EXHIBIT 10.3

 

DESCRIPTION OF NAMED EXECUTIVE OFFICER

AND DIRECTOR COMPENSATION

 

Named Executive Officer Compensation

 

Set forth below is a summary of the compensation paid by Knology, Inc. (the
“Company”) to its named executive officers (defined in Regulation S-K Item
402(a)(3)). All of the Company’s executive officers are at-will employees whose
compensation and employment status may be changed at any time in the discretion
of the Company’s Board of Directors.

 

Total compensation to the named executive officers is primarily composed of
three types of compensation: (1) base salary, (2) bonuses and (3) stock options
awarded under the Company’s Amended and Restated 2002 Long-Term Incentive Plan
(the “Long-Term Incentive Plan”).

 

The Company’s compensation arrangements with its named executive officers are
intended to (1) attract, retain and motivate qualified management, (2) recognize
individual initiative and achievement, (3) reward employees and management for
short and long-term accomplishments, (4) align compensation with the achievement
of the Company’s goals and the Company’s overall performance and (5) align the
interests of employees, directors and management with those of the Company’s
stockholders.

 

Base Salary

 

Individual base salaries and increases for the Company’s named executive
officers, other than the President and Chief Executive Officer, are determined
by the President and Chief Executive Officer after consultation with the
Compensation and Stock Option Committee (the “Committee). The base salary and
any increases for the Company’s President and Chief Executive Officer are
determined by the Committee. Base salaries are initially determined by
evaluating the responsibilities of the position, the experience of the
individual, and the competitive marketplace for managerial talent, including a
comparison of base salaries for similar positions at comparable companies. The
determination of compensation in a given year, including increases in base
salary, is set after a review and consideration of a number of factors,
including the individual’s level of responsibility and commitment, level of
performance, contributions to the achievement of the Company’s goals and overall
performance and compensation levels at comparable companies. With respect to the
President and Chief Executive Officer, the Committee reviews the factors listed
above, but without consultation with or input from the President and Chief
Executive Officer. The Committee recommends the compensation of the President
and Chief Executive Officer to the Board of Directors for final approval.

 

Set forth below are the 2005 base salaries of the named executive officers of
the Company. Base salaries are determined annually in April.

 

Named Executive Officer

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   2005 Base
Salary

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Rodger L. Johnson

   $ 410,000

Bret T. McCants

     200,000

Robert K. Mills

     185,200

Michael B Roddy

     181,200

Chad S. Wachter

     165,100

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Bonuses

 

Bonuses are intended to align short-term cash compensation of eligible Company
employees, including the named executive officers, with individual performance
and Company performance. Bonuses also help to control compensation expenses and
reward past performance by reducing the need for significant annual base salary
increases. The President and Chief Executive Officer approves the annual bonus
potential for named executive officers, other than the President and Chief
Executive Officer. The bonus payment for the President and Chief Executive
Officer is determined by the Compensation and Stock Option Committee based upon
an evaluation of the competitive marketplace, the Company’s performance, the
performance of the individual as well as the achievement of certain measurement
objectives including net customer connections, revenue and EBITDA, as adjusted.
The bonus payment for the named executive officers other than the President and
Chief Executive Officer is based upon a committee approved bonus plan which
measures the attainment of goals including individual performance as well as
Company performance of customer connections, revenue and EBITDA, as adjusted.

 

Set forth below is the annual bonus potential, as a percentage of base salary,
to the Company’s named executive officers, other than the President and Chief
Executive Officer, for the year ended December 31, 2005.

 

Named Executive Officer

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Bret T.McCants

   40 %

Robert K. Mills

   40 %

Michael B Roddy

   40 %

Chad S. Wachter

   40 %

 

Stock Options

 

The Company attempts to align the interests of employees, directors, consultants
and officers, including its named executive officers, with those of the
Company’s shareholders, and to reward outstanding performance, by awarding stock
options to these individuals under the Long-Term Incentive Plan. The Committee
administers the Long-Term Incentive Plan, including designating eligible
participants and determining the number of stock options awarded and the terms
and conditions thereof.

 

Set forth below are stock options granted to the Company’s named executive
officers for 2005 as of May 13, 2005. Additional options may be granted based
upon bonus payments made to the named executive officers related to the year
ended December 31, 2005.

 

Named Executive Officer

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   Securities Underlying
Stock Options

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Rodger L. Johnson

   320,000

Robert K. Mills

   67,500

Bret T. McCants

   45,000

Michael B. Roddy

   10,000

Chad S. Wachter

   40,000

 

Other Compensation

 

In addition to base salary, bonuses and stock options, the named executive
officers receive compensation in the form of premiums on term life insurance
paid by the Company, matching contributions to the Company’s 401(k) plan and car
allowances. The compensation paid to the Company’s named executive officers
under these

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compensation arrangements during 2005 will be set forth under “Other
Compensation” in the Summary Compensation Table of the Company’s 2006 Proxy
Statement to be filed with the Commission on Schedule 14A.

 

Director Compensation

 

Our directors historically have not received directors’ fees. Beginning in 2005,
non-employee directors will be compensated as outlined in the table below. Mr.
Davis, who was appointed to the board of directors pursuant to the Stockholders
Agreement, receives a fee of $1,000 for each board and committee meeting he
attends. In addition, Mr. Davis receives an annual retainer fee of $25,000. All
directors are reimbursed for their reasonable out-of-pocket travel expenses. In
addition, directors of the Company may receive stock options pursuant to the
Company’s Amended and Restated 2002 Long-Term Incentive Plan upon their election
to the Board of Directors. Grants of stock options to directors, and the terms
and conditions thereof, are made at the discretion of the Compensation and Stock
Option Committee.

 

2005 Non-employee Director Compensation

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Annual Retainer

   $ 2,000

Fee Per Board of Directors Meeting:

      

In Person

     1,000

Via Telephone

     250

Quarterly fee for Audit and Compensation Committee Meeting Attendance

     500