Time Warner Cable 2015 Annual Report Download - page 41

Reflecting the fact that many of the 2014 OPI goals were interrelated and interdependent, the Committee
determined to have all the Company’s executive officers share the same goals. This was also intended to foster
collaboration and cooperation among executive team members.
As under the Profit Participation component of the 2014 AIP, the Compensation Committee would
determine a performance “score” for each metric within the four key areas using a scale on which a designated
outcome could represent minimally satisfactory results and a score of 150% would represent truly exceptional
results.
Residential Video Subscriber Additions Bonus. In light of negative residential video subscriber trends, the
Compensation Committee developed the Residential Video Subscriber Additions Bonus opportunity to
encourage employee focus on quarterly residential video subscriber net additions. Under the 2014 AIP, an
additional bonus of 5% of the target bonus opportunity would have been payable based on the achievement of a
net increase in residential video subscribers in any fiscal quarter of 2014. This additional 5% bonus opportunity
would be payable to any AIP-eligible employee, including the executive officers. The payment of this bonus
could have permitted an individual’s total 2014 cash bonus to exceed 150% of the target opportunity. The
Company failed to meet the performance threshold for payment of the Residential Video Subscriber Additions
Bonus.
Supplemental Bonus Program. As noted above, to further incentivize employees to maintain focus on
achieving the Company’s operating goals while also engaging in a complicated and time-consuming integration
planning process during the pendency of the Comcast merger, the Company established a special Supplemental
Bonus Program for all participants in the 2014 AIP (approximately 15,000 employees), including the named
executive officers. The Supplemental Bonus Program provided a 50% increase to each participant’s target bonus
opportunity under the 2014 AIP, subject to an aggregate Supplemental Bonus Program payment limit of $100
million for all AIP-eligible employees. Furthermore, the Supplemental Bonus Program was based on the same
performance goals and subject to the same limits (including a payout cap) established under the 2014 AIP.
Pursuant to its terms, the Supplemental Bonus Program payments were to be made upon the completion or
termination of the Comcast merger and would not have been made had the 2014 AIP performance thresholds not
been met.
The Compensation Committee believed that meaningfully increasing the size of the potential cash bonus
opportunity under the 2014 AIP by 50% for the general employee population, as well as the named executive
officers, was an essential component of the 2014 incentive compensation package to motivate and reward
participants in light of the Company’s ambitious goals and its circumstances. The Compensation Committee
believed that mirroring the 2014 AIP financial and operational goals in the Supplemental Bonus Program
reinforced the criticality of achieving, and exceeding, the operating performance objectives despite the potential
Comcast merger distractions and additional responsibilities. In addition, the timing of the payment of the bonus
would also serve to reinforce the retention of senior management through the closing, or abandonment, of the
Comcast merger.
2014 Annual Incentive Plan Performance Determination. In connection with its determination of annual
bonus payments, the Compensation Committee reviewed the Company’s results under the Profit Participation
Program, the OPI and the Residential Video Subscriber Additions Bonus. The Profit Participation Program and
the Residential Video Subscriber Additions Bonus applied similarly to all bonus-eligible employees, while the
2014 OPI goals described above applied to the executive officers. Management determined the OPI metrics and
goals for the other bonus-eligible employees cascading down, as applicable, from the executive officers, based on
the participants’ roles within the Company. The Company did not achieve the quarterly net residential video
subscriber gain required to receive the Residential Video Subscriber Additions Bonus.
Profit Participation Program. As mandated by the terms of the Profit Participation Program component of
the 2014 AIP, Operating Income was adjusted to reflect identified items, such as merger-related and restructuring
costs, and other items that affect Operating Income but that are beyond the control of management or otherwise
not indicative of management’s performance. For 2014, these mandatory adjustments had the net impact of
increasing Operating Income for 2014 AIP purposes by $147 million in aggregate, predominantly for merger-
related expenses, resulting in adjusted Operating Income, for compensation purposes, of $4,779 million.
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