Time Warner Cable 2015 Annual Report Download - page 42

Since this adjusted Operating Income exceeded the threshold performance, the Compensation Committee
noted the straight-line interpolation between the threshold and maximum target levels. This interpolation yielded
an initial “score” of 96%, which the Compensation Committee used as the starting point for its final
determination of performance under the 2014 Profit Participation Program component.
Pursuant to the Profit Participation Program, in evaluating performance, the Compensation Committee
considered, among other factors:
• the quality of the Company’s 2014 financial performance;
• the Company’s performance relative to its budget;
• the Company’s growth as compared with 2013 results;
• the Company’s performance relative to that of other cable operators;
• Management’s recommendation for the Company financial performance score; and
• the external business environment and market conditions.
After deliberation, the Compensation Committee established a Profit Participation Program “score” of 96%,
based on the straight-line interpolation. This determination reflected the Compensation Committee’s view of the
Company’s accomplishments during the year (as outlined above under “2014 Highlights: Company
Performance”), especially in light of the efforts, demands and distractions arising from the Comcast merger,
including complying with the requests of federal, state and local regulators reviewing the proposed transaction
and planning for post-closing integration.
Operational Performance Incentive Plan. The Compensation Committee reviewed each of the four
principal areas established under the 2014 OPI and considered management’s progress, as reviewed by the
Company’s internal auditor, against the metrics and goals associated with each of these areas. Based on its
review, the Committee established the following scores:
• Residential customer experience score—124%. This score was based on management’s impressive
success in reducing the number of trouble calls (i.e., truck rolls) during 2014, exceeding expectations,
and the Company’s reduction in the number of customer care phone calls during the year. The
Committee considered the impact of growth in customer relationships and the expansion of the TWC
Maxx program on the service call experience, but determined not to adjust the score from the straight
line interpolation.
• Plant reliability and expansion score—122%. This score was based on exceeding expectations with
respect to improving plant reliability and performance and expanding residential service opportunities.
However, the score was negatively impacted by achieving a lower level of success in building business
services line extensions and cell towers despite adding more than $1 billion in business services
opportunity.
• TWC Maxx deployment score—117%. This score was based on management having successfully
completed the migration to “all-digital” in Los Angeles and having deployed its TWC Maxx Internet
speed increases in New York and Los Angeles as planned, and improving plant performance in these
key locations, along with Austin, Texas, to a level above expectations. The Committee did not adjust the
score to reflect the successful increase of Internet speeds in Austin, Texas to TWC Maxx levels ahead of
schedule.
• Financial and operating performance score—102%. This score was based on strong growth in residential
customer relationships during 2014 (net additions of 150,000), as well as revenue growth of 3.1% during
2014.
In each case, the Company’s performance exceeded the threshold performance established under the OPI.
Accordingly, the Compensation Committee noted the straight-line interpolation between the threshold and
maximum target levels in each case in which such goals had been established. This interpolation yielded initial
“scores,” which the Compensation Committee used as the starting point for its final determination of
performance under the 2014 OPI. After deliberation, the Compensation Committee established an aggregate 2014
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