EXHIBIT 10.27

 

Shenandoah Telecommunications Company

2006 Management Compensatory Plans and Arrangements

Components of Executive Compensation

In accordance with the Marketplace Rules of the National Association of
Securities Dealers, all components of compensation for the Company’s chief
executive officer and other executive officers are determined by the board of
directors upon the recommendation of a majority of the Company’s directors who
meet the independence requirements prescribed by those rules.

The Company’s executive compensation program includes a base salary, annual cash
bonuses and long-term incentive compensation in the form of stock option awards.

Base Salary.  Base salaries of the Company’s executive officers are initially
determined by evaluating the responsibilities of the position, the experience
and knowledge of the executive, and the competitive marketplace for executive
talent, including a comparison to base salaries for comparable positions at
public companies considered to be in the Company’s peer group. Base salaries for
executive officers are reviewed annually by the independent directors based
upon, among other things, individual performance and responsibilities. Effective
April 24, 2006, salaries for the executive officers were as follows: Christopher
E. French ($298,000), Earle A. MacKenzie ($254,000), David E. Ferguson
($165,000), David L. Lasier, ($165,000) William L. Pirtle ($171,000), David K.
MacDonald ($167,000), Laurence F. Paxton ($149,000), Jeff Pompeo ($168,000),
Jonathan Spencer ($171,000), and Nancy Stadler ($160,500).

Annual Cash Bonuses.  The Company pays annual cash bonuses to the executive
officers under a cash incentive plan. Under the cash incentive plan, each
participant is assigned a “target bonus” expressed as a percentage of the
participant’s regular salary. For 2006, the target bonus for the chief executive
officer of the Company is 30% of salary paid, the target bonus for the executive
vice president of the Company is 25% of salary paid, and the target bonus for
other executive officers is 20% of salary paid. The maximum cash bonus payable
to any executive officer in any fiscal year could be up to 200% of the target
bonus. Of the bonus amount payable to executive officers, 60% is based on the
achievement of company-wide performance goals relating to net income and service
measures (which include customer turnover or “churn,” and service complaints)
and 40% upon individual objectives established by management and, in the case of
the chief executive officer and chief financial officer, the independent
directors.

 

 

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Long-Term Incentive Compensation.  Stock option awards under the Company’s Stock
Incentive Plan are based on a formula that takes into account each executive’s
annual cash compensation.

Other Compensatory Plans

The Company’s executive officers participate in the Company’s Retirement Plan,
which is a noncontributory defined benefit pension plan that is qualified under
Section 401 of the Internal Revenue Code, and the supplemental executive
retirement plan, or SERP, which is an unfunded, nonqualified plan. The annual
pension benefit under the plans, taken together, is largely determined by the
years of service multiplied by a percentage of the participant’s final earnings.

The purpose of the SERP is to provide retirement benefits in addition to those
provided under the Retirement Plan. Under the terms of the SERP, the normal form
of benefits for executives who complete at least ten years of service is a
monthly benefit for the life of the executive determined as follows: 50% for
executives with 20 years or less of credited service, which is increased by 1%
for each additional year of credited service up to a maximum of 70% with
40 years, times the executive’s final annual earnings, less the accrued monthly
benefit payable at age 65 to the executive under the Retirement Plan on that
date, less the executive’s estimated monthly Primary Social Security Benefit
payable at age 65.

The Company’s executive officers also are eligible to participate in the
Company’s 401(k) and Flexible Benefits Plans, each of which is available to all
regular Company employees.

 

 

 

 

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