Exhibit 10.1
Description of Annual Incentive and Long-Term Incentive Bonus Awards
          On February 17, 2006, the Compensation Committee of the Board of
Directors (the “Compensation Committee”) of CT Communications, Inc. (the
“Company”) approved the terms pursuant to which the Company would award annual
incentive bonus awards for the 2006 fiscal year and the performance criteria for
the long-term incentive bonus awards for the 2006-2007 performance period. The
Company maintains an annual incentive discretionary bonus plan (the “annual
incentive plan”) and long-term incentive discretionary bonus plan (the
“long-term incentive plan”) for the benefit of its executive officers, other
officers and certain other key employees of the Company. The annual incentive
plan and the long-term incentive plan are administered and paid out under the
Company’s shareholder-approved Amended and Restated 2001 Stock Incentive Plan.
          For 2006, the annual incentive award will consist of a cash bonus that
may be paid based on goals established and approved by the Company’s
Compensation Committee. Potential bonuses are specified as a percentage of the
employees’ annual base salary, ranging from 25% to 150% for the Chief Executive
Officer, 20% to 100% for Senior Vice Presidents of the Company and 15% to 70%
for all other executive officers of the Company. For 2006, the annual incentive
award will be based on a combination of financial and operational objectives.
Such objectives and their relative weighting in the overall performance score
are as follows:

          Objective   Weight
Operating revenue
    15 %
 
       
Operating earnings before interest, taxes, depreciation and amortization
    20 %
 
       
Operating free cash flow
    5 %
 
       
Aggregate net customer growth in the Company’s ILEC, Wireless and DSL businesses
    10 %
 
       
Aggregate customer disconnects in the Company’s ILEC, Wireless and DSL
businesses
    10 %
 
       
Achievement of milestones related to broadband network and product deployment
    40 %

          The Company, as authorized by the Compensation Committee, may also pay
a long-term incentive award based on a multi-year performance period with
performance goals established at the beginning of the cycle. Potential bonuses
are specified as a percentage of the employees’ annual base salary, ranging from
80% to 400% for the Chief Executive Officer, 50%

 

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to 200% for Senior Vice Presidents, 30% to 100% for all other Vice Presidents
reporting directly to the Chief Executive Officer and 15% to 70% for all other
executive officers of the Company.
          Although prior to 2005 the performance period established by the
Compensation Committee was a three-year period, in 2005, the Compensation
Committee determined not to grant a long-term incentive award for the 2005 to
2007 performance period and instead determined that a performance period
consisting of two years is more appropriate and consistent with the Company’s
compensation objectives and the rapidly changing telecommunications industry.
Accordingly, in connection with the transition from a three-year performance
period to a two-year performance period, the Compensation Committee approved in
February 2005 a long-term incentive award for the 2006 to 2007 performance
period, subject to the determination of the key performance objectives for such
period, which were approved by the Compensation Committee on February 17, 2006.
          For the long-term incentive award granted in 2005 for the 2006 to 2007
performance period, the long-term incentive award is based on the following
combination of financial measurements and weightings:

          Objective   Weight
Operating revenue
    20 %
 
       
Operating earnings before interest, taxes, depreciation and amortization
    20 %
 
       
Cumulative operating free cash flow
    10 %
 
       
Period-end customers of the Company’s ILEC, Wireless and Broadband businesses
    20 %
 
       
Total shareholder return (compared to a peer stock index)
    30 %

          The long-term incentive awards for the 2006 to 2007 performance period
will consist of 25% unrestricted common stock and 75% restricted common stock.
The restricted common stock will vest according to the following schedule: 33%
will vest one year from the award date and 67% will vest two years from the
award date. The price that is used to calculate the number of restricted and
unrestricted shares that are awarded will be the average closing NASDAQ price
for all trading days in the month of December at the end of the applicable
performance period.
               In addition to the annual and long-term incentive compensation,
compensation for executive officers may include additional awards of
nonqualified and/or incentive stock options issued under the Company’s Amended
and Restated 2001 Stock Incentive Plan.