FairPoint Communications 2006 Annual Report Download - page 109

Download and view the complete annual report

Please find page 109 of the 2006 FairPoint Communications annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 150

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122
  • 123
  • 124
  • 125
  • 126
  • 127
  • 128
  • 129
  • 130
  • 131
  • 132
  • 133
  • 134
  • 135
  • 136
  • 137
  • 138
  • 139
  • 140
  • 141
  • 142
  • 143
  • 144
  • 145
  • 146
  • 147
  • 148
  • 149
  • 150

 
Deferred Compensation We maintain a Non-Qualified Deferred Compensation Plan (the “NQDC Plan”) that covers certain employees.
The NQDC Plan allows highly compensated individuals to defer additional compensation beyond the
limitations of the 401(k) Plan. Company matching contributions are made according to the same percentage of
deferrals as is made under our 401(k) plan, but only with respect to compensation that exceeds the limits for
the 401(k) plan.
Perquisites Our NEOs have received some or all of the following perquisites: supplemental life and disability insurance,
use of a company vehicle, spousal travel benefits, and in one instance, payment of country club dues.
Perquisites paid to our chief executive officer were eliminated in March 2006 as part of a new employment
agreement. All other perquisites for NEOs have been eliminated as of January 1, 2007.
Post-employment Benefits . We maintain a standard 401(k) plan that includes an employer matching contribution up to an
amount equal to 4½% of each participant’s compensation.
. We provide, on equal terms for all employees, group term life insurance, group health
insurance, and short-term and long-term disability insurance.
. We will provide severance benefits to Mr. Johnson, Mr. Leach,
Mr. Nixon, Mr. Crowley and Ms. Linn at levels that we consider conservative yet competitive when compared
to those offered by our peers. We believe that the foregoing benefits are necessary and appropriate in order to
attract and retain qualified NEOs.
Method for Determining Amounts

The compensation committee determines the level of base salary for our chief executive officer and the other executive officers with the general goal of
providing competitive salaries. Decisions take into account independent studies and surveys prepared by consultants based on publicly available information
with respect to other comparable communications companies. In addition, with respect to each executive officer, including the chief executive officer, the
compensation committee considers the individual’s performance, including that individual’s total level of experience in the communications industry, his or
her record of performance and contribution to our success relative to his or her job responsibilities and annual goals, as well as his or her overall service to
FairPoint.

The annual incentive awards are based on a combination of corporate and individual goals having specific financial and operational objectives such as
the following: FairPoint achieving a specified EBITDA target, FairPoint working within a specified total debt to EBITDA ratio, FairPoint achieving certain free
cash flow and revenue targets, FairPoint generating sufficient cash available for dividends, FairPoint accomplishing certain budgetary, operational and
regulatory goals and providing company and industry leadership. We generally establish bonus targets and performance criteria at the end of each year for the
following year.
107