Cincinnati Bell 2012 Annual Report Download - page 42

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Compensation Practices
The Company reviews and modifies its executive compensation programs and practices regularly to address
changes in the Company’s short- and long-term business objectives and strategies, new regulatory standards and
to implement evolving best practices. Listed below are some of the Company’s significant compensation
practices:
•Performance-based Compensation. The Company believes that a significant percentage of each NEO’s
total compensation should be performance-based or “at-risk.” Only 17% of the CEO’s and 35% of the
Other NEOs’ target compensation in 2012 was paid in the form of base salary. The value of the remaining
83% and 65%, respectively, was linked directly to performance-based awards.
Performance-Based Stock
Options/SARs
25%
Performance-Based Stock
Options/SARs
12%
Long-Term Performance-
Based Awards
25%
Long-Term Performance-
Based Awards
12%
Annual Performance-Based
Cash Incentive
33%
Annual Performance-Based
Cash Incentive
41%
Base Salary
17%
Base Salary
35%
Chief Executive Officer Other NEOs*
* The percentages for the Other NEOs understate the percentage of performance-based compensation. In
2012, the Company granted Mr. Torbeck an award of $1.8 million of restricted common shares that vest
over a three-year period. This award was provided to compensate him for the compensation he forfeited
when he left his previous employer to accept employment with the Company. Consequently, for 2012,
Mr. Torbeck did not receive any performance unit or stock option/SARs awards.
•Compensation Risk Assessment. The Company conducted its second annual compensation risk
assessment and concluded that the Company’s compensation policies and practices do not encourage
excessive or unnecessary risk-taking and are not reasonably likely to have a material adverse effect on the
Company.
•Hedging and Pledging Policy. Effective January 31, 2013, the Company updated its Insider Trading Policy
to expressly bar ownership of financial instruments or participation in investment strategies that hedge the
economic risk of owning the Company’s common stock and to prohibit officers and directors from
pledging Company securities as collateral for loans.
•Clawback Policy. The Company has a clawback policy that allows the Company to recover incentive
payments to or realized by certain “executive officers” in the event that the incentive compensation was
based on the achievement of financial results that are subsequently restated to correct any accounting error
due to material noncompliance with any financial reporting requirement under the federal securities laws,
and such restatement results in a lower payment or award.
•Independent Compensation Committee. Each member of the Compensation Committee is independent as
defined in the corporate governance listing standards of the NYSE and the Company’s director
independence standards mirror those of the NYSE.
•Outside Compensation Consultants. The Compensation Committee utilizes the services of an outside
independent compensation consultant to assist in its duties. The Compensation Committee’s consultant
performs no other services for the Company or its management. The Compensation Committee has
30