Cincinnati Bell 2004 Annual Report Download - page 22

deemed to be invested under the plan other than in common shares and will be distributed in the form of
common shares to the extent such amounts are deemed to be invested under the plan in such shares; except
that (i) the vested portion of his or her account under the plan that is attributable to the annual credits that are
or have been made to his or her plan account for serving as a member of the Board and (ii) the value of any
vested amount that is deemed to be invested in a fractional Common Share will, in each such case, only be
paid in cash.
The Company will reimburse a non-employee director for all reasonable commissions or similar costs he
or she incurs in selling any common shares he or she receives under the Directors Deferred Compensation
Plan, or make arrangements to permit the director to have such shares sold without commissions or similar
fees charged to him or her, if the director wants to sell such shares shortly (generally within two weeks) after
he or she receives them.
The Directors Deferred Compensation Plan provides three exceptions to the rules regarding the timing of
distributions of a director’s account under the plan: (i) in the event of a change in control of the Company; (ii)
at the election of the director in the event of severe financial hardship; and (iii) at the election of the director
if he or she agrees to certain forfeitures and restrictions.
Until paid, all amounts credited to a non-employee director’s account under the Directors Deferred
Compensation Plan are not funded or otherwise secured, and all payments under the plan are made from the
general assets of the Company and its subsidiaries.
The Directors Deferred Compensation Plan must comply with the requirements of the recently enacted
American Jobs Creation Act of 2004 in order to retain its ability to defer federal income tax on certain
amounts credited to a non-employee director’s account under the plan. The Company intends to amend and
operate the plan in such a manner that it complies with such requirements.
Non-Employee Directors Stock Option Plan
The Company grants its non-employee directors stock options to purchase common shares under the
Cincinnati Bell Inc. 1997 Stock Option Plan for Non-Employee Directors (the “Directors Stock Option Plan”).
Pursuant to the current terms of such plan, each non-employee director of the Company may, in the discretion
of the Board, be granted on or after January 1, 2005:
•a stock option for 25,000 common shares on the first day of his or her initial term of office as a non-
employee director of the Company; and
•a stock option for 9,000 common shares on the date of each annual meeting, if such director first
became a non-employee director of the Company before the date of such annual meeting and continues
in office as a non-employee director after such meeting.
The Board will exercise its discretion in granting such options on and after January 1, 2005 with the
intent that such grants, together with other compensation that either is paid in the form of common shares or
whose value is determined in relation to the value of common shares (such grants and such other
compensation referred to as “equity-based compensation”), provide equity-based compensation for the
Company’s non-employee directors that each year is competitive with the value of equity-based compensation
provided by comparable companies to their non-employee directors.
In addition, a non-employee director of the Company may elect, prior to the start of any calendar year, to
waive all or a portion (in 25% increments) of his or her retainer and other director fees from the Company for
such calendar year and in return receive an additional stock option under the Directors Stock Option Plan as
of the first business day of such calendar year. The number of common shares to be subject to such elected
option will be determined by the Board in its discretion (and generally, in the absence of another method
chosen by the Board, will be determined by dividing the anticipated retainer and other fees for the calendar
year for which the director is waiving the fees by the per share value of the stock option as determined under
a reasonable valuation method adopted by the Board).
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