Cincinnati Bell 2006 Annual Report Download - page 63

Each of the Named Executive Officers participates in the Cincinnati Bell Management Pension Plan (the
“Management Pension Plan”), which is a qualified defined benefit plan, and a nonqualified excess benefit plan
(the provision for this excess benefit is contained in the qualified defined benefit pension plan document), which
applies the same benefit formula to that portion of the base wages and annual bonus payment that exceeds the
maximum compensation that can be used in determining benefits under a qualified defined benefit pension plan.
All salaried and non-union hourly employees of the Company also participate in the Management Pension Plan
on the same basis and their benefits vest over a five-year period at the rate of 20% per year. Covered
compensation for purposes of calculating benefits include base wages — including any applicable overtime
wages paid — plus annual bonus payments. Upon separation from employment, vested benefits are payable
either as a lump-sum, a single life annuity or, for married participants, a 50% joint and survivor, which provides
a reduced benefit for the employee in order to provide a benefit equal to 50% of that amount if the employee dies
before his/her spouse. The Management Pension Plan is described in further detail on page 56.
Finally, Mr. Cassidy is also covered under a nonqualified supplemental retirement plan – Cincinnati Bell
Pension Program (“SERP”). The SERP provides covered participants with a benefit equal to 50% of their
average monthly compensation, which is the average monthly compensation for the highest 36 month period
during the participants last five years of employment, less an offset for any benefits payable from the qualified
and nonqualified provisions of the Cincinnati Bell Management Pension Plan and the participant’s projected age
65 social security benefit. Benefits are reduced 2.5% per point for age and service to the extent the sum of the
participant’s age plus years of service equals less than 75. Participants are also provided with an additional
payment equal to their estimated age 62 social security benefit until they reach age 62. Benefits are normally
payable as an annuity — either single life or 50% joint and survivor for married participants — or as a 15-year
installment. Under the terms of the Program, a participant must be at least age 55 and have attained at least 10
years of service to be vested in their benefit.
Each of the employment agreements also provide for severance payments upon termination of employment
as a result of death or disability, termination by the Company without cause or termination upon a change of
control. The payments to the Named Executive Officers upon termination or a change in control are described on
page 60.
Long-term Incentives
The Compensation Committee has divided the total long-term incentives granted to the Named Executive
Officers approximately equally between stock option grants and performance unit grants because such an
allocation (i) prevents an excessive portion of long-term compensation being aligned solely on the achievement
of stock price appreciation and (ii) provides an equivalent opportunity for an executive to be rewarded based on
the Company achieving its more objective quantitative operating results that are consistent with its long-term
business strategy. Prior to 2006, the Compensation Committee also granted performance restricted shares to the
Named Executive Officers. The long-term incentives granted to the Named Executive Officers are described in
the Compensation Discussion and Analysis that begins on page 37.
Other Benefits
Each Named Executive Officer is eligible to participate in the Cincinnati Bell Inc. Flexible Perquisite
Reimbursement Program and to receive the Company’s matching contribution under the qualified defined
contribution plan in which all salaried employees of the company are eligible to participate. The flexible
perquisite program provides each eligible executive with an annual allowance (Mr. Cassidy — $35,000, Mr. Dir
— $23,000, Mr. Ross — $23,000, Mr. Callaghan — $23,000 and Mr. Wilson — $13,000) that may be used to
cover a variety of expenses, including
•automobiles (up to 60% of their annual allowance),
•tax planning and preparation,
•financial and estate planning,
•legal fees (excluding legal fees incurred in connection with an action against the Company),
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