Cincinnati Bell 2012 Annual Report Download - page 51

Compensation Determination Process
Role of the Compensation Committee and Management in Recommending Compensation
As described in greater detail below, individual base salaries, annual cash incentive awards and long-term
incentive grant amounts are determined within the framework of the executive’s position and responsibility,
individual performance and future leadership potential, as determined by the Chief Executive Office in
consultation with the Compensation Committee, or by the Compensation Committee and the full Board in the
case of the Chief Executive Officer, as well as with regard to the external marketplace.
The Chief Executive Officer presents compensation recommendations for the senior executives, including
the other NEOs, to the Compensation Committee for its review and approval. The Compensation Committee
evaluates the performance of the Chief Executive Officer, determines his compensation, and discusses its
recommendation with the Board in executive session before the Board’s approval.
Determination of the Target Compensation Levels
Each of the Compensation Committee and the Company have engaged a consultant to advise on
compensation-related matters. Neither the Compensation Committee nor the Company have identified any
conflicts of interest with respect to their respective compensation consultant that would impair the advice
provided by such compensation consultant.
The Compensation Committee retains Mr. Charles Mazza, an independent compensation consultant, who
performs no other services for the Company or its management, to assist in its deliberations regarding executive
compensation. Pursuant to the Committee’s instructions, Mr. Mazza analyzes and comments on various compensation
proposals made by the Company and on various topics specified by the Committee and opines and reports on these
matters in open sessions of Compensation Committee meetings. In executive sessions of Compensation Committee
meetings, Mr. Mazza addresses subjects of particular interest to the Compensation Committee, such as compensation
of the Chief Executive Officer, and presents his analysis of such subjects including the pros and cons of certain
compensation elements and his recommendations. Pursuant to the Compensation Committee Chair’s request,
Mr. Mazza contacts each member of the Compensation Committee annually as part of the Compensation Committee’s
self-evaluation and reports his conclusions to the Compensation Committee.
The Company retains Towers Watson to assist it with various compensation-related projects during the
course of the year. Typically, the Company has a discussion with Towers Watson about a project, outlining the
project’s objectives, and discusses Towers Watson’s approach to the project before requesting them to complete
the project. The projects range from requests for general compensation data or information to requests for
specific guidance and recommendations, such as designing specific incentive plans.
At the Company’s request, Towers Watson conducts an annual study of marketplace compensation
practices. The Compensation Committee annually benchmarks each executive’s compensation to ensure that it is
in a competitive range and that an appropriate portion of it is “at risk”; that is, subject to payment only if the
Company obtains certain quantitative results and the individual achieves certain qualitative results. Towers
Watson obtains, compiles and supplies to the Company and the Compensation Committee competitive
compensation information. This information covers two peer groups.
The first peer group consists of 20 telecommunications companies. The Company, in consultation with Towers
Watson and Mr. Mazza, annually reviews the list of companies in this group to make certain that the group is appropriate
and the Compensation Committee, after review, approves the peer group. The peer group currently includes:
•AT&T Inc. •MetroPCS Communications Inc.
•Centurylink, Inc. •Sprint Nextel Corp.
•Clearwire Corp. •Telephone & Data Systems Inc.
•Comcast Corp. •Time Warner Inc.
•EarthLink Inc. •TW Telecom Inc.
•Fairpoint Communications, Inc. •United States Cellular Corp.
•Frontier Communications Corp. •USA Mobility, Inc.
•IDT Corp. •Verizon Communications Inc.
•Leap Wireless International Inc. •Vonage Holdings Corp.
•Level 3 Communications Inc. •Windstream Corp.
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