business criteria the Committee may approve. Products and services include: (a) residential high-speed, wireless or dial-up internet, (b) managed services, (c) network services, (d) application performance optimization, (e) professional services, (f) voice services, (g) cloud and security, (h) small business internet access and (i) any future products or services of the Company or an Affiliate upon which the Leadership and Compensation Committee determines it is appropriate to base performance conditions. Performance goals may be determined in accordance with GAAP or adjusted to include or exclude any items otherwise includable or excludable under GAAP. In determining if the performance conditions have been achieved, the Leadership and Compensation Committee may adjust the performance targets in the event of any unbudgeted acquisition, divestiture or other unexpected fundamental change in the business of the Company, an Affiliate or business unit or in any product that is material taken as a whole as appropriate to fairly and equitably determine if the Award is to become exercisable, nonforfeitable and transferable or earned and payable pursuant to the conditions set forth in the Award. Additionally, in determining if such performance conditions have been achieved, the Leadership and Compensation Committee also may adjust the performance targets in the event of any (a) unanticipated asset write-downs or impairment charges, (b) litigation or claim judgments or settlements thereof, (c) changes in tax laws, accounting principles or other laws or provisions affecting reported results, (d) accruals for reorganization or restructuring programs, or extraordinary, unusual, infrequently occurring or non-reoccurring items, (e) acquisitions or dispositions or (f) foreign exchange gains or losses.

              The above performance conditions are to permit our Leadership and Compensation Committee to grant Awards that are intended to constitute "qualified performance-based compensation" exempt from the $1 million limit on deductible compensation payable to our Chief Executive Officer or any of our three other highest paid officers, other than our Chief Financial Officer.

              The Leadership and Compensation Committee will have the discretion to select one or more periods of time over which the attainment of one or more of the foregoing performance conditions will be measured for the purpose of determining when an Award will become vested, exercisable or payable.

Minimum Vesting Requirement

              Options, SARs and other Stock-Based Awards in the nature of purchase rights that will vest based on continued employment or service must vest over a period of not less than one year, subject to exceptions for the participant's death or Disability or in connection with a Change in Control, provided that up to 5% of the shares authorized for issuance under the Plan may provide for vesting of Options, SARs and Other Stock-Based Awards in the nature of purchase rights in less than one year.

Limited Discretion to Accelerate

              The Leadership and Compensation Committee may not accelerate the time at which any Award may be exercised, become transferable or nonforfeitable or become earned and settled other than in the event of the participant's death or Disability.

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Form and Timing of Payments

              Payments to be made by us upon the exercise of an Option or SAR or settlement of any other Award may be made in such form as our Leadership and Compensation Committee may determine and set forth in the separate agreement for the Award, including cash, shares of Common Stock, other Awards or other property and may be made in a single payment or transfer, in installments or on a deferred basis. However, no dividends or Dividend Equivalents may be paid in connection with a performance-based Award unless and until the underlying performance conditions are achieved, and any such dividends or Dividend Equivalents will accumulate (without interest) and become payable to the participant only at the time and to the extent that the applicable Award becomes payable or nonforfeitable.

Stockholder Rights

              No participant shall have any rights as a stockholder of EarthLink unless and until the Award is settled by the issuance of Common Stock (other than such rights as a stockholder to which the participant may be entitled pursuant to the specific terms of the separate agreement).

Maximum Award Period

              No Award may be exercisable or become vested or payable more than 10 years after the date of grant (except that the Leadership and Compensation Committee may make certain exceptions in the event the Award would expire prior to exercise, vesting or settlement because trading in shares of our Common Stock is then prohibited by law or by any insider trading policy, in which case the term of the Award may be extended until 30 days after the expiration of any such prohibitions). An ISO granted to a participant who beneficially owns more than 10% of the combined voting power of EarthLink or any of our Affiliates (determined by applying certain attribution rules) or a Corresponding SAR that relates to such an ISO may not be exercisable more than five years after the date of grant.

Change in Control

              Notwithstanding anything to the contrary in the Plan, in connection with a Change in Control

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              Subject in all circumstances to the foregoing, the Leadership and Compensation Committee may take the following actions with respect to vested Awards but has limited discretion (as described under the Key Features of the Plan) to accelerate vesting of outstanding Awards in connection with the Change in Control:

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              The payments described above may be made in any manner the Leadership and Compensation Committee determines, including in cash, stock or other property. The Leadership and Compensation Committee may take the actions described above with respect to Awards that are not then exercisable, nonforfeitable and transferable or earned and payable or with respect to which the fair market value of the Common Stock subject to the Awards does not exceed the purchase price or initial value at the date of grant, as applicable even though the Participant will receive any payments therefor. The Leadership and Compensation Committee in its discretion may take any of the actions described in this section contingent on consummation of the Change in Control, and such actions need not be uniform with respect to all outstanding Awards or Participants. However, outstanding Awards shall not be terminated to the extent that written provision is made for their continuance, assumption or substitution by the Company or a successor employer or its parent or subsidiary in connection with the Change in Control except as otherwise provided in the applicable agreement.

Compliance with Applicable Law

              No Award shall become exercisable, vested or payable except in compliance with all applicable federal and state laws and regulations (including, without limitation, tax, withholding and securities laws), any listing agreement with any stock exchange to which we are a party and the rules of all domestic stock exchanges on which our shares may be listed.

Amendment and Termination of Plan

              Our Board of Directors may amend or terminate the Plan at any time; provided, however, that no amendment may adversely impair the rights of a participant with respect to outstanding Awards without the participant's consent. An amendment will be contingent on approval of our stockholders, to the extent required by law, any tax or regulatory requirement, by the rules of any stock exchange on which our securities are then traded or if the amendment would (a) increase the benefits accruing to Plan participants, (b) increase the aggregate number of shares of Common Stock issuable under the Plan, (c) modify the eligibility requirements of the Plan, or (d) change the performance criteria set forth in the Plan for performance-based awards. Additionally, to the extent our Board of Directors deems necessary to continue to comply with the performance-based exception to the deduction limits of Code Section 162(m), our Board of Directors will submit the material terms of the stated performance conditions to our stockholders for approval no later than the first stockholder meeting that occurs in the fifth year following the year in which the stockholders previously approved the performance conditions.

Forfeiture Provisions; No Repricings

              Awards do not confer upon any individual any right to continue in the employ of or service to EarthLink or any of our Affiliates. All rights to any Award that a participant has will be immediately forfeited if the participant is discharged from employment or service for "Cause" (as defined in the Plan). Except to the extent approved by our stockholders, the Plan does not permit (a) any decrease in the

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exercise price or base value of any outstanding Awards, (b) the issuance of any replacement Options, SARs or Stock-Based Awards in the nature of purchase rights, which shall be deemed to occur if a participant agrees to forfeit an existing Option, SAR or Stock-Based Award in the nature of purchase rights in exchange for a new Option, SAR or Stock-Based Award in the nature of purchase rights with a lower exercise price or base value, (c) us to repurchase underwater or out-of-the-money Options, SARs or Stock-Based Awards in the nature of purchase rights, which shall be deemed to be those Options, SARs or Stock-Based Awards in the nature of purchase rights with exercise prices or base values in excess of the current fair market value of the shares of Common Stock underlying the Option, SAR or Stock-Based Award in the nature of purchase rights, (d) us to issue any replacement or substitute Awards, or pay cash in exchange, for underwater or out-of-the-money Options, SARs or Stock-Based Awards in the nature of purchase rights, (e) us to repurchase any Awards under the Plan prior to the time the Award becomes exercisable, vested or payable or (f) any other action that is treated as a "repricing" under generally accepted accounting principles.

Federal Income Tax Consequences

              The following discussion summarizes the principal federal income tax consequences associated with Awards under the Plan. The discussion is based on laws, regulations, rulings and court decisions currently in effect, all of which are subject to change.

              A participant will not recognize taxable income on the grant or exercise of an ISO (although the excess of the fair market value of the shares over the exercise price at the time of exercise may result in payment of the alternative minimum tax). A participant will recognize taxable income when he or she disposes of the shares of Common Stock acquired under the ISO. If the disposition occurs more than two years after the grant of the ISO and more than one year after its exercise, the participant will recognize long-term capital gain (or loss) to the extent the amount realized from the disposition exceeds (or is less than) the participant's tax basis in the shares of Common Stock. A participant's tax basis in the Common Stock generally will be the amount the participant paid for the stock. If Common Stock acquired under an ISO is disposed of before the expiration of the ISO holding period described above, the participant will recognize as ordinary income in the year of the disposition the excess of the fair market value of the Common Stock on the date of exercise of the ISO over the exercise price. Any additional gain will be treated as long-term or short-term capital gain, depending on the length of time the participant held the shares. Special rules apply if a participant pays the exercise price by delivery of Common Stock.

              We will not be entitled to a federal income tax deduction with respect to the grant or exercise of an ISO. However, in the event a participant disposes of Common Stock acquired under an ISO before the expiration of the ISO holding period described above, we generally will be entitled to a federal income tax deduction equal to the amount of ordinary income the participant recognizes.

              A participant will not recognize any taxable income on the grant of a NQSO. On the exercise of a NQSO, the participant will recognize as ordinary income the excess of the fair market value of the Common Stock acquired over the exercise price. A participant's tax basis in the Common Stock is the amount paid plus any amounts included in income on exercise. Special rules apply if a participant pays the exercise price by delivery of Common Stock. The exercise of a NQSO generally will entitle us to claim a federal income tax deduction equal to the amount of ordinary income the participant recognizes.

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              A participant will not recognize any taxable income at the time SARs are granted. The participant at the time of receipt will recognize as ordinary income the amount of cash and the fair market value of the Common Stock that he or she receives. We generally will be entitled to a federal income tax deduction equal to the amount of ordinary income the participant recognizes.

              A participant will recognize ordinary income on account of a Restricted Stock Award on the first day that the shares are either transferable or not subject to a substantial risk of forfeiture. The ordinary income recognized will equal the excess of the fair market value of the Common Stock on such date over the purchase price, if any, paid for the Restricted Stock Award. However, even if the shares under a Restricted Stock Award are both nontransferable and subject to a substantial risk of forfeiture, the participant may make a special "83(b) election" to recognize income, and have his or her tax consequences determined, as of the date the Restricted Stock Award is made. The participant's tax basis in the shares received will equal the income recognized plus the price, if any, paid for the Restricted Stock Award. We generally will be entitled to a federal income tax deduction equal to the ordinary income the participant recognizes.

              The participant will not recognize any taxable income at the time RSUs are granted. When the terms and conditions to which the RSUs are subject have been satisfied and the RSUs are paid, the participant will recognize as ordinary income the fair market value of the Common Stock he or she receives. We generally will be entitled to a federal income tax deduction equal to the ordinary income the participant recognizes.

              A participant will not recognize any taxable income at the time an Incentive Award is granted. When the terms and conditions to which an Incentive Award is subject have been satisfied and the Award is paid, the participant will recognize as ordinary income the amount of cash and the fair market value of the Common Stock he or she receives. We generally will be entitled to a federal income tax deduction equal to the amount of ordinary income the participant recognizes.

              A participant will recognize ordinary income on receipt of cash or shares of Common Stock paid with respect to a Stock-Based Award. We generally will be entitled to a federal tax deduction equal to the amount of ordinary income the participant recognizes.

              A participant will recognize as ordinary income the amount of cash and the fair market value of any Common Stock he or she receives on payment of the Dividend Equivalents. To the extent the Dividend Equivalents are paid in the form of other Awards, the participant will recognize income as otherwise described herein.

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              The deduction by a publicly-held corporation for otherwise deductible compensation to a "covered employee" generally is limited to $1,000,000 per year. An individual is a covered employee if he or she is the Chief Executive Officer or one of the three highest compensated officers for the year (other than the Chief Executive Officer or Chief Financial Officer). The $1,000,000 limit does not apply to compensation payable solely because of the attainment of performance conditions that meet the requirements set forth in Section 162(m) of the Code and the regulations thereunder. Compensation is considered "qualified performance-based compensation" only if (a) it is paid solely on the achievement of one or more performance conditions; (b) a committee consisting solely of two or more "outside directors," such as our Leadership and Compensation Committee, sets the performance conditions; (c) before payment, the material terms under which the compensation is to be paid, including the performance conditions, are disclosed to, and approved by, the stockholders and (d) before payment, our Leadership and Compensation Committee certifies in writing that the performance conditions have been met. The Plan has been designed to enable our Leadership and Compensation Committee to structure awards that meet the requirements for qualified performance-based compensation that would not be subject to the $1,000,000 per year deduction limit. While approval of the Plan by stockholders will enable us to grant awards that are intended to qualify as "performance-based compensation" under Code Section 162(m), we believe that it is in our best interests and the interests of our stockholders to maintain the flexibility also to grant awards that are not intended to qualify as "performance-based compensation", as determined in the discretion of the Leadership and Compensation Committee.

              The Plan is designed to enable our Leadership and Compensation Committee to structure Awards that will not be subject to Code Section 409A, which imposes certain restrictions and requirements on deferred compensation. However, our Leadership and Compensation Committee may grant Awards that are subject to Code Section 409A. In that case, the terms of such 409A Award will be (a) subject to the deferral election requirements of Section 409A; and (b) may only be paid upon a separation from service, a set time, death, disability, a change in control or an unforeseeable emergency, each within the meanings of Section 409A. Our Leadership and Compensation Committee shall not have the authority to accelerate or defer a 409A Award other than as permitted by Code Section 409A. Moreover, any payment on a separation from service of a "Specified Employee" (as defined in the Plan) will not be made until six months following the participant's separation from service (or upon the participant's death, if earlier) as required by Code Section 409A.

New Plan Benefits

              The benefits that will be awarded or paid under the Plan are not currently determinable. Awards granted under the Plan are within the discretion of the Leadership and Compensation Committee and future awards and the individuals who may receive them have not been determined.

Equity Compensation Plan Benefit Information

              For information regarding all equity grants to the named executive officers under the 2011 Plan in 2015, see "Grants of Plan-Based Awards" beginning on page 46.

              The table below provided information as of March 1, 2016, about shares that may be issued under equity compensation plans currently maintained by the Company.

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EQUITY COMPENSATION PLAN INFORMATION

              The following table provided information, as of March 1, 2016, regarding shares that may be issued under equity compensation plans currently maintained by the Company.

Plan Category   Number of securities
to be issued upon
exercise of
outstanding options,
warrants and rights
  Weighted average
exercise price of
outstanding options,
warrants and rights
  Number of securities
remaining available
for future issuance
under equity
compensation plans
(excluding securities
reflected in column (a))
 
 
  (a)
  (b)
  (c)
 

Equity compensation plans approved by stockholders

    9,605,399 (1)   6.28 (2)   387,640  

Equity compensation plans not approved by stockholders

    70,526     9.48        

Total

    9,675,925              

(1)
Includes 837,206 shares of Common Stock issuable upon exercise of outstanding stock options and 8,768,193 shares of Common Stock issuable upon vesting of outstanding restricted stock units.

(2)
The weighted-average exercise price does not take into account the restricted stock units described in footnote (1) because the restricted stock units do not have an exercise price upon vesting.

              The last reported closing price of our Common Stock on the NASDAQ Stock Market on March 1, 2016 was $5.86 per share.

               THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT THE STOCKHOLDERS VOTE "FOR" APPROVAL OF THE EARTHLINK HOLDINGS CORP. 2016 EQUITY AND CASH INCENTIVE PLAN.

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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, 2016. 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 2016 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 2014 and 2015 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.

              For the years ended December 31, 2014 and 2015, 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,
 
  2014   2015

Audit fees

  $2,089,425   $2,228,417

Audit-related fees

    100,000

Tax fees

   

All other fees

  1,995   1,995

Total

  $2,091,420   $2,330,412

              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.

              All other fees in 2014 included an on-line research tool subscription. Audit-related fees in 2015 included due diligence in connection with the sale of certain assets related to our IT services product offerings. All other fees in 2015 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

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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 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

              Under the Sarbanes-Oxley Act of 2002 and the related rules of the SEC, the Audit Committee is solely responsible for the appointment, compensation, 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 registered accounting firm for the year ending December 31, 2016. Prior to selecting Ernst & Young LLP for fiscal 2016, the Audit Committee evaluated Ernst & Young's performance with respect to fiscal 2015. In conducting this annual evaluation, the Audit Committee considered management's assessment of Ernst & Young's performance in areas such as (i) independence, (ii) the quality and the efficiency of the services provided, including audit planning and coordination, (iii) industry knowledge and (iv) the quality of communications, including Ernst & Young staff accessibility and keeping management apprised of issues. The Audit Committee also considered Ernst & Young's tenure, the impact on the Company of changing auditors and the reasonableness of Ernst & Young's billable rates. 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 every five years, 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 by law but is being presented in the discretion of the Board of Directors. 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, 2016.

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OTHER MATTERS

              The Board of Directors knows of no other matters to be brought before the 2016 Annual Meeting of Stockholders. However, if any other matters are properly brought before the 2016 Annual Meeting of Stockholders, including consideration of a motion to adjourn the 2016 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.


STOCKHOLDER PROPOSALS FOR 2017 ANNUAL MEETING

              In order for proposals of stockholders to be considered for inclusion in the proxy materials for the 2017 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 1170 Peachtree Street, Suite 900, Atlanta, GA 30309, Attention: Corporate Secretary, on or prior to November 15, 2016.

              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. 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 12 to 13 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, 2015. Requests should be directed to EarthLink Holdings Corp., 1170 Peachtree Street, Suite 900, 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.

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              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 1170 Peachtree Street, Suite 900, Atlanta, Georgia 30309, Attention: Investor Relations, or (404) 815-0770 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.
Executive Vice President, General Counsel
and Corporate Secretary

Atlanta, Georgia
March 15, 2016

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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, restructuring, acquisition and integration-related costs, loss on extinguishment of debt 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, loss on extinguishment of debt 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.

              Our Leadership and Compensation Committee also used a "Free Cash Flow" measure in measuring performance under our 2015 incentive plans. Note that this "Free Cash Flow" measure differs from the Unlevered Free Cash Flow financial measure we regularly present to the investment community and in our periodic reports filed with the SEC. Our Leadership and Compensation Committee defines Free Cash Flow as Adjusted EBITDA less cash used for purchases of property and equipment and less restructuring, acquisition and integration-related costs.

              There are limitations to using these non-GAAP financial measures. Adjusted EBITDA, Unlevered Free Cash Flow and 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, Unlevered Free Cash Flow and 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.

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              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, 2015:

 
Year Ended
December 31, 2015
(in thousands)

Net loss

$(43,210 )

Interest expense and other, net

50,972

Income tax provision

2,730

Depreciation and amortization

188,315

Stock-based compensation expense

14,594

Restructuring, acquisition and integration-related costs

19,320

Loss on extinguishment of debt

9,734

Adjusted EBITDA

$242,455

              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, 2015:

 
Year Ended
December 31, 2015
(in thousands)

Net loss

$(43,210 )

Interest expense and other, net

50,972

Income tax provision

2,730

Depreciation and amortization

188,315

Stock-based compensation expense

14,594

Restructuring, acquisition and integration-related costs

19,320

Loss on extinguishment of debt

9,734

Purchases of property and equipment

(87,468 )

Unlevered Free Cash Flow

$154,987

              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, 2015:

 
Year Ended
December 31, 2015
(in thousands)

Net cash provided by operating activities

$167,448

Income tax provision

2,730

Non-cash income taxes

(677 )

Interest expense and other, net

50,972

Amortization of debt discount and issuance costs

(3,703 )

Restructuring, acquisition and integration-related costs

19,320

Changes in operating assets and liabilities

6,721

Purchases of property and equipment

(87,468 )

Other, net

(356 )

Unlevered Free Cash Flow

$154,987

Net cash used in investing activities

$(87,468 )

Net cash used in financing activities

$(122,817 )

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              The following table presents a reconciliation of free cash flow to the most closely related financial measure reported under GAAP for the year ended December 31, 2015:

 
Year Ended
December 31, 2015
(in thousands)

Net loss

$(43,210 )

Interest expense and other, net

50,972

Income tax provision

2,730

Depreciation and amortization

188,315

Stock-based compensation expense

14,594

Loss on extinguishment of debt

9,734

Purchases of property and equipment

(87,468 )

Free Cash Flow

$135,667

              The following table presents a reconciliation of free cash flow, as a liquidity measure, to net cash provided by operating activities for the year ended December 31, 2015:

 
Year Ended
December 31, 2015
(in thousands)

Net cash provided by operating activities

$167,448

Income tax provision

2,730

Non-cash income taxes

(677 )

Interest expense and other, net

50,972

Amortization of debt discount and issuance costs

(3,703 )

Changes in operating assets and liabilities

6,721

Purchases of property and equipment

(87,468 )

Other, net

(356 )

Free Cash Flow

$135,667

Net cash used in investing activities

$(87,468 )

Net cash used in financing activities

$(122,817 )

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ANNEX B

EARTHLINK HOLDINGS CORP. 2016 EQUITY AND CASH INCENTIVE PLAN

B-1


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TABLE OF CONTENTS

 
   
  Page

ARTICLE I        DEFINITIONS

  B-6

1.01

 

409A Award

 
B-6

1.02

 

Affiliate

  B-6

1.03

 

Agreement

  B-6

1.04

 

Award

  B-6

1.05

 

Board

  B-6

1.06

 

Cause

  B-6

1.07

 

Change in Control

  B-7

1.08

 

Code

  B-8

1.09

 

Committee

  B-8

1.10

 

Common Stock

  B-8

1.11

 

Company

  B-8

1.12

 

Control Change Date

  B-8

1.13

 

Corresponding SAR

  B-8

1.14

 

Disability

  B-8

1.15

 

Dividend Equivalent

  B-8

1.16

 

Exchange Act

  B-8

1.17

 

Fair Market Value

  B-9

1.18

 

Full Value Award

  B-9

1.19

 

Incentive Award

  B-9

1.20

 

Incumbent Board

  B-9

1.21

 

Initial Value

  B-9

1.22

 

Named Executive Officer

  B-10

1.23

 

Non-409A Award

  B-10

1.24

 

Option

  B-10

1.25

 

Other Stock-Based Award

  B-10

1.26

 

Participant

  B-10

1.27

 

Plan

  B-10

1.28

 

Person

  B-10

1.29

 

Prior Incentive Plan

  B-10

1.30

 

Restricted Stock Award

  B-10

1.31

 

Restricted Stock Unit

  B-11

1.32

 

Retirement

  B-11

1.33

 

SAR

  B-11

1.34

 

Ten Percent Shareholder

  B-11

1.35

 

Termination Date

  B-11


ARTICLE II        PURPOSES


 

B-11


ARTICLE III        TYPES OF AWARDS


 

B-11


ARTICLE IV        ADMINISTRATION


 

B-12

4.01

 

General Administration

 
B-12

4.02

 

Limited Discretion to Accelerate; Treatment of Awards in Connection with a Change in Control

  B-12

4.03

 

Delegation of Authority

  B-13

4.04

 

Indemnification of Committee

  B-13

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ARTICLE V        ELIGIBILITY


 

B-13


ARTICLE VI      COMMON STOCK SUBJECT TO PLAN


 

B-14

6.01

 

Common Stock Issued

 
B-14

6.02

 

Aggregate Limit

  B-14

6.03

 

Individual Limit

  B-15


ARTICLE VII      OPTIONS


 

B-16

7.01

 

Grant

 
B-16

7.02

 

Option Price

  B-16

7.03

 

Maximum Term of Option

  B-16

7.04

 

Exercise

  B-16

7.05

 

Payment

  B-17

7.06

 

Stockholder Rights

  B-17

7.07

 

Disposition of Shares

  B-17

7.08

 

No Liability of Company

  B-17

7.09

 

Effect of Termination Date on Options

  B-17


ARTICLE VIII      SARS


 

B-19

8.01

 

Grant

  B-19

8.02

 

Maximum Term of SAR

  B-19

8.03

 

Exercise

  B-19

8.04

 

Settlement

  B-19

8.05

 

Stockholder Rights

  B-19

8.06

 

Effect of Termination Date on SARs

  B-20


ARTICLE IX        RESTRICTED STOCK AWARDS


 

B-21

9.01

 

Award

 
B-21

9.02

 

Payment

  B-21

9.03

 

Vesting

  B-21

9.04

 

Maximum Restriction Period

  B-21

9.05

 

Stockholder Rights

  B-22


ARTICLE X        RESTRICTED STOCK UNITS


 

B-22

10.01

 

Grant

 
B-22

10.02

 

Earning the Award

  B-22

10.03

 

Maximum Restricted Stock Unit Award Period

  B-22

10.04

 

Payment

  B-22

10.05

 

Stockholder Rights

  B-23


ARTICLE XI        INCENTIVE AWARDS


 

B-23

11.01

 

Grant

 
B-23

11.02

 

Earning the Award

  B-23

11.03

 

Maximum Incentive Award Period

  B-23

11.04

 

Payment

  B-24

11.05

 

Stockholder Rights

  B-24


ARTICLE XII        OTHER STOCK-BASED AWARDS


 

B-24

12.01

 

Other Stock-Based Awards

 
B-24

12.02

 

Bonus Stock and Awards in Lieu of Other Obligations

  B-24

12.03

 

Effect of Termination Date on Other Stock-Based Awards

  B-25

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ARTICLE XIII      DIVIDEND EQUIVALENTS


 

B-26


ARTICLE XIV      TERMS APPLICABLE TO ALL AWARDS


 

B-26

14.01

 

Written Agreement