Cincinnati Bell 2007 Annual Report Download - page 26

DIRECTOR COMPENSATION
Director Compensation Arrangements
The Company uses a combination of cash and stock-based incentive compensation to attract and retain
qualified candidates to serve on the Board. In setting director compensation, the Company considers the
significant amount of time that Directors spend in fulfilling their duties to the Company as well as the skill-level
required.
Compensation for Employee Directors
Directors who are also employees of the Company (or any subsidiary of the Company) receive no additional
compensation for serving on the Board or its committees.
General Compensation Policy for Non-Employee Directors
Directors who are not employees of the Company or any subsidiary of the Company (“non-employee
directors”) receive an annual retainer ($30,000 in 2007 and increased to $50,000 for 2008) plus $2,000 for each
Board and committee meeting attended. This increase in the annual retainer is intended to make the Board’s total
compensation package more comparable to other publicly traded companies, thereby helping the Board to attract
and retain qualified directors. The chairperson of the Audit and Finance Committee receives a $17,500 annual
retainer, the chairperson of the Compensation Committee receives a $10,000 annual retainer and the chairperson
of the Governance and Nominating Committee receives a $8,500 annual retainer. The members of the Audit and
Finance Committee receive a $5,000 annual retainer and members of each of the Compensation Committee and
the Governance and Nominating Committee receive a $2,500 annual retainer. In addition to the applicable
retainers and meeting fees described above, Mr. Cox, Chairman of the Board, also receives an additional director
fee determined by the Board annually ($180,000 for 2007 and $180,000 for 2008) for his service as Chairman.
Non-Employee Directors Deferred Compensation Plan
The Cincinnati Bell Inc. Deferred Compensation Plan for Outside Directors (the “Directors Deferred
Compensation Plan”) currently allows each non-employee director of the Company to choose to defer receipt of
all or a part of his or her director fees and annual retainers and to have such deferred amounts credited to an
account of the director under the plan. A non-employee director may also choose to have such deferrals assumed
to be invested among a number of investment options that are designated for this purpose by the Compensation
Committee of the Board, and his or her account under the plan is adjusted by the investment returns that would
result if such amounts were assumed to be invested in the investment options that he or she chooses.
In addition, each non-employee director of the Company on the first business day of the year, both in each
of 2007 and 2008, had his or her account under the Directors Deferred Compensation Plan credited on such date
with an amount equal to the value of 6,000 common shares of the Company. Subject to future changes in the
plan, each non-employee director of the Company may, in the discretion of the Board, also have his or her
account under the plan credited on any other date with an amount equal to the value of a number of Company
common shares determined by the Board. The Board will exercise its discretion in crediting amounts to the plan
accounts of the non-employee directors with the intent that such credits, together with other compensation that
either is paid in the form of Company common shares or has its value determined in relation to the value of
common shares (such grants and such other compensation referred to as “Company equity-based
compensation”), provide Company equity-based compensation for the Company’s non-employee directors that
each year is approximately equal to the median level of the value of equity-based compensation provided by a
group of comparable peer group companies to such other companies’ non-employee directors. A non-employee
director’s account under the plan is also adjusted by the investment returns that would result if such amounts
were assumed to be invested exclusively in common shares of the Company. A non-employee director will
generally be vested in the amounts credited to his or her account under the plan only if he or she completes at
least five years of active service as a non-employee director of the Company (with a fraction of a year of service
as a non-employee director being rounded up or down to the nearest whole year) or if he or she dies while a
member of the Board.
12