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The
Charter Communications, Inc. 2008 Incentive Program
(“Program”).
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The
Program is designed to provide both annual and long-term incentive
compensation to selected management employees who contribute and
significantly impact the long term growth and success of Charter
Communications, Inc. (“Company”). It is focused on both
retention and performance, and uses a combination of equity and cash
incentives.
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The
effective date of the Program is January 1,
2008.
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The
Program operates on a calendar year basis, but portions of the awards
under the Program are earned and paid in subsequent years and will
increase or decrease in value based on the degree of attainment of
performance goals and on the market value of the Company’s Class A common
stock.
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Incentive
opportunities are defined generally by position and may vary based on
responsibility and employment level. Individual participation
in the Program is at the discretion of the Compensation and Benefits
Committee (the "Committee") of the Board of Directors which administers
the Program.
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Employees
shall be notified in writing of their eligibility to participate in the
Program for each Program Year. Participation in the Program for
one year does not entitle an employee to participate in any subsequent
year.
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A
written award agreement will document each respective component of a
participant’s
award.
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The
total annual award for each participant will consist of three
components. One-third of the annual award will be in the form
of time-vested restricted stock; one-third of the award will consist of
Performance Units, and the remaining one-third of the award will consist
of Performance Cash. The Performance Units and Performance Cash
awards will be earned and deposited in book-entry format into a
Performance Bank, as described below, based on the degree of attainment by
the Company of its performance goals. Annually, one-third of
the Performance Units and Performance Cash in the Performance
Bank will be paid based on attainment of financial and operational
performance goals for the year of grant. Two-thirds of the
Performance Bank balance will remain to be augmented by any future
performance awards and adjusted by Performance Interest (increases or
decreases based on future performance of the Company). . Each
subsequent
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year,
participants will receive a payout equal to one-third of their Performance
Bank balance, as adjusted based on attainment of the performance goals for
the year immediately preceding the year of
payment.
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Each
participant will have a target, minimum and maximum incentive award
opportunity for Performance Cash and Performance Unit awards. Attainment
of the performance maximum will result in an actual award of 200% of
target opportunity. Attainment of the performance target will
result in an actual award of 100% of target. Attainment of the
performance minimum or threshold level will result in an actual award of
50% of target. Except as otherwise provided in the Program, the
participant must be actively employed on March 15 of the year following
the applicable Program Year in order to receive any
award.
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The
target award will be earned if stated performance objectives are
achieved. The threshold (minimum) and maximum awards will
coincide with stated threshold and maximum performance
objectives.
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If
the threshold level of performance is not achieved for the applicable
measurements, no award payment will be
made.
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If
actual performance results are between the threshold and target, or the
target and maximum levels, the award opportunity will be determined based
on the scale provided.
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If
actual performance is above the maximum level, the award will be the
maximum award allowable under the
Program.
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The
performance metrics will be selected by the Committee may include such
performance and operational criteria as revenue, adjusted EBITDA, free
cash flow, unlevered free cash flow, average revenue per unit, operating
cash flow, customer satisfaction or such other metrics as the Committee
may approve and may change in any given Program Year. The
initial measures established for Performance Cash and Performance Units
are revenue growth and unlevered free cash flow growth, as set forth in
each award agreement. Performance criteria and goals will be
established in writing within 90 days after commencement of each Program
Year and will be provided to the participants
thereafter.
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As
soon as practicable after the close of the Program Year, the Committee
will determine the actual level of performance. This actual
level of performance will be compared to the target and the deviation from
target will be computed. This deviation from target, expressed
as a percentage, will determine the Performance Cash and Performance Unit
awards earned, if any, for each
participant.
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The
Committee will approve final awards and, in its sole discretion, may make
discretionary adjustments as required to reflect the relative performance
of the participant(s).
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Performance
Cash –Earned Performance Cash will be credited to a Performance
Cash Bank. Each year, the Performance Cash balance in the
participant’s Performance Cash Bank will be subject to adjustment based on
attainment of the performance goals for the immediately preceding Program
Year, as shown in the award agreement. After adjustment,
one-third of the Performance Cash balance in the participant’s Performance
Cash Bank will be paid in a cash lump sum payment to the participant, net
of all required tax withholding. Two-thirds of the Performance
Cash balance in the participant’s Performance Cash Bank will remain to be
augmented by any future Performance Cash awards and adjusted by
Performance Interest.
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Performance
Units –Earned Performance Units will be credited to a Performance
Units Bank. Each year, the Performance Units balance in the
participant’s Performance Units Bank will be subject to adjustment based
on attainment of the performance goals for the immediately preceding
Program Year, as shown in the award agreement. After
adjustment, one-third of the Performance Units balance in the
participant’s Performance Units Bank will then be distributed in whole
shares of the Company's Class A common stock; no fractional shares will be
paid. Two-thirds of the Performance Unit balance in the
participant’s Performance Units Bank will remain to be augmented by any
future Performance Unit awards and adjusted by Performance
Interest.
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Restricted
Stock – One-third of the restricted Stock award will vest on each
of the first three anniversary dates of the date of
award.
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One-third
of the amounts credited to the Performance Bank (as adjusted based on
achievement of the performance goals for the Program Year) are payable on
March 15 of the year following the Program Year. Except as
otherwise provided in the Program, a participant must be actively employed
on the payment date to receive
payment.
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Except
as otherwise provided in a written employment agreement, in the event of a
participant’s termination of employment, awards and Performance Bank
balances will be paid or forfeited as
follows:
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Voluntary
Termination, Termination for Cause, Death, Termination on Account of
Disability. All
unvested restricted stock, all Performance Bank Balance amounts and all
unearned Performance Units awards and Performance Cash awards will be
forfeited upon the occurrence of any of these events prior to the day of
payment or vesting (in the case of restricted
stock).
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Involuntary
Termination – Without Cause or for Good
Reason.
In the event of an involuntary termination by the Company without
Cause or by a participant for Good Reason, the current Program Year
Performance Cash and Performance Unit awards will be
forfeited. If termination occurs on or after September 15 and
before the following March 15, any amounts credited to the Performance
Cash Bank and Performance Units Bank that are otherwise payable on March
15 following termination of employment will be paid on that date, and the
remainder will be forfeited. If termination of employment occurs on or
after March 15 and before the following September 15, any amounts then
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credited
to the Performance Cash Bank and Performance Units Bank shall be
forfeited. Any unvested restricted stock that was scheduled to
vest within the one year period following termination of employment will
be vested on termination of employment and any remaining restricted stock
will be forfeited.
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Termination
of Employment without Cause or for Good Reason within 12 months following
a Change in Control. The current Program Year
Performance Cash and Performance Unit awards will be paid at target level
on termination of employment. Any amounts credited to the
Performance Bank will be paid on termination of employment. All
unvested restricted stock awards shall immediately vest. (The awards of
the Chief Executive Officer, Executive Vice Presidents and Senior Vice
Presidents are limited in the event that a Change of Control occurs within
90 days of the grant of the
award.)
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Retirement. The current Program Year
Performance Cash and Performance Unit awards will be
forfeited. Any amounts credited or to be credited to the
Performance Cash Bank and Performance Units Bank will be paid (without
future adjustment) to the participant in three annual installments,
commencing on March 15 following the date of Retirement. All
unvested restricted stock awards will immediately
vest.
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Notwithstanding
any other provision of the Program to the contrary, if the participant is
a “Specified Employee” on the date of termination of the participant’s
employment, the participant may not receive a payment of “nonqualified
deferred compensation” for which the payment event is “separation from
service,” as defined in Internal Revenue Code Section 409A and the
regulations thereunder, until at least six months after the date of
termination. Any payment of nonqualified deferred compensation
otherwise due in such six month period shall be suspended and become
payable at the end of such six month
period.
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A
“Specified Employee” means a specified employee as defined in Treas. Reg.
§1.409A-1(i) (generally, officers earning more than $145,000 per year, as
indexed for inflation, who are among the fifty highest paid
employees).
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The
Program is not a contract of employment, nor is any portion of the Program
to be construed as a contract for continued employment, whether for the
duration of the Program, or
thereafter.
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No
participant shall have the right to anticipate, sell, transfer, assign,
pledge or encumber his or her right to receive any award made under the
Program until such an award becomes payable to him or
her.
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No
participant shall have any lien on any assets of the Company by reason of
any award made under the Program.
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Performance
Cash awards under the Program will be paid out of the general assets of
the Company, dependent upon the achievement of certain performance goals
and continued employment through the applicable date. Equity
awards will be granted under the Company’s 2001 Stock Incentive Plan or
any successor equity plan for employees of the Company and are subject to
approval of such successor plan by the Company's stockholders. Any payment
in shares of Company's Class A common stock will be issued under those
plans, if approved.
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The
Committee may review this Program annually and make changes in Program
participation, target incentives, determination of performance factor
benchmarks or any other aspect of this Program. Such review may
include, but not be limited to, the
following:
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To
interpret the Program and to prescribe, amend and/or eliminate
administrative guidelines.
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To
adjust individual awards, upwards or downwards, in its sole
discretion.
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To
establish award opportunities for each
position.
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To
recommend to the Board of Directors the termination of the Program at any
time without decreasing the value of awards previously earned and still
outstanding.
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The
receipt of an award shall not give an employee any right to continued
employment. The receipt of an award with respect to any Program
Year shall not entitle an employee to an award with respect to any
subsequent Program Year.
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