Charter 2008 Annual Report Download - page 21

Table of Contents
that these metrics should be challenging and represent important incremental improvements over performance
in prior years. Compensation payable pursuant to our annual Executive Bonus Plan and our Long-Term
Incentive Program is dependent on Company performance.
Alignment. We seek to align the interests of the Named Executive Officers with those of our investors by
evaluating executive performance on the basis of the financial measurements noted above, which we believe
closely correlate to long-term stakeholder value creation. The annual cash bonus and long-term stock-based
incentives are intended to align executive compensation with our business strategies, values and management
initiatives, both short- and long-term. Through this incentive compensation, we place a substantial portion of
executive compensation at risk, specifically dependent upon the financial performance of the Company over
the relevant periods. This rewards executives for performance that enhances the Company’s financial strength
and stakeholder value. Moreover, we believe that compensation in the form of equity inherently aligns the
interests of our management team with those of shareholders.
Retention. We recognize that a key element to our success is our ability to retain a team of highly
qualified executives who can provide the leadership necessary to successfully execute our short- and
long-term business strategies. We also recognize that, because of their qualifications, our senior executives
are often presented with other professional opportunities, potentially ones at higher compensation levels. It is
often difficult to retain talented management. Our retention strategy faces additional challenges in that the
skills of our current management team are attractive to many companies outside of the cable industry and the
members of our management team do not have long-standing ties to the St. Louis area where the Company’s
headquarters is located, as well as the volatile nature of our stock. Two programs underscore our focus on
retention. First, the Executive Cash Award Plan provides for a cash award to be paid at the end of a
pre-determined period, discussed in detail below. Second, an Equity Compensation Award was approved in
March 2007, and is also discussed below.
Pay Levels and Benchmarking
Pay levels for executives are determined based on a number of factors, including the individual’s roles
and responsibilities within the Company, the individual’s experience and expertise, pay levels for peers within
the Company, pay levels in the marketplace for similar positions, and performance of the individual and the
Company as a whole. In determining these pay levels, the Compensation and Benefits Committee considers
all forms of compensation and benefits. When establishing the amounts of such compensation, the
Compensation and Benefits Committee considers publicly available information, such as proxy statements,
concerning executive compensation levels paid by other competitors, and in the industry generally.
With the assistance of Pearl Meyer & Partners, the Compensation and Benefits Committee approved two
distinct peer groups of publicly-traded companies for benchmarking executive compensation effective for
2007. The first is an “industry peer group” of 11 companies: Cablevision Systems Corp., Clear Channel
Communications, Inc., Comcast Corporation, The DIRECTV Group, Inc., E.W. Scripps Company, EchoStar
Communications Corp., Embarq Corporation, Global Crossing Ltd., Level 3 Communications, Inc.,
Mediacom Communications Corp. and Time Warner Cable Inc. These companies include companies in cable,
telecommunications or other related industries of similar size and business strategy.
Because we have a much higher level of debt than these industry peers, we also felt it important to
analyze pay practices of a secondary peer group. Specifically, in order to understand pay practices and the
mix of incentive vehicles in companies with similar leverage (i.e., those with total debt of $1 billion or more,
with a debt to capital ratio of 100% or more), the Compensation and Benefits Committee worked with Pearl
Meyer & Partners to analyze a reference group of 10 additional peer companies. While these companies were
not used to gauge levels of pay, the Compensation and Benefits Committee felt it was appropriate to examine
the types, design and mix of compensation vehicles used within these organizations for pay mix and design
purposes.
In addition to these specific peer companies, the Compensation and Benefits Committee also reviews
data from a number of published compensation surveys that provide broader market data for specific
functional responsibilities for companies of similar revenue size to the Company.
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Source: CHARTER COMMUNICATIO, DEF 14A, March 17, 2008