FairPoint Communications 2010 Annual Report Download - page 143

Table of Contents
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Base Salary
The compensation committee determines the level of base salary for our Chief Executive Officer and the other executive officers with the general goal of
providing competitive salaries. In making its decisions, the compensation committee considers independent studies and surveys prepared by consultants
based on publicly available information with respect to other comparable communications companies. In addition, with respect to each executive officer,
including the Chief Executive Officer, the compensation committee considers the individual’s performance, including that individual’s total level of experience
in the communications industry, his or her record of performance and contribution to our success relative to his or her job responsibilities and annual goals,
as well as his or her overall service to the Company.
Annual Incentive Compensation Awards
The annual incentive awards are based on a combination of corporate and individual goals having specific financial and operational objectives. We
generally establish bonus targets and performance criteria at the end of each year for the following year.
Deferred Compensation
We have maintained a nonqualified deferred compensation plan (the “NQDC Plan”) for NEOs and other select senior management to enable them to defer
compensation in excess of the limits applicable to them under our 401(k) plan. Matching contributions are made to the NQDC Plan according to the same
percentage of deferrals as is made under our 401(k) plan, but only with respect to compensation that exceeds the limits for the 401(k) plan.
Retirement and Welfare Benefits
Our NEOs participate in our broad-based 401(k) and welfare benefit plans, and thereby receive, for example, group health insurance, group term life
insurance and short-term and long-term disability insurance. The costs of these benefits constitute only a small percentage of each executive officer’s total
compensation.
Post-employment Severance and Change-in-Control Benefits
We provide post-employment severance and change-in-control benefits to Mr. Sunu, pursuant to an employment agreement, and to Messrs. Sabherwal and
Nixon and Ms. Linn, pursuant to change in control and severance agreements. See “—Potential Payments Upon Termination or Change of Control.” We also
provide post-employment severance and change-in-control benefits to certain other non-NEO executives. The severance benefits for these executives are
generally paid only if the executives are terminated without cause and they do not voluntarily resign. The severance benefits are also provided if any
termination of employment occurs because of a change in control.
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Explained below are the key components of the compensation that our NEOs earned in 2010 as shown in the “Summary Compensation Table.” Their base
salaries generally accounted for between 24% and 95% of their total potential compensation, while incentive compensation accounted for most of the remainder
of their total potential compensation. In addition, Mr. Hauser received approximately $1.6 million in 2010 under a consulting agreement with the Company
subsequent to his resignation. The compensation committee believes that the balance described below of 2010 levels for salary, annual cash incentive awards
and other benefits reflect both (i) an appropriate performance-oriented structure for total compensation, and (ii) a suitable correlation of total NEO
compensation to the Company’s financial and business performance in 2010.
Pursuant to the Plan, all outstanding equity interests of the Company, including but not limited to all outstanding shares of common stock, options and
contractual or other rights to acquire any equity interests, were canceled and extinguished on the Effective
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