Cincinnati Bell 2006 Annual Report Download - page 55

The Company believes that the various benefit plans and programs provided are consistent with
predominant U.S. employment practices and are necessary to attract and retain executive talent.
Proxy Executive Compensation
The Compensation Committee established 2007 compensation for the proxy executives at its regularly
scheduled December 2006 meeting using the principles and process described and explained above. The
assessment of each executive’s performance is detailed and both objective and subjective. Their current total
compensation opportunity was compared to that of other executives in similar positions in the custom group of
telecommunications companies at the 50th percentile of market pay after adjusting for differences in annual
revenue of the company. Their compensation is based on both the Company’s performance as well as each
executive’s personal performance and is designed to be aligned with the existing business strategies to de-lever,
defend and grow the Company.
Mr. Cassidy reviewed each element of the individual executive’s total compensation opportunity — base
salary, annual bonus and long-term incentive compensation with the Compensation Committee. In addition, the
Compensation Committee reviewed a tally sheet showing the value or cost of the various benefit, retirement and
perquisite plan participation for each named executive officer.
Based on the principles previously discussed, Mr. Cassidy made the following recommendations, which the
Compensation Committee approved, based on data from the compensation study, his assessment of individual
performance and internal equity:
•Base Salary:
•Mr. Dir’s salary was increased from $300,000 to $330,000 beginning in 2007.
•Mr. Callaghan’s salary was not reviewed due to his year-end retirement.
•Mr. Ross’s salary was increased from $350,000 to $375,000 beginning in 2007.
•Mr. Wilson’s salary was increased from $250,000 to $300,000 beginning in 2007.
•Annual Bonus Target:
•Mr. Dir’s target bonus remains unchanged at 85% of base salary for 2007.
•Mr. Callaghan’s bonus target was not reviewed due to his year-end retirement.
•Mr. Ross’s target bonus was increased from 85% to 100% of base salary for 2007.
•Mr. Wilson’s target bonus remains unchanged at 50% of base salary for 2007.
•Long-Term Incentives:
•For the 2006 fiscal year Mr. Dir was granted 50,000 performance units during the first quarter of 2006
with respect to the three-year 2006 – 2008 performance plan, which accounted for approximately 50%
of Mr. Dir’s long-term incentive opportunity. On December 1, 2005, the Compensation Committee
granted Mr. Dir 100,000 nonqualified stock options for the 2006 fiscal year. For the 2007 fiscal year,
Mr. Dir received a grant of 100,000 nonqualified stock options at the Compensation Committee’s
regularly scheduled December 8, 2006 meeting and, following approval of goals for the 2007 – 2009
performance unit plan, Mr. Dir received a target grant of 50,000 performance units at the Compensation
Committee’s January 2007 meeting.
•Mr. Callaghan has not participated in any of the three-year performance plan cycles due to his
participation in the 2003 success bonus plan. On December 1, 2005, the Compensation Committee
granted Mr. Callaghan 75,000 nonqualified stock options for the 2006 fiscal year. For the 2007 fiscal
year, Mr. Callaghan did not receive a grant of stock options because of his retirement on December 31,
2006.
•For the 2006 fiscal year Mr. Ross was granted 62,500 performance units during the first quarter of 2006
with respect to the three-year 2006 – 2008 performance plan, which accounted for approximately 50%
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Proxy Statement