Cincinnati Bell 2013 Annual Report Download - page 55

In establishing its compensation programs, the Company evaluates the following from both peer groups’
data:
•Base salary;
•Total target cash compensation — the sum of base salary plus target annual bonus opportunity; and
•Total target direct compensation — the sum of base salary plus target annual bonus opportunity plus target
long-term incentive opportunity.
The Compensation Committee considers, as one of many factors, each component of executive officer
compensation compared to the revenue size-adjusted market 50th percentile for two reasons:
•Benchmarking target compensation at the 50th percentile is consistent with the practice followed by a
majority of companies and is considered “best practice,” and
•Above-median compensation should be on a delivered actual basis, rather than a target basis, for
overachievement of target performance goals consistent with the Company’s “pay-for-performance”
philosophy.
Other factors considered by the Company and the Compensation Committee in determining executive
compensation levels are past and current target pay levels, internal equity considerations and individual
performance.
The Compensation Committee also wants to ensure that each executive has a significant percentage of
compensation “at risk.” Using the benchmark data and input from its own independent consultant as well as from
Company management (primarily the Chief Executive Officer and the Chief Financial Officer), the
Compensation Committee allocates total target direct compensation among base salary, annual bonus and long-
term incentive compensation. For 2013, the charts below reflect this allocation:
Performance-
Based Stock
Options/SARs
12.5%
Long-Term
Performance-
Based Awards
12.5%
Annual
Performance-
Based Cash
Incentive
37.5%
Base Salary
37.5%
Chief Executive Officer*
Performance-
Based Stock
Options/SARs
6%
Long-Term
Performance-
Based Awards
20%
Annual
Performance-
Based Cash
Incentive
33%
Base Salary
41%
Other NEOs*
* In 2013, the Company granted Mr. Torbeck restricted shares with a grant date value of $900,000 that vest
over a three-year period. This was the final installment of awards made in consideration of the compensation
he forfeited when he left his previous employer to accept employment with the Company and is not included
in the above chart. Consequently, Mr. Torbeck did not receive any additional long term incentive grants
during 2012 or 2011. The percentages for the other NEOs reflect the fact that Messrs. Heimbach, Fox and
Duckworth were not executive officers at the beginning of the year.
Based on market practices, combined with the Compensation Committee members’ collective experience,
the Compensation Committee believes that this allocation of pay among base salary and short- and long-term
incentive compensation provides appropriate motivation to achieve objectives set for the current year while also
providing a significant incentive that requires the executives to make decisions that are intended to sustain
attainment of business objectives over the longer term.
As part of the process for setting compensation, the Compensation Committee reviews “tally sheets” prepared
for each of the executives. Tally sheets provide the Compensation Committee with detailed information, as of a
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Proxy Statement