Cincinnati Bell 2006 Annual Report Download - page 24

A non-employee director of the Company who served as a non-employee director prior to 2007 may also
have had additional amounts credited to his or her account under the Directors Deferred Compensation Plan
based on his or her deferral of director fees and annual retainers for years before 2007 or on other extra amounts
that were credited by the Company to his or her account under the plan prior to such year. The portion of a
non-employee director’s account under the plan that is attributable to such pre-2007 credited amounts is also
adjusted by the investment returns that would result if such amounts were assumed to be invested in investment
options that he or she chooses, in common shares or in other investments, depending on the particular credits that
are involved.
Other than for certain circumstances described below and subject to future changes in the Directors Deferred
Compensation Plan, a non-employee director of the Company can, if he or she complies with specific election rules
and procedures set forth in or adopted under the plan and with the requirements of applicable law (including the
American Jobs Creation Act of 2004, which generally applies to any compensation of a non-employee director that
is credited to his or her account under the plan in 2005 or any later year), elect that the vested amounts credited to
his or her account under the Directors Deferred Compensation Plan will not be received by him or her (and thereby
generally will not be subject to federal income tax) until after he or she has ceased to be a member of the Board or
until a specific year he or she chooses that is not earlier than the year in which the sixth anniversary of his or her
deferral election occurs. He or she generally may also elect to have the vested amounts credited to his or her plan
account, when they are to be paid, distributed in a lump sum or in up to ten annual installments.
Each payment made to a non-employee director of the vested amounts credited to his or her account under
the Directors Deferred Compensation Plan is made in the form of cash to the extent such amounts are deemed to
be invested under the plan other than in common shares and will be distributed in the form of common shares to
the extent such amounts are deemed to be invested under the plan in such shares; except that (i) the vested
portion of his or her account under the plan that is attributable to the annual credits that are or have been made to
his or her plan account for serving as a member of the Board and (ii) the value of any vested amount that is
deemed to be invested in a fractional common share will, in each such case, only be paid in cash.
The Company will reimburse a non-employee director for all reasonable commissions or similar costs he or
she incurs in selling any common shares he or she receives under the Directors Deferred Compensation Plan, or
make arrangements to permit the director to have such shares sold without commissions or similar fees charged
to him or her, if the director wants to sell such shares shortly (generally within two weeks) after he or she
receives them.
The Directors Deferred Compensation Plan provides three exceptions to the rules regarding the timing of
distributions of a non-employee director’s account under the plan: (i) in the event of a change in control of the
Company; (ii) at the election of the non-employee director in the event of severe financial hardship; and (iii) at
the election of the non-employee director if he or she agrees to certain forfeitures and restrictions (although,
under the American Jobs Creation Act of 2004, this final exception cannot apply to amounts attributable to
compensation credited on or after January 1, 2005 to a non-employee’s account under the plan).
Until paid, all amounts credited to a non-employee director’s account under the Directors Deferred
Compensation Plan are not funded or otherwise secured, and all payments under the plan are made from the
general assets of the Company.
The Directors Deferred Compensation Plan must comply with the requirements of the American Jobs
Creation Act of 2004 in order to retain its ability to defer federal income tax on certain amounts credited to a
non-employee director’s account under the plan. The Company has amended the plan to meet the requirements of
the American Jobs Creation Act of 2004, and will make further amendments as necessary to comply with the
regulations adopted by the IRS to implement the Act.
Non-Employee Directors Stock Option Plans
Prior to 2007, the Company granted its non-employee directors stock options to purchase common shares
under the Cincinnati Bell Inc. 1997 Stock Option Plan for Non-Employee Directors (the “1997 Directors Stock
Option Plan”). Pursuant to the current terms of such plan, each non-employee director of the Company, in the
discretion of the Board, may have been granted on or after January 1, 2006:
•a stock option for a number of common shares (as determined by the Board) on the first day of his or her
initial term of office as a non-employee director of the Company; and
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