Charter 2008 Annual Report Download - page 25

Table of Contents
The 2001 Stock Incentive Plan must be administered by, and grants and awards to eligible individuals
must be approved by our board of directors or a committee thereof consisting solely of nonemployee directors
as defined in Section 16b-3 under the Securities Exchange Act of 1934, as amended. The Compensation and
Benefits Committee approves the grants for Senior Vice Presidents and Executive Vice Presidents and grant
levels for all other eligible employees and it determines the terms of each stock option grant, restricted stock
grant or other award at the time of grant, including the exercise price to be paid for the shares, the vesting
schedule for each option, the price, if any, to be paid by the grantee for the restricted stock, the restrictions
placed on the shares, and the time or times when the restrictions will lapse. The board of directors or such
committee also has the power to accelerate the vesting of any grant or extend the term thereof.
Upon a change in control of Charter, the board of directors or the administering committee can shorten
the exercise period of any option, have the survivor or successor entity assume the options with appropriate
adjustments, or cancel options and pay out in cash. If an optionee’s or grantee’s employment is terminated by
the Company without “cause” or by the optionee or grantee for “good reason” within one year following a
“change in control” (as those terms are defined in the plan), unless otherwise provided in an employment
agreement or an agreement pursuant to the plan, with respect to such optionee’s or grantee’s awards under the
plan, all outstanding options will become immediately and fully exercisable, all outstanding stock
appreciation rights will become immediately and fully exercisable, the restrictions on the outstanding
restricted stock will lapse, and a number of performance units shall immediately vest, which such number
shall be the number of units that would have vested at the end of the vesting period if he or she had continued
in employment until the end of such vesting period, assuming that the actual performance of the Company
from the grant date through the end of the calendar month before the termination date had continued
throughout the entire performance cycle.
Long-Term Incentive Program
Grants are made from the available shares discussed above to our Named Executive Officers through our
Long-Term Incentive Program (“LTIP”), which is administered under the 2001 Stock Incentive Plan. Under
the LTIP, certain employees are eligible to receive stock options, and more senior level employees are eligible
to receive stock options and performance units. The stock options vest 25% on each of the first four
anniversaries of the date of grant. Participants are given an award of performance units with the opportunity
to earn up to 200% of that award based on the Company’s performance. Following the end of each year, the
Compensation and Benefits Committee reviews the Company’s performance and determines the number of
performance shares which have been earned. These performance shares vest upon the third anniversary of the
grant date of the original performance unit award. The amount of equity incentive compensation granted in
2007 was based upon the strategic, operational and financial performance of the Company overall and reflects
the executives’ expected contributions to the Company’s future success. In 2007, as in the recent past, the
Company has capped the amount of equity awards which may be available to all employees of the Company
at 2% of the outstanding equity outstanding and the Compensation and Benefits Committee includes
consideration of this limitation in awarding such compensation and determining what awards are available at
all levels of the Company. Charter annually reviews the mix of equity vehicles to select equity instruments
with the greatest value to recipients for the least cost to the Company (i.e., we pursue the greatest equity
vehicle efficiency). In 2007, we placed a greater emphasis on performance units rather than stock options
(70%/30% split, respectively). We believe that performance units help to drive Company performance
through their direct linkage to controllable business results while, at the same time, rewarding executives for
the value created through share appreciation.
Charter’s Compensation and Benefits Committee approved conversion of the 2007 performance units to
performance shares at the level of 142% of granted units as a result of the achievement of the financial
performance measures. The attainment level was based on revenue growth of 10.9% versus a target of 11.3%
and unlevered free cash flow growth of 20.8% versus a target of 15.8%. The Compensation and Benefits
Committee made certain revisions to the 2007 measures to account for board-approval actions (i.e.,
incremental increase in the budget for capital expenditures) after the measures were initially adopted. These
shares will vest in 2010 on the third anniversary of the performance unit grant.
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Source: CHARTER COMMUNICATIO, DEF 14A, March 17, 2008