Cincinnati Bell 2013 Annual Report Download - page 49

The Adjusted EBITDA and revenue goals are assessed independently of each other and are scaled above and
below their respective targets. In 2013, significant changes were made to the scale used for exceeding annual
targets. Prior to this period, incentive awards could be earned up to a maximum amount of 200% of the bonus
pool for achieving at least 120% of the desired financial goal. This was adjusted for 2013 as follows:
Percentage of
Criterion Achieved
Adjusted EBITDA Goal Revenue Goal
Percentage of
Target Incentive
Goal
Percentage of
Total Annual
Incentive
Paid
Percentage of
Target Incentive
Goal
Percentage of
Total Annual
Incentive
Paid
Below 95% ................................ 0% 0% 0% 0%
95% ...................................... 50% 30% 50% 10%
100% ..................................... 100% 60% 100% 20%
110% ..................................... 125% 75% 125% 25%
120% or greater ............................. 150% 90% 150% 30%
The 2013 target annual incentives for each of the NEOs at year-end are set forth below:
Named Executive Officer
Target Annual Incentive
as a % of Base Salary
Theodore H. Torbeck ...................................... 100%
David L. Heimbach (a) .................................... 100%
Leigh R. Fox (a) .......................................... 100%
Christopher J. Wilson ..................................... 65%
Joshua T. Duckworth (a) ................................... 50%
(a) Messrs. Heimbach, Fox and Duckworth were all promoted to their current positions during 2013. The
Company has a well-established practice of pro-rating bonuses when an individual is promoted and there is
an increase in the executive’s base salary and/or target bonus. The percents shown in the above table
represent the new annual bonus targets. However, for 2013, the actual bonuses for each of these three
executives were based on a blend of each of their salaries and bonus targets prior to their promotion and their
salaries and target bonuses following their promotion.
In 2013, for annual incentive purposes, the chart below sets out the adjusted EBITDA and revenue target
goals and actual results, which produced a weighted-average payout for the financial portion of 108.3% of target:
Financial Objective
2013
Threshold
Performance
Level 2013 Target
2013
Superior
Performance
Level
2013 Actual
Results
Adjusted EBITDA .................................. 95% $390M 120% $402 M*
Revenue .......................................... 95% $1.19 B 120% $1.24 B
* Excludes a $5.6M favorable gain in EBITDA resulting from the decline in stock price during 2013.
The Chief Executive Officer provides the Compensation Committee with his assessment of each executive
officer’s individual performance. The Chief Executive Officer reviews, for each executive officer, the
performance of the executive’s department, the quality of the executive’s advice and counsel on matters within
the executive’s purview, qualitative peer feedback and the effectiveness of the executive’s communication with
the organization and with the Chief Executive Officer on matters of topical concern. These factors are evaluated
subjectively and are not assigned specific individual weight. The Chief Executive Officer then recommends an
award for the individual performance-based portion for each of the other NEO’s annual incentive, which can
range from 0% to 200% of the target award for such portion.
The Compensation Committee meets in executive session to consider the Chief Executive Officer’s
individual performance. The Compensation Committee evaluates the information obtained from the other
directors concerning the Chief Executive Officer’s individual performance, based on a discussion led by the
Chairman of the Board. Factors considered include: operational and financial performance, succession planning,
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Proxy Statement