Cincinnati Bell 2012 Annual Report Download - page 44

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Elements of Compensation
The chart below sets forth the key elements of compensation used in the executive compensation program,
and the narrative following the chart discusses each element in more detail.
Component Purpose Key Characteristics
Short-Term Incentives
Base Salary •Allow Company to attract and
retain executives
•Recognize individual performance
through merit increase
•Recognize individual work
experience and level of
responsibility
•Fixed annual cash compensation
•Increases primarily driven by
individual performance and by
market positioning
•Used to calculate other components
of compensation
Annual Incentives •Motivate executive to contribute to
Company’s achievement of its
annual financial goals and strategic
objectives
•Motivate executives to achieve
individual annual performance
goals
•Performance-based incentive
compensation
•Bonus target set as a percentage of
base salary
Long-Term Incentives
Non-qualified Stock
Options and Stock
Appreciation Rights
(“SARs”)
•Align executive and shareholder
interests because the increase in
value of the stock options and
SARs are dependent on
improvements in stock price
•Motivate executive to contribute to
Company’s achievement of its
long-term financial goals and
strategic objectives
•Facilitate executive equity
ownership thereby aligning
executive and shareholder interests
•Performance-based incentive
compensation
•Vests 100% over 3 year period
from grant date and/or on the
achievement of performance
measure goals
•Stock options and SARs expire 10
years from grant date
Performance-Based
Awards
•Motivate executive to contribute to
Company’s achievement of its
long-term financial goals and
strategic objectives
•Provide a measure of Company
performance that is not tied to
short-term market volatility
•Performance-based incentive
compensation
•Granted each year with cumulative
one-year, two-year, and three-year
performance cycles
Compensation Element Details
Base Salary
Base salaries are provided to the Company’s named executive officers for performing their day-to-day
responsibilities. The base salaries of our NEOs are based on a review of the competitive median marketplace for
comparable executive positions, assessment by the CEO (or in the case of the CEO’s base salary, by the
Compensation Committee and entire Board) of the executive’s performance as compared to his or her individual
job responsibilities, the salary level required to attract and retain the executive and such other factors as the CEO
or the Compensation Committee deems relevant for such executive. Generally, no one factor is given more
weight than another, nor does the Company and the Compensation Committee use a formulaic approach in
32