Charter 2008 Annual Report Download - page 50

Table of Contents
Certain Relationships and Related Transactions
The Company maintains written policies and procedures covering related party transactions. The Audit
Committee reviews the material facts of related party transactions in accordance with NASDAQ rules.
Management has various procedures in place, e.g., the Company’s Code of Conduct which requires annual
certifications from employees that are designed to identify potential related party transactions. Management
brings those to the Audit Committee for review as appropriate.
The following sets forth certain transactions in which we are involved and in which the directors,
executive officers and affiliates of Charter have or may have a material interest. The transactions fall
generally into three broad categories:
• Transactions in which Mr. Allen has an interest that arise directly out of Mr. Allen’s investment in
Charter and Charter Holdco. A large number of the transactions described below arise out of
Mr. Allen’s direct and indirect (through CII or the Vulcan entities, each of which Mr. Allen controls)
investment in Charter and its subsidiaries, as well as commitments made as consideration for the
investments themselves;
• Transactions with third party providers of products, services and content in which Mr. Allen has or
had a material interest. Mr. Allen has had numerous investments in the areas of technology and
media. We have a number of commercial relationships with third parties in which Mr. Allen has or had
an interest; and
• Other Miscellaneous Transactions. We have a limited number of transactions in which certain of the
officers, directors and principal shareholders of Charter and its subsidiaries, other than Mr. Allen, have
an interest.
A number of our debt instruments and those of our subsidiaries require delivery of fairness opinions for
transactions with Mr. Allen or his affiliates involving more than $50 million. Such fairness opinions have
been obtained whenever required. All of our transactions with Mr. Allen or his affiliates have been deemed by
the board of directors or a committee of the board of directors to be in our best interest. Related party
transactions are approved by our Audit Committee or another independent body of the board of directors in
compliance with the listing requirements applicable to NASDAQ Global Select Market listed companies.
Transactions Arising Out of Our Organizational Structure and Mr. Allen’s Investment in Charter
Communications, Inc. and Its Subsidiaries
Intercompany Management Arrangements
Charter is a party to management arrangements with Charter Holdco and certain of its subsidiaries. Under
these agreements, Charter provides management services for the cable systems owned or operated by its
subsidiaries. These management agreements provide for reimbursement to Charter for all costs and expenses
incurred by it for activities relating to the ownership and operation of the managed cable systems, including
corporate overhead, administration and salary expense.
The total amount paid by Charter Holdco and all of its subsidiaries is limited to the amount necessary to
reimburse Charter for all of its expenses, costs, losses, liabilities and damages paid or incurred by it in
connection with the performance of its services under the various management agreements and in connection
with its corporate overhead, administration, salary expense and similar items. The expenses subject to
reimbursement include fees Charter is obligated to pay under the mutual services agreement with CII.
Payment of management fees by Charter’s operating subsidiaries is subject to certain restrictions under the
credit facilities and indentures of such subsidiaries and the indentures governing the Charter Holdings and its
subsidiaries public debt. If any portion of the management fee due and payable is not paid, it is deferred by
Charter and accrued as a liability of such subsidiaries. Any deferred amount of the management fee will bear
interest at the rate of 10% per year, compounded annually, from the date it was due and payable until the date
it is paid. For the year ended December 31, 2007, the subsidiaries of Charter Holdings paid a total of
$129 million in management fees to Charter.
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Source: CHARTER COMMUNICATIO, DEF 14A, March 17, 2008