FairPoint Communications 2006 Annual Report Download - page 113
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for key positions. The compensation committee has eliminated all perquisites beginning on January 1, 2007.
Mr. Johnson’s 2006 employment agreement entitles him to receive the following severance and/or change-in-control benefits provided he continues to work
as chief executive officer until the end of his term of employment (currently, December 31, 2008), provided we do not terminate his employment for cause, or
he does not voluntarily resign: payment of his base salary as of the termination date for the remainder of the employment period plus one year thereafter
(subject to suspension for a breach of Mr. Johnson’s covenant not to compete with us); continued medical coverage for Mr. Johnson and his wife for the life of
each under our medical benefits plans; and, continued vesting of all restricted stock granted as of the termination date under the 2005 Stock Incentive Plan.
Pursuant to a letter agreement between Mr. Leach and us, upon termination of Mr. Leach’s employment by us without cause (including upon a change of
control), Mr. Leach is entitled to a lump sum payment amount equal to twelve months of his base salary (as of the date of termination), and continued long-
term disability, term life insurance and medical benefits for twelve months following such date of termination.
Pursuant to letter agreements, upon termination of employment without cause (including upon a change of control), Mr. Nixon, Mr. Crowley and
Ms. Linn are entitled to receive from us in a lump sum payment an amount equal to twelve months of base salary as of the date of termination, plus the
continuation of certain benefits, including medical benefits, for twelve months.
Section 162(m) of the Internal Revenue Code, or the Code, generally disallows a tax deduction to public corporations for compensation, other than
performance-based compensation, over $1.0 million paid for any fiscal year to any of the corporation’s chief executive officer and four other highly
compensated executive officers as of the end of any fiscal year. The Company’s policy is to qualify its executive officers’ for deductibility under
Section 162(m) to the extent the compensation committee determines such to be appropriate. In 2006, compensation did not exceed the deductibility limits of
Section 162(m) for any NEO. The compensation committee remains aware of the Code Sections 162(m) and 409A limitations and the available exemptions
and special rules, and will address the issue of 162(m) deductibility and 409A compliance when and if circumstances warrant the use of such exemptions or
other considerations.
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