FairPoint Communications 2010 Annual Report Download - page 144

Table of Contents
Date. In addition, on the Effective Date, the Company was deemed to have adopted the 2010 Long Term Incentive Plan and the Success Bonus Plan without
any further action by the Company. On the Effective Date, in accordance with the Plan, (i) management and other employees of the Company received certain
cash bonuses pursuant to the Success Bonus Plan and (ii) certain equity awards pursuant to the 2010 Long Term Incentive Plan were made. See “Item 1.
Business—Emergence from Chapter 11 Proceedings—New Long Term Incentive Plan and Success Bonus Plan.”
Base Salary
None of the NEOs received a base salary increase in 2010.
Annual Incentive Compensation Awards
The compensation committee established the 2010 target bonuses and related performance goals for certain members of our senior management under the
FairPoint Communications, Inc. Annual Incentive Plan, or the Annual Incentive Plan, on March 2, 2010.
The NEOs’ 2010 performance goals for bonus awards include the following: (i) quarterly financial performance targets, which are calculated by
subtracting Consolidated Capital Expenditures (“CAPEX”) (as defined in the Debtor-in-Possession Credit Agreement, dated as of October 27, 2009, by and
among the Company, FairPoint Logistics, Inc., the lenders party thereto and Bank of America, N.A., as administrative agent (the “DIP Credit Agreement”))
from Consolidated EBITDAR (as defined in the DIP Credit Agreement) (the “EBITDAR Minus CAPEX Targets”), and which are based on an annual
EBITDAR Minus CAPEX Target of $165.6 million for the year ended December 31, 2010; (ii) the Company achieving an average monthly target of 77.5%
for customer service calls that are answered within 20 seconds (the “Call Center Service Target”) at the Company’s consumer, business, collections and repair
call centers in Maine, New Hampshire and Vermont (collectively, “Northern New England”); (iii) the Company achieving an average monthly target of 12.0%
for installation appointments in Northern New England that are not met for Company reasons (the “Installation Appointment Target”); and (iv) the Company
achieving an average on-time target of 90.0% for repair appointments in Northern New England (the “Repair Appointment Target”). These same 2010
performance goals are applicable to all non-represented employees and some represented employees of the Company except commissioned sales employees.
David L. Hauser, the Company’s Chief Executive Officer, was eligible for a target bonus of up to 100% of his 2010 annual base salary. The target bonus
for Mr. Hauser was based on the Company’s ability to achieve the following, tested quarterly (weighted as indicated): (i) 67% — the EBITDAR Minus
CAPEX Targets; (ii) 11% — the Call Center Service Target; (iii) 11% — the Installation Appointment Target; and (iv) 11% — the Repair Appointment Target.
Peter G. Nixon, the Company’s President, Ajay Sabherwal and Alfred C. Giammarino, each the Company’s Executive Vice President and Chief Financial
Officer, Shirley J. Linn, the Company’s Executive Vice President, General Counsel and Secretary, and Raymond C. Allieri, the Company’s Executive Vice
President and Chief Strategy Officer, were each eligible for a target bonus of up to 50% of his or her 2010 annual base salary. Lisa R. Hood, the Company’s
Senior Vice President and Controller, was eligible for a target bonus of up to 40% of her 2010 annual base salary. The target bonus for each of these officers
was based on the same criteria as set forth above for Mr. Hauser.
Previously, the Annual Incentive Plan provided for a single lump sum payment of bonus awards. The compensation committee amended the Annual
Incentive Plan to provide for quarterly payments of bonus awards for 2010. Such quarterly payments were made to the NEOs (and all non-represented
employees of the Company except commissioned sales employees) at 50% of the quarterly target payment amount provided that the quarterly targets are met,
with true-up payments to be included in bonus awards for the full 2010 year.
Compensation of Messrs. Hauser and Sunu
On August 24, 2010, the Bankruptcy Court approved a proposed (i) consulting agreement with David L. Hauser, the Company’s then Chairman and
Chief Executive Officer, and (ii) employment agreement with Paul H. Sunu. The compensation committee had negotiated the proposed agreements in
connection with the transition of the Chief Executive Officer role from Mr. Hauser to Mr.
142