March 15, 2018
Dear Stockholder:
You are invited to attend the annual meeting of stockholders of Charter Communications, Inc. (the “Company” or “Charter”), which will be held at 6400 S6350 S. Fiddler’s Green Circle, Training2nd Floor (Conference Room A,C), Greenwood Village, CO 80111 on Wednesday,Tuesday, April 25, 201823, 2024 at 8:30 a.m. (Mountain Daylight Time).
Details of the business to be conducted at the annual meeting are provided in the attached Notice of Annual Meeting of Stockholders and Proxy Statement.
Whether or not you attend the annual meeting, it is important that your shares be represented and voted at the meeting. Therefore, Iwe urge you to sign, date, and promptly return the enclosed proxy in the postage-paid envelope that is provided, or you may vote via the Internet pursuant to the instructions on the proxy card. If you decide to attend the annual meeting, you will have the opportunity to vote in person.
Lastly, Craig Jacobson has decided not to stand for re-election to the Board of Directors at the annual meeting. We thank Craig for his commitment to Charter and the many valuable contributions he has made during his tenure on the Board of Directors.
On behalf of management and the boardBoard of directors, IDirectors, we would like to express our appreciation for your continued interest in Charter.
Sincerely,
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| Eric L. Zinterhofer | Christopher L. Winfrey | |
Non-Executive Chairman of the Board | President and Chief Executive Officer, Director |
| Charter Communications, Inc. 400 Washington Blvd. Stamford, CT 06902 |
Notice of Annual Meeting of Stockholders
Thomas M. Rutledge
Chairman and Chief Executive Officer
of Charter Communications, Inc.
400 Atlantic Street
Stamford, CT 06901
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
OF
CHARTER COMMUNICATIONS, INC.
| Date: | Time: | Place: | ||||||||||
| April | |||||||||||
(Mountain Daylight Time) | ||||||||||||
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2nd Floor (Conference Room | ||||||||||||
| C) Greenwood Village, CO 80111 |
Matters to be voted on:
| How to Vote: By Mail
The proxy statement more fully describes these proposals. All stockholders of record at the close of business on February 23, 2024 are invited to attend the meeting. For security reasons, however, to gain admission to the meeting you may be required to present identification containing a photograph and to comply with other security measures. By order of the Board of Directors,
Jamal H. Haughton
Corporate Secretary March |
Table of Contents
CHARTER COMMUNICATIONS, INC.
PROXY STATEMENT
Important Notice Regarding the Availability of Proxy Materials for the Stockholders Meeting to Be Held on April 25, 2018. The 2018 notice and proxy statement and the 2017 annual report to stockholders are available at www.proxyvote.com.
This proxy statement and the Notice of Internet Availability of Proxy Materials were first mailed to stockholders on or about March 15, 2018.
Board Leadership Structure, Company Strategy and Risk OversightQuestions and Answers about Voting and the Annual Meeting 1 Proposal No. 1: Election of Directors 5 5 What matters will be voted onDirector Nominees6 12 13 15 15 16 17 17 19 19 21 Compensation Committee Interlocks and Insider Participation 23 Report of the Compensation and Benefits Committee 23 Compensation Discussion and Analysis 24 24 24 31 33 38 38 39 41 43 45 48 48 48 49 49
Charter Communications, Inc.
PROXY STATEMENT
Important Notice Regarding the Availability of Proxy Materials for the Stockholders Meeting to Be Held on April 23, 2024. The 2024 notice and proxy statement and the 2023 annual report to stockholders are available at www.proxyvote.com.
This proxy statement and the Notice of Internet Availability of Proxy Materials were first mailed to stockholders on or about March 14, 2024.
Questions and Answers about Voting and the Annual Meeting
What matters will be voted on at the annual meeting?
As a holder of Class A common stock, you are being asked to vote on the following:
| • | Proposal 1: To elect thirteen directors, nominated by our |
| • | Proposal 2: To increase the number of shares in the Company’s 2019 Stock Incentive Plan; |
| • | Proposal 3: To amend the Company’s Amended and Restated Certificate of Incorporation to reflect new Delaware law provisions regarding officer exculpation; |
| • | Proposal 4: To ratify the appointment of KPMG LLP as the Company’s independent registered public accounting firm for the year ended December 31, |
| • | Proposal
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Proposal 5: To vote on a stockholder proposal regarding vesting of equity awards;
| • | Proposal 6: To vote on a stockholder proposal regarding |
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How does the Board of Directors recommend that I vote?
The Board of Directors recommends that you vote:
| • | FOR the election of the thirteen directors, nominated by our |
| • | FOR the approval of the amendment increasing the number of shares in the Company’s 2019 Stock Incentive Plan; |
| • | FOR the approval of the amendment to the Company’s Amended and Restated Certificate of Incorporation to reflect new Delaware law provisions regarding officer exculpation; |
| • | FOR the ratification of the appointment of KPMG LLP as the Company’s independent registered public accounting firm for the year ended December 31, |
| • | AGAINST each of the stockholder proposals.
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What if other matters come up at the annual meeting?
The items listed on the Notice of Annual Meeting of Stockholders are the only matters that we know will be voted on at the annual meeting. Your proxy gives discretionary authority to the persons named on the proxy card to vote on other matters. On such other business as may properly come before the meeting, your shares will be voted in the discretion and judgment of the proxy holder.
Who has been nominated for election as directors at the annual meeting?
The Board of Directors has nominated thirteen directors for election, twelve of whom are currently serving on our Board of Directors and one new director-nominee, Carolyn J. Slaski. The thirteen directors who have been nominated by the Board of Directors and agreed to serve as directors are Mses. Goodman and Slaski and Messrs. Conn, Maffei, Markley, Merritt, Meyer, Miron, Newhouse, Nair, Ramos, Winfrey and Zinterhofer.
Charter Communications | 1 | 2024 Proxy Statement
Who can vote at the annual meeting?
As of the close of business on February 23, 2024 (the “Record Date”), a total of 161,279,328 shares of Class A common stock, including Charter Communications Holdings, LLC (“Charter Holdings”) common units on an as-if-exchanged basis, are entitled to be voted by our stockholders at the annual meeting. Each holder of Class A common stock is entitled to one vote per share, representing 144,386,152 votes. Advance/Newhouse Partnership (“A/N”) holds one share of our Class B common stock, which is entitled to a number of votes equal to the number of shares of Class A common stock into which the Charter Holdings common units held by A/N may be exchanged, or 16,893,176 votes. The enclosed proxy card indicates the number of Class A shares that our records show you are entitled to vote. There are no other classes of common stock outstanding.
What is the difference between being a stockholder of record and a beneficial owner?
You are a stockholder of record if at the close of business on the Record Date your shares were registered in your name with Computershare Shareowner Services, our transfer agent and registrar.
You are a beneficial owner if at the close of business on the Record Date, your shares were held by a brokerage firm or other nominee and not directly in your name, but are held in “street name.” As the beneficial owner of your shares, you have the right to direct your broker or other nominee how to vote your shares, i.e., for or against the proposals to be considered at the annual meeting. If you do not provide your broker or nominee with instructions on how to vote your shares, your broker or nominee will be able to vote your shares with respect to some of the proposals, but not all. See, “What if I do not provide instructions on how to vote my shares?” below.
What do I do if my shares are held in “street name”?
If your shares are held in the name of your broker or other nominee, you should return your proxy in the envelope provided by your broker or nominee or instruct the person responsible for holding your shares to execute a proxy on your behalf. In either case, your shares will be voted according to your instructions.
What if I do not provide instructions on how to vote my shares?
If you are a stockholder of record and you submit a proxy, but do not provide voting instructions, your shares will be voted “FOR” the election of each of the Company’s director nominees on proposal 1, “FOR” proposals 2 through 4 and “AGAINST” the stockholder proposals.
If you are a beneficial owner and you do not provide the broker or other nominee that holds your shares with voting instructions, the broker or nominee has discretionary authority to vote for certain proposals, but not others pursuant to applicable regulatory requirements. Brokers and other nominees have the discretion to vote on routine matters such as proposal 4, but not on non-routine matters such as proposals 1 through 3 and 5 and 6. Therefore, if you do not provide voting instructions to the broker or nominee that holds your shares, the broker or nominee may only vote for proposal 4 and any other routine matters properly presented for a vote at the annual meeting.
What is the quorum required for the meeting?
We will hold the annual meeting if holders of shares having a majority of the voting power of Charter’s capital stock as of the Record Date either sign and return their proxy cards, vote via the Internet or attend the meeting. If you sign and return your proxy card or vote via the Internet, your shares will be counted to determine whether we have a quorum, even if you fail to indicate your vote.
Abstentions and broker non-votes will be counted as present for purposes of determining whether a quorum exists at the annual meeting.
How are broker non-votes and abstentions treated?
If an executed proxy is returned by a broker holding shares in street name that indicates that the broker does not have discretionary authority as to certain shares to vote on one or more matters (a broker non-vote), such shares will be considered present at the meeting for purposes of determining a quorum on all matters, but will not be considered to be votes cast with respect to such matters.
Charter Communications | 2 | 2024 Proxy Statement
A stockholder may vote to “abstain” on any of the proposals. If you vote to “abstain” on any matter, your shares will be counted as present at the meeting for purposes of determining a quorum on all matters, but will not be considered to be votes cast with respect to such matter. Only “FOR” and “AGAINST” votes are counted for purposes of determining the votes cast in connection with each proposal.
With respect to each of proposals 1, 2 and 4 through 6, broker non-votes and abstentions will have no effect on determining whether the affirmative vote constitutes a majority of the shares present or represented by proxy and voting at the annual meeting. In addition, because they do not count as votes cast, assuming a quorum is present, abstentions from voting, broker non-votes or a stockholder’s other failure to vote will have no effect on proposals 1, 2 and 4 through 6. With respect to proposal 3, broker non-votes and abstentions will have the same effect as a vote “against” in determining whether the affirmative vote constitutes a majority of the outstanding shares of Class A common stock entitled to vote at the annual meeting.
In order to minimize the number of broker non-votes, the Company encourages you to vote or to provide voting instructions to the organization that holds your shares by carefully following the instructions provided in the Notice of Internet Availability of Proxy Materials.
What is the vote required for the proposals on the agenda?
The affirmative vote of the holders of a majority of the votes cast is required for approval of the matters in proposals 1, 2 and 4 through 6. Abstentions and broker non-votes are not considered votes cast. Accordingly, assuming a quorum is present, abstentions, broker non-votes and a stockholder’s other failure to vote will have no effect on the outcome of the applicable proposal.
The affirmative vote of the holders of a majority of the outstanding shares of Class A common stock entitled to vote thereon is required for approval of proposal 3. Accordingly, assuming a quorum is present, abstentions, broker non-votes and a stockholder’s other failure to vote will have the same effect as a vote “against” on the outcome of proposal 3.
What are my choices for each proposal on the agenda?
On proposal 1, for each of the director nominees you can vote your shares “FOR” a nominee or “AGAINST” a nominee, or you can abstain from voting. On proposals 2 through 6 you can vote “FOR” a proposal or “AGAINST” a proposal, or you can abstain from voting.
How do I vote by proxy?
Follow the instructions on the enclosed proxy card. Sign and date the proxy card and mail it back to us in the enclosed envelope. If you receive more than one proxy card it may mean that you hold shares in more than one account. Sign and return all proxy cards to ensure that all of your shares are voted. The proxy holder named on the proxy card will vote your shares as you instruct. If you sign and return the proxy card but do not indicate your vote, the proxy holder will vote on your behalf “FOR” each of the director nominees on proposal 1, “FOR” proposals 2 through 4, and “AGAINST” the stockholder proposals and will also have discretionary authority to vote your shares on any other matter that is properly brought before the annual meeting. Stockholders may also vote their proxy by using the toll free number listed on the proxy card and following the instructions.
Can I vote via the Internet?
Stockholders with shares registered in their names with Computershare Shareowner Services, our transfer agent, may authorize a proxy via the Internet at the following address: www.proxyvote.com. A number of brokerage firms and banks participate in a program that permits Internet voting. If your shares are held in an account at a brokerage firm or bank that participates in such a program, you may direct the vote of those shares by following the instructions on the voting form enclosed with the proxy from the brokerage firm or bank.
Proxies submitted via the Internet must be received by 11:59 p.m. (EDT) on April 22, 2024. Please refer to your voting instruction form and/or your proxy card for specific voting instructions. If you vote this year’s proxy via the Internet, you may also elect to receive future proxy and other materials electronically by following the instructions when you vote. Making this election will save the Company the cost of producing and mailing these documents.
Charter Communications | 3 | 2024 Proxy Statement
Can I change my vote after I return my proxy card?
Yes. At any time before the vote at the annual meeting, you can change your vote either by giving our Corporate Secretary a written notice revoking your proxy card, or by signing, dating and submitting a new later-dated proxy card via the Internet, by telephone or by mail. We will honor the latest dated proxy card which has been received prior to the closing of the voting. You may also attend the meeting and vote in person. If you wish to attend the annual meeting and vote your shares in person and you are the beneficial owner of your shares, you must obtain the documents required to vote your shares in person at the annual meeting from your broker or nominee.
Is my vote confidential?
We will maintain the confidentiality of proxy cards and other votes that identify individual stockholders unless disclosure is required by law.
Who will count the votes?
Broadridge Financial Solutions, Inc. has been appointed to receive and tabulate stockholder votes and to act as the inspector of election and certify to the election results.
Who is soliciting my vote?
The Board of Directors is soliciting your vote. In addition, we retained Innisfree M&A Incorporated, a proxy solicitation firm, to solicit proxies in connection with our 2024 annual meeting of stockholders at a total cost of approximately $20,000 plus expenses. Charter expects to solicit proxies primarily by mail, but directors, officers and other employees of Charter may also solicit in person or by internet, telephone or mail. Contact information for the proxy solicitor appears below.
Proxy Solicitor
Charter stockholders who need assistance in voting their shares or need a copy of this proxy statement should contact:
Innisfree M&A Incorporated
501 Madison Avenue, 20th Floor
New York City, New York 10022
Stockholders may call toll free: (888) 750-5834
Banks and brokers may call collect: (212) 750-5833
Who pays for this proxy solicitation?
The Company pays for the proxy solicitation. We will ask banks, brokers and other nominees and fiduciaries to forward the proxy material to the beneficial owners of the Class A common stock and to obtain the authority of executed proxies. We will reimburse them for their reasonable expenses.
Where can I find the voting results of the annual meeting?
We will report the voting results on a Current Report on Form 8-K that we will file with the Securities and Exchange Commission (“SEC”) within four business days after the date of the meeting and that we will post on our website promptly after it is filed.
Charter Communications | 4 | 2024 Proxy Statement
Proposal No. 1: Election of Directors
(Item 1 on Proxy Card)
The size of our Board of Directors is thirteen, and we have twelve members standing as nominees for election as well as one new director-nominee, Carolyn J. Slaski. Proxies cannot be voted for a greater number of persons than the number of nominees named. As set forth in more detail below, the Nominating and Corporate Governance Committee of the Board of Directors and the Board of Directors have determined that twelve of our thirteen current directors are independent pursuant to NASDAQ rules, and that twelve of our thirteen director nominees are independent pursuant to NASDAQ rules.
Each of our directors is elected on an annual basis. The Board of Directors is soliciting your vote for the directors to be elected at the annual meeting of stockholders. Once elected, each of the directors will hold office until his or her successor is elected, or he or she resigns or is otherwise removed.
Mr. Rutledge retired from the role of Executive Chairman of the Company and the Board of Directors (“Executive Chairman”) effective November 30, 2023, but continues to serve as a director emeritus. Mr. Winfrey was appointed to the Board of Directors effective November 30, 2023 to fill the vacancy resulting from Mr. Rutledge’s retirement. The Board also appointed Eric L. Zinterhofer as Non-Executive Chairman of the Board effective November 30, 2023 upon the retirement of Mr. Rutledge as Executive Chairman. Craig Jacobson will not stand for reelection to the Board and his term of office will expire as of the end of the annual meeting. To fill the vacancy caused by Mr. Jacobson’s departure, Carolyn J. Slaski has been nominated by the Board of Directors, based on the recommendation of the Nominating and Corporate Governance Committee, for election to the Board of Directors at the upcoming annual meeting. Ms. Slaski was identified by a third party recruiting firm that the Nominating and Corporate Governance Committee engaged to assist in developing its pipeline of potential diverse director candidates.
Under the Second Amended and Restated Stockholders Agreement, dated May 23, 2015, among Charter, Liberty Broadband Corporation (“Liberty Broadband”), A/N and the former Charter Communications, Inc. (the “Stockholders Agreement”), and Charter’s amended and restated certificate of incorporation, the number of Charter’s directors is fixed at thirteen. Under the Stockholders Agreement, Liberty Broadband currently has the right to designate three directors as nominees for Charter’s Board of Directors and A/N currently has the right to designate two directors as nominees for Charter’s Board of Directors. Of our current directors and the director nominees named in this proxy statement, Messrs. Maffei, Meyer and Nair were designated by Liberty Broadband and Messrs. Miron and Newhouse were designated by A/N.
THE BOARD OF DIRECTORS RECOMMENDS VOTING “FOR” THE DIRECTOR NOMINEES.
Information about the Director Nominees
The following information concerns the thirteen individuals who have been nominated by the Board of Directors for election by the stockholders. Each of the following individuals currently serves as a director except new director-nominee Carolyn J. Slaski.
Directors | Position(s) | |
Eric L. Zinterhofer | Non-Executive Chairman | |
W. Lance Conn | Director | |
Kim C. Goodman | Director | |
Gregory B. Maffei | Director | |
John D. Markley, Jr. | Director | |
David C. Merritt | Director | |
James E. Meyer | Director | |
Steven A. Miron | Director | |
Balan Nair | Director | |
Michael A. Newhouse | Director | |
Mauricio Ramos | Director | |
Carolyn J. Slaski | Director | |
Christopher L. Winfrey | Director |
Charter Communications | 5 | 2024 Proxy Statement
Director Nominees
Eric L. Zinterhofer Non-Executive Chairman Age: 52 Director Since: 2009 Committees: Compensation and Benefits, Nominating and Corporate Governance, Finance | ||||||
Biographical Information: Mr. Zinterhofer serves as Non-Executive Chairman of Charter’s board of directors and
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Mr. Zinterhofer’s qualifications to sit on Charter’s Board include his extensive background in banking and investment industries and his particular knowledge and experience as a financial advisor and investor in the telecommunications industries. This knowledge and experience contributes to the Board’s evaluation of financing opportunities and strategies and consideration of our
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W. Lance Conn
Independent Director Age: 55 Director Since: 2004
Committees: Compensation and Benefits (Chair), 49, was appointed to the board of directors of Charter on November 30, 2009. Finance
Biographical Information:
Mr. Conn previously served on Charter’s board of directors since September 2004.is a businessman, investor and conservationist. From July 2004 to May 2009, Mr. Conn served as the President of Vulcan Capital, the investment arm of Vulcan, Inc. Prior to Vulcan, Mr. Conn served aswas employed by America Online, Inc. from March 1996 to May 2003. From September 1994 to February 1996, Mr. Conn was an officer of Charter Investment, Inc. prior to and during the time of its Chapter 11 bankruptcy proceedings filed concurrentlyattorney with Charter’s Chapter 11 proceedings.Shaw, Pittman, Potts & Trowbridge LLP in Washington, D.C. Mr. Conn holds a J.D. degree from the University of Virginia, a M.A. degree in history from the University of Mississippi and a B.A. degree in history from Princeton University. We believe
Skills and Qualifications:
Mr. Conn’s qualifications to sit on Charter’s boardBoard include his extensive experience in the media and telecommunications industries, his experience in the media businessinvestment industry and his knowledge of Charter gained from his long-term service as a director.
Charter Communications | 6 | 2024 Proxy Statement
Kim C. Goodman Independent Director Age: 58 Director Since: 2016 Committees: Audit |
Biographical Information: Ms. Goodman
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Skills and Qualifications: Ms.
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Gregory B. Maffei Independent Director Age: 63 Director Since: 2013 Committees: Compensation and Benefits, Finance |
Biographical Information: Mr. Maffei has served as the
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Skills and Qualifications: Mr. Maffei’s qualifications to sit on Charter’s
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Charter Communications | 7 | 2024 Proxy Statement
John D. Markley, Jr. Independent Director Age: 58 Director Since: 2009 Committees: Nominating and Corporate Governance (Chair), |
Biographical Information: Mr. Markley is Managing Director of |
Skills and Qualifications: Mr. Markley’s qualifications to sit on Charter’s |
David C. Merritt Independent Director Age: 69 Director Since: 2003 Committees: Audit (Chair), |
Biographical Information: Mr. Merritt is a private investor and consultant. From March 2009 to December 2013, he served as the president of BC Partners, Inc., a financial advisory firm. From October 2007 to March 2009, Mr. Merritt served as Senior Vice President and Chief Financial Officer of iCRETE, LLC. From |
Skills and Qualifications: Mr. Merritt’s qualifications to sit on Charter’s
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Charter Communications | 8 | 2024 Proxy Statement
James E. Meyer Independent Director Age: 69 Director Since: 2018 Committees: Nominating and Corporate Governance |
Biographical Information: Mr. |
Skills and Qualifications: Mr. Meyer’s qualifications to sit on Charter’s Board include his expertise in media and business and his extensive managerial experience. Mr. Meyer brings to our Board demonstrated management ability at senior levels and critical industry, technology and operational insights. |
Steven A. Miron Independent Director Age: 57 Director Since: 2016 Committees: Compensation and Benefits |
Biographical Information: Mr. Miron is the Chief Executive Officer of Advance/Newhouse Partnership, a privately-held media company headquartered in Syracuse, New York and a senior executive officer at Advance, a private, family-held business that owns and invests in companies across media, entertainment, technology, communications, education and other promising growth sectors. Advance’s portfolio includes Condé Nast, which produces high quality award-winning journalism, content and entertainment in a variety of media formats, including print, digital and video, for global audiences; Advance Local, which operates America’s leading local media groups news and information companies in more than 20 cities as well as software and data platforms, and marketing agencies; Stage Entertainment, one of the world’s leading producers of musical theatre, operating a network of 16 premier theatres across continental Europe; The IRONMAN Group, the world’s largest operator of mass participation sports platform; in the world; American City Business Journals, the largest publisher producer of local business news, information and events in the United States, covering 44 cities; Leaders Group, a global business intelligence platform for sports and gaming professionals; Turnitin, a leading provider of educational technology to promote academic integrity, streamline grading and feedback and improve educational outcomes; 1010data, a leading provider of cloud-based data analytics; and POP, a digital marketing agency. Advance holds an approximately 13% interest in Charter and is among the largest shareholders in Warner Bros. Discovery, Inc. and Reddit. Mr. Miron previously served as President of Bright House Networks from July 2002 to May |
Skills and Qualifications: Mr. Miron’s qualifications to sit on Charter’s Board include his extensive experience as a cable television executive and his experience in the media and technology industries. Mr. Miron has developed a deep understanding of our industry and his expertise in the cable television industry makes him a valued presence on our |
Charter Communications | 9 | 2024 Proxy Statement
Balan Nair Independent Director Age: 57 Director Since: 2013 Committees: None |
Biographical Information: Mr. Nair is President and Chief Executive Officer and a director of Liberty Latin America,
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Skills and Qualifications: Mr. Nair’s qualifications to sit on Charter’s |
Michael A. Newhouse Independent Director Age: 64 Director Since: 2016 Committees: Nominating and Corporate Governance, Finance |
Biographical Information: Mr. Newhouse is a |
Skills and Qualifications: Mr. Newhouse’s qualifications to sit on Charter’s Board include his extensive experience in the cable television, media and |
Charter Communications | 10 | 2024 Proxy Statement
Mauricio Ramos Independent Director Age: 55 Director Since: 2016 Committees: Compensation and Benefits |
Mr. Ramos has been the Chief Executive Officer of Millicom International Cellular S.A. (“Millicom”), a Luxembourg public liability company traded on the Stockholm and U.S. NASDAQ stock exchange since April |
Skills and Qualifications: Mr. Ramos’ qualifications to sit on Charter’s Board include his significant executive experience in the telecommunications and media
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Carolyn J. Slaski Independent Director-Nominee Age: 61 Director Since: N/A Committees: None |
Biographical Information: Ms. Slaski served as the |
Skills and Ms. Slaski’s qualifications to sit on Charter’s
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Skills and Qualifications: Mr. Winfrey’s qualifications to sit on Charter’s Board include his many years of experience as an executive in the telecommunications industry, including as our President and Chief Executive Officer since December 2022. Mr. Winfrey is responsible for setting and executing the goals and strategies related to our business and provides the Board not only with a knowledge of our day-to-day operations, but also with the essential experience, insight and expertise that can be provided only by a person who is intimately involved in running our business. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Board of Directors and Committees of the Board of Directors
Our Board of Directors meets regularly throughout the year on an established schedule. The Board also holds special meetings and executive sessions and acts by written consent from time to time as necessary. The Company held an annual stockholders’ meeting in 2023, which twelve directors attended. Members of the Board of Directors are encouraged to attend the annual meeting each year. In 2023, the full Board of Directors held fourteen meetings and acted two times by unanimous written consent. All directors attended 75% or more of the aggregate meetings of the Board and of the Board committees on which they served during 2023.
The Board of Directors delegates authority to act with respect to certain matters to Board committees whose members are appointed by the Board of Directors. The current standing committees of the Board of Directors are the following: Audit Committee, Compensation and Benefits Committee, Nominating and Corporate Governance Committee and Finance Committee. The Audit, Compensation and Benefits, Nominating and Corporate Governance and Finance Committees each have a charter that is available on the “Investors” section of our website at ir.charter.com.
Charter’s Audit Committee is responsible for overseeing the Company’s accounting and financial reporting processes and the audits of the Company’s financial statements, reviewing the work of the independent registered public accounting firm (including resolution of disagreements between management and the public accounting firm regarding financial reporting) for the purpose of preparing or issuing an audit report or performing other audit, review or attest services and reviewing our risk management program. During 2023, the Audit Committee members consisted of Messrs. Merritt and Markley and Ms. Goodman. Mr. Merritt is Chairman of the Audit Committee. Charter’s Board of Directors has determined that, in its judgment, Mr. Merritt is an audit committee financial expert within the meaning of the applicable federal regulations. All members of the Audit Committee were determined by the Board of Directors in 2023 to be independent in accordance with the listing standards of NASDAQ and Rule 10A-3 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). The Audit Committee met five times and acted two times by unanimous written consent in 2023.
The Compensation and Benefits Committee reviews and approves the compensation of the senior management of the Company. During 2023, Messrs. Conn, Maffei, Miron, Ramos and Zinterhofer served on the Compensation and Benefits Committee. Mr. Conn served as the Chairman of the Compensation and Benefits Committee during 2023. All members of the
Charter Communications | 12 | 2024 Proxy Statement
Compensation and Benefits Committee were determined by the Board of Directors in 2023 to be independent in accordance with the listing standards of NASDAQ and Rule 10C of the Exchange Act. The Compensation and Benefits Committee met six times and acted three times by unanimous written consent in 2023.
The Nominating and Corporate Governance Committee oversees corporate governance, including recommending Board and committee nominations, overseeing the Corporate Governance Guidelines, reviewing and reporting to the Board as to director independence, overseeing environmental, social and governance matters, reviewing public policy priorities and political engagement strategy and overseeing lobbying activities. The Nominating and Corporate Governance Committee considers director candidates proposed by stockholders if adequate information is submitted in a timely manner (see “Nomination and Qualifications of Directors” below). During 2023, Messrs. Markley, Jacobson, Meyer, Newhouse and Zinterhofer served on the Nominating and Corporate Governance Committee. Mr. Markley is the Chairman of the Nominating and Corporate Governance Committee. All members of the Nominating and Corporate Governance Committee were determined by the Board in 2023 to be independent in accordance with the listing standards of NASDAQ. The Nominating and Corporate Governance Committee met four times in 2023.
The Finance Committee reviews the Company’s financing activities and approves the terms and conditions of certain financing transactions, in consultation with the Company’s legal and financial advisors. During 2023, Messrs. Conn, Maffei, Merritt, Newhouse and Zinterhofer served on the Finance Committee. The Finance Committee met one time and acted four times by unanimous written consent in 2023.
In addition to the standing committees described above, from time to time, the Board of Directors may create “ad hoc” committees for specific projects or transactions. Ad hoc committees acted by written consent during 2023 related to the Company’s stock buyback arrangements with each of A/N and Liberty Broadband.
The Nominating and Corporate Governance Committee and the Board of Directors have determined that a majority of the thirteen current directors are independent, and a majority of the thirteen director nominees are independent. The Nominating and Corporate Governance Committee and the Board of Directors have specifically determined that Ms. Goodman and Messrs. Conn, Jacobson, Markley, Merritt, Ramos and Zinterhofer are independent directors under NASDAQ rules. The Nominating and Corporate Governance Committee and the Board of Directors have also determined that director-nominee Ms. Slaski is independent under NASDAQ rules. The Nominating and Corporate Governance Committee and the Board of Directors also determined that Messrs. Maffei, Meyer and Nair are independent under the NASDAQ rules; however, due to their designation as nominees by, or relationship with, Liberty Broadband, a stockholder of the Company, they may not be considered independent under SEC rules for Audit Committee membership purposes. Similarly, the Nominating and Corporate Governance Committee and the Board of Directors determined that Messrs. Miron and Newhouse are independent under the NASDAQ rules; however, due to their designation as nominees by, or relationship with, A/N, a stockholder of the Company, they may not be considered independent under SEC rules for Audit Committee membership purposes. The Nominating and Corporate Governance Committee and the Board of Directors further determined that Messrs. Maffei, Meyer, Miron, Nair and Newhouse’s designation as nominees by, or relationship with, a stockholder of the Company does not prohibit a finding of independence under SEC rules and NASDAQ Rule 5605(d)(2) for Compensation and Benefits Committee membership purposes. Mr. Winfrey is President and Chief Executive Officer of the Company and is thus not independent for NASDAQ Rule purposes as an executive officer of the Company.
Nomination and Qualifications of Directors
Candidates for director are nominated by the Board of Directors, based on the recommendation of the Nominating and Corporate Governance Committee and subject to certain requirements under the Stockholders Agreement. Charter’s Corporate Governance Guidelines provide that, among other things, candidates for new Board membership to be considered by Charter’s Board of Directors should be individuals from diverse business and professional backgrounds with unquestioned high ethical standards and professional achievement, knowledge and experience. The Corporate Governance Guidelines provide that a candidate’s contribution of diversity to the Board of Directors (based on common factors associated with diversity such as gender, race/ethnicity and other background characteristics that enhance the diversity of the Board) will be one of the many elements considered in evaluating candidates. Further, the Board of Directors and the Nominating and Corporate Governance Committee believe that it is important that Board members represent diverse viewpoints. In considering candidates for the Board of Directors, the Nominating and Corporate Governance Committee considers the entirety of each candidate’s credentials in the context of these standards. In addition, director candidates must be individuals with the time and commitment necessary to perform the duties of a Board member and other special skills that complement or supplement the skill sets of current directors.
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We believe that the Board of Directors is comprised of an effective mix of experience, backgrounds, knowledge, and skills, including the following:
| • | Nine directors have experience and demonstrated expertise in managing large, complex organizations, such as serving as CEOs or next-level executives of a significant company or organization; |
| • | Four directors and the new director nominee have significant financial, accounting or other risk management expertise; |
| • | Two directors have significant technology and product development experience; and |
| • | Eleven directors and the new director nominee have experience on one or more boards of other significant public or nonprofit organizations. |
In addition, we believe that all of our directors have the following attributes that positively contribute to our Board of Directors:
| • | Experience with video, internet, telephone, wireless or media businesses; |
| • | Experience with significant transactions, including financings, investments and acquisitions; |
| • | Judgment, skill, integrity and reputation; and |
| • | Diversity of life experiences and backgrounds, as well as gender and ethnic diversity. |
At this time, our Board includes an African American woman, an Asian American/Pacific Islander and a Latino American, as well as a female candidate nominated for election at the 2024 annual stockholders’ meeting. In 2023, the Nominating and Corporate Governance Committee engaged a third party recruiting firm to further develop its pipeline of potential female director candidates, which resulted in the nomination of Ms. Slaski for election to the Board at the 2024 annual stockholders’ meeting.
In recent years, some investors have expressed concerns about the number of outside public company boards that certain highly sought-after directors serve on. The Nominating and Corporate Governance Committee considers all aspects of each director’s contributions, skills and dedication to ensure that each remains an effective director for the Company. The Board realizes that Mr. Maffei, a director on the board and President and Chief Executive Officer of Liberty Broadband, also sits on the boards of several other companies in which Liberty Broadband has an investment or a management relationship, as well as the boards of other companies, as more fully discussed in his biographical information above. The Nominating and Corporate Governance Committee has thoroughly evaluated Mr. Maffei’s role in and contributions to the Board, including the significant time and attention he dedicates to the Company, his outside board commitments (which primarily relate to his role with Liberty Broadband and affiliated companies), the overlaps between his service on outside boards and our Board, and Mr. Maffei’s considerable knowledge and experience in the industry. The Nominating and Corporate Governance Committee concluded that Mr. Maffei’s service on outside boards improves, rather than detracts from, his service on the Company’s Board and firmly believes that he will continue to provide the Company with the necessary time and attention to make him an effective director.
Stockholders may nominate persons to be directors by following the procedures set forth in our Bylaws. These procedures require the stockholder to deliver timely notice to the Corporate Secretary at our principal executive offices. That notice must contain the information required by the Bylaws about the stockholder proposing the nominee and about the nominee. No stockholder nominees have been proposed for this year’s meeting.
Stockholders also are free to suggest persons directly to the Board of Directors for the Board to consider as nominees. The Board of Directors will consider those individuals if adequate information is submitted in a timely manner (see “Stockholder Proposals for 2025 Annual Meeting” below for deadline requirements) in writing to the Board of Directors at the Company’s principal executive offices, in care of the General Counsel.
In July 2018, Dr. John C. Malone retired from the Board of Directors, but continues to serve as a director emeritus. As a director emeritus, Dr. Malone continues to attend Board meetings, but does not have a vote on matters presented. Dr. Malone previously served on the Board of Directors as a designee of Liberty Broadband under the terms of the Stockholders Agreement. In November 2023, Mr. Rutledge retired as Executive Chairman from the Board of Directors, but continues to serve as a director emeritus. As a director emeritus, Mr. Rutledge continues to attend Board meetings, but does not have a vote on matters presented.
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Board Diversity Matrix
The table below provides certain information with respect to the composition of Charter’s Board of Directors. Each of the categories listed in the table has the meaning ascribed to it in NASDAQ Listing Rule 5605(f).
Board Diversity Matrix (as of January 30, 2024) |
| |||||||
Total Number of Directors: | 13 | |||||||
| Female | Male | |||||||
Part I: Gender Identity |
| |||||||
Directors | 1 | 12 | ||||||
Part II: Demographic Background |
| |||||||
African American or Black | 1 | |||||||
Alaskan Native or Native American | ||||||||
Asian | 1 | |||||||
Hispanic or Latino | 1 | |||||||
Native Hawaiian or Pacific Islander | ||||||||
White | 10 | |||||||
Two or More Races or Ethnicities | ||||||||
LGBTQ | 0 | |||||||
Did Not Disclose Demographic Background | 0 | |||||||
Governance Under the Stockholders Agreement
On May 23, 2015, the Company entered into an Agreement and Plan of Mergers (the “Merger Agreement”) with the company formerly known as Charter Communications, Inc. (“Legacy Charter”), Time Warner Cable Inc. (“Legacy TWC”), and certain other subsidiary entities, pursuant to which the parties engaged in a series of transactions that resulted in Legacy Charter and Legacy TWC becoming wholly owned subsidiaries of Charter (the “TWC Transaction”) on the terms and subject to the conditions set forth in the Merger Agreement. After giving effect to the TWC Transaction, Charter became the new public company parent that holds the operations of the combined companies.
On March 31, 2015, the Company entered into a definitive Contribution Agreement (the “Contribution Agreement”), which was amended on May 23, 2015 in connection with the execution of the Merger Agreement, with A/N, A/NPC Holdings LLC, Legacy Charter and Charter Communications Holdings, LLC (“Charter Holdings”), pursuant to which the Company became the owner of the membership interests in Bright House Networks, LLC (“Bright House”) and any other assets (other than certain excluded assets and liabilities and non-operating cash) primarily related to Bright House (the “Bright House Transaction,” and together with the TWC Transaction, the “Transactions”).
In connection with the Transactions, Charter entered into the Stockholders Agreement on May 23, 2015. Under the Stockholders Agreement, Liberty Broadband has designated Messrs. Maffei, Meyer and Nair as director nominees and A/N has designated Messrs. Miron and Newhouse as director nominees.
Under the terms of the Stockholders Agreement and Charter’s amended and restated certificate of incorporation, the number of Charter’s directors is fixed at thirteen. Two designees selected by A/N are members of the Board of Directors of Charter and three designees selected by Liberty Broadband are members of the Board of Directors of Charter. The remaining eight directors are not designated by either A/N or Liberty Broadband. Each of A/N and Liberty Broadband is entitled to designate at least one director to each of the committees of Charter’s Board of Directors, subject to applicable stock exchange listing rules and certain specified voting or equity ownership thresholds for each of A/N and Liberty Broadband, and provided that the Nominating and Corporate Governance Committee and the Compensation and Benefits Committee each have at least a majority of directors independent from A/N, Liberty Broadband and the Company. Each of the Nominating and Corporate Governance Committee and the Compensation and Benefits Committee is currently comprised of three directors not designated by either A/N or Liberty Broadband and one designee of each of A/N and Liberty Broadband. Neither A/N nor
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Liberty Broadband has designated a director to serve on the Audit Committee, but each has designated a director to serve in an observer role on the Audit Committee. A/N and Liberty Broadband also have certain other committee designation and governance rights.
Under the Stockholders Agreement, Liberty Broadband and A/N are required to vote (subject to the applicable voting cap) their respective shares of Charter Class A common stock and Charter Class B common stock for the director nominees nominated by the Nominating and Corporate Governance Committee, including the respective designees of Liberty Broadband and A/N, and against any other nominees, except that, with respect to the directors not designated by either A/N or Liberty Broadband, Liberty Broadband and A/N must instead vote in the same proportion as the voting securities are voted by stockholders other than A/N and Liberty Broadband or any group which includes any of them are voted, if doing so would cause a different outcome with respect to any such directors.
Board Leadership Structure, Company Strategy and Risk Oversight
Mr. Zinterhofer is the Non-Executive Chairman of the Board. Mr. Winfrey, President and Chief Executive Officer of the Company and a Board member, is responsible for setting the strategic direction for the Company in consultation and with the necessary approvals of the Board of Directors and is responsible for the day-to-day leadership and performance of the Company.
The Non-Executive Chairman presides over meetings of the Board of Directors and executive sessions of independent directors and provides leadership for the non-A/N and non-Liberty Broadband directors. The Non-Executive Chairman serves as a liaison between the independent directors and the President and Chief Executive Officer and has authority to call meetings of the independent directors. The Non-Executive Chairman leads the Board’s annual evaluation of the President and Chief Executive Officer’s performance. If requested, the Non-Executive Chairman is available for consultation and direct communication with major stockholders and regulators under appropriate circumstances. The Non-Executive Chairman also monitors and coordinates with management on corporate governance issues and developments.
Every year, the Nominating and Corporate Governance Committee reviews and makes a recommendation on the appropriate governance framework for Board leadership. The Committee takes into consideration governance best practices and the facts and circumstances of our Board. In connection with this process, the Company determined that Board leadership is best provided through a clearly defined and significant Non-Executive Chairman role, active and strong committee chairs, and independent-minded, skilled, engaged, diverse and committed directors. The Board believes that its current structure and governance allows it to provide effective challenge and oversight of management.
The Board regularly discusses with management the Company’s competitive positioning, strategic dynamics and business priorities. We are a leading broadband connectivity company and cable operator serving more than 32 million customers in 41 states through our Spectrum brand. Over an advanced communications network, we offer a full range of state-of-the-art residential and business services including Spectrum Internet®, TV, Mobile and Voice. For small and medium-sized companies, Spectrum Business® delivers the same suite of broadband products and services coupled with special features and applications to enhance productivity, while for larger businesses and government entities, Spectrum Enterprise® provides highly customized, fiber-based solutions. Spectrum Reach® delivers tailored advertising and production for the modern media landscape. We also distribute award-winning news coverage and sports programming to our customers through Spectrum Networks.
The Board discusses and advises management with respect to the Company’s strategies to effectively operate within each of our service areas. These discussions support our core initiatives, which focus on the evolution of our network and products, expansion of our footprint, and the execution of high-quality operations, including customer service. It allows us to maintain a state-of-the-art network delivering the most compelling converged connectivity services in a capital and time-efficient manner, and in turn, offer advanced services to consumers at highly attractive prices, together with outstanding customer service. Offering high quality, competitively priced products and outstanding service allows us to increase both the number of customers we serve over our network and the number of products we sell to each customer. This combination also reduces the number of service transactions we perform per relationship, yielding higher customer satisfaction and lower customer churn, which results in lower costs to acquire and serve customers and greater profitability.
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In addition to discussions with management, our non-management directors meet regularly in executive sessions that are chaired by our Non-Executive Chairman with no members of management present. Non-management directors use these executive sessions to discuss matters of concern, as well as evaluations of the President and Chief Executive Officer and senior management, management and Board successions, matters to be included on Board agendas, and additional information the Board would like management to provide to them.
The chairs and all members of the Board committees are independent directors. These chairs shape the agenda and information presented to their committees. Oversight of critical issues within these committees is owned by the independent directors. All directors have full access to all members of management and all employees on a confidential basis.
The full Board of Directors oversees the various risks to the Company, delegating to the various committees specific responsibilities. The Audit Committee reviews our Enterprise Risk Management (“ERM”) Program on a regular basis, and the Board of Directors regularly reviews reports from management and the Audit Committee regarding the ERM Program. The Audit Committee meets regularly with members of management in executive session, as well as separately with each of the General Counsel, the Senior Vice President of Internal Audit Services and representatives of our independent registered public accounting firm. The Compensation and Benefits Committee oversees our succession planning and compensation policies and practices, including reviewing our incentive and equity-based compensation plans and benefits plans. The Nominating and Corporate Governance Committee oversees corporate governance, including recommending Board and committee nominations and the Corporate Governance Guidelines and determining director independence, as well as overseeing the Company’s public policy priorities, political engagement strategy and lobbying activities. The Government Affairs team manages the Company’s lobbying activities and reports directly to the President and Chief Executive Officer, with oversight from the Nominating and Corporate Governance Committee. While the Nominating and Corporate Governance Committee provides oversight, our Government Affairs Team is responsible for the activities, positions and daily decision-making consistent with this oversight. The Board has delegated authority and responsibility for state and local campaign contributions to the President and Chief Executive Officer, subject to the provisions of the Company’s Code of Conduct and any other applicable Company policies. Procedurally, corporate political spending plans and decisions are reviewed and approved by the President and Chief Executive Officer. The Nominating and Corporate Governance Committee receives an annual report from the Government Affairs team on the Company’s political engagement strategy, including lobbying activities and expenditures made during the past year and the framework for the coming year. The Board of Directors receives quarterly updates on regulatory activities and policy priorities and regular updates on significant policy issues facing the Company.
Compensation Risk Assessment
An independent consultant was engaged to perform a risk assessment of the Company’s compensation programs and did not identify any material risks that might adversely impact the financial health or performance of the Company. After review of the work and conclusion of the independent consultant, the Compensation and Benefits Committee agreed with the conclusion reached by the independent consultant.
Proactive Stockholder Engagement
Charter values and carefully considers the feedback we receive from our stockholders. In 2023, we engaged in constructive dialogue with our leading institutional stockholders. We reached out to and offered to have discussions with our 15 largest stockholders holding approximately 75% of the shares of our outstanding stock. We also engaged with stockholders who contacted us requesting engagement and have engaged with each of the stockholders who have submitted a proposal for consideration at the 2024 annual stockholders’ meeting. We engaged with each stockholder who accepted our offer, making our Executive Vice President, General Counsel and Corporate Secretary, our Senior Vice President, Investor Relations and our Senior Vice President, Deputy General Counsel and Assistant Corporate Secretary available. We also engaged with proxy advisory firms. Stockholder feedback, including through direct discussions and prior stockholder votes, is reported to our Nominating and Corporate Governance Committee regularly throughout the year. We also review our practices against guidelines published by stockholders and proxy advisory firms, among others.
The engagements covered a variety of topics. The topics most often raised and the Company’s response to these discussions are summarized below.
Board Diversity. Our Corporate Governance Guidelines reflect our commitment to diversity and provide that a candidate’s contribution of diversity to the Board of Directors (based on common factors associated with diversity such as gender, race/
Charter Communications | 17 | 2024 Proxy Statement
ethnicity and other background characteristics that enhance the diversity of the board) will be one of the many elements to be considered in evaluating candidates. At this time, our Board includes an African American woman, an Asian American/Pacific Islander and a Latino American, as well as a female candidate nominated for election at the 2024 annual stockholders’ meeting. In 2023, the Nominating and Corporate Governance Committee engaged a third party recruiting firm to further develop its pipeline of potential female director candidates, which resulted in the nomination of Ms. Slaski for election to the Board at the 2024 annual stockholders’ meeting.
The business case for significant gender representation on the Board of Directors driven by the adoption of a board diversity policy was raised by four stockholders (British Columbia Investment Management Corporation, Brunel Pension Partnership, Nest Corporation, and UBS Asset Management) in a proposal originally submitted for consideration at the 2024 annual stockholders’ meeting. We engaged with the stockholders who submitted the proposal, and during the engagement, the Company announced that the Board nominated Carolyn J. Slaski for election to the Board of Directors at the 2024 annual stockholders’ meeting to fill the vacancy created by Craig Jacobson’s decision not to stand for re-election. The Company also reaffirmed to these stockholders its ongoing commitment to ensure gender and other forms of diversity are considered in its director recruitment efforts as detailed in its Corporate Governance Guidelines and described elsewhere in this proxy statement. In exchange, each stockholder proposal proponent agreed to withdraw its proposal. This demonstrates the importance of achieving mutually beneficial outcomes through stockholder engagement efforts. We take seriously the views of our stockholders and take into consideration all the various input we receive, and we intend to continue our stockholder engagement efforts in 2024.
Lobbying Activities and Political Spend. Our Company makes significant disclosures regarding lobbying and political contributions, and our Board believes that these current disclosures are appropriate and consistent with the objectives of transparency and accountability reflected in the proposals. During our engagement discussions, some stockholders indicated they would appreciate increased disclosure describing the Company’s management and oversight of lobbying and political spend activities. In this regard, we reviewed our practices against the CPA-Zicklin Index of Corporate Political Disclosure and Accountability and as a result, adopted a Political Activities Policy Statement and amended our Nominating and Corporate Governance Committee Charter to provide the Committee with oversight of our lobbying and political contribution activity. The Nominating and Corporate Governance Committee receives an annual report from the Government Affairs team on the Company’s political engagement strategy, including lobbying activities and expenditures made during the past year and the framework for the coming year, and the Board receives quarterly updates on regulatory activities and policy priorities and regular updates on significant policy issues facing the Company. The Company maintains a public policy website that sets out the Company’s views as to regulatory and other policy issues around our business, including the Political Activities Policy Statement. Those are the public policy issues we focus upon through our government affairs efforts.
We have received a stockholder proposal regarding lobbying activities in each of the last three years, similar to the stockholder proposal regarding lobbying activities contained in this proxy statement. The proposal requests that the Company prepare an annual report disclosing the Company’s policies and procedures governing lobbying, payments by the Company for lobbying, membership in organizations that prepare model legislation and a description of management’s decision-making process regarding, and the board’s oversight of, lobbying activities. We received a similar proposal with respect to political spending. Our position on the lobbying activities and political spend proposals are set forth in greater detail under the description of the proposals in this proxy statement.
Director Overboarding. In recent years, some investors have expressed concerns about the number of outside public company boards that certain highly sought-after directors serve on. In addition, some investors and proxy advisors have instituted “bright-line” proxy voting policies on the number of outside public company boards that a director may serve on. The Board acknowledges the worry that such directors could lack the resources to perform all of their obligations to each board. Accordingly the Nominating and Corporate Governance Committee considers all aspects of each director’s contributions, skills and dedication to ensure that each remains an effective director for the Company. The Board realizes that Mr. Maffei, a director on the board and President and Chief Executive Officer of Liberty Broadband, also sits on the boards of several other companies in which Liberty Broadband has an investment or a management relationship, as well as the boards of other companies, as more fully discussed in his Biographical Information above. The Nominating and Corporate Governance Committee has thoroughly evaluated Mr. Maffei’s role in and contributions to the Board, including the significant time and attention he dedicates to the Company, his outside board commitments (which primarily relate to his role with Liberty Broadband and affiliated companies), the overlaps between his service on outside boards and our Board, and Mr. Maffei’s considerable knowledge and experience in the industry. The Nominating and Corporate Governance Committee concluded that Mr. Maffei’s service on outside boards improves, rather than detracts from, his service on the Company’s Board and firmly believes that he will continue to provide the Company with the necessary time and attention to make him an effective director.
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Frequency of a Vote on Executive Compensation. At the 2023 annual stockholders’ meeting, stockholders were presented with an advisory, nonbinding proposal on whether advisory, nonbinding votes on the Company’s executive compensation should be held every one, two or three years. The Company recommended and the stockholders’ voted in favor of a triennial vote. The Board of Directors approved a triennial vote on executive compensation and referred the frequency of holding an advisory vote on executive compensation to the Nominating and Corporate Governance Committee of the Board of Directors for further assessment and subsequent recommendation to the Board of Directors for further consideration. The Committee solicited input from management and key stakeholders on the topic and considered peer data. After consideration, the Committee concluded and recommended to the Board that the Company continue to hold a triennial vote.
EEO-1 Disclosure and Diversity, Equity and Inclusion Reporting. Two stockholder proposals were submitted for consideration at the 2023 annual stockholders’ meeting regarding EEO-1 disclosure and diversity, equity and inclusion reporting. We engaged with the stockholders who submitted those proposals and reached agreement that, subject to regulatory developments, Charter would begin to release, during 2024 or before, its consolidated EEO-1 form, along with the rates of at least two inclusion indicators (hiring, retention or promotion) for its employees, sharing this data by the gender, race and ethnicity categories established by the Equal Employment Opportunity Commission. In exchange, each stockholder proposal proponent withdrew its proposal.
We take seriously the views of our stockholders and took into consideration all the various input we received, and intend to continue our stockholder engagement efforts in 2024.
Stockholder Contact with Directors
Individuals may communicate directly with members of the Board of Directors or members of the Board’s standing committees by writing to the following address:
Charter Communications, Inc.
400 Washington Blvd.
Stamford, CT 06902
Attn: Corporate Secretary
The Corporate Secretary will summarize all correspondence received, subject to the standards below, and periodically forward summaries to the Board of Directors. Members of the Board may at any time request copies of any such correspondence. Communications may be addressed to the attention of the Board of Directors, a standing committee of the Board of Directors, or any individual member of the Board of Directors. Communication that is primarily commercial in nature, relates to an improper or irrelevant topic, or requires investigation to verify its content may not be forwarded. Communications including substantive accounting matters will be forwarded to the Chair of the Audit Committee.
2023 Director Compensation
The non-employee director compensation package for 2023 included an annual retainer of $120,000 in cash or equity as elected by each director. The non-employee director compensation package also included an annual award of $200,000 in restricted stock, except with respect to the Non-Executive Chairman, who received an annual award of $350,000 in restricted stock. In addition to these annual retainers, under the non-employee director compensation package, the Audit Committee chair receives $30,000 per year, the Compensation and Benefits Committee chair receives $25,000 per year, and the Nominating and Corporate Governance Committee chair receives $20,000 per year. Each Audit Committee member (including the chair) receives $30,000 per year, each Compensation and Benefits Committee member (including the chair) receives $25,000 per year, each Finance Committee member receives $20,000 per year and each Nominating and Corporate Governance Committee member (including the chair) receives $20,000 per year. Mr. Winfrey, Charter’s President and Chief Executive Officer, is the only current director who was also an employee during 2023.
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The following table sets forth information regarding the compensation paid or issued to those non-employee members of the Board of Directors listed below, as well as to Mr. Rutledge as a non-employee Director Emeritus, for services rendered for the fiscal year ended December 31, 2023.
Name | Fees Earned or Paid in Cash ($) (1) | Stock Awards ($) (2) | Total ($) | |||||||||
W. Lance Conn | 190,000 | 199,935 | 389,935 | |||||||||
Kim C. Goodman | 30,000 | 319,830 | 349,830 | |||||||||
Craig Jacobson | 20,000 | 319,830 | 339,830 | |||||||||
Gregory B. Maffei | 45,000 | 319,830 | 364,830 | |||||||||
John D. Markley, Jr. | 190,000 | 199,935 | 389,935 | |||||||||
David Merritt | 200,000 | 199,935 | 399,935 | |||||||||
James E. Meyer | 140,000 | 199,935 | 339,935 | |||||||||
Steven A. Miron | 25,000 | 319,830 | 344,830 | |||||||||
Balan Nair | — | 319,830 | 319,830 | |||||||||
Michael A. Newhouse | 160,000 | 199,935 | 359,935 | |||||||||
Mauricio Ramos | 25,000 | 319,830 | 344,830 | |||||||||
Thomas M. Rutledge (Director Emeritus) | — | 127,985 | 127,985 | |||||||||
Eric Zinterhofer | 65,000 | 469,700 | 534,700 | |||||||||
| (1) | Cash compensation to the directors is paid in advance on a quarterly basis. In addition to the annual retainer, Mr. Conn received payments for his service as the Compensation and Benefits Committee chair, as a member of the Compensation and Benefits Committee and as a member of the Finance Committee. Ms. Goodman elected to receive her annual retainer in equity for 2023 and she received payments for her service as a member of the Audit Committee. Mr. Jacobson elected to receive his annual retainer in equity for 2023 and he received payments for his service as a member of the Nominating and Corporate Governance Committee. Mr. Maffei elected to receive his annual retainer in equity for 2023 and he received payments for his service as a member of the Compensation and Benefits Committee and as a member of the Finance Committee. In addition to the annual retainer, Mr. Markley received payments for his service on the Audit Committee, and as chair and as a member of the Nominating and Corporate Governance Committee. In addition to the annual retainer, Mr. Merritt received payments for his service as chair and as a member of the Audit Committee and for his service on the Finance Committee. In addition to the annual retainer, Mr. Meyer received payments for his service as a member of the Nominating and Corporate Governance Committee. Mr. Miron elected to receive his annual retainer in equity for 2023 and he received payments for his service on the Compensation and Benefits Committee. Mr. Nair elected to receive his annual retainer in equity for 2023 and did not serve on any committees during 2023. In addition to the annual retainer, Mr. Newhouse received payments for his service as a member of the Nominating and Corporate Governance Committee and as a member of the Finance Committee. Mr. Ramos elected to receive his annual retainer in equity for 2023 and he received payments for his service on the Compensation and Benefits Committee. Mr. Rutledge elected to receive his annual director emeritus retainer in equity for the period from November 30, 2023 to December 31, 2023 and did not serve on any committees during 2023. Mr. Zinterhofer elected to receive his annual retainer in equity for 2023 and he received payments for his service as a member of the Compensation and Benefits Committee, the Nominating and Corporate Governance Committee and the Finance Committee. |
| (2) | Represents the grant date fair value of restricted stock grants for directors, which were granted on April 24, 2023 and vest one year after the date of grant on April 24, 2024 or, for Mr. Jacobson, which vests on the date of the 2024 annual stockholders’ meeting, April 23, 2024. For Mr. Rutledge only, this amount represents the prorated grant date fair value of the restricted stock grant to Mr. Rutledge on November 30, 2023 which will vest on April 24, 2024. Amounts include the annual equity retainer granted to all directors with a grant date fair value of $199,935 (and $349,804 for Mr. Zinterhofer as the Non-Executive Chairman), except for Mr. Rutledge whose annual director emeritus equity retainer grant had a grant date fair value of $79,891. For Ms. Goodman and Messrs. Jacobson, Maffei, Miron, Nair, Ramos and Zinterhofer, amounts also include the annual retainer that they elected to receive in the form of equity and which had a grant date fair value of $119,895. For Mr. Rutledge, the amount also includes the prorated annual director emeritus retainer that he elected to receive in the form of equity and which had a grant date fair value of $48,094. The grant date fair value amount was calculated in accordance with accounting guidance related to share-based payment transactions. For more information, see “Tax and Accounting” under Compensation Discussion and Analysis. |
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Executive Officers
Our executive officers for purposes of Section 16 of the Exchange Act, listed below, are elected by the Board of Directors annually, and each serves at the pleasure of the Board of Directors or until his or her successor is elected and qualified or until his or her earlier resignation or removal.
Executive Officers | Position | |
Christopher L. Winfrey | President and Chief Executive Officer | |
Richard | President, Product and Technology | |
Jessica M. Fischer | Chief Financial Officer | |
Jamal H. Haughton | Executive Vice President, General Counsel and Corporate | |
Kevin D. Howard
| Executive Vice President, Chief Accounting Officer and | |
R. Adam Ray | Executive Vice President,
|
Information regarding our executive officers, other than Mr. Winfrey who also serves as a director, is set forth below. Information regarding our other senior company leaders is available on the “Investors” section of our website at ir.charter.com.
Richard J. DiGeronimo President, Product and |
Mr. DiGeronimo |
Chief Financial Officer Age: 38 |
Ms. Fischer was named Chief Financial Officer of Charter in October 2021. Ms. Fischer oversees Accounting, Finance, Tax and Risk Management, Procurement, Investor Relations, Internal Audit, Business Intelligence and Corporate Budgeting and Planning. Additionally, she manages Charter’s equity and capital markets strategy and execution, as well as M&A and investing activity. Ms. Fischer most recently served as Executive Vice President, Finance and joined Charter as Corporate Treasurer in 2017. Before joining Charter, she was a partner in the National Tax Department at EY where she advised clients on the tax structuring and implementation of partnership transactions primarily in the media and telecommunications space, including advising Charter on its transactions with Time Warner Cable and Bright House Networks in 2016. She is a graduate of Washington University in St. Louis, where she earned a B.S. in business administration in accounting and managerial economics, and a master of science in business administration with a concentration in accounting.
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Jamal H. Haughton Executive Vice President, General Counsel and Corporate Secretary Age: 49 |
Mr. Haughton joined Charter as Executive Vice President, General Counsel and Corporate Secretary in 2023. Mr. Haughton serves as Charter’s chief legal officer and oversees all legal functions across a broad range of disciplines including corporate, commercial, transactional, litigation, product, and programming, as well as regulatory legal matters. Mr. Haughton joined Charter from Madison Square Garden Entertainment Corp. (MSG Entertainment), where he served as the Company’s Executive Vice President, General Counsel and Corporate Secretary, working closely with executive leadership to support MSG Entertainment’s long-term direction and growth. Prior to MSG Entertainment, Mr. Haughton served as Senior Vice President and General Counsel at Samsung Electronics America, Inc. He served as Samsung’s chief legal officer for the U.S. and was responsible for providing counsel to the CEO and senior leadership on all legal matters affecting Samsung and its subsidiaries. Mr. Haughton spent 10 years at Cablevision Systems Corporation in roles of increasing responsibility. In his last role at Cablevision as Senior Vice President, Associate General Counsel and Assistant Secretary, Mr. Haughton provided ongoing legal counsel to the Board of Directors and senior executive management on corporate governance, public company reporting, corporate finance and major strategic company-wide corporate transactions, including Cablevision’s sale to Altice USA in 2016. Mr. Haughton began his legal career in the New York office of Cravath, Swaine & Moore LLP, where he spent seven years in the firm’s Corporate Practice where he specialized in domestic and cross-border mergers and acquisitions, corporate finance, and securities law matters. Mr. Haughton has been recognized with several industry honors including Chambers’ “Global Top 100 GC Influencers” (2019). Mr. Haughton received his J.D. from Yale Law School and his B.A. from the University of Michigan.
Kevin D. Howard Executive Vice President, |
Mr. |
R. Adam Ray Executive Vice President, Chief Commercial Officer Age: 48 |
Mr. Ray is Executive Vice President,
|
Charter Communications | 22 | 2024 Proxy Statement
Compensation Committee Interlocks
and Insider Participation
During 2023, the Compensation and Benefits Committee consisted of Messrs. Conn, Maffei, Miron, Ramos and Zinterhofer, none of which was an officer or employee of Charter or any of its subsidiaries. See “Certain Relationships and Related Transactions” below for information on related party transactions.
During 2023: (1) none of Charter’s executive officers served on the compensation committee of any other company that has an executive officer currently serving on Charter’s Board of Directors or Compensation and Benefits Committee; and (2) none of Charter’s executive officers served as a director of another entity in circumstances where an executive officer of that entity served on the Compensation and Benefits Committee of Charter’s Board of Directors.
Report of the Compensation and Benefits Committee
Scott Weber, 62, Executive Vice President, Network Operations.Mr. Weber joined Charter as Executive Vice President, Network Operations on June 18, 2012. Prior to joining Charter, Mr. Weber served as Executive Vice President, Engineering Network Management for Cablevision from January 2007 through January 2012. Mr. Weber is a member of Society of Cable Telecommunications Engineers, Institute of Electrical and Electronics Engineers and American Radio Relay League.
Compensation Committee Interlocks and Insider Participation
During 2017, no member of Charter’s Compensation and Benefits Committee was an officer or employee of Charter or any of its subsidiaries. Mr. Zinterhofer has served as Lead Independent Director since the closing of the Transactions on May 18, 2016. Mr. Rutledge has served as Chairman of the Board since the closing of the Transactions.
During 2017: (1) none of Charter’s executive officers served on the compensation committee of any other company that has an executive officer currently serving on Charter’s board of directors or Compensation and Benefits Committee; and (2) none of Charter’s executive officers served as a director of another entity, one of whose executive officers served on the Compensation and Benefits Committee.
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Report of the Compensation and Benefits Committee
The following report does not constitute soliciting materials and is not considered filed or incorporated by reference into any other filing under the Securities Act of 1933, as amended, or the Securities Exchange Act, of 1934, as amended, unless we specifically state otherwise.
The Compensation and Benefits Committee has reviewed and discussed with management the Compensation Discussion and Analysis set forth below including the accompanying tables and recommended to the board of directors that it be included in this proxy statement.
W. LANCE CONN, Chairman
GREGORY B. MAFFEI
STEVEN A. MIRON
MAURICIO RAMOS
ERIC L. ZINTERHOFER
19Charter Communications | 23 | 2024 Proxy Statement
COMPENSATION DISCUSSION AND ANALYSISCompensation Discussion and Analysis
This Compensation Discussion and Analysis (“CD&A”) describes important elements of our executive compensation program and compensation decisions for our named executive officers (“NEOs”) in fiscal year 2017.2023. The Compensation and Benefits Committee of our Board of Directors (the “Committee”), working with management and with input from its independent compensation consultant, oversees these programs and determines compensation for our NEOs. This CD&A should be read together with the compensation tables and related disclosures set forth elsewhere in this proxy statement.
Fiscal Year 20172023 Named Executive Officers
Thomas M. Rutledge; Chairman and Chief Executive Officer
| • | Christopher L. Winfrey, President and Chief Executive Officer |
John Bickham; President and Chief Operating Officer
| • | Richard J. DiGeronimo, President, Product & Technology |
David G. Ellen; Senior Executive Vice President
| • | Jessica M. Fischer, Chief Financial Officer |
Christopher L. Winfrey; Chief Financial Officer
| • | Kevin D. Howard, EVP, Chief Accounting Officer & Controller |
| • | R. Adam Ray, EVP, Chief Commercial Officer |
Kevin Howard; Senior Vice President, Finance – Controller and Chief Accounting Officer
| • | Thomas M. Rutledge, Board Member Emeritus (previously served as Executive Chairman until his retirement effective November 30, 2023) |
Executive Summary
Fiscal 20172023 Operational and Financial Highlights
Over the courseIn 2023, Charter achieved a number of 2017, Charterimportant successes with respect to its multi-year network evolution and expansion initiatives. First, we added 295,000 new subsidized rural passings, with a penetration rate of nearly 50% (after 12 months) that continues to grow. Second, we continued to successfully integrate legacy businessesenhance our network to deliver multi-gig speeds across our entire footprint, with work on track to be completed by the end of 2026 at a low cost of approximately $100 per passing. Finally, we further advanced the development and completed theroll-outconvergence of our high-value Spectrum pricing, packaging and brand across the legacy Time Warner Cable and legacy Bright House residential and small and medium business footprints. The harmonization of Charter’s operations and product offerings, overincluding:
| • | Continued strong performance of the high-value Spectrum One bundle of internet and mobile products; and |
| • | The launch of our industry-leading Xumo platform that allows customers across our entire footprint to access linear and direct-to-consumer content within an easy-to-use interface. |
These accomplishments position Charter well for future growth through the delivery of high-quality connectivity and video products to consumers and, for the fiscal year was reflected in our strong topended December 31, 2023, translated into the following operational and bottom-line growth: total customer relationships grew by 984,000 or 3.8% (excluding the impact of customer activity related to Legacy Bright House’s seasonal customer plan in 2016), revenue increased by 3.9% to $41.6 billion, and Adjusted EBITDA rose 5.8% to $15.3 billion (all numbers are on a pro forma basis).financial performance milestones:
With respect to delivering value to shareholders —
| • | Mobile lines grew by 2.5 million, Internet customers by 155,000; 13% of Internet customers now have Spectrum Mobile |
| • | Revenue grew by 1.1% to $54.6 billion |
| • | Adjusted EBITDA grew by 1.3% to $21.9 billion(1) |
| • | Generated free cash flow of $3.5 billion(1) |
| • | Charter also purchased approximately 9.0 million shares of Charter Class A common stock and Charter Holdings common units for approximately $3.6 billion in 2023 at an average price per share of $396.65. |
| (1) | See “Non-GAAP Financial Measures” in Appendix A. |
Charter purchased approximately 38.2 million shares of Charter Class A common stock and Charter Holdings common units for approximately $13.2 billion and saw continued stock price growth, with an annual increase of 16.7% based on the 2017year-end stock price of $335.96. Communications | 24 | 2024 Proxy Statement
The graph below tracks Charter’s5-year total shareholder return (TSR) against the S&P 500 and peer groupPrimary Peer Group companies. No changes were made to Charter’s Primary or Secondary Peer Groups in 2023 (the Secondary Peer Group is not included on the graph). See “Compensation Peer Groups” section below for further details on Charter’s Primary and Secondary Peer Groups.
COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN*
Among Charter Communications, Inc., the S&P 500 Index,
and a Peer Group
20
Each year, the Committee works closely with the CEO, management and the Committee’s consultants in talent planning and managing executive transitions for the Company’s executive officers. The work conducted includes promoting or hiring executives in connection with the expansion and transition of responsibilities, conducting talent development processes to support such activity, and crafting the proper compensation packages and incentives. The Committee believes this process has been effective at progressing Charter’s highly experienced management team and maintaining the focus to deliver on Charter’s strategies for growth and value creation. Following significant talent activity in 2022, including the transition of the CEO role from Mr. Rutledge to Mr. Winfrey and the promotion of Mr. DiGeronimo to President, Product & Technology, there were no promotions or role changes among the Named Executive Officers in 2023, with the exception of Mr. Rutledge’s retirement effective November 30, 2023 as previously planned and pursuant to his employment agreement and his appointment as Board Member Emeritus effective November 30, 2023.
Compensation Structure & Pay for Performance Alignment
Charter structures its NEO compensation packages to provide a total opportunity that is competitive against the median of Charter’s compensation programs are designed topeer group, create a strong linkage between the actual compensation earned by our NEOs and Company performance, rewardingand reward both growth-oriented annual operating results as well as sustainable long-term shareholder returns.
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The following table summarizes the performance-focused natureelements of Charter’s incentive designs in 20172023 and the key outcomes demonstrating theresulting alignment between compensation realized by our NEOs and results achieved by the Company.
Summary of 2023 Performance-Oriented Incentive Program Designs
Annual Incentive Plan
| • | Annual cash incentive with target opportunities based on a percentage of base salary and representing a meaningful portion of the overall cash compensation mix — all NEOs participated in the annual incentive plan with target bonus opportunities ranging from 85% to 250% of base salary, tying a substantial portion of cash compensation to the achievement of financial results and strategic business objectives. | ||
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5-Year Performance-Based Equity Program (the “2023 Performance Equity Program”)
| • | Special equity program providing multiple years of long-term incentive value in a single grant, aligning with multi-year strategic business initiatives — all NEOs except for Mr. Rutledge participated in the 2023 Performance Equity Program, with awards made to program participants in February. Under the program, each participant received a target award value equal to 5x their annual long-term incentive guideline, less value already delivered through the annual long-term incentive plan in January. By combining equity award value that would ordinarily be granted in future years into a single grant with vesting |
| • | Option-heavy award mix that mirrors the annual long-term incentive plan and emphasizes stock price appreciation — all participants received grants such that, of the total number of options and units granted, 90% of such total was stock options and 10% was RSUs. This is comparable to the mix for the annual long-term incentive plan (which uses a |
Charter Communications | 26 | 2024 Proxy Statement
mix of 90% stock options and 10% RSUs, based on the allocation of value between the different vehicles versus the overall number of options and units granted) and ties the substantial majority of value realized to stock price appreciation. |
| • | Time-based vesting period of 3 to 5 years, longer than the 3-year cliff vesting schedule used in the annual long-term incentive plan and aligning with the 5-year period over which the program is intended to deliver value — grants are subject to time-based vesting criteria with equal components of the award becoming eligible to vest (subject to additional performance criteria) on each of the third, fourth and fifth anniversaries of the grant date. This vesting structure provides a longer time horizon over which awards are earned relative to the annual long-term incentive plan, consistent with the multiple years of award value delivered under the program. |
| • | Performance-based vesting criteria that tie vesting to the achievement of targeted levels of stock price appreciation — in addition to time-based vesting criteria, awards under the 2023 Performance Equity Program require the achievement of significant increases to Charter’s stock price in order to vest, with each tranche of stock options and RSUs having an associated stock price hurdle that must be achieved in order for that tranche to vest. There are a total of six price hurdles ranging from $507 to $1,000 and representing between 28% to 152% stock price growth relative to the February 10, 2023 closing stock price of $396.94 (the reference point used by the Committee and the Board when approving performance objectives for the program). These levels of price appreciation correspond to 5-year compound annual growth rates between 5% and 20%, and if a price hurdle is not achieved by the sixth anniversary of the grant date then the associated stock options and RSUs will be forfeited. The specific time and performance-vesting requirements of stock options and RSUs under the 2023 Performance Equity Program, along with other relevant terms and conditions of these awards, are described further in the Long-Term Incentives section of this CD&A. |
| • | No accelerated vesting upon any involuntary termination or voluntary resignation occurring outside of a change in control — accelerated vesting is only provided in circumstances where the associated price hurdle has been achieved and either (i) the termination is due to death or disability, or (ii) an involuntary termination without cause or voluntary resignation for good reason in connection with a change in control. This treatment is an important shareholder protection mechanism and ensures that participants only recognize value from the program in connection with the achievement of stock price appreciation over a multi-year time horizon. |
Long-Term Incentive Program Aligns Pay and Performance
Since the completion of the Transactions, Charter has had the same general approach to incentive design. Specifically, Charter’s philosophy has been to deliver the largest portion of NEO compensation in the form of long-term incentives tied to stock price appreciation, i.e., stock options. These long-term awards have either been delivered through annual grants of time-vested awards or as part of special, multi-year performance-based equity programs. In each case, awards utilize an option-heavy mix, and the multi-year programs further incentivize price appreciation by granting multiple years of value up-front and tying such value to additional stock price hurdle vesting requirements. Over time, Charter’s consistent approach to long-term incentive design has created a strong linkage between compensation realized by NEOs and sustained stock price growth over the long-term. From the time of the Transactions, Charter’s stock price performance can be summarized as follows:
| • | Over an approximately 5-year period, Charter achieved significant stock price growth, increasing 261% from $227.41 (the closing price of Charter’s Class A common stock on May 18, 2016) to a high of $821.01 (the closing stock price on September 2, 2021). |
| • | Over the following year, driven by an overall reduction in equity market valuations (in part due to an inflationary macroeconomic environment and rising interest rates) and a slowdown in growth resulting largely from the post-pandemic reduction in move volume and increased competition, the stock price declined by 63% to a low of $303.35 (the closing stock price on September 30, 2022). |
| • | Charter’s stock price subsequently moved higher as Charter remained focused on the execution of multi-year network evolution and expansion initiatives that are critical drivers of future value, increasing by 28% to $388.68 (the closing stock price on December 29, 2023). |
Over this same time period, the consistent application of Charter’s long-term incentive design philosophy has resulted in both a significant degree of performance accountability as well as a balanced forward-looking incentive profile for our NEOs. Of currently outstanding, unvested NEO equity awards:
| • | The 2021 and 2022 annual stock option grants (vesting in 2024 and 2025) are underwater with grant prices of $625.55 and $588.825 and require price appreciation of 61% and 51% (from Charter’s December 29, 2023 closing |
Charter Communications | 27 | 2024 Proxy Statement
stock price), respectively, to be at-the-money. These stock options, which represented at least 90% of the long-term incentive mix in each year, demonstrate how the long-term incentive plan creates accountability for sustained stock price growth, with future shareholder returns needing to meet and exceed previously achieved levels in order for NEOs to realize value from these historical awards. |
| • | The 2023 annual stock option awards (vesting in 2026) have a grant price of $387.375, approximately equal to the December 29, 2023 closing stock price. These stock options therefore provide NEOs with an incentive to drive stock price growth from current levels, in particular relative to the 2021 and 2022 awards which will not generate value until Charter’s stock price has grown substantially above current levels. |
| • | Stock options granted under the 2023 Performance-Based Equity Program (eligible to vest over 2026 – 2029) have a grant price of $380.53 and have vesting tied to the achievement of price hurdles ranging from $507 to $1,000. These stock options provide significant earnings opportunity for price appreciation from current levels, but such value can only be realized upon the achievement of specific price appreciation objectives between 3 to 5 years after |
Charter believes that the above stock price performance and long-term incentive outcomes demonstrate the desired alignment between NEO compensation opportunities and long-term shareholder value creation. This alignment is further illustrated in the Pay Versus Performance disclosure on page 79 of this proxy statement.
Mix of Pay
Charter’s compensation structure for the NEOs results in an overall mix of pay that is highly performance-based, particularly with respect to the proportion of compensation tied to stock price appreciation via stock options and without taking into account the performance-based incentives derived from previously vested equity awards. The compensation mix delivered in 2023 to the CEO, other NEOs, and the Executive Chairman, based on the values disclosed in the Summary Compensation Table, was as follows:
Charter Communications | 28 | 2024 Proxy Statement
Were awards under the 2023 Performance Equity Program to be annualized over 5-years (i.e., through the last vesting date), the mix was as follows for the CEO and Other NEOs (excluding Mr. Rutledge who did not participate in the program):
Compensation Actions in 2023
The Committee established 2023 compensation actions for the NEOs within the framework of the Committee’s compensation philosophy and in accordance with the section below regarding the process for determining executive compensation. Key elements of the Committee’s process include comparing compensation levels against industry and size-appropriate peer group companies, designing pay for performance incentive programs, linking a significant majority of pay to sustained stock price growth, and ensuring that outstanding incentive value appropriately motivates and retains NEOs. Through this approach, the Committee entered into or amended employment agreements, determined any appropriate changes to NEO compensation levels, and established annual and long-term incentive designs for the 2023 fiscal year. The actions undertaken by the Committee for 2023 included the following:
| 1. | Amended the employment agreements for Messrs. Winfrey and DiGeronimo effective February 22, 2023 in connection with equity awards made under the 2023 Performance Equity Program on the same date. |
The amendments to the employment agreements for Messrs. Winfrey and DiGeronimo removed references to future annual equity grants and excluded grants made under the 2023 Performance Equity Program from the section that related to the treatment of certain equity incentive awards upon termination. Specifically, the amendments clarified that 2023 Performance Equity Program grants are not subject to comparable treatment upon termination as other awards made pursuant to the original employment agreements. Such awards are generally subject to full vesting upon death or disability and accelerated pro rata vesting for a termination without cause or resignation for good reason and, for Mr. Winfrey, continued vesting for a termination due to non-renewal following the expiration of the term of his employment agreement. Per the terms of the respective grant agreements, the 2023 Performance Equity Program awards are only eligible for accelerated vesting upon death or disability or upon a termination without cause or resignation for good reason in connection with a change in control, and in each case only to the extent that the associated price hurdles have been satisfied as of such date. For Mr. Winfrey, upon a termination in connection with the non-renewal of his employment agreement, the 2023 Performance Equity Program awards also remain subject to continued vesting for an additional two years following such termination, but contingent upon the time-based and performance vesting criteria being achieved during that period.
Charter Communications | 29 | 2024 Proxy Statement
| 2. | Entered into a new employment agreement with Ms. Fischer in connection with her continued service as Chief Financial Officer. |
In December 2022, the Committee approved entering into a new employment agreement with Ms. Fischer, increasing her long-term incentive opportunity from $3.5 million to $5.5 million effective with the annual equity grant on January 17, 2023 and increasing her base salary to $800,000 as of the February 5, 2023 effective date of the new employment agreement. Ms. Fischer’s annual bonus opportunity remained at 150% of base salary. The agreement has an initial term through February 5, 2025, and Ms. Fischer’s resulting annual compensation package is as follows:
Pay Element | Prior | New | ||
| $700,000 | $800,000* | ||
Annual Incentive | 150% of | 150% of | ||
Long-Term Incentive | $3.5 million | $5.5 million** |
| * | Effective as of the |
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Under Charter’s 2023 annual incentive plan design, all NEOs were eligible to earn a cash incentive ranging from 0% to 150% of their target annual incentive opportunity, which is set as a percentage of their annual base salary. Actual performance achievement against the plan’s financial metrics and strategic objectives determined the actual payouts received under the plan. The metrics, weightings and performance ranges were as follows:
Metric | Weighting (All NEOs) | Threshold / Maximum Performance (% of Target) | ||
Revenue | 20.0% | 98.0% / 101.0% | ||
Adjusted EBITDA | 60.0% | 96.5% / 102.0% | ||
Strategic Objectives | 20.0% | N/A |
Strategic objectives related to Capital and Free Cash Flow Management and the execution of Network Evolution and Network Expansion Initiatives for all NEOs.
| 4. | Granted annual equity awards to Messrs. Winfrey, DiGeronimo, Howard, |
All NEOs received grants under Charter’s annual equity program on January 17, 2023 based on their long-term incentive opportunities then in effect. Messrs. Winfrey, DiGeronimo, and Rutledge’s long-term incentive opportunities were as set forth in their employment agreements dated September 20, 2022. The individual grant values and equity mixes were as follows:
Executive | Annual LTI Grant Guideline | Equity Mix | ||
Christopher L. Winfrey | $17.0 million | 100% stock | ||
Richard J. DiGeronimo | $10.0 million | 90% stock options | ||
Jessica M. Fischer | $5.5 million | 90% stock options / 10% RSUs | ||
Kevin D. Howard | $1.5 million | 90% stock options / 10% RSUs | ||
R. Adam Ray | $3.0 million | 90% stock options / 10% RSUs | ||
Thomas M. Rutledge | $15.0 million | 100% stock options | ||
Compensation Actions
Charter Communications | 30 | 2024 Proxy Statement
| 5. | Granted equity awards under the 2023 Performance Equity Program to Messrs. Winfrey, DiGeronimo, Howard, Ray and Ms. Fischer on February 22, 2023. |
Except for Mr. Rutledge, all NEOs participated in 2017
and received grants under Charter’s 5-year performance-based equity program on February 22, 2023. The Committee’s compensation decisions forvalue granted to each NEO was equal to 5x their annual LTI grant guideline less the NEOs in 2017value granted under the annual equity program on January 17, 2023. The individual grant values under the program were shaped by the compensation actions which occurred in the prior year (2016) in connection with the Time Warner Cable and Bright House Networks transactions, in particular:as follows:
Executive | Annual LTI Grant Guideline | 5-Year LTI Value | Net Value Granted under 2023 Performance Equity Program | |||||||
Christopher L. Winfrey | $17.0 million | $85.0 million | $68.0 million | |||||||
Richard J. DiGeronimo | $10.0 million | $50.0 million | $40.0 million | |||||||
Jessica M. Fischer | $ 5.5 million | $27.5 million | $22.0 million | |||||||
Kevin D. Howard | $ 1.5 million | $ 7.5 million | $ 6.0 million | |||||||
R. Adam Ray | $ 3.0 million | $15.0 million | $12.0 million | |||||||
NewApart from the actions described above, there were otherwise no changes to the base salary, annual incentive and long-term incentive levelscompensation for our NEOs commensuratethe NEOs.
See the “Employment Agreements” section below for additional information on the employment agreements for the NEOs.
Compensation Actions in 2024
In addition to the above, in December 2023 the Committee approved a two-year renewal of Mr. Ray’s employment agreement, increasing his base salary from $625,000 to $725,000 and his target long-term incentive opportunity from $3.0 million to $3.75 million as of the January 19, 2024 effective date of the amended agreement. In connection with the substantially expanded scope of their roles following the transactions.
The establishment of a five-yearincrease to Mr. Ray’s long-term incentive program, as described in the discussion of Pay for Performance Alignment above, for all NEOs except Mr. Howard.
Within the context of these actions taken in 2016,opportunity, the Committee determinedalso approved an off-cycle equity award of $750,000, equal to the followingincrease in connection with its review of NEO compensation levels and incentive designs for the 2017 fiscal year:
No further adjustments to base salary, annual incentive orhis target long-term incentive levels were necessaryopportunity, with a January 19, 2024 grant date. The award was delivered in a mix of 90% stock options and 10% RSUs, vests on the third anniversary of the grant date and provides a 10-year term to exercise stock options. The number of stock options granted equals the portion of the executive’s grant value allocated to stock options divided by the Black-Scholes value per stock option at grant, and the number of RSUs granted equals the portion of the grant value allocated to RSUs divided by the grant price (the average of the high and low prices of Charter common stock on the date of grant).
In December 2023, the Committee also approved the Company’s annual equity program for Messrs. Rutledge, Bickham, Ellen and Winfrey. These2024, with awards under the program granted on January 16, 2024 to all eligible employees. However, none of the NEOs also did not receive anyreceived awards under the annual equity awards during the 2017 fiscal year givenprogram due to their participation in the five-year long-term incentive program.
Mr. Howard’s2023 Performance Equity Program. When determining and approving equity awards to executives, the Committee has consistently authorized the annual salary was increased as partequity awards to be effective in mid-January of each year, and the Committee has not taken into account any fluctuations in Charter’s stock price with respect to the timing of the Company’s annual salary review process in February and his annual incentive and long-term incentive opportunities were increased in April. These incentive increases applied for the full-year and were based on the continued increase in scope of Mr. Howard’s role and his level of strategic influence within Charter. As Mr. Howard participates in the Company’s annual long-term incentive program, the Committee also approved twoawards or any other equity awards for him in 2017 — one at the time of our annual grants in January and a second in April following the increase to his long-term incentive opportunity.
granted.
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A formulaic annual incentive plan design was established for the full 2017 fiscal year, tied to the achievement of revenue, Adjusted EBITDA and Capital Management objectives and comparable to what was in place for the first half of 2016 and prior years.
Process for Determining Executive Compensation
Role of the CEO and Compensation and Benefits Committee
The Compensation and Benefits Committee of our Board of Directors is responsible for overseeing our overall compensation structure, policies and programs and assessing whether our compensation structure results in appropriate compensation levels and incentives for executive management and employees.management.
PayThe Committee determines the pay levels for our NEOs are determined by the Committeein consideration of a number of factors and within the framework of the Company’s compensation philosophy, as described below, and in consideration of a number of factors, includingbelow. Factors considered include each individual’s rolesrole and responsibilities within Charter, the individual’s experience and expertise, pay levels for comparable peer positions both within Charter and in the competitive marketplace, and performance of the individual and Charter as a whole. In determining thesesetting pay levels for each element of compensation, the Compensation and Benefits Committee considers all forms of compensation and benefits.benefits and the resulting impact on total value delivered to the executive.
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Each year, the CEO reviews the performance of each of the other NEOs and recommends both compensation adjustments based on overall competitiveness and effectiveness of the compensation program as well as actual bonus payouts under the annual incentive plan in light of performance against the objectives approved by the Committee. The Committee regularly meets in executive session to consider these matters, and while the Committee considers the CEO’s recommendations along with analysis provided by the Committee’s compensation consultants,consultant, it retains full discretion to set all compensation for our NEOs other than the CEO. With respect to the CEO, the Committee recommends the CEO’s compensation to Charter’s full Board of Directors, withnon-employee directors voting on the approval of any recommendations, subject to any employment agreements.
Role of the Independent Compensation Consultant
The Committee has retained Semler Brossy Consulting Group, LLC (“Semler Brossy”) to serve as its independent compensation consultant and assist in fulfilling its responsibilities. Semler Brossy is engaged by and reports directly to the Committee, providing recommendations and advice related to all aspects of Charter’s executive compensation program. As necessary, Semler Brossy works with management to obtain information necessary to develop their recommendations.
During the year ended December 31, 2017,2023, Semler Brossy provided no services to Charter other than those provided directly to or for the benefit of the Committee, including: attending meetings; providing information, research and analysis pertaining to executive compensation programs; conducting a comprehensive assessment of our annual executive compensation program relative to competitive markets;our peer groups and broader industry data; updating the Committee on market trends and changing practices; and advising on the design of the executive compensation program and the reasonableness of individual compensation targets and awards.awards, including the design of the 2023 Performance Equity Program and the amount of compensation delivered through the program. The Committee has determined that there was no conflict of interest between its compensation consultant and the Committee during the year ended December 31, 2017.2023.
Compensation Philosophy and Competitive Positioning
Since 2016, theThe Committee has appliedapplies the following pay philosophy for purposes of setting NEO compensation and designing annual and long-term incentive programs that motivate performance:the performance and retention of our NEOs:
| 1. | Base salary, |
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| 2. | Annual incentive design that rewards the achievement of meaningful year-over-year growth in revenue and Adjusted EBITDA and the |
| 3. | Long-term equity |
Compensation Peer Groups
The Committee maintains a Primary Peer Group and Secondary Peer Group and examines these peer groups on an annual basis. The Committee uses the following criteria to identify members of the Primary Peer Group:
| • | North American publicly traded companies, in particular internet providers and organizations in the |
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Structured to not deliver any value for performance below 30% stock price growth over asix-year period
Potential value realizable by participants targeted at the median of the compensation peer group when stock price growth reaches approximately 70% over asix-year period
Potential value realizable by participants targeted to reach or exceed the 75th percentile of the compensation peer group when stock price growth is at or above approximately 125% over asix-year period
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Long-term incentive grant value targeted at or above the median of the peer group, delivered in a mix of RSUs and stock options, vesting 100% after a three-year period
The proportion of stock options awarded at each participant level is aligned with that level’sline-of-sight to the Company’s stock price performance (i.e., greater emphasis on stock price appreciation for more senior level participants)
In adopting the equity compensation philosophy for our EVP and above NEOs, the Committee shifted from a traditional analysis of peer group grant date value (value of long-term incentive award on date of grant and as reported in the Summary Compensation Table) to a more dynamic approach that calibrates actual value received under particular stock price performance scenarios. With the completion of the Time Warner Cable and Bright House Networks transactions, the Committee believed that a more robust model was required at this level based on the potential value that could be created by the Company over the next six years. The philosophy at the SVP level, which applies for Mr. Howard, continues to reflect the Company’s traditional approach that sets long-term incentives based on the competitive grant values observed among peer companies.
Compensation Peer Group
The Committee examines Charter’s peer group on an annual basis. Due to the Company’s increased size post-transactions, the Committee approved the following criteria to identify peers:
North American publicly traded companies
Size: Approximately $10 billion to $100 billion in annual revenue (0.33x to 2.5x the combined Company’s revenue)
Relevant Industries: Cable & Satellite, Integrated Telecommunication Services and Wireless Telecommunications, Movies & Entertainment and Broadcast
Following the addition of AT&T and Verizon to the peer group in 2016, the Committee did not identify any additional peer group changes in 2017
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Relevant Industries: Cable & Satellite, Integrated Telecommunication Services and Wireless Telecommunications, Movies & Entertainment and Broadcast | ||||||
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In addition to the peer group,Primary Peer Group, the Committee also examines the executive compensation practices of other larger publicly traded, consumer-oriented companies, which compose the secondarySecondary Peer Group.
Charter Communications | 32 | 2024 Proxy Statement
In 2023, the Committee reviewed the composition of the peer group:groups, including the impact of merger and acquisition activity on companies within the groups, and determined that no changes to either peer group were necessary.
| Primary Peer Group | ||||||
AT&T Inc. | Fox Corp. | Paramount Global | Warner Bros. Discovery, Inc. | |||
| Cisco Systems, Inc. | Liberty Global Plc | The Walt Disney Company | ||||
| Comcast Corporation | Lumen Technologies, Inc. | T-Mobile US, Inc. | ||||
| DISH Network Corp. | Netflix, Inc. | Verizon Communications Inc. | ||||
| Secondary Peer Group | ||||||
| 3M | IBM | Pfizer Inc. | The Kraft Heinz Co. | |||
| American Express | ||||||
| Johnson & Johnson | ||||||
| Merck & Co., Inc. | ||||||
| Caterpillar | Mondelez International, Inc. | Qualcomm | ||||
| Gilead Sciences, Inc. | Nike, Inc. | Raytheon Technologies | ||||
| Honeywell International, Inc. | PepsiCo, Inc. | The Coca-Cola Co. | ||||
Elements of Compensation
Base Salary
We setCharter sets base salaries with regard to the level of the individual’s position with Charter and the individual’s current and sustained performance results. The Committee annually reviews base salary levels for the NEOs and determines any necessary changes in those salary levels. Adjustments to base salary levels may be based on factors such as new roles and responsibilities assumed by the executive or the executive’s impact on our then-current goals and business objectives. Salary adjustmentsThe Committee may also be based on changesmake salary adjustments in consideration of competitive market pay levels for comparable positions in the competitive market for executive talent.positions.
Charter does not apply specific weighting to any one factor in setting the level of salary, and the process ultimately relies on the Committee’s judgment. Although we generally target salaries at market median compared to an industry peer group and other compensation survey data for experienced executives, the Committee may also take into account historical compensation, potential as a key contributor, and special recruiting or retention situations when deciding to set salaries for individual executives relative to market median pay levels. Consistent with our pay philosophy and taking into consideration the factors set forth above, salary increases are neither automatic nor the same for each individual.
The Committee reviewed base salaries for our NEOs in 2017leading up to and approved a 3.3% salary increase for Mr. Howard, effective February 17, 2017 as part of the Company’s annual salary review process during which salary increase recommendations are reviewed and approved in consideration of employee performance and development over the year. Mr. Howard’s increase therefore reflects the Committee’s evaluation of his performance, contributions and development over the course of 2016.2023, with the only base salary change in 2023 relating to Ms. Fischer, whose base salary increased from $700,000 to $800,000 as of the February 5, 2023 effective date of her new employment agreement with the Company. In setting Ms. Fischer’s new base salary, the Committee considered the factors noted above, in particular her performance and contributions since assuming the role of Chief Financial Officer in October 2021. For our other NEOs, the Committee determined that no base salary adjustments were necessary and that compensation packages established in 2016 in connection with the Time Warner Cable and Bright House Networks transactions (except for Mr. Ellen, who was hired after the transactions) continued to be appropriate.at this time.
Executive Officer | 2017 Base Salary | Change from Prior Year | ||||
Thomas M. Rutledge | $ | 2,000,000 | None | |||
John Bickham | $ | 1,500,000 | None | |||
David G. Ellen | $ | 1,250,000 | None | |||
Christopher L. Winfrey | $ | 850,000 | None | |||
Kevin Howard | $ | 423,325 | 3.25% increase (from $410,000) | |||
Executive Officer | Base Salary as of December 31, 2023 | Change from Prior Year | ||||
Christopher L. Winfrey | $1,700,000 | None | ||||
Richard J. DiGeronimo | $1,450,000 | None | ||||
Jessica M. Fischer | $ 800,000 | 14.3% increase from $700,000 effective February 5, 2023 | ||||
Kevin D. Howard | $ 600,000 | None | ||||
R. Adam Ray | $ 625,000 | None | ||||
Thomas M. Rutledge | $1,250,000 | * | None | |||
| * | Mr. Rutledge retired effective November 30, 2023 after which time he no longer received a base salary. |
Charter Communications | 33 | 2024 Proxy Statement
Annual Incentive Plan
Charter has established the Annual Incentive Plan for the NEOs to provide a cash-based incentive whichthat rewards the achievement of strong annual operational and financial results.results and drives annual progress for key strategic objectives. Each year, the actual amount of
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compensation earned by participants under the plan is dependent upon performance againstpre-established objectives which are set and approved by the Committee. TheIn determining the particular performance metrics under the plan, are selected based onthe Committee selects what the Committeeit believes to be the best annual financial and operational metrics that support long-term success and are most closely tiedwith the strongest linkage to the creation of shareholder value.value creation. When establishing the particular threshold, target and maximum performance objectives for each plan metric, the Committee seeks to set goals that represent challenging but attainable year-over-year improvement in Company performance.
For fiscal year 2017,2023, the Annual Incentive Plan for our NEOs was based onutilized both financial measures of top and bottom-line performance as well as strategic objectives that represented operating priorities important to the achievementsuccess of both growth-based objectives with respect to Charter’s consolidatedbusiness. The financial metrics under the plan were total revenue (weighted 20%) and total Adjusted EBITDA (weighted 40%60%). The strategic objectives that applied to all NEOs under the plan were Capital and 50%, respectively) as well as a discretionary evaluation of the Company’s CapitalFree Cash Flow Management over the year (weighted 10%) and the execution of Network Evolution and Expansion Initiatives (weighted 10%).
Payouts under the Annual Incentive Plan were set to range from 80%60% to 150% of each NEO’s target annual incentive opportunity based on the actual performance achieved against the Committee-approved goals for each metric.
Charter’s actual 2017 revenue and Adjusted EBITDA results represented strong year-over-year growth, falling between threshold and targeted performance levels, resulting in payout levels that were below target. In addition, the Committee evaluated the Company’s performance with respect to Capital Management, and approved a payout of 100% of target for the corresponding component of annual incentives. The resulting overall annual incentive payout, summarized in the table below, was 91.5% of the target annual incentive for all NEOs.
Metric | Target ($ million) | Actual Performance ($ million) | Payout % | Weighting % | Weighted Payout % | |||||||||||||||
Total Revenue Growth | $ | 1,892.2 | $ | 1,558.0 | 93.42 | % | 40 | % | 37.37 | % | ||||||||||
Adjusted EBITDA Growth | $ | 1,166.4 | $ | 805.0 | 88.26 | % | 50 | % | 44.13 | % | ||||||||||
Capital Management | Discretionary Assessment | 100.00 | % | 10 | % | 10.00 | % | |||||||||||||
Total | 100 | % | 91.50 | % | ||||||||||||||||
Note: Adjusted EBITDA is defined as consolidated net income (loss) plus net interest expense, income taxes, depreciation and amortization, stock compensation expense, loss on extinguishment of debt, (gain) loss on derivative instruments, net, other pension benefits, other (income) expense, net and other operating (income) expenses, such as merger, acquisition and transition costs, special charges and (gain) loss on sale or retirement of assets. Capital Management is anafter-the-fact, objective evaluation of our capital spend by the Committee.
In setting target annual incentive opportunities for our NEOs each year, the Committee reviews current opportunities relative to those among peer group companies and also evaluates criteria with respect to each NEO’s particular role, including changes in scope and complexity, impact on Company strategy, and degree of enterprise-wide influence. Based on these factors, the Committee approved an increase in Mr. Howard’s target annual incentive opportunity from 65% of base salary to 70% of base salary, with such change being in effect for the full 2017 fiscal year. The Committee determined that no annual incentive adjustments were necessary for our other NEOs as the changes put in place for them in 2016 continued to be competitive and appropriate for their roles. Target annual incentive opportunities and actual incentive payouts, based on the performance achievement detailed above, are summarized below for each of our NEOs.
Executive Officer | Base Salary | Target Annual Incentive | Actual Annual Incentive | |||||||||||||||||
| % of Base Salary | $ Value | % of Target | $ Value | |||||||||||||||||
Thomas M. Rutledge | $ | 2,000,000 | 300 | % | $ | 6,000,000 | 91.50 | % | $ | 5,489,856 | ||||||||||
John Bickham | $ | 1,500,000 | 200 | % | $ | 3,000,000 | 91.50 | % | $ | 2,744,928 | ||||||||||
David G. Ellen | $ | 1,250,000 | 160 | % | $ | 2,000,000 | 91.50 | % | $ | 1,829,952 | ||||||||||
Christopher L. Winfrey | $ | 850,000 | 150 | % | $ | 1,275,000 | 91.50 | % | $ | 1,166,594 | ||||||||||
Kevin Howard | $ | 423,325 | 70 | % | $ | 296,328 | 91.50 | % | $ | 271,133 | ||||||||||
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The Committeealso has the discretion to increase or decrease payouts under the Annual Incentive Plan based on organizational considerations, such as acquisitions or significant transactions and performance considerations, such as changes in products or markets and other unusual, unforeseen or exogenous situations. For 2017,
Based on Charter’s 2023 performance achievement against the Annual Incentive Plan’s revenue and Adjusted EBITDA goals and strategic objectives, the Committee did not exercise any such discretion toapproved an overall incentive payout of 82.35% of the target annual incentives for the NEOs. With respect to the financial performance objectives, Charter’s 2023 revenue and Adjusted EBITDA results both fell below targeted levels under the plan. Revenue results fell slightly below threshold with actual performance representing 97.8% of target versus the plan threshold of 98.0% of target, and, in consideration of the business and economic environment in which such revenue performance was achieved, the Committee decided to pay out the revenue component of the plan at 55.62% of target (versus the 60% of target threshold payout level), extrapolating the payout below threshold on a straight-line basis in proportion to the corresponding revenue achievement relative to threshold. Adjusted EBITDA results fell between the plan’s threshold and target performance levels and the Committee approved a payout level of 75.38% of target.
In determining payout levels for the strategic objectives regarding Network Evolution and Expansion and Capital and Free Cash Flow Management, the Committee evaluated the Company’s 2023 performance achievement against these objectives, considering the following in particular:
| • | Constructed and activated over one million total passings including rural subsidized, residential, and commercial passings. |
| • | Continued to build and staff the construction teams necessary to expand Charter’s footprint, including further development of the underground construction team established in 2022 and the creation of a new aerial construction team. |
| • | Completed the initial wave of the high split project in certain targeted markets. |
| • | In October 2023, launched the new Xumo product, which allows customers to access linear and direct-to-consumer video content in an easy-to-use interface and serves as Charter’s go-to-market platform for new video sales. |
| • | Actively managed our balance sheet and free cash flow in anticipation of rising interest rates. |
| • | Calibrated share buybacks within leverage targets to reflect higher investments in the business. |
With respect to the strategic objectives that applied for all NEOs, the Committee approved payouts of 130% for the Capital and Free Cash Flow Management objective and 130% for the Network Evolution and Expansion strategic objective, resulting in an overall strategic objectives payout of 130% for NEOs. The tables below detail the annual incentive calculations for the NEOs.
Charter Communications | 34 | 2024 Proxy Statement
2023 Annual Incentive Payout
Metric | Target ($ million) | Performance ($ million) | Payout % | Weighting | Weighted % | |||||||||||||||
Revenue | $53,845 | $52,650 | 55.62 | % | 20.0 | % | 11.12 | % | ||||||||||||
Adjusted EBITDA | $22,376 | $21,894 | 75.38 | % | 60.0 | % | 45.23 | % | ||||||||||||
Strategic Objectives | Discretionary Assessment | 130.00 | % | 20.0 | % | 26.00 | % | |||||||||||||
Total | 100.0 | % | 82.35 | % | ||||||||||||||||
Note: Adjusted EBITDA is defined as net income attributable to Charter shareholders plus net income attributable to non-controlling interest, net interest expense, income taxes, depreciation and amortization, stock compensation expense, other income (expenses), net and other operating (income) expenses, net, such as special charges and (gain) loss on sale or retirement of assets. For purposes of calculating bonus attainment, revenue does not include mobile device related revenue, and Adjusted EBITDA does not include such revenue or mobile device related expenses. Capital Management is an after-the-fact, objective evaluation of our capital spend by the Committee.
Each NEO has a target annual incentive opportunity set as a percentage of the NEO’s base salary. In setting opportunities each year, the Committee reviews current opportunities relative to those among peer group companies and evaluates criteria with respect to each NEO’s particular role, including changes in scope and complexity, impact on Company strategy, and degree of enterprise-wide influence. Mr. Rutledge’s 2023 target annual incentive was prorated to reflect his retirement on November 30, 2023, but the Committee otherwise determined that no annual incentive adjustments were necessary for our other NEOs as current opportunities continued to be competitive and appropriate for their roles. The table below summarizes the 2023 target annual incentive opportunities and actual incentive payouts for each of our NEOs.
The CEO is also authorized by the Committee to make discretionary bonus awards of up to 5% of the total projected Annual Incentive Plan payout based on actual achievement against the approved performance objectives. Discretionary bonus awards are recommended by management based upon management’s judgment of a participant’s performance and contribution to the Company, and are in addition to payments made under the Annual Incentive Plan. For 2017, none of the NEOs received any portion of this 5% discretionary bonus allocation.
| Target Annual Incentive | Annual Incentive | |||||||||||||||||||
Executive Officer | Base Salary | % of Base Salary | $ Value | % of Target | $ Value | |||||||||||||||
Christopher L. Winfrey | $1,700,000 | 250 | % | $ | 4,250,000 | 82.35 | % | $ | 3,499,875 | |||||||||||
Richard J. DiGeronimo | $1,450,000 | 200 | % | $ | 2,900,000 | 82.35 | % | $ | 2,388,150 | |||||||||||
Jessica M. Fischer | $ 800,000 | 150 | % | $ | 1,200,000 | 82.35 | % | $ | 988,200 | |||||||||||
Kevin D. Howard | $ 600,000 | 85 | % | $ | 510,000 | 82.35 | % | $ | 419,985 | |||||||||||
R. Adam Ray | $ 625,000 | 150 | % | $ | 937,500 | 82.35 | % | $ | 772,031 | |||||||||||
Thomas M. Rutledge | $1,250,000 | 300 | % | $ | 3,431,507 | (1) | 82.35 | % | $ | 2,825,846 | ||||||||||
| (1) | Represents Mr. Rutledge’s target annual incentive amount prorated based on his base salary of $1,250,000 and target annual incentive of 300% of base salary in effect from January 1, 2023 through his retirement date of November 30, 2023. |
Long-Term Incentives
Charter’s long-term incentive awards are designed to align the interests of the NEOs with those of our stockholders by linking a significant portion of NEO compensation to sustained growth in the Company’s stock price over multi-year periods. Long-termThe Committee establishes long-term incentive designs and opportunities are established by the Committee in consideration of each NEO’s level within the organization, the nature of their particular role and job responsibilities, the desired mix of short and theirlong-term incentive compensation, retention and succession planning considerations, the executive’s line-of-sight to our stock price performance. The Committee typically targets long-term incentive grantperformance, competitive pay levels at the median to 75th percentile of competitive levelsobserved among peer group companies. Since 2016,and general industry organizations, and how such designs align with overall business financial and strategic objectives. In 2023, the Committee has administeredNEOs participated in two long-term incentive program designs for our NEOs, based upon their correspondingprograms established by the Committee: the annual long-term incentive plan and the 2023 Performance Equity Program.
Annual Long-Term Incentive Plan
Under the annual long-term incentive plan, participants receive annual grants of equity in mid-January (the “annual grant date”), delivered in a mix of stock options and RSUs and with the particular mix determined by the participant’s level, within Charter.
For our NEOs atvesting in full on the EVP levelthird anniversary of the grant date (i.e., 3-year cliff vesting), and above, which includes Messrs. Rutledge, Bickham, Ellen and Winfrey,having a 10-year term to exercise stock options. Each year, the Committee approved equity awards under a five-yeardetermines the long-term incentive program. Awardsopportunities for NEOs and approves annual equity grants
Charter Communications | 35 | 2024 Proxy Statement
based on that opportunity. The number of stock options granted equals the portion of the executive’s grant value allocated to stock options divided by the Black-Scholes value per stock option at grant. The number of RSUs granted equals the portion of the executive’s grant value allocated to RSUs divided by the grant price (the average of the high and low prices of Charter common stock on the grant date). All NEOs received grants under this programthe 2023 annual long-term incentive plan on the January 17, 2023 annual grant date, based on their approved long-term incentive opportunities. The value and mix of the long-term incentive awards for Messrs. Winfrey, DiGeronimo and Rutledge were granted entirelyas set forth in 2016their employment agreements in effect at that time, with Messrs. Winfrey and Rutledge receiving their awards 100% in the form of stock options and Mr. DiGeronimo and all other NEOs receiving their awards in a mix of 90% stock options and 10% restricted stock units, with potential time-based vesting over a minimum of 3 to 5 years afterRSUs. The grant contingent upondetails under the achievement ofpre-established stock price hurdles; if a stock price hurdle is not met within 6 years after grant, the associated award tranche is forfeited. The Committee intends for these awards to be the only equity compensation provided to these NEOs through fiscal year 2020, except in the case of promotion. As a result, none of these NEOs received any equity awards in 2017.
As an employee at the SVP level, the Committee determined that Mr. Howard should participate in the Company’s annual long-term incentive program. This program provides participants anplan for each NEO are as follows:
2023 Annual Long-Term Incentive Plan Award Details
| Executive Officer | Target Award Value | Equity Award Mix | Grant / Strike Price | # of Stock Options Granted | # of RSUs Granted | |||||||||||
| Christopher L. Winfrey | $17.0 million | 100% Stock Options | $ | 387.375 | 124,922 | — | ||||||||||
| Richard J. DiGeronimo | $10.0 million | 90% Stock Options /10% RSUs | $ | 387.375 | 66,135 | 2,581 | ||||||||||
| Jessica M. Fischer | $ 5.5 million | 90% Stock Options /10% RSUs | $ | 387.375 | 36,374 | 1,420 | ||||||||||
| Kevin D. Howard | $ 1.5 million | 90% Stock Options /10% RSUs | $ | 387.375 | 9,920 | 387 | ||||||||||
| R. Adam Ray | $ 3.0 million | 90% Stock Options /10% RSUs | $ | 387.375 | 19,841 | 774 | ||||||||||
| Thomas M. Rutledge | $15.0 million | 100% Stock Options | $ | 387.375 | 110,225 | — | ||||||||||
For changes to long-term incentive opportunities occurring during the year after the annual grant date, the Committee generally also approves additional off-cycle equity awards based on the difference between the NEO’s new and prior opportunities and prorates the award value delivered based on the timing of the change. Prorated award guidelines range from 100% of the value difference for changes occurring in the first quarter to 25% for changes occurring in October or November, and in certain circumstances the Committee may provide for a different off-cycle award amount in order to ensure that such award delivers the appropriate amount of retentive value and alignment with long-term performance. There were no off-cycle equity awards granted under the annual long-term incentive award, the value of which is based on their level, deliveredplan in a mix of stock options and restricted stock units that vest fully on the third anniversary of the date of grant. Mr. Howard’s 2017 long-term incentive award was comprised of two grants, the first occurring on the Company’s annual equity grant date in January 2017 and based on his then-current long-term incentive opportunity. In April 2017, the Committee approved an increase in Mr. Howard’s long-term incentive opportunity and an additional equity grant, which provided the incremental difference in value between Mr. Howard’s new long-term incentive opportunity and the value he was granted in January. This increase occurred in conjunction with the increase to Mr. Howard’s annual incentive target and was based upon the same considerations as described in the section regarding the Annual Incentive Plan. Details regarding Mr. Howard’s 2017 equity awards, which represented the only equity awards made2023 to any of our NEOsthe NEOs.
2023 Performance Equity Program
In February 2023, the Committee also approved the 2023 Performance Equity Program in 2017, are provided below.
Grant Date | Target Award Value | Equity Award Mix | Grant / Strike Price | # of Stock Options Granted | # of RSUs Granted | |||||||||||||
January 17, 2017 | $ | 637,000 | 50% stock options / 50% restricted stock units | $ | 299.6050 | 4,371 | 1,063 | |||||||||||
April 24, 2017 | $ | 188,000 | 90% stock options / 10% restricted stock units | $ | 340.4409 | 2,058 | 55 | |||||||||||
Total | $ | 825,000 | N/A | $ | 312.6771 | * | 6,429 | 1,118 | ||||||||||
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Summaryconsideration of 2016 Five-Year Long-Term Incentive Program
TargetedCharter’s commitment to a number of multi-year transformational and industry-leading network expansion and evolution initiatives. Under the program, participants received 5x their annual long-term incentive grant valuesvalue, less the value already issued in January 2023 under the five-yearannual long-term incentive programplan. Awards were determined by the Committee using an analysis of potential realizable compensation (i.e., actual value realized from awards upon vesting or exercise) from achieving certain levels of stock price appreciation over the duration of the program. The actual number of stock options and restricted stock units granted to participants were calculated based on (i) the target realizable compensation for the participant, (ii) stock price hurdles established for the program and (iii)delivered in a targeted mix of 90% stock options and 10% restrictedRSUs, subdivided into 18 tranches of stock units.options and 12 tranches of RSUs, each with a time-based vesting requirement ranging from 3 to 5 years after the grant date and performance-based vesting requirement in the form of a stock price hurdle. There are a total of six price hurdles under the program, representing between 5% to 20% compound annual stock price growth over a 5-year period, and the achievement of each price hurdle is determined based on the 60-trading day average closing stock price of Charter common stock. In order to vest, both the time and performance vesting criteria for a tranche must be satisfied, and if a tranche’s associated price hurdle is not achieved by the sixth anniversary of the grant date, that tranche is forfeited. Furthermore, no awards under the program are eligible to vest in connection with any termination, except upon death or disability or for an involuntary termination without cause or resignation for good reason following a change in control; in each case, only award tranches for which the price hurdle is satisfied at the time of termination are eligible to vest. All stock options granted under the 2023 Performance Equity Program have a 10-year term to exercise.
Charter Communications | 36 | 2024 Proxy Statement
The table below summarizes the vesting requirements for all grants made under the program, and both the time and performance-vesting criteria for each tranche must be satisfied in order for the associated tranche to vest.
Vesting Structure of 2023 Performance Equity Program Awards
Vesting Structure | Price Growth(3) | |||||||||||||||
Approximate(1) % of Stock Options Eligible to Vest | Approximate(1) % of RSUs Eligible to Vest | Price Hurdle Vesting Requirement | Total | 5-Year CAGR | ||||||||||||
On or After 3rd Anniversary of the Grant Date | On or After 4th Anniversary of the Grant Date | On or After 5th Anniversary of the Grant Date | On or After 3rd Anniversary of the Grant Date | On or After 4th the Grant Date | On or After 5th the Grant Date | |||||||||||
6.7% | 6.7% | 6.7% | — | — | — | $507 / $564(2) | 28% / 42% | 5% / 7% | ||||||||
6.7% | 6.7% | 6.7% | — | — | — | $639 | 61% | 10% | ||||||||
6.7% | 6.7% | 6.7% | 11.1% | 11.1% | 11.1% | $798 | 101% | 15% | ||||||||
6.7% | 6.7% | 6.7% | 11.1% | 11.1% | 11.1% | $870 | 119% | 17% | ||||||||
3.3% | 3.3% | 3.3% | 5.6% | 5.6% | 5.6% | $988 | 149% | 20% | ||||||||
3.3% | 3.3% | 3.3% | 5.6% | 5.6% | 5.6% | $1,000 | 152% | 20% | ||||||||
| (1) | Percentages may not sum to 100% due to rounding. |
| (2) | For Mr. Winfrey who participated in the similar performance-based award program in 2016, the lowest stock price hurdle for awards under the 2023 Program is $564, which is equivalent to the highest stock price hurdle under the 2016 awards. |
| (3) | Equals stock price growth – both as a total percentage increase and a compound annual growth rate (CAGR) over a 5-year period – relative to Charter’s February 10, 2023 closing stock price of $396.94. |
All NEOs except Mr. Rutledge participated in the 2023 Performance Equity Program. The number of stock options and restrictedRSUs granted to each participant was based upon: (i) the target grant value of the award, (ii) the value per each stock unitsoption and RSU for each tranche, as calculated by a Monte Carlo model of the value of such awards, and (iii) the number of stock options and RSUs required to bedeliver the targeted grant value such that 90% of the total combined number of stock options and RSUs granted was comprised of stock options and 10% of the total combined number of stock options and RSUs granted was comprised of RSUs. Grants under the 2023 Performance Equity Program were then dividedmade on February 22, 2023, and the grant details for each NEO were as follows:
2023 Performance Equity Program Award Details
| Executive Officer | Target Award Value | Equity Award Mix | Grant / Strike Price | # of Stock Options Granted | # of RSUs Granted | |||||||||||
| Christopher L. Winfrey | $68.0 million | 90% Stock Options / 10% RSUs | $380.53 | 531,840 | 59,093 | |||||||||||
| Richard J. DiGeronimo | $40.0 million | 90% Stock Options / 10% RSUs | $380.53 | 310,996 | 34,555 | |||||||||||
| Jessica M. Fischer | $22.0 million | 90% Stock Options / 10% RSUs | $380.53 | 171,048 | 19,005 | |||||||||||
| Kevin D. Howard | $ 6.0 million | 90% Stock Options / 10% RSUs | $380.53 | 46,649 | 5,184 | |||||||||||
| R. Adam Ray | $12.0 million | 90% Stock Options / 10% RSUs | $380.53 | 93,299 | 10,366 | |||||||||||
As noted above, all NEOs except for Mr. Rutledge (who, pursuant to the terms of his employment agreement, only received an award under the annual long-term incentive plan) received a total target award value equal to 5x their annual long-term incentive opportunity from the combined grants under the annual long-term incentive plan and the 2023 Performance Equity Program. Total target award values delivered over the course of 2023 were therefore as follows:
| • | Christopher L. Winfrey - $85.0 million |
| • | Richard J. DiGeronimo - $50.0 million |
| • | Jessica M. Fischer - $27.5 million |
| • | Kevin D. Howard - $7.5 million |
| • | R. Adam Ray - $15.0 million |
| • | Thomas M. Rutledge - $15.0 million |
The target award values described above differ from the corresponding values in the Summary Compensation Table and Grants of Plan-Based Awards Table due to: (i) rounding to the nearest whole stock option and RSU when converting award
Charter Communications | 37 | 2024 Proxy Statement
values into a number of tranches, each with a combination of time-based and stock price performance vesting criteria. If the stock price vesting criteria are not achieved within six years after grant, the unvested awards will be forfeited, and the determination of whether a stock price hurdle is achieved is based on Charter’s60-day average closing stock price. The tranche-level vesting schedules for stock options and restrictedRSUs to be granted, and (ii) variation between the initial Monte Carlo value estimates used to calculate the number of stock units are provided inoptions and RSUs to be granted under the exhibits below.2023 Performance Equity Program and the finalized Monte Carlo values calculated after the grant date for purposes of expensing and disclosing the value of such awards.
Proportion of Stock Options Vesting by Stock Price Hurdle and Time-Based Vesting Period
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Proportion of Restricted Stock Units Vesting by Stock Price Hurdle and Time-Based Vesting Period
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2009 Stock Incentive Plan and 2019 Stock Incentive Plan
OurCharter granted long-term incentive awards are grantedmade prior to April 23, 2019 under the 2009 Stock Incentive Plan (the “2009 Plan”), and granted awards made after this date under the 2019 Stock Incentive Plan (the “2019 Plan” and, collectively, the “Stock Incentive Plan”Plans”), which. Each of the Stock Incentive Plans is an omnibus plan, administered at the discretion of the Committee, that provides for a range of compensation programs including the potential grant ofnon-qualified stock options, incentive stock options, stock appreciation rights, dividend equivalent rights, performance units and performance shares, share awards, phantom stock, restricted stock units and restricted stock as each(each term isas defined in the Stock Incentive Plans). The Board of Directors approved the 2019 Plan in January 2019 and inshareholders approved the discretion2019 Plan at the annual meeting on April 23, 2019. The terms of the Committee.2019 Plan, after its approval, do not permit additional awards under the 2009 Plan, which terminated on November 30, 2019. Unless terminated sooner, the Stock Incentive2019 Plan will terminateterminates on April 28, 2019, andJanuary 29, 2029, with no optionfurther options or award can be grantedawards permitted thereafter under that plan.
As of December 31, 2017, 5,844,5882023, 5,113,241 million shares remained available for future grants under the Stock Incentive2019 Plan. As of December 31, 2017,2023, there were 6655,690 participants in the Stock Incentive2019 Plan and there remained 371 participants with awards outstanding under the 2009 Plan.
The Stock Incentive2009 Plan authorizesauthorized the repricing of options. No repricing occurred under the 2009 Plan through its termination. While the 2019 Plan also initially authorized the repricing of options, which could include reducingon January 28, 2020 the exercise price per shareBoard approved an amendment to the 2019 Plan prohibiting the repricing of any outstanding option, permitting the cancellation, forfeiture or tender of outstanding options
28
in exchange for other awards or for new options with a lower exercise price per share, or repricing or replacing any outstanding options by any other method. While the Stock Incentive Plan authorizes repricing, no repricing has occurred under the plan to date.
Modifications to Certain Long-Term Awards
In October, 2017, the Committee approved the amendment of certain outstanding long-term incentive awards for the NEOs such that unvested RSUs and stock options would vest fully upon death or Disability, as defined under the 2009 Stock Incentive Plan, and vested stock options following death, Disability or Retirement would remain exercisable until the earlier of eighteen months following such a termination or the original expiration date of the stock option. These changes were made by the Committee in consideration of peer group practices as well as what was considered fair and appropriate for participants in our long-term incentive program upon such termination events. Prior to this amendment, all such awards vested on a pro rata basis upon death, Disability or Retirement and vested stock options expired upon the earlier of six months following such a termination or the original expiration date of the stock option. For Messrs. Rutledge, Bickham, Ellen and Winfrey, this amendment only applied to grants made on or before January 15, 2016 and did not apply to the performance-based RSU and stock option awards granted after this date in 2016.without shareholder approval.
Other Elements of Compensation
The NEOs are eligible to participate in all other benefit programs offered to all employees generally.
Employment Agreements
The Company did not enterOver the course of 2023, Charter amended the employment agreements for Messrs. Winfrey and DiGeronimo effective February 22, 2023, removing references to future annual equity grants and excluding grants under the 2023 Performance Equity Program from the sections of their employment agreements relating to the treatment of certain equity incentive awards upon termination. Charter also entered into new employment agreements with Ms. Fischer and Mr. Ray, with Ms. Fischer’s agreement effective February 5, 2023 and Mr. Ray’s agreement executed on December 21, 2023 with a January 19, 2024 effective date. The agreements with Ms. Fischer and Mr. Ray renewed the terms of their employment for an additional two years from each agreement’s respective effective date. Ms. Fischer’s prior employment agreement was effective February 5, 2021 with a term through February 5, 2023 and Mr. Ray’s prior employment agreement was effective July 1, 2022 with a term through July 1, 2024. There were otherwise no new employment agreements entered into with an NEO or modifyamendments to existing employment agreements for, any of our NEOs induring the 2017 fiscal year. Messrs. Rutledge, Bickham, Ellen and Winfrey currently have employment agreements with the Company, while Mr. Howard does not have an employment agreement. A more detailed description of employment arrangements with our NEOs is set forth below under the section titled “Employment“NEO Employment Agreements.”
Tax and Accounting
Prior to the Tax Cuts and Jobs Act, Section 162(m) of the Internal Revenue Code placed a $1 million limit on the amount ofnon-performance-based compensation the Company can deduct in any year for certain NEOs. The Committee had designed the compensation programs with the intention to qualify a majority of compensation as performance-based compensation under Section 162(m). Effective January 1, 2018, performance-based compensation potentially no longer qualifies for exemption from the Section 162(m) limitation. Certain awards under the existing plans may be deductible, but future awards would be analyzed under the new laws and may not create a tax deduction. Once an individual has become an NEO, these individuals will remain subject to the limitation under Section 162(m) for all current and future compensation. These tax effects are only one factor considered by the Committee when entering into compensation arrangements, and the Committee maintains flexibility in compensating executive officers in a manner designed to promote varying corporate goals, which may not be deductible under sectionSection 162(m).
Charter Communications | 38 | 2024 Proxy Statement
We account for stock-based compensation in accordance with United States generally accepted accounting principles (“GAAP”). ForRestricted stock, restricted stock units, stock options and restricted stockas well as equity awards with market conditions are measured at the costgrant date fair value and amortized to stock compensation expense over the requisite service period. The fair value of options is equal toestimated on the grant date using the Black-Scholes option-pricing model and the fair value of the option or restricted stockequity awards with market conditions is estimated on the date of grant estimateddate using Monte Carlo simulations.
Additional Compensation Governance Policies
Stock Ownership Guidelines
The stock ownership guidelines are based onrequire the achievement of a certain specified multiple of the applicable officer’s base salary or outside director’s cash retainer. The guidelines do not apply to officers, directors or
29
affiliates of any stockholder of the Company beneficially holding 10% or greater of the outstanding shares of the Company’s stock.
Executive Officer | Ownership Multiple of Salary (for employees) or Cash Retainer | ||
CEO | 5x | ||
| |||
Executive Vice President | 2x | ||
Other Covered Individuals | 1x | ||
Outside Director | 3x |
In determining whether a covered individual has met the applicable stock ownership level, management evaluates annually 1) stock beneficially owned outright and; 2)and 25% of the value of time-based restricted stock and restricted stock units that are only subject to time-based vesting (the performance-based restricted stock unit awards do not count toward the ownership guidelines). There is no time requirement to meet the guidelines. However, until the officer or outside director achieves the minimum ownership level, is reached, a covered individual is required to retain a minimum of 25% of the shares received when options to purchase stock are exercised or restricted stock vests (unless an exemption is granted). As of December 31, 20172023 all covered directors and the NEOs met the applicable stock ownership guidelines (except for individuals appointedrecently hired or hired after the closing of the Transactionspromoted individuals who have had limited or no vesting events).
Compensation Recovery Policy
ThePrior to October 1, 2023, Charter’s Compensation Recovery Policy provides(the “Prior Policy”) provided that all executive officers, including the NEOs, as well as all members of Company management with the title of executive vice president, may be required under certain circumstances be required to repay or forfeit annual incentive or other performance-based compensation including payments under our Executive Bonus Plan, received in the event of a restatement of Charter’s financial statements filed with the SEC. Under this policy, there iswas a three-year look back period for compensation recovery and it appliesapplied regardless of whether or not the individual was at fault in the circumstances leading to the restatement. However,In addition, the Prior Policy granted the Committee has been granted greater authority to recover any outstanding equity basedequity-based awards, vested and unvested, if it determines that a covered executive was engaged in any fraud or intentional misconduct with regard to the circumstances leading to the restatement.
On October 24, 2023, the Committee adopted a new Compensation Recovery Policy (the “New Policy”), which was effective October 1, 2023 (applying to compensation received after such date) and designed to comply with NASDAQ Listing Rule 5608 relating to such policies (with such listing rule itself having been adopted as required by SEC rules adopted pursuant to the Dodd-Frank Act). The New Policy applies to Charter’s executive officers, including the NEOs, and provides for the repayment of certain incentive compensation received over a covered period if the Company is required to prepare an accounting restatement due to the material noncompliance of the Company with any financial reporting requirement under the securities laws. The covered period under the New Policy is the three full fiscal years prior to the date the Company is required to prepare an accounting restatement. Compensation subject to recovery is the amount of incentive-based compensation received that exceeds the amount of incentive-based compensation that otherwise would have been received had it been determined based on the restated amounts, which would include (i) the portion of bonuses received over the covered period due to the financial misstatement, and (ii) performance-based equity vested over the covered period due to the financial misstatement.
In connection with the adoption of the New Policy, the Committee also approved phasing out the Prior Policy, which continues to apply for executive officers and executive vice presidents subject to the Prior Policy as of September 30, 2023, with only compensation realized prior to October 1, 2023 being subject to recovery under the Prior Policy.
Charter Communications | 39 | 2024 Proxy Statement
Hedging
The Company prohibits any Named Executive Officer, as well as other senior members of management,Restricted Employees from hedging transactions or similar arrangements with respect to Company securities without the prior approval of the Company’s Legal department. Specific transactions prohibited are sales of Company securities of the same class for at least six months after the purchase, short sales of Company securities, buying or selling puts or calls or other derivative securities on the Company’s securities, and entering into hedging or monetization transactions or similar arrangements with respect to Company securities.
Restricted Employees include any employee with the title of Vice President or equivalent and above; all persons employed in the Finance, Investor Relations, Legal and Stock Administration departments; members of corporate executive staff; members of the Board of Directors; and any other designated employee identified by senior management as a “Restricted Employee” (e.g., key consultants, executive staff support, compensation personnel, senior Marketing staff).
Stockholder Vote on Say on Pay
At the Company’s 20172023 annual stockholders’ meeting, the stockholders considered an advisory proposal on the frequency of holding a vote on executive compensation and, as the Board of Directors recommended, voted to hold an advisory vote on executive compensation every three (3) years with approximately 57%51% of the votes cast in favor of the triennial frequency proposal. At this same meeting, the stockholders also considered an advisory vote on executive compensation for the NEOs and, as the Board of Directors recommended, the stockholders approved the 20172023 executive compensation program with approximately 70%71% of the votes cast voting in favor of the proposal.
Charter’s At the annual stockholders’ meeting in 2026, stockholders will consider an advisory vote on executive compensation as described in the Compensation Discussion and Analysis.
Charter designs its executive compensation program is designed to ensure management’s interests are alignedalign with those of our investors’ interests to support long-term value creation, while also maintaining the consistency over time that is imperative for motivating and retaining employees. After considering the stockholders’ advisory votes, including the level of support received for each proposal, the Committee continues to believe that the Company’s
30
executive compensation structure — including the five-year long-term incentive program established in 2016 — best achieves the desired alignment. In addition, the Committee views a three-year period between advisory votes on executive compensation as the most effective approach, providing investors sufficient time to evaluate the effectiveness of both short and long-term compensation strategies and corresponding business outcomes of the Company. Although the Committee will continue to monitor the frequency of the vote, the Committee considers a triennial vote on executive pay to be the appropriate frequency to provide time to thoughtfully consider and implement appropriate changes to our executive compensation program.
Charter Communications | 40 | 2024 Proxy Statement
Summary Compensation Table
The following table sets forth compensation information for our named executive officers (“NEOs”) that were identified as such as of December 31, 2017.2023.
Name and Principal Position | Year | Salary ($) | Stock Awards ($)(1) | Option Awards ($)(2) | Non-Equity Incentive Plan Compensation ($)(3) | Change in pension value and nondeferred compensation earnings ($)(4) | All Other Compensation ($)(5) | Total ($) | ||||||||||||||||||||||||
Thomas M. Rutledge Chairman and Chief Executive Officer | 2017 | 2,000,000 | — | — | 5,489,856 | 89,697 | 233,763 | 7,813,316 | ||||||||||||||||||||||||
| 2016 | 2,000,000 | 10,086,658 | 77,990,740 | 7,651,397 | 503,383 | 283,549 | 98,515,727 | |||||||||||||||||||||||||
| 2015 | 2,000,000 | 999,925 | 8,999,426 | 4,156,600 | — | 205,436 | 16,361,387 | |||||||||||||||||||||||||
John Bickham President and Chief Operating Officer | 2017 | 1,500,000 | — | — | 2,744,928 | 356,409 | 282,481 | 4,883,818 | ||||||||||||||||||||||||
| 2016 | 1,450,962 | 7,009,538 | 35,349,000 | 3,279,151 | 192,726 | 159,661 | 47,441,038 | |||||||||||||||||||||||||
| 2015 | 1,375,000 | 499,962 | 4,499,713 | 2,204,483 | — | 150,303 | 8,729,461 | |||||||||||||||||||||||||
David G. Ellen(6) Senior Executive Vice President | 2017 | 1,250,000 | — | — | 1,829,952 | — | 61,725 | 3,141,677 | ||||||||||||||||||||||||
| 2016 | 605,770 | 2,384,516 | 17,797,369 | 1,286,995 | — | 13,973 | 22,088,623 | |||||||||||||||||||||||||
Christopher L. Winfrey Chief Financial Officer | 2017 | 850,000 | — | — | 1,166,594 | — | 55,746 | 2,072,340 | ||||||||||||||||||||||||
| 2016 | 772,127 | 4,164,371 | 23,002,337 | 1,250,148 | — | 19,900 | 29,208,883 | |||||||||||||||||||||||||
| 2015 | 651,500 | 249,981 | 2,249,827 | 580,291 | — | — | 3,731,599 | |||||||||||||||||||||||||
Kevin Howard(7) Senior Vice President, Finance - Controller and Chief Accounting Officer | 2017 | 423,325 | 337,204 | 487,686 | 271,133 | — | 20,209 | 1,539,557 | ||||||||||||||||||||||||
Name and Principal Position | Year | Salary ($)(1) | Bonus ($)(2) | Stock Awards ($)(3) | Option Awards ($)(4) | Non-Equity Incentive Plan Compensation ($)(5) | Change in pension value and nonqualified deferred compensation earnings ($)(6) | All Other Compensation ($)(7) | Total ($) | |||||||||||||||||||||||||||
Christopher L. Winfrey President and Chief Executive Officer | 2023 | 1,700,000 | — | 8,696,687 | 74,956,650 | 3,499,875 | — | 223,866 | 89,077,078 | |||||||||||||||||||||||||||
| 2022 | 1,359,038 | — | — | 12,001,909 | 2,035,221 | — | 230,799 | 15,626,967 | ||||||||||||||||||||||||||||
| 2021 | 1,041,346 | — | 712,575 | 7,038,681 | 2,747,200 | — | 145,914 | 11,685,716 | ||||||||||||||||||||||||||||
Richard J. DiGeronimo President, Product and Technology | 2023 | 1,450,000 | — | 6,085,226 | 43,139,414 | 2,388,150 | — | 251,010 | 53,313,800 | |||||||||||||||||||||||||||
| 2022 | 1,298,461 | — | 880,296 | 7,921,224 | 1,740,968 | — | 200,572 | 12,041,521 | ||||||||||||||||||||||||||||
| 2021 | 1,041,346 | — | 499,824 | 4,500,594 | 2,747,200 | — | 77,878 | 8,866,842 | ||||||||||||||||||||||||||||
Jessica M. Fischer Chief Financial Officer | 2023 | 734,615 | — | 3,347,020 | 23,726,633 | 988,200 | — | 23,188 | 28,819,656 | |||||||||||||||||||||||||||
| 2022 | 700,000 | — | 349,762 | 3,150,523 | 811,020 | — | 21,530 | 5,032,835 | ||||||||||||||||||||||||||||
| 2021 | 555,752 | 250,000 | 295,982 | 1,704,509 | 777,767 | — | 19,476 | 3,603,486 | ||||||||||||||||||||||||||||
Kevin D. Howard EVP, Chief Accounting Officer and Controller | 2023 | 600,000 | — | 912,843 | 6,470,815 | 419,985 | — | 23,646 | 8,427,289 | |||||||||||||||||||||||||||
R. Adam Ray EVP, Chief Commercial Officer | 2023 | 625,000 | — | 1,825,353 | 12,941,899 | 772,031 | — | 25,014 | 16,189,297 | |||||||||||||||||||||||||||
Thomas M. Rutledge Former Executive Chairman | 2023 | 1,250,000 | — | — | 14,999,418 | 2,825,846 | — | 390,357 | 19,465,621 | |||||||||||||||||||||||||||
| 2022 | 2,447,115 | — | — | 30,005,043 | 6,364,251 | (249,614) | 646,555 | 39,213,350 | ||||||||||||||||||||||||||||
| 2021 | 2,500,000 | — | — | 30,004,409 | 8,901,000 | 59,302 | 395,552 | 41,860,263 | ||||||||||||||||||||||||||||
| (1) | Ms. Fischer’s salary calculation is prorated based on the adjustment to her base salary effective February 5, 2023. Mr. Rutledge retired effective November 30, 2023 after which time he no longer received a base salary. |
| (2) | Ms. Fischer received a $250,000 lump sum payment made in connection with her relocation in 2021. |
| (3) | Amounts reported in this column reflect the aggregate grant date fair value of |
Amounts reported in this column were calculated in accordance with GAAP and reflect the aggregate grant date fair value of options granted to each NEO during the applicable fiscal years set forth above. For more information on accounting guidance regarding stock compensation, see |
The amounts reported under this column for 2023 are executive bonus plan payments made in |
|
31Charter Communications | 41 | 2024 Proxy Statement
The |
Name | Personal Use of Corporate Airplane ($)(a) | 401(k) Matching Contributions ($) | Group Term Life Premiums ($) | Executive Long- Term Disability Premiums ($) | Gross-up for Executive Long Term Disability ($) | Other ($)(b) | Personal Use of Corporate Airplane ($)(a) | 401(k) Matching Contributions ($) | Group Life ($) | Executive Long- Term Disability Premiums ($) | Gross-up for Executive Long Term Disability ($) | Other ($) | ||||||||||||||||||||||||||||||||||||
Christopher L. Winfrey | ||||||||||||||||||||||||||||||||||||||||||||||||
Richard J. DiGeronimo | ||||||||||||||||||||||||||||||||||||||||||||||||
Jessica M. Fischer | ||||||||||||||||||||||||||||||||||||||||||||||||
Kevin D. Howard | ||||||||||||||||||||||||||||||||||||||||||||||||
R. Adam Ray | ||||||||||||||||||||||||||||||||||||||||||||||||
Thomas M. Rutledge | 218,206 | — | 12,246 | 1,113 | 2,086 | 112 | ||||||||||||||||||||||||||||||||||||||||||
John Bickham | 272,424 | — | 6,858 | 1,113 | 2,086 | — | ||||||||||||||||||||||||||||||||||||||||||
David Ellen | 44,491 | 14,154 | 1,242 | 599 | 1,123 | 116 | ||||||||||||||||||||||||||||||||||||||||||
Christopher L. Winfrey | 35,807 | 16,200 | 540 | 1,113 | 2,086 | — | ||||||||||||||||||||||||||||||||||||||||||
Kevin Howard | — | 16,200 | 810 | 1,113 | 2,086 | — | ||||||||||||||||||||||||||||||||||||||||||
| (a) | As set forth in more detail below under the section titled |
|
|
|
32Charter Communications | 42 | 2024 Proxy Statement
20172023 Grants of Plan Based Awards
Name | Grant Date(1) |
Estimated Future Payouts | All Other Stock Awards: Number of Shares of Stock or Units (#)(3) | All Other Option Awards: Number of Securities Underlying Options (#)(4) | Exercise or Base Price of Option Awards ($)(5) | Grant Date Fair Value of Stock and Option Awards ($)(6) | Grant Date(1) |
Estimated Future Payouts | All Other Stock Awards: Number of Shares of Stock or Units (#)(4) | All Other Option Awards: Number of Securities Underlying Options (#)(5) | Exercise or Base Price of Option Awards ($)(6) | Grant Date Fair Value of Stock and Option Awards ($)(7) | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Threshold – 0% ($) | Target – 100% ($) | Maximum – 150% ($) | Threshold – 0% ($) | Target – 100% ($)(3) | Maximum – 150% ($)(3) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Thomas M. Rutledge | — | — | 6,000,000 | 9,000,000 | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
John Bickham | — | — | 3,000,000 | 4,500,000 | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
David Ellen | — | — | 2,000,000 | 3,000,000 | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Christopher L. Winfrey | — | — | 1,275,000 | 1,912,500 | — | — | — | — | — | — | 4,250,000 | 6,375,000 | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||
Kevin Howard | — | — | 296,328 | 444,492 | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 1/17/2023 | — | — | — | — | 124,922 | 387.375 | 16,999,386 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2/22/2023 | — | — | — | — | 531,840 | 380.53 | 57,957,264 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2/22/2023 | — | — | — | 59,093 | — | — | 8,696,687 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Richard J. DiGeronimo | — | — | 2,900,000 | 4,350,000 | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 1/17/2017 | — | — | — | 1,063 | — | — | 318,480 | 1/17/2023 | — | — | — | — | 66,135 | 387.375 | 8,999,651 | |||||||||||||||||||||||||||||||||||||||||||||||||
| 1/17/2017 | — | — | — | — | 4,371 | 299.61 | 318,471 | 1/17/2023 | — | — | — | 2,581 | — | — | 999,815 | |||||||||||||||||||||||||||||||||||||||||||||||||
| 4/24/2017 | — | — | — | 55 | — | — | 18,724 | 2/22/2023 | — | — | — | — | 310,996 | 380.53 | 34,139,763 | |||||||||||||||||||||||||||||||||||||||||||||||||
| 4/24/2017 | — | — | — | — | 2,058 | 340.44 | 169,215 | 2/22/2023 | — | — | — | 34,555 | — | — | 5,085,411 | |||||||||||||||||||||||||||||||||||||||||||||||||
Jessica M. Fischer | — | — | 1,200,000 | 1,800,000 | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 1/17/2023 | — | — | — | — | 36,374 | 387.375 | 4,949,774 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 1/17/2023 | — | — | — | 1,420 | — | — | 550,073 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2/22/2023 | — | — | — | — | 171,048 | 380.53 | 18,776,859 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2/22/2023 | — | — | — | 19,005 | — | — | 2,796,947 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Kevin D. Howard | — | — | 510,000 | 765,000 | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 1/17/2023 | — | — | — | — | 9,920 | 387.375 | 1,349,914 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 1/17/2023 | — | — | — | 387 | — | — | 149,914 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2/22/2023 | — | — | — | — | 46,649 | 380.53 | 5,120,901 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2/22/2023 | — | — | — | 5,184 | — | — | 762,929 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
R. Adam Ray | — | — | 937,500 | 1,406,250 | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 1/17/2023 | — | — | — | — | 19,841 | 387.375 | 2,699,963 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 1/17/2023 | — | — | — | 774 | — | — | 299,828 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2/22/2023 | — | — | — | — | 93,299 | 380.53 | 10,241,936 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2/22/2023 | — | — | — | 10,366 | — | — | 1,525,525 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Thomas M. Rutledge | — | — | 3,431,507 | 5,147,261 | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 1/17/2023 | — | — | — | — | 110,225 | 387.375 | 14,999,418 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| (1) |
|
| (2) | These columns show the range of payouts under the |
| (3) | Mr. Rutledge’s target annual incentive amount is prorated based on his base salary of $1,250,000 and target annual incentive of 300% of base salary in effect from January 1, 2023 through his retirement date of November 30, 2023. |
Charter Communications | 43 | 2024 Proxy Statement
| (4) | Awards under this column were granted as restricted stock units under the |
These option awards were granted as options under the |
The exercise prices of the option awards were determined using the average of high and low stock prices on the date of grant. |
Amounts were calculated in accordance with |
33Charter Communications | 44 | 2024 Proxy Statement
Outstanding Equity Awards at Fiscal Year End
The following table provides information concerning unexercised options and unvested restricted stock and restricted stock units for each of our NEOs that remained outstanding as of December 31, 2017.2023. In connection with the closing of the Transactions the merger exchange ratio of .90420.9042 was applied to the exercise price and performance targets (divided by .9042)0.9042) and the number of restricted stock units and stock options (multiplied by .9042)0.9042) for all equity awards outstanding on May 18, 2016.
| Option Awards | Stock Awards | |||||||||||||||||||||||||||||||||||
Name | Number of Securities Underlying Unexercised Options Exercisable (#) | Number of Securities Underlying Unexercised Options Unexercisable (#) | Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#) | Option Exercise Price ($) | Option Expiration Date | Number of Shares or Units of Stock That Have Not Vested (#) | Market Value of Shares or Units of Stock That Have Not Vested (#)(1) | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#) | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($)(1) | |||||||||||||||||||||||||||
Thomas M. Rutledge | 180,840 | (2) | — | — | 59.28 | 12/19/2021 | — | — | — | — | ||||||||||||||||||||||||||
| 203,445 | (3) | — | — | 59.28 | 12/19/2021 | — | — | — | — | |||||||||||||||||||||||||||
| 147,905 | (4) | — | — | 150.88 | 1/15/2024 | — | — | — | — | |||||||||||||||||||||||||||
| — | 136,188 | (5) | — | 175.76 | 1/15/2025 | — | — | — | — | |||||||||||||||||||||||||||
| — | — | 904,200 | (8) | 222.92 | 4/25/2026 | — | — | — | — | |||||||||||||||||||||||||||
| — | — | 723,360 | (8) | 232.34 | 4/26/2026 | — | — | — | — | |||||||||||||||||||||||||||
| — | — | — | — | — | — | — | 180,840 | (9) | $ | 60,755,006 | ||||||||||||||||||||||||||
| — | — | — | — | — | 5,689 | (10) | $ | 1,911,276 | — | — | ||||||||||||||||||||||||||
John Bickham | 63,294 | (2) | — | — | 66.87 | 4/30/2022 | — | — | — | — | ||||||||||||||||||||||||||
| 81,378 | (3) | — | — | 66.87 | 4/30/2022 | — | — | — | — | |||||||||||||||||||||||||||
| 73,952 | (4) | — | — | 150.88 | 1/15/2024 | — | — | — | — | |||||||||||||||||||||||||||
| 68,094 | (5) | — | 175.76 | 1/15/2025 | — | — | — | — | ||||||||||||||||||||||||||||
| — | 48,129 | (6) | — | 183.87 | 1/15/2026 | — | — | — | — | |||||||||||||||||||||||||||
| — | — | 587,730 | (8) | 221.25 | 6/17/2026 | — | — | — | — | |||||||||||||||||||||||||||
| — | — | 135,630 | (8) | 242.30 | 7/25/2026 | — | — | — | — | |||||||||||||||||||||||||||
| — | — | — | — | — | — | — | 80,373 | (9) | $ | 27,002,113 | ||||||||||||||||||||||||||
| — | — | — | — | — | 16,440 | (10) | $ | 5,523,182 | — | — | ||||||||||||||||||||||||||
David Ellen | — | — | 406,890 | (8) | 221.25 | 6/17/2026 | — | — | — | — | ||||||||||||||||||||||||||
| — | — | — | — | — | — | — | 45,210 | (9) | $ | 15,188,752 | ||||||||||||||||||||||||||
Christopher L. Winfrey | 81,378 | (11) | — | — | 36.17 | 11/1/2020 | — | — | — | — | ||||||||||||||||||||||||||
| 70,075 | (2) | — | — | 60.96 | 4/26/2021 | — | — | — | — | |||||||||||||||||||||||||||
| 163,509 | (3) | — | — | 60.96 | 4/26/2021 | — | — | — | — | |||||||||||||||||||||||||||
| 36,976 | (4) | — | — | 150.88 | 1/15/2024 | — | — | — | — | |||||||||||||||||||||||||||
| — | 34,046 | (5) | — | 175.76 | 1/15/2025 | — | — | — | — | |||||||||||||||||||||||||||
| — | 24,064 | (6) | — | 183.87 | 1/15/2026 | — | — | — | — | |||||||||||||||||||||||||||
| — | — | 497,309 | (8) | 221.25 | 6/17/2026 | — | — | — | — | |||||||||||||||||||||||||||
| — | — | — | — | — | — | — | 55,257 | (9) | $ | 18,564,142 | ||||||||||||||||||||||||||
| — | — | — | — | — | 8,220 | (10) | $ | 2,761,591 | — | — | ||||||||||||||||||||||||||
Kevin Howard | 5,652 | (11) | — | — | 39.13 | 7/27/2020 | — | — | — | — | ||||||||||||||||||||||||||
| 13,563 | (2) | — | — | 60.96 | 4/26/2021 | — | — | — | — | |||||||||||||||||||||||||||
| 8,374 | (4) | — | — | 150.88 | 1/15/2024 | — | — | — | — | |||||||||||||||||||||||||||
| — | 7,711 | (5) | — | 175.76 | 1/15/2025 | — | — | — | — | |||||||||||||||||||||||||||
| — | 6,131 | (6) | — | 183.87 | 1/15/2026 | — | — | — | — | |||||||||||||||||||||||||||
| — | 4,371 | (7) | — | 299.61 | 1/17/2027 | — | — | — | — | |||||||||||||||||||||||||||
| — | 2,058 | (7) | — | 340.44 | 4/24/2027 | — | — | — | — | |||||||||||||||||||||||||||
| — | — | — | — | — | 3,575 | (10) | $ | 1,201,057 | — | — | ||||||||||||||||||||||||||
| Option Awards | Stock Awards | |||||||||||||||||||||||||||||||||||||
Name | Number of Securities Underlying Unexercised Options Exercisable (#) | Number of Securities Underlying Unexercised Options Unexercisable (#) | Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#) | Option Exercise Price ($) | Option Expiration Date | Number of Shares or Units of Stock That Have Not Vested (#) | Market Value of Shares or Units of Stock That Have Not Vested ($)(1) | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#) | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($)(1) | |||||||||||||||||||||||||||||
Christopher L. Winfrey | 36,976 | (2) | — | — | 150.88 | 1/15/2024 | — | — | — | — | ||||||||||||||||||||||||||||
| 34,046 | (3) | — | — | 175.76 | 1/15/2025 | — | — | — | — | |||||||||||||||||||||||||||||
| 24,064 | (4) | — | — | 183.87 | 1/15/2026 | — | — | — | — | |||||||||||||||||||||||||||||
| 497,309 | (5) | — | — | 221.25 | 6/17/2026 | — | — | — | — | |||||||||||||||||||||||||||||
| 55,758 | (6) | — | — | 512.06 | 1/15/2030 | — | — | — | — | |||||||||||||||||||||||||||||
| — | 31,819 | (7) | — | 625.55 | 1/15/2031 | — | — | — | — | |||||||||||||||||||||||||||||
| — | 5,176 | (8) | — | 704.21 | 7/15/2031 | — | — | — | — | |||||||||||||||||||||||||||||
| — | 3,099 | (9) | — | 714.99 | 10/19/2031 | — | — | — | — | |||||||||||||||||||||||||||||
| — | 57,356 | (10) | — | 588.83 | 1/18/2032 | — | — | — | — | |||||||||||||||||||||||||||||
| — | 17,073 | (11) | — | 342.24 | 9/22/2032 | — | — | — | — | |||||||||||||||||||||||||||||
| — | 124,922 | (12) | — | 387.38 | 1/17/2033 | — | — | — | — | |||||||||||||||||||||||||||||
| — | — | 531,840 | (13) | 380.53 | 2/22/2033 | — | — | — | — | |||||||||||||||||||||||||||||
| — | — | — | — | — | 1,119 | (14) | 434,933 | — | — | |||||||||||||||||||||||||||||
| — | — | — | — | — | — | — | 59,093 | (15) | 22,968,267 | |||||||||||||||||||||||||||||
Richard J. DiGeronimo | 23,620 | (16) | — | — | 353.20 | 1/16/2028 | — | — | — | — | ||||||||||||||||||||||||||||
| 27,151 | (17) | — | — | 292.31 | 1/15/2029 | — | — | — | — | |||||||||||||||||||||||||||||
| 6,760 | (18) | — | — | 378.67 | 8/15/2029 | — | — | — | — | |||||||||||||||||||||||||||||
| 24,781 | (6) | — | — | 512.06 | 1/15/2030 | — | — | — | — | |||||||||||||||||||||||||||||
| — | 21,212 | (7) | — | 625.55 | 1/15/2031 | — | — | — | — | |||||||||||||||||||||||||||||
| — | 4,462 | (9) | — | 714.99 | 10/19/2031 | — | — | — | — | |||||||||||||||||||||||||||||
| — | 41,296 | (10) | — | 588.83 | 1/18/2032 | — | — | — | — | |||||||||||||||||||||||||||||
| — | 6,146 | (11) | — | 342.24 | 9/22/2032 | — | — | — | — | |||||||||||||||||||||||||||||
| — | 66,135 | (12) | — | 387.38 | 1/17/2033 | — | — | — | — | |||||||||||||||||||||||||||||
| — | — | 310,996 | (13) | 380.53 | 2/22/2033 | — | — | — | — | |||||||||||||||||||||||||||||
| — | — | — | — | — | 4,953 | (19) | 1,925,132 | — | — | |||||||||||||||||||||||||||||
| — | — | — | — | — | — | — | 34,555 | (15) | 13,430,837 | |||||||||||||||||||||||||||||
Jessica M. Fischer | 5,765 | (17) | — | — | 292.31 | 1/15/2029 | — | — | — | — | ||||||||||||||||||||||||||||
| 3,289 | (6) | — | — | 512.06 | 1/15/2030 | — | — | — | — | |||||||||||||||||||||||||||||
| — | 2,815 | (7) | — | 625.55 | 1/15/2031 | — | — | — | — | |||||||||||||||||||||||||||||
| — | 4,610 | (20) | — | 621.71 | 2/5/2031 | — | — | — | — | |||||||||||||||||||||||||||||
| — | 2,231 | (9) | — | 714.99 | 10/19/2031 | — | — | — | — | |||||||||||||||||||||||||||||
| — | 18,067 | (10) | 588.83 | 1/18/2032 | — | — | — | — | ||||||||||||||||||||||||||||||
| — | 36,374 | (12) | — | 387.38 | 1/17/2033 | — | — | — | — | |||||||||||||||||||||||||||||
| — | — | 171,048 | (13) | 380.53 | 2/22/2033 | — | — | — | — | |||||||||||||||||||||||||||||
| — | — | — | — | — | 2,478 | (21) | 963,149 | — | — | |||||||||||||||||||||||||||||
| — | — | — | — | — | — | — | 19,005 | (15) | 7,386,863 | |||||||||||||||||||||||||||||
Kevin D. Howard | 6,131 | (4) | — | — | 183.87 | 1/15/2026 | — | — | — | — | ||||||||||||||||||||||||||||
| 4,371 | (22) | — | — | 299.61 | 1/17/2027 | — | — | — | — | |||||||||||||||||||||||||||||
| 2,058 | (23) | — | — | 340.44 | 4/24/2027 | — | — | — | — | |||||||||||||||||||||||||||||
| 6,495 | (16) | — | — | 353.20 | 1/16/2028 | — | — | — | — | |||||||||||||||||||||||||||||
| 7,467 | (17) | — | — | 292.31 | 1/15/2029 | — | — | — | — | |||||||||||||||||||||||||||||
| 1,593 | (24) | — | — | 289.52 | 1/28/2029 | — | — | — | — | |||||||||||||||||||||||||||||
| 6,195 | (6) | — | — | 512.06 | 1/15/2030 | — | — | — | — | |||||||||||||||||||||||||||||
| — | 5,303 | (7) | — | 625.55 | 1/15/2031 | — | — | — | — | |||||||||||||||||||||||||||||
| — | 5,162 | (10) | — | 588.83 | 1/18/2032 | — | — | — | — | |||||||||||||||||||||||||||||
| — | 1,452 | (25) | — | 478.38 | 7/26/2032 | — | — | — | — | |||||||||||||||||||||||||||||
| — | 9,920 | (12) | — | 387.38 | 1/17/2033 | — | — | — | — | |||||||||||||||||||||||||||||
| — | — | 46,649 | (13) | 380.53 | 2/22/2033 | — | — | — | — | |||||||||||||||||||||||||||||
| — | — | — | — | — | 769 | (26) | 298,894 | — | — | |||||||||||||||||||||||||||||
| — | — | — | — | — | — | — | 5,184 | (15) | 2,014,917 | |||||||||||||||||||||||||||||
Charter Communications | 45 | 2024 Proxy Statement
| Option Awards | Stock Awards | |||||||||||||||||||||||||||||||||||||
Name | Number of Securities Underlying Unexercised Options Exercisable (#) | Number of Securities Underlying Unexercised Options Unexercisable (#) | Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#) | Option Exercise Price ($) | Option Expiration Date | Number of Shares or Units of Stock That Have Not Vested (#) | Market Value of Shares or Units of Stock That Have Not Vested ($)(1) | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#) | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($)(1) | |||||||||||||||||||||||||||||
R. Adam Ray |
|
5,015 |
(16) |
|
— |
|
|
— |
|
|
353.20 |
|
|
1/16/2028 |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
| |||||||||||
| 5,765 | (17) | — | — | 292.31 | 1/15/2029 | — | — | — | — | |||||||||||||||||||||||||||||
| 3,289 | (6) | — | — | 512.06 | 1/15/2030 | — | — | — | — | |||||||||||||||||||||||||||||
| 3,802 | (27) | — | — | 515.62 | 7/1/2030 | — | — | — | — | |||||||||||||||||||||||||||||
| — | 9,280 | (7) | — | 625.55 | 1/15/2031 | — | — | — | — | |||||||||||||||||||||||||||||
| — | 2,570 | (28) | — | 702.13 | 6/23/2031 | — | — | — | — | |||||||||||||||||||||||||||||
| — | 12,905 | (10) | — | 588.83 | 1/18/2032 | — | — | — | — | |||||||||||||||||||||||||||||
| — | 2,602 | (29) | — | 581.19 | 1/19/2032 | — | — | — | — | |||||||||||||||||||||||||||||
| — | 19,841 | (12) | — | 387.38 | 1/17/2033 | — | — | — | — | |||||||||||||||||||||||||||||
| — | — | 93,299 | (13) | 380.53 | 2/22/2033 | — | — | — | — | |||||||||||||||||||||||||||||
| — | — | — | — | — | 1,645 | (30) | 639,379 | — | — | |||||||||||||||||||||||||||||
| — | — | — | — | — | — | — | 10,366 | (15) | 4,029,057 | |||||||||||||||||||||||||||||
Thomas M. Rutledge | 62,051 | (3) | — | — | 175.76 | 1/15/2025 | — | — | — | — | ||||||||||||||||||||||||||||
| 904,200 | (5) | — | — | 222.92 | 4/25/2026 | — | — | — | — | |||||||||||||||||||||||||||||
| 723,360 | (5) | — | — | 232.34 | 4/26/2026 | — | — | — | — | |||||||||||||||||||||||||||||
| 195,022 | (31) | — | — | 597.16 | 11/3/2030 | — | — | — | — | |||||||||||||||||||||||||||||
| — | 176,770 | (7) | — | 625.55 | 1/15/2031 | — | — | — | — | |||||||||||||||||||||||||||||
| — | 172,067 | (10) | — | 588.83 | 1/18/2032 | — | — | — | — | |||||||||||||||||||||||||||||
| — | 110,225 | (12) | — | 387.38 | 1/17/2033 | — | — | — | — | |||||||||||||||||||||||||||||
| (1) | Based on the closing stock price at December 29, |
| (2) | Amounts shown reflect time-vesting stock options granted |
34
| (3) | Amounts shown reflect |
| (4) | Amounts shown reflect time-vesting stock options granted on January 15, |
| (5) | Amounts shown reflect |
|
|
|
| (6) | Amounts shown reflect time-vesting stock options granted on January 15, 2020 under the 2019 Stock Incentive Plan that fully vested and became exercisable on the third anniversary of the grant date. |
| (7) | Amounts shown reflect time-vesting stock options granted on January 15, 2021 under the 2019 Stock Incentive Plan that fully vest and become exercisable on the third anniversary of the grant date. |
| (8) | Amounts shown reflect time-vesting stock options granted on July 15, 2021 under the 2019 Stock Incentive Plan that fully vest and become exercisable on the third anniversary of the grant date. |
| (9) | Amounts shown reflect time-vesting stock options granted on October 19, 2021 under the 2019 Stock Incentive Plan that fully vest and become exercisable on the third anniversary of the grant date. |
| (10) | Amounts shown reflect time-vesting stock options granted on January 18, 2022 under the 2019 Stock Incentive Plan that fully vest and become exercisable on the third anniversary of the grant date. |
| (11) | Amounts shown reflect time-vesting stock options granted on September 22, 2022 under the 2019 Stock Incentive Plan that fully vest and become exercisable on the third anniversary of the grant date. |
| (12) | Amounts shown reflect time-vesting stock options granted on January 17, 2023 under the 2019 Stock Incentive Plan that fully vest and become exercisable on the third anniversary of the grant date. |
Charter Communications | 46 | 2024 Proxy Statement
| (13) | Amounts shown reflect grants of performance-vesting |
Amounts shown reflect time-vesting RSUs granted |
Amounts shown reflect grants of performance-vesting RSUs granted on February 22, 2023 that vest subject to achievement of certain price per share thresholds measured based on the average of the per share closing price of the Company’s Class A common stock on the NASDAQ Global Select for sixty (60) consecutive trading days. |
| (16) | Amounts shown reflect time-vesting stock |
| (17) | Amounts shown reflect time-vesting stock options granted on January 15, 2019 under the 2009 Stock Incentive Plan that fully vested and became exercisable on the third anniversary of the grant date. |
| (18) | Amounts shown reflect time-vesting stock options granted on August 15, 2019 under the 2019 Stock Incentive Plan that fully vested and became exercisable on the third anniversary of the grant date. |
| (19) | Amounts shown reflect time-vesting RSUs granted January 15, 2021, October 19, 2021, January 18, 2022, September 22, 2022 and January 17, 2023 under the 2019 Stock Incentive Plan that fully vest on the third anniversary of the grant date. |
| (20) | Amounts shown reflect time-vesting stock options granted on February 5, 2021 under the 2019 Stock Incentive Plan that fully vest and become exercisable on the third anniversary of the grant date. |
| (21) | Amounts shown reflect time-vesting RSUs granted on January 15, 2021, February 5, 2021, October 19, 2021, January 18, 2022 and January 17, 2023 under the 2019 Stock Incentive Plan that fully vest on the third anniversary of the grant date. |
| (22) | Amounts shown reflect time-vesting stock options granted on January 17, 2017 under the 2019 Stock Incentive Plan that fully vested and became exercisable on the third anniversary of the grant date. |
| (23) | Amounts shown reflect time-vesting stock options granted on April 24, 2017 under the 2019 Stock Incentive Plan that fully vested and became exercisable on the third anniversary of the grant date. |
| (24) | Amounts shown reflect time-vesting stock options granted on January 28, 2019 under the 2019 Stock Incentive Plan that fully vested and became exercisable on the third anniversary of the grant date. |
| (25) | Amounts shown reflect time-vesting stock options granted on July 26, 2022 under the 2019 Stock Incentive Plan that fully vest and become exercisable on the third anniversary of the grant date. |
| (26) | Amounts shown reflect time-vesting RSUs granted on January 15, 2021, January 18, 2022, July 26, 2022 and January 17, 2023 under the 2019 Stock Incentive Plan that fully vest on the third anniversary of the grant date. |
| (27) | Amounts shown reflect time-vesting stock options granted on July 1, 2020 under the 2019 Stock Incentive Plan that fully vested and became exercisable on the third anniversary of the grant date. |
| (28) | Amounts shown reflect time-vesting stock options granted on June 23, 2021 under the 2019 Stock Incentive Plan that fully vest and become exercisable on the third anniversary of the grant date. |
| (29) | Amounts shown reflect time-vesting stock options granted on January 19, 2022 under the 2019 Stock Incentive Plan that fully vest and become exercisable on the third anniversary of the grant date. |
| (30) | Amounts shown reflect time-vesting RSUs granted on January 15, 2021, June 23, 2021, January 18, 2022, January 19, 2022 and January 17, 2023 under the 2019 Stock Incentive Plan that fully vest on the third anniversary of the grant date. |
| (31) | Amounts shown reflect time-vesting stock options granted on November |
35Charter Communications | 47 | 2024 Proxy Statement
20172023 Options Exercised and Stock Vested
The following table provides information on option awards exercised and restricted stock and stock unit awards that vested during 20172023 for each of the Company’s NEOs.
Name | Option Awards | Stock Awards | ||||||||||||||
| Number of Shares Acquired on Exercise (#) | Value Realized on Exercise ($) | Number of Shares Acquired on Vesting or Transfer for Value (#) | Value Realized on Vesting ($)(1) | |||||||||||||
Thomas M. Rutledge(2) | — | — | 6,627 | 1,978,027 | ||||||||||||
John Bickham(3) | — | — | 3,313 | 988,864 | ||||||||||||
David Ellen | — | — | — | — | ||||||||||||
Christopher L. Winfrey(4) | — | — | 1,657 | 494,581 | ||||||||||||
Kevin Howard(5) | — | — | 844 | 251,917 | ||||||||||||
Name | Option Awards | Stock Awards | ||||||||||||||||
Number of Shares Acquired on Exercise (#) | Value Realized on Exercise ($) | Number of Shares Acquired on Vesting or Transfer for Value (#) | Value Realized on Vesting ($)(1) | |||||||||||||||
Christopher L. Winfrey(2) | — | — | 1,758 | 680,030 | ||||||||||||||
Richard J. DiGeronimo(3) | — | — | 781 | 302,106 | ||||||||||||||
Jessica M. Fischer(4) | — | — | 311 | 120,301 | ||||||||||||||
Kevin D. Howard(5) | — | — | 195 | 75,430 | ||||||||||||||
R. Adam Ray(6) | — | — | 419 | 159,931 | ||||||||||||||
Thomas M. Rutledge(7) | 222,042 | 57,435,134 | — | — | ||||||||||||||
| (1) | Amount attributed to the average high and low market values of the stock on the day of vesting. |
| (2) | Mr. |
| (3) | Mr. |
| (4) |
|
| (5) | Mr. Howard had |
| (6) | Mr. Ray had 311 time vesting RSUs vest on January 13, 2023 and 112 shares were withheld to cover taxes at a market value of $386.82 (the average of the high and low trading prices on that day). Mr. Ray had 108 time vesting RSUs vest on June 30, 2023 and 34 shares were withheld to cover taxes at a market value of $366.94 (the average of the high and low trading prices on that day). |
| (7) | Mr. Rutledge exercised 147,905 shares that were set to expire on January 15, 2024 on a net exercise basis at an exercise price of $150.88 per option on November 14, 2023 at a market value of $417.855 with 97,197 shares withheld to cover the exercise price and taxes. Mr. Rutledge exercised 74,137 shares that were set to expire on January 15, 2025 on a net exercise basis at an exercise price of $175.76 per option on November 14, 2023 at a market value of $417.855 with 51,089 shares withheld to cover the exercise price and taxes. |
Retirement Benefits
We sponsor a 401(k) plan, which is a qualified retirement plan offered to all eligible employees, including our NEOs, that permits eligible employees to elect to defer a portion of their compensation on apre-tax basis.
Legacy TWC Pension Benefits
In connection with Mr. Rutledge’s and Mr. Bickham’s employment by a predecessor and/or affiliate of Legacy TWC, Mr. Rutledge and Mr. Bickham participated in the Time Warner Cable Pension Plan, a tax qualified defined benefit pension plan (the “Cable“Pension Plan”), and the Time Warner Cable Excess Benefit Pension Plan (the “Excess Benefit Plan”), a nonqualified defined benefit pension plan (collectively, the “Pension Plans”) offered by those employers and accrued a benefit as a result. No other NEO is entitled to benefits under the Pension Plans.Plan. As of the closing of the Transactions, Charter is the sponsor of the Pension Plans.Plan. As of December 31, 2017, the present value of2023, Mr. Rutledge’s and Mr. Bickham’sRutledge no longer had an accrued benefit under the Pension PlansPlan as it was $1,268,082, and $1,162,238, respectively, reflecting the assumptions that (i) the benefits will be payable at the earliest retirement age at which unreduced benefits are assumed to be payable (which is age 65) under the plans, valued as if paid as a life annuity, (b) 28.58 and 8.75 years, respectively, of benefit service to Legacy TWC during their tenure there, and (c) are consistent with the assumptions usedout in the calculationsum of $1,535,429 on December 8, 2023 in connection with Mr. Rutledge’s retirement as Executive Chairman of the Company’s benefit obligations as disclosed in Note 21 to the audited consolidated financial statementsBoard of Directors of the Company included in the Company’s Annual Report on Form10-K for the year ended December 31, 2017. As shown above in the Summary Compensation Table, the actuarial present value of Mr. Rutledge’s and Mr. Bickham’s accrued benefit under the Pension Plans increased by $89,697 and $356,409, respectively, during 2017 as a result of a required discontinuation of the payout status of their pension benefits prior to the Transactions and the required actuarial calculations pursuant to the Pension Plans.effective November 30, 2023.
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Federal tax law limits both the amount of compensation that is eligible for the calculation of benefits and the amount of benefits that may be paid to participants under atax-qualified plan, such as the CablePension Plan. However, as permitted under Federal tax law, Legacy TWC designed the Excess Benefit Plan to provide for supplemental payments by Legacy TWC of an amount that eligible employees would have received under the Cable Plan if eligible compensation were subject to a higher limit and there were no payment restrictions. The amount of the payment under the Excess Benefit Plan is calculated based on the differences between (a) the annual benefit that would have been payable under the Cable Plan if the annual eligible compensation limit imposed by the tax laws was $350,000 (the maximum compensation limit imposed under the Excess Benefit Plan) and (b) the actual benefit payable under the Cable Plan.
Benefit payments under the Pension PlansPlan are calculated using the highest consecutive five-year average annual compensation (subject to federal law limits and the $350,000 limit referred to above), which is referred to as “average compensation.” Compensation covered by the
Charter Communications | 48 | 2024 Proxy Statement
Pension PlansPlan takes into account salary, bonus, some elective deferrals and other compensation paid, but excludes the payment of deferred or long-term incentive compensation and severance payments. The annual pension payment under the terms of the TWC Pension Plans,Plan, if the retired employee is vested, and if paid as a single life annuity, commencing at age 65, is an amount equal to the sum of:
1.25% of the portion of average compensation that does not exceed the average of the Social Security taxable wage base ending in the year the employee reaches the Social Security retirement age, referred to as “covered compensation,” multiplied by the number of years of benefit service up to 35 years, plus
| • | 1.25% of the portion of average compensation that does not exceed the average of the Social Security taxable wage base ending in the year the employee reaches the Social Security retirement age, referred to as “covered compensation,” multiplied by the number of years of benefit service up to 35 years, plus |
1.67% of the portion of average compensation that exceeds covered compensation, multiplied by the number of years of benefit service up to 35 years, plus
| • | 1.67% of the portion of average compensation that exceeds covered compensation, multiplied by the number of years of benefit service up to 35 years, plus |
0.5% of average compensation multiplied by the employee’s number of years of benefit service in excess of 35 years, plus
| • | 0.5% of average compensation multiplied by the employee’s number of years of benefit service in excess of 35 years, plus |
a supplemental benefit in the amount of $60 multiplied by the employee’s number of years of benefit service up to 30 years, with a maximum supplemental benefit of $1,800 per year.
| • | a supplemental benefit in the amount of $60 multiplied by the employee’s number of years of benefit service up to 30 years, with a maximum supplemental benefit of $1,800 per year. |
Reduced benefits are available in the case of retirement before age 65 and in other optional forms of benefits payouts, as described below.
The benefits under the Pension Plan are payable as (i) a single life annuity, (ii) a 50%, 75% or 100% joint and survivor annuity, (iii) a life annuity that is guaranteed for 10 years, or (iv) as of January 1, 2015, a lump sum. Spousal consent is required in certain cases. The participant may elect the form of benefit payment at the time of retirement or termination of employment (in which case, benefits are payable as (i) a single life annuity, (ii) a 50% or 75% joint and survivor annuity or (iii) a lump sum). In the case of a single life annuity, the amount of the annuity is based on the applicable formulas described above. In the case of a joint and survivor annuity, the amount of the annuity is based on the single life annuity amount but is reduced to take into account the ages of the participant and beneficiary at the time the annuity payments begin and the percentage elected by the participant. In the case of a life annuity that is guaranteed for a period of time, the amount of the annuity is based on the single life annuity amount but is reduced to take into account the guaranteed period. Benefits under the Excess Benefit Plan are payable only as a lump sum, unless the participant elected to receive monthly installments over 10 years by the applicable deadline.
Pension Benefits Table
Set forth in the table below are payments made during the last fiscal year to Mr. Rutledge. Number of years of credited service and the present value of Mr. Rutledge’s and Mr. Bickham’s accumulated benefit under the Pension Plans computedare not shown as of December 31, 2017, the pension plan measurement date used for financial statement reporting purposes2023 because Mr. Rutledge received a lump sum distribution of his entire accrued benefit in the Company’s audited consolidated financial statementsamount of $1,535,429 on December 8, 2023 in connection with his retirement as Executive Chairman of the Board of Directors of the Company effective November 30, 2023.
Pension Benefits for the year ended December 31, 2017.2023
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PENSION BENEFITS FOR 2017
Name | Plan Name | Number of Years Credited Service(1) | Present Value of Accumulated Benefit(2) | Payments During 2017 | ||||||||||
Thomas M. Rutledge | Time Warner Cable Pension Plan | 28.583 | $ | 1,268,082 | — | |||||||||
| Excess Benefit Plan | — | — | ||||||||||||
|
|
|
| |||||||||||
| Total | $ | 1,268,082 | — | |||||||||||
John Bickham | Time Warner Cable Pension Plan | 8.75 | $ | 662,675 | — | |||||||||
| Excess Benefit Plan | $ | 499,563 | — | |||||||||||
|
|
|
| |||||||||||
| Total | $ | 1,162,238 | — | |||||||||||
Name | Plan Name | Number of Years Credited Service | Present Value of Accumulated Benefit | Payments During Last Fiscal Year(1) | ||||||||||
Thomas M. Rutledge | Time Warner Cable Pension Plan | — | — | $1,535,429 | ||||||||||
| (1) |
|
|
NEO Employment Agreements
Thomas M. RutledgeChristopher L. Winfrey
On May 17, 2016,September 20, 2022, Charter and Mr. Winfrey entered into an amended and restated employment agreement with Thomas Rutledge (the “Rutledgewhich was amended effective as of February 22, 2023 (collectively, the “Winfrey Agreement”). The Rutledge Agreement has a term of five years from May 17, 2016, and provides that Mr. Rutledge will serve as the Chairman of the Charter board of directors and Chief Executive Officer of Charter and will have duties commensurate with such positions. Under the Rutledge Agreement, Mr. Rutledge is to receive a current base salary of $2,000,000 during the term. Mr. Rutledge is eligible to participate in the Executive Bonus Plan with a target bonus equal to 300% of base salary. Mr. Rutledge is also eligible to participate in other employee benefit plans, programs and arrangements available to other senior executives. In addition, Charter must reimburse Mr. Rutledge for all reasonable and necessary expenses incurred in connection with the performance of his duties, and Mr. Rutledge is entitled to use Company aircraft for such travel and for commuting and up to 125 hours of discretionary personal use per calendar year (without carryover). The Rutledge Agreement contains aone-yearnon-compete provision and atwo-yearnon-solicitation clause.
John Bickham
Effective as of May 18, 2016, Charter entered into an employment agreement with John Bickham (the “Bickham Agreement”). The BickhamWinfrey Agreement provides that effective December 1, 2022, Mr. Bickham shall beWinfrey became employed in an executive capacity as President and Chief OperatingExecutive Officer with such responsibilities, duties and authority as are customary for such role, reporting to the Chief Executive Officer at a base salary of $1,500,000 per year during the term. Under the Bickham Agreement, Mr. Bickham is to serve as Charter’s President and Chief Operating Officer for a term expiring on May 18, 2021. He is eligible to participate in the Executive Bonus Plan with a
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target bonus of not less than 200% of his annual base salary. Mr. Bickham is also eligible to participate in other employee benefit plans, programs and arrangements available to other senior executives. In addition, Charter must reimburse Mr. Bickham for all reasonable and necessary expenses incurred in connection with the performance of his duties, and Mr. Bickham is entitled to use Company aircraft for such travel and for up to 80 hours of discretionary personal use per calendar year (without carryover). The Bickham Agreement contains aone-yearnon-compete provision and atwo-yearnon-solicitation clause.
David Ellen
Effective as of July 1, 2016, Charter entered into an employment agreement with David Ellen (the “Ellen Agreement”). The Ellen Agreement provides that Mr. Ellen shall be employed in an executive capacity as Senior Executive Vice President with the authorities, duties and responsibilities for overseeing: (i) the following business and corporate functions: Programming, Policy (in partnership with Government Affairs), Spectrum Networks (including RSNs and the local news and sports networks), Human Resources (including Diversity and Labor Relations), Communications and Security; and (ii) the legal group (x) supporting the Programming, Policy, Spectrum Networks, Product and Labor Relations functions as well as (y) handling regulatory compliance for a term expiring on July 1, 2021. The Ellen Agreement provides that Mr. Ellen will receive a base salary of $1,250,000at least $1,700,000 per year during the term, subject to annual review and, in its discretion, increase by the Compensation and Benefits Committee. Pursuant to the Winfrey Agreement, Mr. Winfrey was appointed as a member of the Board of Directors effective November 30, 2023. Under the Winfrey Agreement, he is eligible to participate in the Executive Bonus Plan with a target bonus of not less than 160% of his annual base salary. Mr. Ellen is also eligible to participate in other employee benefit plans, programs and arrangements available to other senior executives. In addition, Charter must reimburse Mr. Ellen for all reasonable and necessary expenses incurred in connection with the performance of his duties, and Mr. Ellen is entitled to use Company aircraft for such travel and for up to 30 hours of discretionary personal use per calendar year (without carryover). The Ellen Agreement contains atwo-yearnon-compete provision and aone-yearnon-solicitation clause.
Christopher L. Winfrey
Effective as of May 18, 2016, Charter and Mr. Winfrey entered into an employment agreement (the “Winfrey Agreement”). The Winfrey Agreement provides that Mr. Winfrey shall be employed in an executive capacity as Executive Vice President and Chief Financial Officer with such responsibilities, duties and authority as are customary for such role, including, but not limited to, overall management responsibility for Charter’s financial and accounting functions, at a base salary of $850,000 per year during the term. He is eligible to participate in the Executive Bonus Plan with a target bonus of not less than 150%250% of his annual base salary. He is also eligible to receive such other employee benefits as are generally made available to other senior executives. In addition, Charter must reimburse Mr. Winfrey for all reasonable and
Charter Communications | 49 | 2024 Proxy Statement
necessary expenses incurred in connection with the performance of his duties, and Mr. Winfrey is entitled to use Company aircraft for such travel and for up to 100 hours of discretionary personal use per calendar year (without carryover). The Winfrey Agreement has an initial term from the effective date through December 1, 2025, provided that the term can be extended by the Company for unlimited one-year periods. The Winfrey Agreement contains a two-year non-compete provision and a two-year non-solicitation clause.
Richard J. DiGeronimo
Effective as of September 20, 2022, Charter and Mr. DiGeronimo entered into an employment agreement which was amended effective as of February 22, 2023 (collectively, the “DiGeronimo Agreement”). The DiGeronimo Agreement provides that effective December 1, 2022, Mr. DiGeronimo became employed in an executive capacity as President, Product and Technology with such responsibilities, duties and authority as are customary for such role, at a base salary of $1,450,000 per year during the term, subject to annual review and, in its discretion, increase by the Compensation and Benefits Committee. The DiGeronimo Agreement provides that he is eligible to participate in the Executive Bonus Plan with a target bonus of 200% of his annual base salary. He is also eligible to receive such other employee benefits as are generally made available to other senior executives. In addition, Charter must reimburse Mr. DiGeronimo for all reasonable and necessary expenses incurred in connection with the performance of his duties and Mr. DiGeronimo is entitled to use Company aircraft for such travel and for up to 40 hours of discretionary personal use per calendar year (without carryover). The DiGeronimo Agreement has an initial term from the effective date through December 1, 2025 provided that the term can be extended by the Company for unlimited one-year periods. The DiGeronimo Agreement contains a two-year non-compete provision and a one-year non-solicitation clause.
Jessica M. Fischer
Effective as of February 5, 2023, Charter and Ms. Fischer entered into an employment agreement (the “Fischer Agreement”). The Fischer Agreement provides that Ms. Fischer shall be employed in an executive capacity as Chief Financial Officer with such responsibilities, duties and authority as are customary for such role, at a base salary of $800,000 per year during the term, subject to annual review and, in its discretion, increase by the Compensation and Benefits Committee. The Fischer Agreement provides that Ms. Fischer is eligible to participate in the Executive Bonus Plan with a target bonus of 150% of her annual base salary. She is also eligible to receive such other employee benefits as are generally made available to other senior executives. In addition, Charter must reimburse Ms. Fischer for all reasonable and necessary expenses incurred in connection with the performance of her duties. The Fischer Agreement has an initial term from the effective date through February 5, 2025 provided that the term can be extended by the Company for unlimited one-year periods. The Fischer Agreement contains a two-year non-compete provision and a one-year non-solicitation clause.
Kevin D. Howard
Effective as of July 26, 2022, Charter and Mr. Howard entered into an employment agreement (the “Howard Agreement”). The Howard Agreement provides that Mr. Howard shall be employed in an executive capacity as Executive Vice President, Chief Accounting Officer and Controller with such responsibilities, duties and authority as are customary for such role, at a base salary of $600,000 per year during the term, subject to annual review and, in its discretion, increase by the Compensation and Benefits Committee. The Howard Agreement provides that Mr. Howard is eligible to participate in the Executive Bonus Plan with a target bonus of 85% of his annual base salary. He is also eligible to receive such other employee benefits as are generally made available to other senior executives. In addition, Charter must reimburse Mr. Howard for all reasonable and necessary expenses incurred in connection with the performance of his duties. The WinfreyHoward Agreement has an initial term from the effective date through May 18, 2021July 26, 2024 provided that the term can be extended by the Company for unlimitedone-year periods. The WinfreyHoward Agreement contains atwo-yearnon-competetwo-year non-compete provision and a oneone-year non-solicitation clause.
R. Adam Ray
Effective as of January 19, 2024, Charter and Mr. Ray entered into an employment agreement (the “Ray Agreement”). The Ray Agreement provides that Mr. Ray shall be employed in an executive capacity as Executive Vice President, Chief Commercial Officer with such responsibilities, duties and authority as are customary for such role, at a base salary of $725,000 per yearnon-solicitation clause. during the term, subject to annual review and, in its discretion, increase by the Compensation and Benefits Committee. The Ray Agreement provides that Mr. Ray is eligible to participate in the Executive Bonus Plan with a target bonus of 150% of his annual base salary. He is also eligible to receive such other employee benefits as are generally made available to other senior executives. In addition, Charter must reimburse Mr. Ray for all reasonable and necessary expenses incurred in connection with
Charter Communications | 50 | 2024 Proxy Statement
the performance of his duties. The Ray Agreement has an initial term from the effective date through January 19, 2026 provided that the term can be extended by the Company for unlimited one-year periods. The Ray Agreement contains a two-year non-compete provision and a one-year non-solicitation clause.
Thomas M. Rutledge
On September 20, 2022, Charter and Mr. Rutledge entered into an amended and restated employment agreement (the “Rutledge Agreement”). The Rutledge Agreement had a term ending November 30, 2023. Effective November 30, 2023, Mr. Rutledge transitioned from Executive Chairman to the role of director emeritus of the Board of Directors. Under the Rutledge Agreement, Mr. Rutledge’s base salary was $1,250,000 effective December 1, 2022, in connection with his transition to the role of Executive Chairman. The Rutledge Agreement also provided for continued eligibility to participate in the Executive Bonus Plan with a target bonus equal to 300% of his base salary. Mr. Rutledge was also eligible to participate in other employee benefit plans, programs and arrangements available to other senior executives through November 30, 2023. In addition, Charter had to reimburse Mr. Rutledge for all reasonable and necessary expenses incurred in connection with the performance of his duties, and Mr. Rutledge was entitled to use Company aircraft for such travel and for commuting and up to 65 hours of discretionary personal use per calendar year (without carryover). The Rutledge Agreement contained a two-year non-compete provision and a two-year non-solicitation clause, which will expire on November 30, 2025.
Separation and Related Arrangements
Named Executive Officers
TheUnless otherwise noted, the stock price used in the separation tables that follow is based on $335.96$388.68 per share, the closing price of Charter’s Class A common stock on the NASDAQ Global Select Market on December 29, 2017.2023. The paragraphs that follow describe the payments that each Named Executive OfficerNEO would have received assuming the applicable termination event occurred on December 31, 2017.2023. Mr. Rutledge, whose employment with Charter ended on November 30, 2023 in connection with the expiration of his employment agreement, is only included in the section pertaining to such a termination; for sections relating to other termination events, all references to NEOs exclude Mr. Rutledge. The descriptions that follow cover only information regarding benefits that are not generally available to other employees. Benefits generally available to other employees include:
Salary earned through date of termination;
| • | Salary earned through date of termination; |
Lump sum payment for COBRA coverage for the period of severance, if applicable; and
| • | Lump sum payment for COBRA coverage; and |
Lump sum payment of accrued and unused vacation.
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| • | Lump sum payment of accrued and unused vacation. |
As used in the following sections:
| • | “Severance”: NEOs may be eligible for certain payments following the occurrence of certain termination events specified in their employment |
| • | “Bonus”: As used in the tables below, “Bonus” is the target bonus set forth and defined in each |
| • | “Stock Options |
Termination by Charter for Cause or a Voluntary Termination by the Executive without Good Reason
Under the current employment agreements, equity award agreements and Company policies applicable to our NEOs, we do not provide any severance in the event of a termination by the Company for cause or a voluntary termination by aan NEO without good reason, each NEO would
Charter Communications | 51 | 2024 Proxy Statement
only be entitled to any bonus earned for periods ending on or before the termination date but not yet paid as of such date, including a bonus under the 2023 Executive Bonus Plan for a termination occurring on December 31, 2023. NEOs are otherwise not provided any severance and all bonus awards and unvested equity willwould be forfeited and cancelled effective as of the date of termination. Under the long-term incentiveequity award agreements with our NEOs, vested stock options generally may be exercised for a period of time not to exceed six months from the effective date offollowing a for cause/voluntary termination, or through the optionoriginal expiration date, if sooner. The performance-vesting options granted to Mr. Bickham in 2016 provide that he may exercise the options for up to three years following a voluntary termination without good reason. “Forearlier.
“For cause” is generally defined under our NEOs’ employment agreements and applicable Company policies to include: willful breaches of material obligations, fiduciary duties, the Company’s code of conduct or other material Company policies;policies (which, in the case of Mr. Winfrey, causes or should reasonably be expected to cause substantial injury to the business or reputation of the Company); acts of fraud or willful and material misrepresentations or concealments from the Company or boardthe Board of directors;Directors; misappropriation of a material amount of Company property; criminal convictions, guilty or no contest pleas with respect to felonies or any crime expected to havematerially adversely affect the Company; or admission or finding of liability for a material negative impactknowing and deliberate breach of any securities laws (which, in the case of Mr. Winfrey, materially adversely affects or crimes relatedcould reasonably be expected to materially adversely affect the Company). Under our employment agreements with Ms. Fischer and Messrs. DiGeronimo, Howard and Ray, “for cause” also includes criminal convictions, guilty or no contest pleas with respect to fraud, embezzlement, dishonesty, breach of trust or moral turpitude; admissionillegal possession or finding of liability for knowing or deliberate breach of any securities laws; illegal possessionuse of a controlled substance;substance or excessive alcohol use, in each case in connection with executive’s duties, or otherwise on the Company’s premises or duringat a Company function; gross neglect of duty or willful misconduct related to duties; or willful or grossgrossly negligent commission of an act or willful failure to act in connection with executive’s duties which causes or is reasonably expected to cause substantial economic injury to the business reputation of the Company. Under our employment agreements with Messrs. Rutledge and Bickham, “for cause” includes the foregoing factors amended to read that breaches of material obligations and fiduciary duties, material misrepresentations and concealments and failure to adhere to Company policies must be willful and reasonably expected to cause substantial injury to the business or reputation of the Company.
For a definition of “good reason”, see the section below titled “Termination by the Company without Cause or by the Executive for Good Reason (other than for a Change in Control)”.
Severance ($)(1) | Bonus ($)(2) | Stock Options ($)(3) | Restricted Stock and Restricted Stock Units ($)(4) | Total ($) | ||||||||||||||||
Christopher L. Winfrey | — | 4,250,000 | — | — | 4,250,000 | |||||||||||||||
Richard J. DiGeronimo | — | 2,900,000 | — | — | 2,900,000 | |||||||||||||||
Jessica M. Fischer | — | 1,200,000 | — | — | 1,200,000 | |||||||||||||||
Kevin D. Howard | — | 510,000 | — | — | 510,000 | |||||||||||||||
R. Adam Ray | — | 937,500 | — | — | 937,500 | |||||||||||||||
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| (1) | No severance is payable in the event of a termination by Charter for cause or a voluntary termination by the executive without good reason. |
| (2) | “Bonus” is the bonus payable under the 2023 Executive Bonus Plan, which would be earned but unpaid for all NEOs upon a termination on December 31, 2023; performance attainment for such bonuses is assumed at 100% for the purposes of these separation tables. Upon any termination, all NEOs are entitled to any bonus earned for a performance period ending on or before the termination date but unpaid as of such date. |
| (3) | Upon a termination by Charter for cause, all unvested stock option grants made to our NEOs will be forfeited and cancelled. Upon a voluntary resignation without good reason, all unvested stock option grants made to our NEOs will be forfeited and cancelled. |
| (4) | Upon a termination by Charter for cause or a voluntary resignation by the executive without good reason, all unvested restricted stock unit grants made to our NEOs will be forfeited and cancelled. |
Termination in Connection with Expiration of Term
Under the employment agreements, equity award agreements and Company policies applicable to our NEOs, we may be required to make certain payments to, or allow pro rata or continued equity vesting for, Messrs. Winfrey, DiGeronimo and Rutledge if they are terminated in connection with the expiration of the term of their employment agreements. Unless their respective employment agreement is otherwise renewed or extended, Mr. Winfrey’s employment will terminate immediately upon the expiration of the term of the agreement on December 1, 2025, and Mr. DiGeronimo may terminate his employment for any reason within thirty (30) days following the expiration of the term of his employment agreement on December 1, 2025. In each case, no severance is payable to Messrs. Winfrey and DiGeronimo, but they are entitled to a pro rata bonus in the year
Charter Communications | 52 | 2024 Proxy Statement
of termination. In addition, Mr. Winfrey’s stock options granted on or after September 22, 2022 and pursuant to his employment agreement would continue to vest and such stock options would remain exercisable through their original expiration date. Any unvested performance-vesting stock options and RSUs granted to him on February 22, 2023 would remain outstanding and eligible to vest through the second anniversary of the date of termination, contingent upon the applicable time and performance-vesting criteria of such awards being satisfied during that time, and any performance-vesting stock options vested as of the date of termination will remain exercisable for 12 months following such date and performance-vesting stock options vesting after the date of termination will remain exercisable for 12 months following the date of vesting, but in no event will any such option remain exercisable past the original expiration date. Mr. DiGeronimo’s stock options and RSUs granted on or after September 22, 2022 and pursuant to his employment agreement would pro rata vest and such vested stock options would remain exercisable until the fifth anniversary of the date of his termination, or the original expiration date, if earlier. Any unvested performance-vesting stock options granted to him on February 22, 2023 would be forfeited. Mr. Rutledge’s employment terminated upon the expiration of his employment agreement on November 30, 2023, and he was entitled to the amounts set forth in the table below and descried in the corresponding footnotes. As the respective terms for Messrs. Winfrey and DiGeronimo’s employment agreements expire after 2024, no payment or benefit amounts would apply as of December 31, 2023 and they are therefore not included in the table below.
Severance ($)(1) | Bonus ($)(2) | Stock Options ($)(3) | Restricted Stock and Restricted Stock Units ($) | Total ($) | ||||||||||||||||
Thomas M. Rutledge | — | 3,431,507 | 1,405,920 | — | 4,837,427 | |||||||||||||||
| (1) | No severance is payable in the event of a termination in connection with the expiration of the term of an employment agreement. |
| (2) | “Bonus” is the bonus payable under the 2023 Executive Bonus Plan. Mr. Rutledge is entitled to a pro rata bonus in the year of termination if terminated in connection with the expiration of the term of his employment agreement as described above. The bonus amount for Mr. Rutledge is prorated based on his November 30, 2023 termination date. |
| (3) | All of Mr. Rutledge’s stock options granted pursuant to his employment agreement continue to vest following his termination on November 30, 2023, will remain exercisable through the original expiration date, and are valued in the table above at the November 30, 2023 closing stock price of $400.13. |
Termination due to Death or Disability
Under the current employment agreements, equity award agreements and Company policies, as applicable, for each of our NEOs, we may be required to make certain payments to, or allow full equity vesting for, these executives or their estates or beneficiaries in the event that the executive is terminated as a result of death or “disability.” Under the equity award agreements with our NEOs, vested stock options generally may be exercised for a period of eighteen months following a termination due to death or disability, or through the original expiration date, if earlier.
An executive is deemed to have a “disability” if, due to illness or injury: the executive is unable to perform his or her duties without accommodation for a certain period of time; or the executive is considered disabled for the purposes of receiving long term disability benefits under a participating plan or policy. In the event there is a period of time during which aan NEO is not being paid annual base salary and not receiving long-term disability insurance payments, the executive will receive interim payments equal to such unpaid disability insurance payments until commencement of disability insurance payments.
| Severance ($)(1) | Bonus ($)(2) | Stock Options ($)(3) | Restricted Stock and Restricted Stock Units ($)(4) | Total ($) | ||||||||||||||||
Thomas M. Rutledge | — | 6,000,000 | 21,817,318 | 1,911,276 | 29,728,594 | |||||||||||||||
John Bickham | — | 3,000,000 | 18,228,598 | 5,523,182 | 26,751,780 | |||||||||||||||
David Ellen | — | 2,000,000 | — | — | 2,000,000 | |||||||||||||||
Christopher L. Winfrey | — | 1,275,000 | 9,114,063 | 2,761,591 | 13,150,654 | |||||||||||||||
Kevin Howard | — | 296,328 | 2,326,674 | 1,201,057 | 3,824,059 | |||||||||||||||
Severance ($)(1) | Bonus ($)(2) | Stock Options ($)(3) | Restricted Stock and Restricted Stock Units ($)(4) | Total ($) | ||||||||||||||||
Christopher L. Winfrey | — | 4,250,000 | 955,979 | 434,933 | 5,640,912 | |||||||||||||||
Richard J. DiGeronimo | — | 2,900,000 | 371,757 | 1,925,132 | 5,196,889 | |||||||||||||||
Jessica M. Fischer | — | 1,200,000 | 47,468 | 963,149 | 2,210,617 | |||||||||||||||
Kevin D. Howard | — | 510,000 | 12,946 | 298,895 | 821,841 | |||||||||||||||
R. Adam Ray | — | 937,500 | 25,893 | 639,379 | 1,602,772 | |||||||||||||||
| (1) | No severance is payable in the event of a termination based on death or disability of any NEO. |
Charter Communications | 53 | 2024 Proxy Statement
| (2) |
|
| (3) | All unvested time-vesting option grants made to our NEOs are subject to full vesting |
| (4) | All unvested time-vesting |
Termination due to Retirement by the Executive
In the event that an NEO terminates his or her employment with Charter due to retirement, the executive may be entitled to pro rata vesting of unvested equity awards granted to the executive.
Charter generally defines “retirement” eligibility in its long-term incentive plan documents as the employee’s age (at least 55) plus years of service equal to 70. Although70 (with a minimum of 5 years of service required for grants made in or after 2021). Under the current employment agreements, equity award agreements and Company policies applicable to our NEOs, in the event that an NEO terminates his or employment with Charter due to retirement, no severance is payable to any NEO but each NEO would be entitled to any bonus earned for periods ending on or before the termination date but not yet paid as of such date, including a bonus under the 2023 Executive Bonus Plan for a termination occurring on December 31, 2023. In addition, time-vesting stock option and RSU grants made prior to 2021 are subject to pro rata vesting after the first anniversary of the respective award’s grant date and vested stock options remain exercisable for three years following termination or through the original expiration date, if earlier, and, for grants made in or after 2021, unvested time-vesting stock option and RSU grants are subject to continued vesting through the original vesting date if retirement occurs at or above age 60 and are otherwise subject to pro rata vesting after the first anniversary of the respective award’s grant date. Unvested performance-vesting stock option and RSU grants made on February 22, 2023 would be forfeited and cancelled as of the date of termination. For a retirement at or above age 60, all vested time-vesting and performance-vesting stock option awards remain exercisable for five years after the termination date or, in the case of stock options that continue to vest, the vesting date, but in no event will stock options remain exercisable beyond the original expiration date. For a retirement at or above age 55 but below age 60, stock options remain exercisable for three years after the termination date or through the original expiration date, if earlier. None of the NEOs only Mr. Rutledge and Mr. Bickham
41
meet the “rule of 70”were eligible for retirement qualification, the table that follows assumes that all of them did as of December 31, 2017.2023.
| Severance ($)(1) | Bonus ($)(1) | Stock Options ($)(2) | Restricted Stock and Restricted Stock Units ($)(3) | Total ($) | ||||||||||||||||
Thomas M. Rutledge | — | — | 21,518,705 | 1,885,072 | 23,403,777 | |||||||||||||||
John Bickham | — | — | 15,541,366 | 3,926,365 | 19,467,731 | |||||||||||||||
David Ellen | — | — | — | — | — | |||||||||||||||
Christopher L. Winfrey | — | — | 7,770,523 | 1,963,350 | 9,733,873 | |||||||||||||||
Kevin Howard | — | — | 1,827,441 | 620,182 | 2,447,623 | |||||||||||||||
|
|
|
Termination by Charter Without Cause or by the Executive for Good Reason (other than for a Change in Control)
In the event that Charter terminates aan NEO’s employment without cause or the executive terminates his or her employment with Charter for good reason other than in connection with a change in control, Charter may be required to make certain payments to the executive and the executive may be entitled to pro rata or continued vesting of unvested equity awards granted to the executive. Under the equity award agreements with our NEOs, vested stock options generally may be exercised for a period of six months following a termination without cause or resignation for good reason, or through the original expiration date, if earlier.
For a definition of a “for cause,” see the prior section titled “Termination by Charter for Cause or a Voluntary Termination by the Executive without Good Reason.”
AAn NEO may generally only terminate his or her employment for “good reason” following thirty (30) days written notice to the Company of his or her intent to terminate, or, in certain circumstances, advance notice to the Company detailing the “good reason” and giving the Company an opportunity to cure prior to termination. As the term is used in the employment agreements of our NEOs, “good reason” includes: a reduction in base salary or bonus; a material reductionadverse change or diminution in title, authority, duties, or responsibilities of the executive or of the executive’s reporting structure;executive; a material failure by the Company to comply with provisions of the executive’s employment agreement including paying compensation when due anddue; changing the location of the executive’s primary workplace;workplace by more than 50 miles (for Ms. Fischer and Messrs. Winfrey, DiGeronimo, Howard and Ray); any change in reporting structure such that the executive no longer reports directly to the Board (for Mr. Winfrey); or any failure by a successor company to assume the executive’s employment agreement following a change in control. For Mr. Howard, our equity grant agreements define “good reason” to include a reduction in base salary, a failure to pay compensation when due, and certain relocations of the executive’s primary workplace.
42Charter Communications | 54 | 2024 Proxy Statement
For a definition of “change in control”, see the section immediately following titled “Termination within 30 days before or 1312 months after Change in Control for without Cause or for Good Reason.”
| Severance ($)(1) | Bonus ($)(2) | Stock Options ($)(3) | Restricted Stock and Restricted Stock Units ($)(4) | Total ($) | ||||||||||||||||
Thomas M. Rutledge | 20,000,000 | 6,000,000 | 21,518,705 | 1,885,072 | 49,403,777 | |||||||||||||||
John Bickham | 17,728,946 | 3,000,000 | 15,541,366 | 3,926,365 | 40,196,677 | |||||||||||||||
David Ellen | 6,500,000 | 2,000,000 | — | — | 8,500,000 | |||||||||||||||
Christopher L. Winfrey | 4,250,000 | 1,275,000 | 7,770,523 | 1,963,350 | 15,258,873 | |||||||||||||||
Kevin Howard | 423,325 | 296,328 | 1,877,939 | 738,104 | 3,335,696 | |||||||||||||||
Severance ($)(1) | Bonus ($)(2) | Stock Options ($)(3) | Restricted Stoc kand Restricted Stock Units ($)(4) | Total ($) | ||||||||||||||||
Christopher L. Winfrey | 14,875,000 | 4,250,000 | 388,190 | 418,649 | 19,931,839 | |||||||||||||||
Richard J. DiGeronimo | 8,700,000 | 2,900,000 | 148,512 | 985,097 | 12,733,609 | |||||||||||||||
Jessica M. Fischer | 3,700,000 | 1,200,000 | 15,072 | 495,172 | 5,410,244 | |||||||||||||||
Kevin D. Howard | 2,220,000 | 510,000 | 4,110 | 161,667 | 2,895,777 | |||||||||||||||
R. Adam Ray | 3,125,000 | 937,500 | 8,221 | 357,988 | 4,428,709 | |||||||||||||||
| (1) | All NEOs as of December 31, 2023 are entitled to severance in accordance with the terms and conditions of each executive’s respective employment agreement with the Company or the Company’s policies, as applicable. |
| (2) |
|
| (3) | All unvested time-vesting stock option grants made to our NEOs are subject to pro rata vesting |
| (4) | All unvested time-vesting |
Termination within 30 days before or 1312 months after Change in Control without Cause or for Good Reason
Under the employment agreements, equity award agreements and Company policies, as applicable, for each of our NEOs, we may be required to make payments to, or allow pro rata or full vesting of unvested equity awards for, these executives in the event that, within 30 days before, or 1312 months following, (and in the case of Mr. Howard, 12 months following), the occurrence of a change in control, Charter or any of its subsidiaries terminateterminates the executive’s employment without cause or he or she terminates his or her employment with Charter and its subsidiaries for good reason.
For a definition of “for cause,” see the prior section titled “Termination by Charter for Cause or a Voluntary Termination by the Executive without Good Reason.”
For a definition of “good reason”, see the prior section titled “Termination by the Company without Cause or by the Executive for Good Reason (other than for a Change in Control)”.
Charter Communications | 55 | 2024 Proxy Statement
A “change in control” is defined to include: any person or entity acquires beneficial ownership of 35% (50% under Mr. Howard’s long-term incentive grant agreements) or more of our outstanding common stock or combined voting power over our outstanding voting securities; the incumbent directors (as defined in the employment agreements) cease to constitute a majority of the boardBoard of directors;Directors; the completion of certain
43
corporate transactions including a reorganization or merger subject to certain exceptions; the complete liquidation or dissolution of the Company; and the sale or disposition of all or substantially all of the assets of the Company.
| Severance ($)(1) | Bonus ($)(2) | Stock Options ($)(3) | Restricted Stock and Restricted Stock Units ($)(4) | Total ($) | ||||||||||||||||
Thomas M. Rutledge | 20,000,000 | 6,000,000 | 57,250,384 | 1,911,276 | 85,161,660 | |||||||||||||||
John Bickham | 11,250,000 | 3,000,000 | 34,252,921 | 5,523,182 | 54,026,103 | |||||||||||||||
David Ellen | 6,500,000 | 2,000,000 | 9,334,870 | — | 17,834,870 | |||||||||||||||
Christopher L. Winfrey | 4,250,000 | 1,275,000 | 20,523,234 | 2,761,591 | 28,809,825 | |||||||||||||||
Kevin Howard | 423,325 | 296,328 | 2,326,674 | 1,201,057 | 4,247,384 | |||||||||||||||
Severance ($)(1) | Bonus ($)(2) | Stock Options ($)(3) | Restricted Stock and Restricted Stock Units ($)(4) | Total ($) | ||||||||||||||||
Christopher L. Winfrey | 14,875,000 | 4,250,000 | 955,979 | 434,933 | 20,515,912 | |||||||||||||||
Richard J. DiGeronimo | 8,700,000 | 2,900,000 | 371,757 | 1,925,132 | 13,896,889 | |||||||||||||||
Jessica M. Fischer | 3,700,000 | 1,200,000 | 47,468 | 963,149 | 5,910,617 | |||||||||||||||
Kevin D. Howard | 2,220,000 | 510,000 | 12,946 | 298,895 | 3,041,841 | |||||||||||||||
R. Adam Ray | 3,125,000 | 937,500 | 25,893 | 639,379 | 4,727,772 | |||||||||||||||
| (1) | All NEOs as of December 31, 2023 are entitled to severance in accordance with the terms and conditions of each executive’s respective employment agreement with the Company or the Company’s policies, as applicable. |
| (2) |
|
| (3) | All unvested time-vesting stock option grants made to our NEOs are subject to full |
| (4) | All unvested time-vesting |
Limitation of Directors’ Liability and Indemnification Matters
Our Certificate of Incorporation limits the liability of directors to the maximum extent permitted by Delaware law. The Delaware General Corporation Law provides that a corporation may eliminate or limit the personal liability of a director for monetary damages for breach of fiduciary duty as a director, except for liability for:
| (1) | any breach of the director’s duty of loyalty to the corporation and its stockholders; |
| (2) | acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law; |
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| (3) | unlawful payments of dividends or unlawful stock purchases or redemptions; or |
| (4) | any transaction from which the director derived an improper personal benefit. |
Our Bylaws provide that we will indemnify all persons whom we may indemnify pursuant thereto to the maximum extent permitted by law from and against any claims, damages, liabilities, losses, costs or expenses incurred in connection with or arising out of the performance by them of their duties for us or our subsidiaries.
We have also entered into indemnification agreements that require us to indemnify each of our directors and executive officers to the fullest extent permitted by law for any claims made against each of these persons because he or she is, was or may be deemed to be a stockholder, director, officer, employee, controlling person, agent or fiduciary of Charter or any of our subsidiaries. We are obligated to pay the expenses of these persons in connection with any claims that are subject to the agreement.
45Charter Communications | 56 | 2024 Proxy Statement
Certain Beneficial Owners of
Charter Class A Common Stock
The following table sets forth information as of February 23, 20182024 regarding the beneficial ownership of Charter Class A common stock by:
each holder of more than 5% of outstanding shares Charter Class A common stock;
| • | each holder of more than 5% of outstanding shares Charter Class A common stock; |
each Charter director and named executive officer; and
| • | each Charter director, director nominee and named executive officer; and |
all Charter directors and executive officers as a group.
| • | all Charter directors and executive officers as a group. |
| Shares Beneficially Owned(1) | ||||||||
Name | Number | Percent of Class | ||||||
5% Stockholders: | ||||||||
Liberty Broadband Corporation(2) 12300 Liberty Boulevard Englewood, CO 80112 | 70,096,104 | 25.01 | % | |||||
Advance/Newhouse Partnership(3) One World Trade Center, 44th Floor New York, New York 10007 | 34,778,200 | 12.7 | % | |||||
Directors and Executive Officers: | ||||||||
W. Lance Conn(4) | 9,374 | * | ||||||
Kim C. Goodman(5) | 1,281 | * | ||||||
Craig A. Jacobson(6) | 13,206 | * | ||||||
Gregory B. Maffei(7) | 1,870 | * | ||||||
John C. Malone(2)(7) | 1,088 | * | ||||||
John D. Markley, Jr.(8) | 14,211 | * | ||||||
David C. Merritt(9) | 9,374 | * | ||||||
Steven A. Miron(10) | 3,135 | * | ||||||
Balan Nair(11) | 5,014 | * | ||||||
Michael Newhouse(12) | 1,088 | * | ||||||
Mauricio Ramos(13) | 2,870 | * | ||||||
Thomas M. Rutledge(14) | 945,951 | * | ||||||
Eric L. Zinterhofer(15) | 14,573 | * | ||||||
John Bickham(16) | 324,060 | * | ||||||
David Ellen | — | * | ||||||
Christopher L. Winfrey(17) | 486,552 | * | ||||||
Kevin Howard(18) | 38,182 | * | ||||||
Richard Dykhouse(19) | 79,980 | * | ||||||
Jonathan Hargis(20) | 14,977 | * | ||||||
All executive officers and directors as a group (19 persons)(21) | 1,966,786 | * | ||||||
| Shares Beneficially Owned(1) | ||||||||
Name | Number | Percent of Class | ||||||
5% Stockholders: | ||||||||
Liberty Broadband Corporation(2) 12300 Liberty Boulevard Englewood, CO 80112 | 46,056,001 | 28.56 | % | |||||
Advance/Newhouse Partnership(3) One World Trade Center, 44th Floor New York, NY 10007 | 20,029,687 | 12.42 | % | |||||
Dodge & Cox(4) 555 California Street, 40th Floor San Francisco, CA 94104 | 8,399,842 | 5.21 | % | |||||
The Vanguard Group(5) 100 Vanguard Blvd. Malvern, PA 19355 | 8,251,684 | 5.12 | % | |||||
Directors and Executive Officers: | ||||||||
W. Lance Conn(6) | 6,194 | * | ||||||
Kim C. Goodman(7) | 5,388 | * | ||||||
Craig A. Jacobson(8) | 10,249 | * | ||||||
Gregory B. Maffei(9) | 6,379 | * | ||||||
John D. Markley, Jr.(10) | 15,629 | * | ||||||
David C. Merritt(11) | 9,918 | * | ||||||
James E. Meyer(12) | 2,619 | * | ||||||
Steven A. Miron(13) | 10,144 | * | ||||||
Balan Nair(14) | 7,023 | * | ||||||
Michael A. Newhouse(15) | 3,835 | * | ||||||
Mauricio Ramos(16) | 6,223 | * | ||||||
Thomas M. Rutledge(17) | 2,290,883 | 1.42 | % | |||||
Carolyn J. Slaski | — | * | ||||||
Eric L. Zinterhofer(18) | 48,327 | * | ||||||
Christopher L. Winfrey(19) | 848,258 | * | ||||||
Richard J. DiGeronimo(20) | 109,331 | * | ||||||
Jessica M. Fischer(21) | 17,669 | * | ||||||
Kevin D. Howard(22) | 44,462 | * | ||||||
R. Adam Ray(23) | 27,911 | * | ||||||
All executive officers and directors as a group (18 persons) (24) | 1,179,559 | 0.73 | % | |||||
| * | less than 1% |
Charter Communications | 57 | 2024 Proxy Statement
| (1) | Beneficial ownership is determined in accordance with the rules and regulations of the SEC. These rules generally provide that a person is the beneficial owner of securities if such person has or shares the power to vote or direct the voting thereof, or to dispose or direct the disposition thereof or has the right to acquire such powers within 60 days. Shares shown in the table above include shares held in the beneficial owner’s name or jointly with others, or in the name of a bank, nominee or trustee for the beneficial owner’s account. |
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Common stock subject to options that are currently exercisable or exercisable within 60 days of February 23, |
| (2) | Based on |
Charter Communications | 58 | 2024 Proxy Statement
the basis that he is not, individually, a party to any agreement, arrangement or understanding relating to the voting or disposition of any such shares. Decisions with respect to the voting or disposition of any Charter shares owned by Liberty Broadband are made by Liberty Broadband’s |
| (3) | Based on a Schedule |
| (4) |
|
| (5) |
|
| (6) | Includes |
| (7) |
|
| (8) | Includes |
| (9) | Includes 971 shares of restricted stock for Mr. Maffei that are not yet vested but eligible to be voted. Mr. Maffei is the President and Chief Executive Officer of Liberty Broadband. Liberty Broadband beneficially owns 28.56% of the outstanding shares of Charter Class A common stock. Mr. Maffei expressly disclaims beneficial ownership of any shares owned by Liberty Broadband. |
| (10) | Includes 14,478 shares held jointly with his spouse, 1,151 shares held by the John Markley Family Trust and |
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|
|
| (11) | Includes |
| (12) | Includes |
| (13) | Includes |
| (14) | Includes |
| (15) | Includes |
| (16) | Includes |
| (17) | Includes |
| (18) | Includes 1,426 shares of restricted stock that are not yet vested but eligible to be voted. |
| (19) | Includes (i) 20,674 shares beneficially held by Mr. Winfrey and owned by Atalaya Management, LLC which is 100% owned by The Christopher Lawrence Winfrey Revocable Trust, a revocable trust pursuant to which Mr. Winfrey is the grantor and beneficiary with the power to revoke the |
Charter Communications | 59 | 2024 Proxy Statement
Revocable Trust; (iii) 38,385 shares held in the Winfrey Dynasty Trust; (iv) 38,454 shares held in the Yeniley Lorenzo Winfrey Irrevocable Trust; and (v) 50,046 shares held in the GST Non-Exempt Winfrey Dynasty Trust. Also includes (a) 407,238 options that are vested and exercisable, (b) 180,000 options that are vested and exercisable and held in The Christopher L. Winfrey 2023 GRAT I and (c) 55,758 options that are vested and exercisable and held in The Christopher L. Winfrey 2023 GRAT II. The 57,703 shares held by the Winfrey Revocable Trust are pledged as security for a margin loan with a balance of approximately $708,000 as of the date of this proxy statement. |
Includes |
Includes |
Includes |
Includes 27,151 options that are vested and exercisable. |
| (24) | Includes options and restricted stock units that are exercisable or eligible to become vested within sixty (60) days of February |
48Charter Communications | 60 | 2024 Proxy Statement
Certain Relationships and Related Transactions
We maintain written policies and procedures covering related party transactions. The Audit Committee reviews the material facts of related party transactions.Related Party Transactions (as defined below). Management has various procedures in place,e.g., our 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. Our Related Party TransactionTransactions Policy provides that a “Related Party Transaction” is any transaction, arrangement or relationship or series of similar transactions, arrangements or relationships (including any indebtedness or guarantee of indebtedness) in which: (1) the aggregate amount involved will or may be expected to exceed $120,000 in any calendar year; (2) the Company is a participant; and (3) any Related Party has or will have a direct or indirect interest (other than solely as a result of being a director or a less than 10 percent beneficial owner of another entity). A “Related Party” is any person: (a) who is or was (since the beginning of the last fiscal year for which the Company has filed a Form10-K and proxy statement, even if they do not presently serve in that role) an executive officer, director or nominee for election as a director; (b) who is a greater than 5 percent beneficial owner of the Company’s common stock; or (c) who is an immediate family member of any of the foregoing. Immediate family member includes a person’s spouse, parents, stepparents, children, stepchildren, siblings, mothers- andfathers-in-law, sons- anddaughters-in-law, and brothers- andsisters-in-law and anyone residing in such person’s home (other than a tenant or employee). Open market purchases or privately-negotiated transactions, excluding any distributions by the Company, involving any securities of the Company or its subsidiaries, are not deemed to be a “Related Party Transaction” under our Related Party TransactionTransactions Policy.
The following sets forth certain transactions in which we are involved and in which the directors,a director, executive officers and affiliatesofficer or other Related Party of Charter have or may have a material interest. The indentures of our subsidiaries, CCO Holdings, LLC and CCO Holdings Capital Corp., require delivery of fairness opinions for transactions with affiliates involving more than $100 million. Such fairness opinions have been obtained whenever required. Charter has determined that all of our transactions entered into with affiliatesRelated Parties are in Charter’s best interest. Related Party Transactions are approved by the Audit Committee or another independent body of Charter’s boardBoard of directors.Directors.
On May 23, 2015, in connection with the execution of the Merger Agreement and the amendment of the Contribution Agreement, Charter entered into the Amended and Restated Stockholders Agreement with Liberty Broadband, A/N and Legacy Charter (the “Stockholders Agreement”). As of the closing of the Transactions on May 18, 2016, the Stockholders Agreement replaced Legacy Charter’s existing stockholders agreement with Liberty Broadband, dated September 29, 2014, and superseded the amended and restated stockholders agreement among Legacy Charter, Charter, Liberty Broadband and A/N, dated March 31, 2015.
Agreement. Under the terms of the Stockholders Agreement, the number of Charter’s directors is fixed at 13, and includes its chief executive officer. Upon the closing of the Transactions, two13. Two designees selected by A/N becameare members of the boardBoard of directorsDirectors of Charter and three designees selected by Liberty Broadband continued asare members of the boardBoard of directorsDirectors of Charter. The remaining eight directors are not affiliated with either A/N or Liberty Broadband. Each of A/N and Liberty Broadband is entitled to nominate at least one director to each of the committees of Charter’s boardBoard of directors,Directors, subject to applicable stock exchange listing rules and certain specified voting or equity ownership thresholds for each of A/N and Liberty Broadband, and provided that the Nominating and Corporate Governance Committee and the Compensation and Benefits Committee each have at least a majority of directors independent from A/N, Liberty Broadband and the Company (referred to as the “unaffiliated directors”).Charter. Each of the Nominating and Corporate Governance Committee and the Compensation and Benefits Committee is currently comprised of three unaffiliated directors not designated by either A/N or Liberty Broadband and one designee of each of A/N and Liberty Broadband. A/N and Liberty Broadband also have certain other committee designation and other governance rights. Upon the closing of the Transactions, Mr. Rutledge became the chairman of the board of Charter.
In connection with the closing of the Transactions, a number of agreements were entered into with Liberty Broadband and/or A/N, including the Charter Communications Holdings LLC operating agreement (the “LLC Agreement”), an exchange
49
agreement, a registration rights agreement, a tax receivables agreement, an amendment agreement (that amended the Stockholders Agreement and the Liberty Broadband investment agreement) and a transition services agreement. These agreements were approved by the boardBoard of directors. Under the LLC agreement, during 2017Directors. In 2023, Charter paid $150 million to A/N as dividends on the 25 million convertible preferred units held by it that are entitled to a 6% annual dividend. Charter also paid approximately $1.4$156 million to A/N as tax distributions under the LLC Agreement and $14 million to A/N under the tax receivables agreement.
In December 2017, Charter and A/N entered into an amendment to the letter agreement dated December 23, 2016 (the “Letter Agreement”) that requires A/N to sell to Charter or to Charter Holdings, on a monthly basis, a number of shares of Charter Class A common stock or Charter Holdings common units that represents a pro rata participation by A/N and its affiliates in any repurchases of shares of Charter Class A common stock from persons other than A/N effected by Charter during the immediately preceding calendar month, at a purchase price equal to the average price paid by Charter for the shares repurchased from persons other than A/N during such immediately preceding calendar month. A/N and Charter both have the right to terminate or suspend the pro rata repurchase arrangement on a prospective basis once Charter or Charter Holdings have repurchased shares of Class A common stock or Charter Holdings common units from A/N and its affiliates for an aggregate purchase price of $400 million.basis. Pursuant to the TRAtax receivables agreement between Charter and A/N, Charter must pay to A/N 50% of the tax benefit when realized by Charter from thestep-up in tax basis resulting from any future exchange or sale of the preferred and common units.
In February 2021, Charter and Liberty Broadband entered into a letter agreement that requires Liberty Broadband to sell to Charter, on a monthly basis, a number of shares of Class A common stock representing an amount sufficient for Liberty Broadband’s ownership of Class A common stock to be reduced such that it does not exceed the ownership cap then applicable to Liberty Broadband under the Stockholders Agreement (the “LBB Cap”), at a purchase price equal to the average price paid by Charter for the shares repurchased from persons other than A/N during such immediately preceding
Charter Communications | 61 | 2024 Proxy Statement
calendar month. The Company is awareletter agreement with Liberty Broadband terminates upon the earliest of (i) mutual written agreement of the parties, (ii) the termination of the Stockholders Agreement, or (iii) 12:01 a.m. following the first end date of a repurchase period occurring at least ten days after either party, in its sole discretion, delivers a written termination notice to the other party (provided, that, in the case of clause (iii), the rights and obligations of the parties under the letter agreement with Liberty Broadband survive with respect to a repurchase period ending prior to such termination). Upon the termination of the letter agreement with Liberty Broadband, the requirement of Liberty Broadband to sell shares of Class A Common Stock to Charter to the extent necessary so that Liberty Broadband’s ownership of Charter does not exceed the LBB Cap would revert to the terms of the Stockholders Agreement.
Dr. John Malone, may be deemed to have a 39.2% voting interest in Liberty Interactive Corp. (“Liberty Interactive”)director emeritus of Charter and is Chairman of the board of directors an executive officer position, of Liberty Interactive.Broadband and holder of a 48.9% voting interest in Liberty InteractiveBroadband, also serves on the board of directors of Qurate Retail, Inc. (“Qurate”). As reported in Qurate’s SEC filings, Dr. Malone owns approximately 30.4 million shares of the Series A common stock and approximately 0.9 million shares of the Series A Cumulative Redeemable Preferred Stock of Qurate and has a 6.6% voting interest in Qurate for the election of directors. Mr. Gregory Maffei, a member of Charter’s Board of Directors, serves as the Chairman of the Board of Qurate. As reported in Qurate’s SEC filings, Mr. Maffei owns approximately 0.4 million shares of the Series A common stock and approximately 9.6 million shares of the Series B common stock of Qurate and has a 20.1% voting interest in Qurate for the election of directors. Qurate wholly owns HSN, Inc. (“HSN”) and QVC, Inc. (“QVC”). The Company has programming relationships with HSN and QVC whichpre-date the transaction whereby Liberty Broadband’s predecessor, Liberty Media, became a stockholder in Charter.QVC. For the year ended December 31, 2017,2023, the Company recorded paymentsrevenue in aggregate of approximately $77$47.0 million from HSN and QVC as part of channel carriage fees and revenue sharing arrangements for home shopping sales made to customers in the Company’s footprint.
Dr. Malone and Mr. Steven Miron, each a member of Charter’s board of directors, also serve on the board of directors of Discovery Communications, Inc., (“Discovery”). The Company is aware that Dr. Malone owns 93.6% of the series B common stock of Discovery, 6% of the series C common stock of Discovery and has a 28.1% voting interest in Discovery for the election of directors. The Company is aware that Advance/Newhouse Programming Partnership (“A/N PP”), an affiliate of A/N and in which Mr. Miron is the CEO, owns 100% of the Series A preferred stock of Discovery and 100% of the Series C preferred stock of Discovery and has a 31.1% voting interest for the election of directors. A/N PP has the right to appoint three directors out of a total of eleven directors to Discovery’s board to be elected by the holders of Discovery’s Series A preferred stock. In addition, Dr. Malone is a member of the board of directors of Lions Gate Entertainment Corp. (“Lions Gate,” parent company of Starz, Inc.) and owns approximately 5.5% in the aggregate of the common stock of Lions Gate and has 7.9% of the voting power, pursuant to his ownership of Lions Gate Class A voting shares. The Company purchases programming from both Discovery and Lions Gate pursuant to agreements entered into prior to Dr. Malone and Mr. Miron joining Charter’s board of directors. Based on publicly available information, the Company does not believe that either Discovery or Lions Gate would currently be considered related parties. The amounts paid in the aggregate to Discovery and Lions Gate represent less than 3% of total operating costs and expenses for the year ended December 31, 2017.
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Liberty Broadband and A/N each have a number of subsidiary or affiliated companies with which Charter has existing customer or vendor relationships, some of which involved amounts in excess of $120,000 for 20172023 or may involve amounts in excess of $120,000 for 2018.2024. The following summarizes each of these relationships with Liberty Broadband and A/N subsidiaries and affiliates:
| • | Live Nation Entertainment, Inc. (Mr. Maffei is the Chairman of the Board; and Dr. Malone has a 48.8% voting interest in Liberty Media, which owns 30.29% of the Live Nation equity) is a customer of Spectrum Enterprise and Spectrum Reach and purchased approximately $2.0 million of services during 2023. |
Charter Communications | 62 | 2024 Proxy Statement
Advance Digital Inc.Proposal No. 2: Increase the Number of Shares in the Company’s 2019 Stock Incentive Plan
(Item 2 on Proxy Card)
Our Board of Directors recommends that stockholders approve an amendment to the 2019 Plan (the “Plan Amendment”) to increase the number of shares of Class A common stock available for issuance under the 2019 Plan by 7.0 million shares. The Board adopted the Plan Amendment on January 30, 2024 upon recommendation of the Compensation and Benefits Committee. The Plan Amendment will only become effective if approved by stockholders at the annual meeting. If approved, the effective date of the Plan Amendment will be April 23, 2024.
The 2019 Plan was approved by shareholders on April 23, 2019 with an initial share authorization of 16.0 million shares. Over the approximately five-year period from adoption through January 31, 2024, the Company made awards of approximately 14.2 million shares under the 2019 Plan. Of these awards, approximately 0.8 million shares have been forfeited or cancelled and approximately 0.3 million shares have been withheld for payment of taxes and exercise prices, leading to approximately 2.9 million shares remaining for future awards. See “Long-Term Incentives” in the Compensation Discussion and Analysis, above, for a description of the 2019 Plan and awards made under the 2019 Plan.
Our long-term incentive award compensation program is designed to recognize scope of responsibilities, reward demonstrated performance and leadership, motivate future superior performance, align the interests of our executives with that of our stockholders, and incentivize and retain our executives through the term of the awards. We believe that performance-based incentives help to drive our performance through their direct linkage to controllable business results while, at the same time, rewarding executives for the value created through stock price appreciation. Approval of the Plan Amendment would allow the Compensation and Benefits Committee to continue making awards to participants as the Committee deems appropriate. The 2,871,620 million shares currently available for future grant under the 2019 Plan represents approximately 1.6% of the Company’s outstanding shares on a fully diluted basis. Approval of the Plan Amendment would result in the Company having 9,871,620 million shares available for future grants under the 2019 Plan, representing approximately 5.5% of the Company’s outstanding shares on a fully diluted basis.
If the Plan Amendment is approved by stockholders, we intend to file with the SEC a registration statement on Form S-8 to register the increased number of shares issuable under the 2019 Plan pursuant to the Plan Amendment.
Material Terms of the 2019 Plan
The following summary of the material terms of the 2019 Plan, as amended by the Plan Amendment, is qualified in its entirety by the full text of the 2019 Plan, a copy of which is filed with our Annual Report on Form 10-K for the year ended December 31, 2023, as amended by the Plan Amendment, a copy of which is attached to this Proxy Statement as Appendix B. You also may obtain a copy of the 2019 Plan, as amended, free of charge, by writing to the Company, 400 Washington Boulevard, Stamford, CT 06902, Attention: Investor Relations.
Effective Date; Duration of the 2019 Plan
The 2019 Plan became effective upon approval by the Company’s stockholders on April 23, 2019 and no awards were granted under the 2019 Plan prior to such approval. Except with respect to awards then outstanding, unless sooner terminated, the 2019 Plan will expire on January 29, 2029, the tenth anniversary of the date it was adopted by the Board, and no further awards may be granted after such date.
2019 Plan Administration
The 2019 Plan is administered by the Compensation and Benefits Committee or, in the Board’s discretion, by the Board. The Compensation and Benefits Committee has the authority to, among other things, interpret the 2019 Plan, determine who will be granted awards under the 2019 Plan, prescribe the terms and conditions of each award, interpret, administer, reconcile any inconsistency in, correct any defect in and supply any omission in the 2019 Plan, and exercise discretion to make any and all other determinations which it determines to be necessary or advisable for the administration of the 2019 Plan.
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Eligibility
The Board in its discretion selects participants from among the employees, consultants and directors of the Company and its affiliates and other individuals designated by the Compensation and Benefits Committee who are reasonably expected to become employees, consultants and directors and who, in such capacities, are reasonably expected by the Board to contribute to the Company’s success. Only employees are eligible to receive incentive stock options. Approximately 101,300 employees, twelve non-employee directors and two non-employee director emeriti, and 6,600 consultants are eligible to participate in the 2019 Plan as of January 31, 2024, however, historically the Company has limited awards to a select number of individuals. For example, as of January 31, 2024, only 5,660 eligible persons held awards issued under the 2019 Plan. We do not currently anticipate granting any awards under the 2019 Plan to independent contractors of our Company.
Shares Available for Awards; Limits on Awards
The Company initially reserved an aggregate of 16.0 million shares of Class A common stock to be awarded under the 2019 Plan (the “Initial Share Reserve”) at the time of its adoption, and upon approval the Plan Amendment would reserve an additional 7.0 million shares of Class A common stock to be awarded under the 2019 Plan (the “Additional Share Authorization”). Both the Initial Share Reserve and Additional Share Authorization were determined after reviewing the comprehensive assessment of our annual executive compensation program relative to our peer groups and broader industry data prepared by Semler Brossy, which included advice regarding the design of the executive compensation program and the reasonableness of individual compensation targets and awards. The Initial Share Reserve was intended to be sufficient to cover awards granted over a five-year period through the annual grants in January 2024, and the Additional Share Authorization is intended to cover the remaining five-year period through the January 29, 2029 expiration date of the 2019 Plan. Following the Additional Share Authorization, up to 23.0 million of shares (the “Total Share Reserve”) could be issued under the 2019 Plan, in the aggregate, through the exercise of incentive stock options. No non-employee director or director emeritus may be granted awards under the 2019 Plan, during any fiscal year, that have a total value that exceeds $3.0 million (calculating the value of any awards based on the grant date fair value for financial reporting purposes).
If any outstanding award expires or is canceled, forfeited, or terminated without issuance of the full number of shares of common stock to which the award related, then the number of shares available under the 2019 Plan is increased by the portion of the award that expired, or was canceled, forfeited or terminated. Shares tendered in payment of the option exercise price or delivered or withheld by the Company to satisfy any tax withholding obligation, or shares covered by a stock-settled stock appreciation right or other awards that were not issued upon the settlement of the award also again become available for future grants under the 2019 Plan. Awards may be granted under the 2019 Plan in assumption of, or in substitution for, outstanding awards previously granted by an entity acquired by the Company or with which the Company combines. The Compensation and Benefits Committee may make appropriate adjustments to these limits to prevent dilution or enlargement of the rights of participants under the 2019 Plan (see Adjustments Upon Changes in Stock).
Available Awards
Awards that may be granted under the 2019 Plan include stock options (including both incentive stock options (ISOs) and nonqualified stock options), stock appreciation rights (SARs), dividend equivalent rights, restricted stock, restricted stock units (RSUs), performance awards and other stock-based awards. The terms of each award will be set forth in a written agreement.
Stock Options
A stock option is the right to purchase shares of Class A common stock at a future date at a specified price per share called the exercise price. An option may be either an A/N company, provides search engine marketing servicesISO or a nonqualified stock option. ISOs and nonqualified stock options are taxed differently, as described under Federal Income Tax Treatment of Awards Under the 2019 Plan. Except in the case of options granted pursuant to an assumption or substitution for another option, the exercise price of a stock option may not be less than the fair market value (or in the case of an ISO granted to a ten percent stockholder, 110% of the fair market value) of a share of common stock on the grant date. Full payment of the exercise price must be made at the time of such exercise in cash, shares of Class A common stock, withholding of shares of Class A common stock deliverable upon exercise or in another manner approved by the Compensation and Benefits Committee. No stock option may be exercisable for a period of more than ten (10) years following the grant date of the stock option (or in the case of an ISO granted to a ten percent stockholder, for a period of more than five (5) years following the grant date). As of January 31, 2024, 10,128,003 options have been granted under the Plan.
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Stock Appreciation Rights
A SAR is the right to receive payment of an amount equal to the excess of the fair market value of a share of common stock on the date of exercise of the SAR over the exercise price. The exercise price of a SAR may not be less than the fair market value of a share of common stock on the grant date. SARs may be granted alone (“freestanding rights”) or in tandem with options (“related rights”).
Dividend Equivalent Rights
Dividend Equivalent Rights represent the right to receive all or some portion of the dividends that are or would be payable with respect to shares of Class A common stock, payable in either cash or shares of Class A common stock.
Restricted Stock
A restricted stock award is an award of actual shares of common stock which are subject to certain restrictions for a period of time determined by the Compensation and Benefits Committee. Restricted stock may be held by the Company in escrow or delivered to the participant pending the release of the restrictions. The participant generally has the rights and privileges of a stockholder as to such restricted stock during the restricted period, including the right to vote the restricted stock and the right to receive dividends.
Restricted Stock Units
An RSU is an award of hypothetical common stock units having a value equal to the fair market value of an identical number of shares of common stock, which are subject to certain restrictions for a period of time determined by the Compensation and Benefits Committee. No shares of common stock are issued at the time an RSU is granted, and the Company is not required to set aside any funds for the payment of any RSU award. Prior to settlement of an RSU award and the receipt of shares, the participant does not have any rights as a stockholder with respect to such shares. The Compensation and Benefits Committee may grant RSUs with a deferral feature, whereby settlement of the RSU is deferred beyond the vesting date until a future payment date or event set out in the participant’s award agreement. The Compensation and Benefits Committee has the discretion to credit RSUs with dividend equivalents.
Performance Awards
A performance award is an award that is only earned if certain conditions are met. Performance awards may be denominated in shares of Class A common stock or in cash. The Compensation and Benefits Committee has the discretion to determine: the number of shares of common stock or stock-denominated units subject to a performance share award; the applicable performance period; the conditions that must be satisfied for a participant to earn an award; and the other terms, conditions and restrictions of the award. Whether a participant earns all or a portion of a performance award depends on the extent to which the performance goals established by the Compensation and Benefits Committee are attained within the applicable performance period. The Compensation and Benefits Committee has the discretion to determine whether the performance award is paid in shares of Class A common stock, cash or a combination of both.
Other Stock-Based Awards
The Compensation and Benefits Committee may grant other stock-based awards, either alone or in tandem with other awards, in amounts and subject to conditions as determined by the Compensation and Benefits Committee as set out in an award agreement.
Vesting
The 2019 Plan allows for awards subject to either time-based vesting or performance-based vesting, or both. The Compensation and Benefits Committee has the authority to determine the vesting schedule of each award, and to accelerate the vesting and exercisability of any award. The Company’s practice with respect to employee grants over the last five years has been to grant awards with a minimum of three years before any part of the award vests. Please see the Compensation Discussion and Analysis for information regarding the Company’s grant practices and outstanding awards for its Named Executive Officers.
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Adjustments Upon Changes in Stock
In the event of changes in the outstanding common stock or in the capital structure of the Company by reason of any stock or extraordinary cash dividend, stock split, reverse stock split, an extraordinary corporate transaction such as any recapitalization, reorganization, merger, consolidation, combination, exchange, or other relevant change in capitalization occurring after the grant date of any award, awards granted under the 2019 Plan and any award agreements, the exercise price of options and SARs, the maximum number of shares of common stock subject to all awards may be equitably adjusted or substituted, as to the number, price or kind of a contractshare of common stock or other consideration subject to such awards to the extent necessary to preserve the economic intent of the award.
Unless the Compensation and Benefits Committee specifically determines that was entered intosuch adjustment is in the best interests of the Company or its affiliates, the Compensation and Benefits Committee will, in the case of non-qualified stock options, ensure that any adjustments will not constitute a modification of such non-qualified stock options within the meaning of Code Section 409A. Any adjustments will be made in a manner which does not adversely affect the exemption provided under Rule 16b-3 under the Exchange Act. The Company will give participants notice of any adjustment.
Change in Control
Unless otherwise provided in an award agreement, in the event of a participant’s termination of service without cause or for good reason, in either case, during the 30-day period prior to or 13-month period following a change in control, the vesting of all awards will fully accelerate and all outstanding options and SARs will become immediately exercisable as of the date of the participant’s termination of service. In the case of performance awards, in the event of a participant’s termination of service without cause or for good reason, in either case, during the 30-day period prior to or 13-month period following a change in control, all performance goals or other vesting criteria will be deemed achieved at 100% of target levels and all other terms and conditions will be deemed met as of the date of the participant’s termination of service.
In the event of a change in control, the Compensation and Benefits Committee may in its discretion cancel any outstanding awards and pay to the holders the value of the awards based upon the price per share of Class A common stock received or to be received by other stockholders of the Company in the event. In the case of any option or SAR with an exercise price that equals or exceeds the price paid for a share of common stock in connection with the change in control, the Compensation and Benefits Committee may cancel the option or SAR without the payment of any consideration.
Unless otherwise provided in an award agreement, a change in control is defined generally as (a) the acquisition by one person or more than one person acting as a group, of beneficial ownership of Class A common stock representing more than 50% of the total voting power of the Company’s stock; (b) a majority of the members of the Board are replaced by directors whose appointment or election is not endorsed by a majority of the Board; (c) a merger, consolidation, reorganization or similar transaction involving the Company or in which securities of the Company are issued unless the Company’s stockholders before the transaction beneficially own at least 50% of the voting power of the resulting company’s equity and at least a majority of the Board prior to the closingtransaction represent a majority of the transactions.board of the resulting company; or (d) the sale of all or substantially all of the assets of the Company.
Amendment or Termination of the 2019 Plan
The Board may amend or terminate the 2019 Plan. However, except in the case of adjustments upon changes in Class A common stock, no amendment will be effective unless approved by the stockholders of the Company to the extent stockholder approval is necessary to satisfy any applicable laws or stock exchange rules. The 2019 Plan shall terminate on January 29, 2029, unless previously terminated by the Board.
Amendment of Awards
The Board may amend the terms of any one or more awards. However, the Board may not affect any amendment which would otherwise constitute an impairment of the rights under any award unless the Company requests the consent of the participant and the participant consents in writing.
Clawback and Recoupment
The Company may cancel any award or require the participant to reimburse any previously paid compensation provided under the 2019 Plan or an award agreement in accordance with (a) any Company recoupment policy (including the Charter
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Communications, Inc. Compensation Recovery Policy, as amended from time to time), (b) any other agreement or arrangement with a participant, or (c) any right or obligation that the Company may have regarding the clawback of “incentive-based compensation” under Section 10D of the Securities Exchange Act of 1934, as amended, and any applicable rules and regulations promulgated under that act.
Repricing
The 2019 Plan, as amended, prohibits the repricing of options without shareholder approval, including reducing the exercise price per share of any outstanding option, permitting the cancellation, forfeiture or tender of outstanding options in exchange for other awards or for new options with a lower exercise price per share, or repricing or replacing any outstanding options by any other method. While the 2019 Plan initially authorized repricing, the 2019 Plan was amended by the Board on January 28, 2020 to prohibit repricing without shareholder approval and no such repricing has occurred under our equity plans to date.
Federal Income Tax Consequences of Awards
The following is a summary of the U.S. federal income tax consequences of awards granted under the 2019 Plan. This summary is based on U.S. federal income tax laws and regulations in effect on the date of this Proxy Statement and is not a complete description of the U.S. federal income tax laws. This summary is not intended to be exhaustive and does not constitute legal or tax advice. This summary does not address municipal, state or foreign income tax consequences of awards, or federal employment taxes.
Nonqualified Stock Options
The grant of a nonqualified stock option will not result in taxable income to the participant. The participant will recognize ordinary income at the time of exercise equal to the excess of the fair market value of the shares on the date of exercise over the exercise price and the Company will be entitled to a corresponding deduction for tax purposes. Gains or losses realized by the participant upon the sale of the shares acquired on exercise will be treated as capital gains or losses.
Incentive Stock Options (ISOs)
The grant of an ISO will not result in taxable income to the participant. The exercise of an ISO will not result in taxable income to the participant if at the time of exercise the participant has been employed by the Company or its subsidiaries at all times beginning on the date the ISO was granted and ending not more than 90 days before the date of exercise. However, the excess of the fair market value of the shares on the date of exercise over the exercise price is an adjustment that is included in the calculation of the participant’s alternative minimum tax liability for the year the shares are sold.
If the participant does not sell the shares acquired on exercise within two years from the date of grant and one year from the date of exercise then on the sale of the shares any amount realized in excess of the exercise price will be taxed as capital gain. If the amount realized in the sale is less than the exercise price, then the participant will recognize a capital loss. If these holding requirements are not met, then the participant will generally recognize ordinary income at the time the shares are sold in an amount equal to the lesser of (a) the excess of the fair market value of the shares on the date of exercise over the exercise price, or (b) the excess, if any, of the amount realized on the sale of the shares over the exercise price, and the Company will be entitled to a corresponding deduction.
SARs
The grant of a SAR will not result in taxable income to the participant. The participant will recognize ordinary income at the time of exercise equal to the amount of cash received or the fair market value of the shares received and the Company will be entitled to a corresponding deduction for tax purposes. If the SARs are settled in shares, then when the shares are sold the participant will recognize capital gain or loss on the difference between the sale price and the amount recognized at exercise. Whether it is a long-term or short-term gain or loss depends on how long the shares are held.
Restricted Stock and Performance Awards
Unless a participant makes an election to accelerate the recognition of income to the grant date (as described below), the grant of restricted stock or performance awards will not result in taxable income to the participant. When the restrictions
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lapse, the participant will recognize ordinary income on the excess of the fair market value of the shares on the vesting date over the amount paid approximately $1.7for the shares, if any, or the amount received in the case of awards paid in cash and the Company will be entitled to a corresponding deduction. If the participant makes an election under Code Section 83(b) within thirty days after the grant date, the participant will recognize ordinary income as of the grant date equal to the fair market value of the shares on the grant date over the amount paid, if any, and the Company will be entitled to a corresponding deduction. Any future appreciation will be taxed at capital gains rates. However, if the shares are later forfeited, the participant will not be able to recover any taxes paid.
RSUs
The grant of an RSU will not result in taxable income to the participant. When the RSU vests, the participant will recognize ordinary income equal to the fair market value of the shares or the cash provided on settlement and the Company will be entitled to a corresponding deduction. Any future appreciation will be taxed at capital gains rates.
Section 409A
Code Section 409A imposes complex rules on nonqualified deferred compensation arrangements, including requirements with respect to elections to defer compensation and the timing of payment of deferred amounts. Depending on how they are structured, certain equity-based awards may be subject to Code Section 409A, while others are exempt. If an award is subject to Code Section 409A and a violation occurs, the compensation is includible in income when no longer subject to a substantial risk of forfeiture and the participant may be subject to a 20% penalty tax and, in some cases, interest penalties. The 2019 Plan and awards granted under the 2019 Plan are intended to be exempt from or conform to the requirements of Code Section 409A.
Section 162(m) and the Company’s Deduction
Generally, whenever a participant recognizes ordinary income under the 2019 Plan, a corresponding deduction is available to the Company provided that the Company complies with certain reporting requirements. However, under Code Section 162(m), the Company will be denied a deduction for compensation paid to certain senior executives that exceeds $1.0 million. Beginning January 1, 2018, with the passage and signing of the Tax Cuts and Jobs Act (the “Act”), this limitation will apply to the Company’s Chief Executive Officer, Chief Financial Officer, the Company’s other named executive officers, and anyone who was a covered person after December 31, 2016. Prior to January 1, 2018, certain performance-based compensation was excluded from the $1.0 million deduction limit. With the passage and signing of the Act, beginning January 1, 2018 (with an exception for certain grandfathered arrangements), the Company will be denied a deduction for any compensation exceeding $1.0 million for these servicessuch covered individuals, regardless of whether the compensation is performance-based compensation.
New Plan Benefits
As of the record date, the closing price of our common stock was $299.42. No determination has yet been made as to the awards, if any, that any eligible individuals will be granted in 2017.the future and, therefore, the future benefits to be awarded under the 2019 Plan as amended by the Plan Amendment, which are subject to the discretion of the Committee, are not determinable at this time. The following table, however, sets forth the aggregate value of benefits or amounts that were received by or allocated to each of the following persons or groups, in each case, under the 2019 Plan with respect to fiscal year 2023:
Name and position | Dollar value ($)(1) | Number of units (#)(1) | ||||||
Christopher L. Winfrey, President and Chief Executive Officer | 8,696,687 | 715,855 | ||||||
Richard J. DiGeronimo, President, Product & Technology | 6,085,226 | 414,267 | ||||||
Jessica M. Fischer, Chief Financial Officer | 3,347,020 | 227,847 | ||||||
Kevin D. Howard, EVP, Chief Accounting Officer & Controller | 912,843 | 62,140 | ||||||
R. Adam Ray, EVP, Chief Commercial Officer | 1,825,353 | 124,280 | ||||||
Thomas M. Rutledge, Board Member Emeritus (Former Executive Chairman)(2) | — | 110,225 | ||||||
Executive Group | 20,867,129 | 1,654,614 | ||||||
Non-Executive Directors Group(2) | 3,516,369 | 10,609 | ||||||
All Employees Group (including all current officers who are not executive officers) | 539,826,845 | 4,184,675 | ||||||
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| (1) | Such units are inclusive of all awards granted in fiscal 2023, inclusive of restricted stock units, restricted stock and stock options. Restricted stock and restricted stock units are valued based on the closing price on the date of grant. No dollar value is ascribed to stock options. |
| (2) | Restricted stock awards granted to Mr. Rutledge after his retirement and in connection with his role as Board Member Emeritus are included in the values for the Non-Executive Directors Group. |
Securities Authorized for Issuance Under Equity Compensation Plans
The following information is provided as of December 31, 2023 with respect to equity compensation plans:
Plan Category | Number of Securities to be Issued Upon Exercise of | Weighted Average Exercise Price of | Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans | |||||||||
Equity compensation plans approved by security holders | 15,029,325 | (1) | $403.81 | 5,113,241 | (1) | |||||||
Equity compensation plans not approved by security holders | — | $ — | — | |||||||||
|
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| |||||||||
TOTAL | 15,029,325 | (1) | 5,113,241 | (1) | ||||||||
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| (1) | This total does not include 10,609 shares issued pursuant to restricted stock grants made under our 2019 Stock Incentive Plan to our non-employee directors, which are subject to vesting based on continued service. |
For information regarding outstanding equity awards granted to our NEOs, see the information contained in the “Outstanding Equity Awards at Fiscal Year End” table in this proxy statement.
Required Vote
Approval of this Proposal No. 2 requires the affirmative vote of the holders of a majority of the votes cast at the annual meeting. Abstentions and broker non-votes are not considered votes cast. Accordingly, assuming a quorum is present, abstentions, broker non-votes and a stockholder’s other failure to vote will have no effect on the approval of this Proposal No. 2.
Board Recommendation
THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” INCREASING THE NUMBER OF SHARES IN THE COMPANY’S 2019 STOCK INCENTIVE PLAN.
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Live Nation Entertainment, Inc. (Mr. Maffei isProposal No. 3: Amend the ChairmanCompany’s Amended and Restated Certificate of Incorporation to reflect new Delaware Law Provisions Regarding Officer Exculpation
(Item 3 on Proxy Card)
In 2022, the State of Delaware enacted legislation that enables Delaware companies to limit the liability of certain of their officers in limited circumstances. In light of this update, we are proposing to amend the Company’s Amended and Restated Certificate of Incorporation (the “Certificate of Incorporation”) to add a provision exculpating certain of the Board;Company’s officers from liability in specific circumstances, as permitted by Delaware law. The new Delaware legislation only permits, and Mr. Malone hasour proposed amendment would only permit, exculpation for direct claims (as opposed to derivative claims made by stockholders on behalf of the corporation) and would not apply to breaches of the duty of loyalty, acts or omissions not in good faith or that involve intentional misconduct or a 47.6% votingknowing violation of law, or any transaction in which the officer derived an improper personal benefit. The rationale for so limiting the scope of liability is to strike a balance between stockholders’ interest in Liberty Media, which owns 34%accountability and their interest in the Company being able to attract and retain quality officers.
The Nominating and Corporate Governance Committee believes that there is a need for directors and officers to remain free of the Live Nation equity)risk of financial ruin as a result of an unintentional misstep. Further, the Nominating and Corporate Governance Committee noted that the proposed provision would not negatively impact stockholder rights. Therefore, taking into account the narrow class and type of claims for which officers’ liability would be exculpated, and the benefits the Nominating and Corporate Governance Committee believes would accrue to the Company and its stockholders in the form of an enhanced ability to attract and retain talented officers, the Nominating and Corporate Governance Committee recommended to the Board an amendment to the Certificate of Incorporation to provide such exculpation to the extent permitted by Delaware law. Based on this recommendation, the Board determined that it is in the best interests of the Company and our stockholders to amend the Certificate of Incorporation as described herein.
Accordingly, we ask our stockholders to vote on the following resolution:
“RESOLVED, that the Company’s stockholders approve an amendment to the Company’s Amended and Restated Certificate of Incorporation to add a customernew Article TWELFTH, which shall read in its entirety as follows:
ARTICLE TWELFTH
OFFICER EXCULPATION
No officer of Spectrum Enterprise and Spectrum Media and purchased approximately $1.8 millionthe Corporation shall have any personal liability to the Corporation or its stockholders for monetary damages for any breach of services during 2017.
Charter believesfiduciary duty as an officer, except to the extent such exemption from liability or limitation thereof is not permitted under the DGCL as the same exists or hereafter may be amended. No amendment, alteration or repeal of this Article TWELFTH shall eliminate or reduce the effect thereof in respect of any matter occurring, or any cause of action, suit or claim that, all of these agreements and relationships and pricing are arms-length and at market terms.but for this Article TWELFTH would accrue or arise, prior to such amendment, alteration or repeal.”
51
THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” THE PROPOSAL TO AMEND THE COMPANY’S AMENDED AND RESTATED CERTIFICATE OF INCORPORATION.
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Proposal No. 2:4: Ratification of the Appointment of Independent Registered Public Accounting Firm
(Item 24 on Proxy Card)
The Audit Committee of the boardBoard of directorsDirectors has appointed KPMG LLP (“KPMG”) as the Company’s independent registered public accounting firm for 2018.2024. Stockholder ratification of the selection of KPMG as the Company’s independent registered public accounting firm is not required by the Company’s Bylaws or other applicable requirement. However, as a matter of corporate responsibility, the Audit Committee decided to solicit stockholder ratification of this appointment. Ratification of the appointment of KPMG as the Company’s independent registered public accounting firm is not required for KPMG’s retention; however, if the appointment is not ratified, the Audit Committee may considerre-evaluating the appointment.
KPMG has been serving as the Company’s independent registered public accounting firm since 2002. The Company has been advised that no member of KPMG had any direct financial interest or material indirect financial interest in the Company or any of its subsidiaries or, during the past three years, has had any connection with the Company or any of its subsidiaries in the capacity of promoter, underwriter, voting trustee, director, officer or employee. The Company has been advised that no other relationship exists between KPMG and the Company that impairs KPMG’s status as the independent registered public accounting firm with respect to the Company within the meaning of the Federal securities laws and the requirements of the Independence Standards Board.
Representatives of KPMG will be in attendance at the annual meeting and will have an opportunity to make a statement if they so desire. The representatives will also be available to respond to appropriate questions.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” RATIFICATION OF THE APPOINTMENT OF KPMG LLP AS THE COMPANY’S INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM.FIRM FOR 2024.
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Accounting Matters
Principal Accounting Firm
KPMG acted as the Company’s independent registered public accounting firm since 2002, and, subject to ratification by stockholders at the annual meeting, KPMG is expected to serve as the Company’s independent registered public accounting firm for 2018.2024.
Services of Independent Registered Public Accounting Firm
The Audit Committee has adopted policies and procedures requiring thepre-approval ofnon-audit services that may be provided by our independent registered public accounting firm. We have also complied and will continue to comply with the provisions of the Sarbanes-Oxley Act of 2002 and the related SEC rules pertaining to auditor independence and audit committeepre-approval of audit andnon-audit services.
Audit Fees
During the years ended December 31, 20172023 and 2016,2022, we incurred fees and related expenses for professional services rendered by KPMG for the audits of Charter and its subsidiaries’ financial statements, for the review of Charter and its subsidiaries’ interim financial statements, registration statement filings and offering memoranda filings totaling approximately $9$7 million and $12$8 million, respectively.
Audit-Related Fees
Charter incurredNo audit-related fees to KPMG of approximately $0.2 million and $1 millionwere incurred during the years ended December 31, 20172023 and 2016, respectively. These services were primarily related to accounting and reporting consultation and services related to the Transactions.2022.
Tax Fees
Charter incurred tax fees to KPMG of approximately $2$1 million and $3 million during each of the years ended December 31, 20172023 and 2016, respectively.2022.
All Other Fees
None.
The Audit Committee appoints, retains, compensates and oversees the independent registered public accounting firm (subject, if applicable, to boardBoard of directorDirector and/or stockholder ratification), and approves in advance all fees and terms for the audit engagement andnon-audit engagements wherenon-audit services are not prohibited by Section 10A of the Securities Exchange Act, of 1934, as amended with respect to independent registered public accounting firms.Pre-approvals ofnon-audit services are sometimes delegated to a single member of the Audit Committee. However, anypre-approvals made by the Audit Committee’s designee are presented at the Audit Committee’s next regularly scheduled meeting. The Audit Committee has an obligation to consult with management on these matters. The Audit Committee approved 100% of the KPMG fees for the years ended December 31, 20172023 and 2016.2022. The Audit Committee considered whether the provision ofnon-audit services was compatible with KPMG’s independence. Each year, including 2017,2023, with respect to the proposed audit engagement, the Audit Committee reviews the proposed risk assessment process in establishing the scope of examination and the reports to be rendered.
In its capacity as a committee of the board, the Audit Committee oversees the work of the independent registered public accounting firm (including resolution of disagreements between management and the public accounting firm regarding financial reporting) for the purpose of preparing or issuing an audit report or performing other audit, review or attest services. The independent registered public accounting firm reports directly to the Audit Committee. In performing its functions, the Audit Committee undertakes those tasks and responsibilities that, in its judgment, most effectively contribute to and implement the purposes of the Audit Committee charter. For more detail of the Audit Committee’s authority and responsibilities, see the Company’s Audit Committee charter on the Company’s“Investors” section of our websitewww.charter.com. at ir.charter.com.
53Charter Communications | 72 | 2024 Proxy Statement
Report of the Audit Committee
The following report does not constitute soliciting materials and is not considered filed or incorporated by reference into any other Company filing under the Securities Act of 1933, as amended, or the Securities Exchange Act, of 1934, as amended, unless we state otherwise.
The Audit Committee was established to oversee the Company’s accounting and financial reporting processes and the audits of the Company’s annual financial statements. In 20172023 Ms. Goodman and Messrs. Merritt and Markley served on the Audit Committee for the entire year. All members were determined by the boardBoard to be independent in accordance with the applicable corporate governance listing standards of the NASDAQ Global Select Market. The Company’s boardBoard of directorsDirectors has determined that, in its judgment, Mr. Merritt is an audit committee financial expert within the meaning of the applicable federal regulations.
The Audit Committee’s functions are detailed in a written amended and restated Audit Committee charter adopted by the boardBoard of directors,Directors, a copy of which is available on the Company’s“Investors” section of our website at www.charter.com.ir.charter.com. As more fully described in its charter, the Audit Committee reviews the Company’s financial reporting process on behalf of the boardBoard of directors.Directors. Company management has the primary responsibility for the Company’s financial statements and the reporting process. The Company’s independent registered public accounting firm is responsible for performing an audit of the Company’s consolidated financial statements in accordance with generally accepted auditing standards and expressing an opinion on the conformity of the financial statements to generally accepted accounting principles. The internal auditors are responsible to the Audit Committee and the boardBoard of directorsDirectors for testing the integrity of the financial accounting and reporting control systems and such other matters as the Audit Committee and boardBoard of directorsDirectors determine. The Audit Committee held fourfive meetings in 2017.2023.
The Audit Committee has reviewed and discussed with management and the internal auditors the Company’s audited financial statements and effectiveness of internal controls for the year ended December 31, 2017.2023. The Audit Committee has discussed the matters required to be discussed by the applicable requirements of the Public Company Accounting Oversight Board and the SEC, including those described in Auditing Standard No. 1301, as amended (Communication(Communications with Audit Committees), with KPMG, the independent registered public accounting firm for the Company’s audited financial statements for the year ended December 31, 2017.2023.
The Audit Committee has also received the written disclosures and the letter from KPMG required by applicable requirements of the Public Company Accounting Oversight Board regarding the independent accountant’s communications with the Audit Committee concerning independence, and the Audit Committee has discussed the independence of KPMG with that firm and has considered the compatibility ofnon-audit services with KPMG’s independence.
Based on the Audit Committee’s review and discussions noted above, the Audit Committee recommended to the boardBoard of directorsDirectors that the Company’s audited financial statements be included in the Company’s Annual Report on Form10-K for the fiscal year ended December 31, 20172023 for filing with the SEC.
The Audit Committee evaluated KPMG’s independence, performance, qualifications, tenure, partnership rotation and relationship management and based on that evaluation approved the appointment of KPMG as the Company’s independent registered public accounting firm for 2017.2024.
DAVID C. MERRITT
KIM C. GOODMAN
JOHN D. MARKLEY, JR.
54Charter Communications | 73 | 2024 Proxy Statement
Proposal No. 3:5: Stockholder Proposal Regarding Proxy Access
Lobbying Activities
(Item 35 on Proxy Card)
This proposal was submitted by the custodian and trustee of the New York City Employees’ Retirement System, the New York City FireThe Service Employees International Union Pension Fund, the New York City Teachers’ Retirement System and the New York City Police Pension Fund, and the custodian for the New York City Board of Education Retirement System, One Centre Street, 8th Floor North, New York, NY 10007, and the Chief Investment Officer of the City of Philadelphia Public Employees Retirement System, Sixteenth Floor, Two Penn Center Plaza, Philadelphia, PA 19102, in each casePlans Master Trust (“SEIU”), the beneficial ownersowner of at least $2,000 worth of shares of our Class A common stock.
RESOLVED: Shareholders of Charter Communications, Inc. (the “Company”) ask the board of directors (the “Board”) to take the steps necessary to adopt a “proxy access” bylaw. Such a bylaw shall require the Company to include in proxy materials prepared for a shareholder meeting at which directors are to be elected the name, Disclosure and Statement (as defined herein) of any person nominated for election to the board by a shareholder or group (the “Nominator”) that meets the criteria established below. The Company shall allow shareholders to vote on such nominee on the Company’s proxy card.
The number of shareholder-nominated candidates appearing in proxy materials shall not exceed the larger of two or one quarter of the directors then serving. This bylaw, which shall supplement existing rights under Company bylaws, should provide that a Nominator must:
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The Nominator may submit with the Disclosure a statement not exceeding 500 words in support of each nominee (the “Statement”). The Board shall adopt procedures for promptly resolving disputes over whether notice of a nomination was timely, whether the Disclosure and Statement satisfy the bylaw and applicable federal regulations, and the priority to be given to multiple nominations exceeding theone-quarter limit.
Supporting Statement
We believe proxy access will make directors more accountable and enhance shareholder value. A 2014 study by the CFA Institute concluded that proxy access could raise overall US market capitalization by up to $140.3 billion if adopted market-wide, “with little cost or disruption.” (http://www.cfapubs.org/doi/Tdf/10.2469/ccb.v2014.n9.1)
The proposed terms are similar to those in vacated SEC Rule14a-11 (https://www.sec.gov/rules/final/2010/33-9136.pdf). The SEC, following extensive analysis and input from market participants, determined that those terms struck the proper balance of providing shareholders with viable proxy access while containing appropriate safeguards.
The proposed terms enjoy strong investor support and company acceptance. Between January 2015 and October 2017, 112 similar shareholder proposals received majority votes and at least 444 companies of various sizes across industries enacted bylaws with similar terms.
We urge shareholders to vote FOR this proposal.
55
Statement Against Stockholder Proposal Regarding Proxy Access
Our Company is committed to strong corporate governance practices including meaningful stockholder rights and robust engagement measures. Proxy access proposals are largely driven by a genuine and legitimate interest to find ways to ensure that boards are comprised of the right people to effectively represent stockholder interests. Although our board of directors understands that proxy access is a topic of interest among investors, the board believes that this particular proposal is fundamentally flawed for several reasons and is not in the best interest of our stockholders.
The Company’s corporate governance structure reflects our commitment to strong and effective governance practices and a willingness to be responsive and accountable to stockholders. We regularly assess our corporate governance policies to take into account evolving best practices and to address stockholder feedback. Our goals are to align the interests of stockholders, directors, and management; ensure accountability; encourage robust engagement with our key stakeholders; and provide our stockholders with a meaningful voice in both the nomination and the election of directors. The proposal disregards the many mechanisms the Company has instituted to ensure board accountability. The board is accountable to the Company’sfrom SEIU reads as follows:
“Resolved, stockholders through protections that are embedded in our governing documents and corporate governance practices. These practices include having a Lead Independent Director and majority voting for directors.
Proxy access would also bypass the Nominating and Corporate Governance Committee’s process of identifying and recommending director nominees with a diverse and complementary blend of experiences, skills, qualifications and perspectives, to oversee our business and who can contribute to the overall effectiveness of the board. In undertaking this responsibility, the Nominating and Corporate Governance Committee has a fiduciary duty to act in a manner the committee reasonably believes to be in the best interests of the Company; proxy access stockholder proponents do not have a fiduciary duty when nominating directors.
In addition to the foregoing, the proposal does not require nominating stockowners to disclaim any current intent to effect a change in control, but only requires nominating stockowners to certify that the required shares were originally acquired in the ordinary course and not to change or influence control at the Company. A nominating stockholder’s current intentions would be unknown. In addition, the proposal permits an excessive number of stockholder access candidates, thereby allowing a control contest via the proxy access right. Each of our directors is elected annually for aone-year term. The proposal would allow stockholders, some motivated by special or short-term interests, to nominate access candidates for 100% of the board’s seats. Proxy access should not be used as a means to effect a corporate takeover.
The board believes the right thing to do now is what it has always done — continue to engage with our stockholders to ensure that we have as fulsome an understanding of their views as possible so that it can be incorporated into our approach on this issue.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE “AGAINST” THIS PROPOSAL.
56
Proposal No. 4: Stockholder Proposal Regarding Lobbying Activities
(Item 4 on Proxy Card)
This proposal was submitted by the New York State Common Retirement Fund and the New York State Local Retirement System, 59 Maiden Lane, 30th Floor, New York, NY 10038, in each case the beneficial owners of at least $2,000 worth of shares of our Class A common stock.
Whereas,we believe in full disclosure of Charter Communication’s (“Charter”) direct and indirect lobbying activities and expenditures to assess whether Charter’s lobbying is consistent with its expressed goals and in the best interests of stockholders.
Resolved,the stockholders of Charter request the preparation of a report, updated annually, disclosing:
| 1. | Company policy and procedures governing lobbying, both direct and indirect, and grassroots lobbying communications. |
| 2. | Payments by Charter used for (a) direct or indirect lobbying or (b) grassroots lobbying communications, in each case including the amount of the payment and the recipient. |
| 3. | Charter’s membership in and payments to anytax-exempt organization that writes and endorses model legislation. |
| 4. | Description of management’s |
For purposes of this proposal, a “grassroots lobbying communication” is a communication directed to the general public that (a) refers to specific legislation or regulation, (b) reflects a view on the legislation or regulation and (c) encourages the recipient of the communication to take action with respect to the legislation or regulation. “Indirect lobbying” is lobbying engaged in by a trade association or other organization of which Charter is a member.
Both “direct and indirect lobbying” and “grassroots lobbying communications” include efforts at the local, territorial, state and federal levels.
The report shall be presented to the Audit Committee or other relevant oversight committees and posted on Charter’s website.
Supporting Statement
We encourage transparencyFull disclosure of Charter’s lobbying activities and accountability in the use of corporate fundsexpenditures is needed to influence legislationassess whether Charter’s lobbying is consistent with its expressed goals and regulation. Sincestockholder interests. Charter spent $92,185,000 from 2010 Charter has spent over $30 million– 2022 on federal lobbying. This figure does not include state lobbying expenditures, to influence legislation in states, where Charter also lobbies but disclosure is uneven or absent. Forextensively, for example Charter spent $363,837spending over $3.4 million on lobbying in California in 2016. Charter’s federalfrom 2015 – 2022.
Companies can give unlimited amounts to third party groups that spend millions on lobbying over interest deductibility has attracted media scrutiny (“House GOP Tax Proposal May Broadside Broadband Expansion,”Bloomberg BNA,June 30, 2017)and undisclosed grassroots activity.1 Unlike many of its peers, Charter fails to disclose its payments to trade associations and social welfare groups (SWGs), as has its stateor the amounts used for lobbying, against broadband expansion in Maine (“Pick for Public Utility Advocate Has Wireless Industry Ties,”AP,April 30, 2017).
to stockholders. Charter serves on the board of NCTA —– The Internet & Television Association, which spent $120 million$203,440,000 on lobbying from 2010 — 2016.– 2022, and supports SWGs that lobby like the RATE Coalition. Charter also does not disclose its memberships in, or paymentscontributions to trade associations, or the amounts used for lobbying. And Charter does not disclose membership in or contributions totax-exempt organizations thatgroups which write and endorse model legislation, such as its membership insponsoring the American Legislative Exchange Council (ALEC).2
We are concerned that Charter’s lack of trade association and ALEC disclosure presents reputational risks.risks when its lobbying contradicts company public positions. For example, Charter’sCharter states that it is committed to an open internet, yet NCTA has lobbied against net neutrality.3 Charter reportedly ran “a fake consumer group in Maine that’s killing community broadband.”4 As Charter paid zero federal taxes in 2020,55 the RATE Coalition lobbied against raising taxes to pay for health care, education and safety net programs.6 And while Charter is committed to diversity and inclusion, over 300 groups have asked Charter to leave ALEC membership has drawn press scrutiny (“FCC Commissioner Tells ALEC to Helpbecause of its voter restriction efforts.7 In the last three years, this proposal received majority support of outside stockholders. Charter should expand its lobbying disclosure.”
| 1 | https://theintercept.com/2019/08/06/business-group-spending-on-lobbying-in-washington-is-at-least-double-whats-publicly- reported/. |
| 2 | https://documented.net/reporting/energy-and-pharmaceutical-companies-among-sponsors-of-alec-policy-meeting. |
| 3 | https://arstechnica.com/tech-policy/2021/07/isps-spent-235-million-on-lobbying-and-donations-more-than-320000-a-day/. |
| 4 | https://www.techdirt.com/2022/07/12/charters-running-a-fake-consumer-group-in-maine-thats-killing-community-broadband-with-the-help-of-a-democratic-advisor/. |
| 5 | https://www.citizen.org/news/corporations-are-spending-millions-on-lobbying-to-avoid-taxes/. |
| 6 | https://www.washingtonpost.com/us-policy/2021/08/31/business-lobbying-democrats-reconciliation/. |
| 7 | https://www.commoncause.org/press-release/common-cause-fair-fight-action-and-over-300-organizations-call-on-corporations-to-cut-ties-with-alec/. |
57
Charter Communications | 74 | 2024 Proxy Statement
Squash Net Neutrality,”Huffington Post,May 7, 2017), and over 100 companies have publicly left ALEC, including Sprint andT-Mobile. According to the2017Harris Poll Reputation Quotient,Charter ranked in the bottom ten of the 100 most visible companies, ranking 93rd.
Statement Against Stockholder Proposal Regarding Lobbying Activities
Our board of directorsBoard believes that our Company’s participation in the political, legislative and regulatory processes at all levels of government enhances stockholder value. Our Company is committed to participating constructively in the political process to increase shareholder value and in full compliance with applicable rules and regulations. Our companyCompany makes significant disclosures regarding lobbying and political contributions, including the publication of our new Political Activities Policy Statement, and our boardBoard believes that these current disclosures are appropriate and consistent with the objectives of transparency and accountability reflected in the proposal. Indeed, the proponent includes contribution data from our disclosures, demonstrating that significant information concerning our activities is already publicly available.
Our Company has extensive policiesAs further detailed in our Company’s Political Activities Policy Statement, available on our website at: https://policy.charter.com, our Government Affairs team manages the Company’s political engagement strategy and procedures in place to ensure that all lobbying activities and reports directly to the President and Chief Executive Officer, with oversight from the Nominating and Corporate Governance Committee of our Board of Directors, which is comprised exclusively of independent directors. The Board has delegated authority and responsibility for state and local campaign contributions to the President and Chief Executive Officer, subject to the provisions of the Company’s Code of Conduct and any other applicable Company policies. The Nominating and Corporate Governance Committee receives an annual report from the Government Affairs team on the Company’s political contributions conducted byengagement strategy, including lobbying activities and expenditures made during the Companypast year and our employees comply with all applicable laws, including robust internal controlsthe framework for the coming year. The Board of Directors receives quarterly updates on regulatory activities and oversight. policy priorities and regular updates on significant policy issues facing the Company.
Applicable laws and regulations include the prohibition under federal law barring corporations from making direct or indirect contributions to candidates or political parties at the federal level. Similarly, we make political contributions only in states where such contributions are permitted. Contributions are intended to support political issues and candidates consistent with our policy objectives. We disclose our policy objectives on our website at https://policy.charter.com. Charter publicly discloses all U.S. federal lobbying costs and the issues to which our lobbying efforts relate on a quarterly basis. Charter also makes such disclosures at the state or local level consistent with applicable lobbying laws.
Our boardBoard believes that the information currently made available strikes the appropriate balance between transparency and excessive burden and cost, and that additional disclosures with respect to lobbying activities would not provide useful information to stockholders. The implementation of the proposal’s additional requirements would result in the unproductive consumption of valuable time and corporate resources without materially enhancing existing disclosures.
Additional detailed disclosures regarding our participation or contribution to anytax-exempt industry organization or trade associations may further encourage issue activists, some motivated by special or short-term interests, to pressure us to alter our political participation in a manner that could adversely affect stockholder interests, or require us to disclose proprietary information, putting us at a competitive disadvantage. As further addressed in our Political Activities Policy Statement, our Company maintains memberships in trade associations and other tax-exempt entities primarily for strategic, rather than advocacy-related purposes. For these reasons, additional disclosures regarding contributions to such organizations and associations would not provide useful information to stockholders.
Our boardBoard also opposes the proposal because many aspects of it are vague or unworkable and may create confusion. The definition of lobbying, and the expenditures that would be considered lobbying-related, vary across jurisdictions and could include employee salaries, office rent and employee travel expenses. As a result, the disclosures regarding lobbying-related expenditures required by the proposal may be inconsistent and confusing, as a particular expenditure may be considered lobbying-related in one jurisdiction but not in another.
In light of our existing policies and disclosures with respect to lobbying activities, our boardBoard believes that producing a report beyond our Political Activities Policy Statement, and what has been published on our website and required in our public filings, would impose a significant burden on the Company, but provide minimal additional information of value to Charter’s stockholders. As a result, our boardBoard believes that adopting the proposal is unnecessary and is not in the best interests of our Company or our stockholders.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE “AGAINST” THIS PROPOSAL.
58
Proposal No. 5: Stockholder Proposal Regarding Vesting of Equity Awards
(Item 5 on Proxy Card)
This proposal was submitted by theAFL-CIO Reserve Fund, 815 16th St., NW, Washington, DC 20006, the beneficial owners of 121 shares of our Class A common stock.
RESOLVED: The shareholders urge the Board of Directors of Charter Communications Inc. (the “Company”) to adopt a policy that in the event of a change in control of the Company, as defined under any applicable employment agreement, equity incentive plan or other plan, there shall be no acceleration of vesting of any equity award granted to any senior executive. However, under this policy the Compensation and Benefits Committee may provide in an applicable grant or purchase agreement that any unvested award will vest on a partial,pro ratabasis up to the time of the senior executive’s termination, with such qualifications for an award as the Compensation and Benefits Committee may determine. The implementation of this policy shall not affect any contractual rights in existence on the date adopted.
Supporting | 75 | 2024 Proxy Statement
The Company allows senior executives to receive accelerated equity awards under certain conditions after a change in control of the Company. These accelerated equity awards can significantly increase the total value of senior executives’ “golden parachutes” after a change in control. We do not question that a reasonable amount of severance payments may be appropriate for senior executives and other employees.
We are concerned, however, that current practices at our Company may permit windfall awards to senior executives. As of December 31, 2016, our Company’s Chairman and CEO Thomas Rutledge had $39 million in unvested stock options and restricted stock units subject to acceleration following a change in control. This amount of accelerated equity is in addition to a lump sum of $20 million in cash severance and a $6 million cash bonus Mr. Rutledge would have been entitled to receive if his employment was terminated after a change on control.
We note that many companies use a “double trigger” system to determine eligibility for accelerated vesting of equity awards — there must be a change in control, and the executive must be involuntarily terminated. While we support the use of double triggers, we are not convinced that executives deserve to receive all unvested awards after a termination event. We do believe, however, that an affected executive should be eligible to receive vesting of equity awards on apro ratabasis as of his or her termination date, with the details ofany pro rataaward to be determined by the Compensation and Benefits Committee.
Other leading companies, including Apple Inc., Chevron Corporation, Exxon Mobil Corporation, International Business Machines Corporation, Intel Corporation, Microsoft Corporation and Occidental Petroleum Corporation impose limitations on accelerated vesting of equity, such as providing pro rata awards or simply forfeiting unearned awards.
We urge you to vote FOR this proposal.
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Statement Against Stockholder Proposal Regarding Vesting of Equity Awards
The Compensation and Benefits Committee of our board of directors (the “Compensation Committee”) has taken great care to structure an executive compensation program that rewards our executive officers for performance, and the committee believes that our compensation programs have played an important role in driving our growth. The proposed policy seeks preemptively to tie the hands of the Compensation Committee with respect to a single element of our executive compensation program. The policy would not allow for any acceleration of vesting to occur upon a change in control and would only allow for partial, pro rata vesting through the executive’s termination date.
Charter’s compensation programs are designed to create a strong linkage between the actual compensation earned by our NEOs and Company performance, rewarding both growth-oriented annual operating results as well as sustainable long-term shareholder returns. The provisions that the proposal seeks to prohibit are one component of a broad-based equity compensation program that we believe has successfully driven dramatic increases in stockholder value. The Compensation Committee carefully designs compensation programs to encourage the creation of stockholder value. Companies commonly enter into contractual arrangements with their executives providing for accelerated vesting of equity awards and other benefits in connection with change in control transactions. The possibility of a change in control transaction, and the uncertainty and questions which it may raise among executives, may provide misaligned incentives for executives to pursue a change in control transaction or result in the departure or distraction of executives. A policy effectively prohibiting us from providing any accelerated vesting of equity awards would significantly limit our ability to properly incentivize our executives to pursue a change in control transaction that could result in the termination of their employment and retain our executives during the time we are pursuing such a change in control transaction. The distraction or loss of senior executives at critical times during a potential change in control transaction could make it more difficult for the potential transaction to be completed and reduce the value achieved for stockholders from the transaction. Providing executives with accelerated vesting and other benefits in connection with change in control transactions provides better alignment with our stockholders.
Furthermore, this policy is inconsistent with our existing contractual arrangements and, based on public disclosures, those of our peers. Because most other public companies do not prohibit accelerated vesting of equity awards in connection with a change in control, adopting the policy recommended by the proposal could place us at a competitive disadvantage in attracting and retaining key executives, particularly if a change in control transaction were to occur or be contemplated. Retaining key executives during the pendency of a change in control transaction can be particularly important, since the loss of such executives could adversely affect the Company’s business or operations whether or not the contemplated transaction is completed. None of the seven companies that the proponent cites as examples for the proposal are peers or industry competitors of ours (four are in the computer/software industry and three are in the petrochemical industry). Consequently, our board believes that implementing this proposal could negatively impact our ability to recruit or retain desirable and highly sought after candidates for executive positions, and could place us at a distinct disadvantage within our industry. Such a disadvantage could substantially jeopardize our ability to consistently execute on, or execute at all, our strategic goals, ultimately hindering our ability to create and maximize stockholder value.
Taking these considerations into account, the board believes that the adoption of a rigid policy only allowing for the provision of partial pro rata vesting upon a change in control would not be in the best interests of our stockholders. Our board believes that the Compensation Committee must have the continued flexibility to structure the terms of our senior executive compensation packages in ways that: (i) provide appropriate incentives for them in the context of change in control transactions; and (ii) allow us to remain competitive in attracting high quality executive talent.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE “AGAINST” THIS PROPOSAL.
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Proposal No. 6: Stockholder Proposal Regarding Chairman of the Board and CEO Roles
Political Expenditures Report
(Item 6 on Proxy Card)
This proposal was submitted by the Trowel Trades Large Cap Equity IndexNew York State Common Retirement Fund, 411 West Lafayette Blvd., Detroit, MI 48226, the beneficial owner of at least $2,000 worth of shares of our Class A common stock. The proposal reads as follows:
RESOLVED: The stockholders“Resolved, that the shareholders of Charter Communications, Inc. (“Charter Communications”Charter” or “Company”), ask hereby request that the Company provide a report, updated semiannually, disclosing the Company’s:
| 1. | Policies and procedures for making, with corporate funds or assets, contributions and expenditures (direct or indirect) to (a) participate or intervene in any campaign on behalf of (or in opposition to) any candidate for public office, or (b) influence the general public, or any segment thereof, with respect to an election or referendum. |
| 2. | Monetary and non-monetary contributions and expenditures (direct and indirect) used in the manner described in section 1 above, including: |
| a. | The identity of the recipient as well as the amount paid to each; and |
| b. | The title(s) of the person(s) in the Company responsible for decision-making. |
The report shall be presented to the board of directors to adopt a policy that, whenever possible,or relevant board committee and posted on the board chairman should be a director who has not previously served as an executive officerCompany’s website within 12 months from the date of the annual meeting. This proposal does not encompass lobbying spending.
Supporting Statement
As long-term shareholders of Charter, we support transparency and accountability in corporate electoral spending. This includes any activity considered intervention in a political campaign under the Internal Revenue Code, such as direct and indirect contributions to political candidates, parties, or organizations, and independent expenditures or electioneering communications on behalf of federal, state, or local candidates.
A company’s reputation, value, and bottom line can be adversely impacted by political spending. The risk is especially serious when giving to trade associations, Super PACs, 527 committees, and “social welfare” organizations – groups that routinely pass money to or spend on behalf of candidates and political causes that a company might not otherwise wish to support.
When the Conference Board released its 2021 “Under a Microscope” report8 it detailed these risks, and recommended the process suggested in this proposal. The organization also said, “a new era of stakeholder scrutiny, social media, and political polarization has propelled corporate political activity-and the risks that come with it-into the spotlight. Political activity can pose increasingly significant risks for companies, including the perception that political contributions-and other forms of activity-are at odds with core company values.”
Publicly available records show Charter has contributed at least $3.9 million in corporate funds since the 2010 election cycle.
This proposal asks Charter to disclose all of its electoral spending, including payments to trade associations and other tax-exempt organizations which may be used for electoral purposes – and are otherwise not public. This would bring our Company in line with a growing number of leading companies, including AT&T Inc., Comcast Corporation, and who is “independent”Verizon Communications Inc., which present this information on their websites.
Without knowing the recipients of management. For these purposes, a director shall not be considered “independent” if, during the last three years, heour company’s political dollars, we cannot sufficiently assess whether our company’s election-related spending aligns or she —conflicts with its business strategy, corporate priorities, or other areas of concern. We urge your support for this critical governance reform.”
was affiliated with a company that was an advisor or consultant to the Company, or a significant customer or supplier of the Company;
was employed by or had a personal service contract(s) with the Company or its senior management;
was affiliated with a company ornon-profit entity that received the greater of $2 million or 2% of its gross annual revenues from the Company;
had a business relationship with the Company that the Company had to disclose under the Securities and Exchange Commission regulations;
has been employed by a public company at which an executive officer of the Company serves as a director;
had a relationship of the sort described above with any affiliate of the Company; and,
was a spouse, parent, child, sibling orin-law of any person described above.
The policy should be implemented without violating any contractual obligation and should specify how to select an independent chairman if a current chairman ceases to be independent between annual shareholder meetings. Compliance with the policy may be excused if no independent director is available and willing to be chairman.
Supporting Statement
The Board of Directors, led by its chairman, is responsible for protecting shareholders’ long-term interests by providing independent oversight of management, including the Chief Executive Officer, in directing the corporation’s affairs. This oversight can be diminished when the chairman is not independent. Since May 2016, Thomas M. Rutledge has served as both the Chair and CEO of Charter Communications.
An independent chairman who sets agendas, priorities, and procedures for the board can enhance its oversight and accountability of management and ensure the objective functioning of an effective board. We view the alternative of a lead outside director, even one with a robust set of duties, as adequate only in exceptional circumstances fully disclosed by the board.
Several respected institutions recommend chair independence. CalPERS’ Corporate Core Principles and Guidelines state that “the independence of a majority of the Board is not enough;” “the leadership of the board must embrace independence, and it must ultimately change the way in which directors interact with management.”
We urge you to vote FOR this proposal.
| 8 | https://www.conference-board.org/topics/corporate-poIiticaI-activity/Under-a-Microscope-A-New-Era-of-Scrutiny-for-Corporate-Political-Activity |
61Charter Communications | 76 | 2024 Proxy Statement
Statement Against Stockholder Proposal Regarding Chairman of the Board and CEO RolesPolitical Expenditures Report
Our boardBoard believes that our Company’s participation in the political, legislative and regulatory processes at all levels of directors valuesgovernment enhances stockholder value. Our Company is committed to participating constructively in the flexibility of selectingpolitical process to increase shareholder value and in full compliance with applicable rules and regulations. Our Company’s political contributions and expenditures are made to further the structure of leadership best suited to meet the needsinterests of the Company and its stockholders. Givenour stockholders and are made without regard to the dynamicpersonal political preferences of individual board members, officers, or employees. We are subject to extensive regulation at the federal and competitive environmentstate levels and are involved in whicha number of legislative initiatives across a broad spectrum of policy areas that can have an immediate and dramatic effect on our business and operations. We ethically and constructively promote legislative and regulatory actions that further the business objectives of our Company and attempt to protect our Company from unreasonable, unnecessary, or burdensome legislative or regulatory actions at all levels of government.
We actively participate in the political process and maintain memberships with a variety of trade associations with the ultimate goal of promoting and protecting the economic future of our Company and our stockholders and employees. An important part of participating effectively in the political process is making prudent political contributions and focused lobbying expenditures – but only where permitted by applicable law.
Participation in the political process and as a member of various trade associations comes with the understanding that we operate,may not always agree with all of the board believespositions of the recipients, organizations, or organizations’ other members. However, as detailed in our Company’s Political Activities Policy Statement, available on our website at https://policy.charter.com, we believe that these recipients take many positions and address many issues of importance to our Company in a meaningful manner, and the right leadership structure may vary as circumstances warrant. The board recommendsassociations take positions and address issues in a vote against this proposal because it believes it is incollective industry manner and predominantly advance positions consistent with company interests, that will help us provide strong financial returns, enhance long-term stockholder value, and advance the best interests of our stockholders forCompany..
Our Board believes that the boardinformation currently made available strikes the appropriate balance between transparency and excessive burden and cost, and that additional disclosures with respect to havelobbying and political expenditures would not provide useful information to stockholders. The implementation of the flexibility proposal’s additional requirements would result in the unproductive consumption of valuable time and corporate resources without materially enhancing existing disclosures.
Additional detailed disclosures regarding our participation or contribution to determineany tax-exempt industry organization or trade associations may further encourage issue activists, some motivated by special or short-term interests, to pressure us to alter our political participation in a manner that could adversely affect stockholder interests, or require us to disclose proprietary information, putting us at a competitive disadvantage. For these reasons, additional disclosures regarding contributions to such organizations and associations would not provide useful information to stockholders.
Because parties with interests adverse to our Company also participate in the political process to their business advantage, any unilateral expanded disclosure, above what is required by law and equally applicable to all similar parties engaged in public debate, could benefit those parties while harming the interests of our Company and our stockholders. The Board believes any reporting requirements that go beyond those required under existing law should be applicable to all participants in the process, rather than our Company alone (as the proponent requests).
In short, we believe our current policies and procedures governing political contributions, including our Political Activities Policy Statement, adequately protect our corporate brand, values and reputation, while allowing our Company to actively and effectively participate in the political process with the ultimate goal of promoting and protecting the best person to serve as board Chair, whether that person is an independent director or the CEO.
Every year, the Nominating and Corporate Governance Committee reviews and makes a recommendation on the appropriate governance framework for board leadership. The Committee takes into consideration governance best practices and the facts and circumstancesinterests of our board. Upon the closing of the Transactions in 2016, the Company determined that board leadership is best provided through the combination of a unified Chairman and CEO, a clearly defined and significant lead independent director role, active and strong committee chairs, and independent-minded, skilled, engaged, diverse and committed directors. The board believes that its current structure and governance allows it to provide effective challenge and oversight of management.
We have a Lead Independent Director with significant responsibilities that are described in detail in this proxy statement. Mr. Zinterhofer’s skills, experience, commitment and the time he devotes to serve his role all make him well qualified to serve as our lead independent director. The Chairman and CEO is responsible for setting the strategic direction for the Company and our stockholders and employees. If adopted, the dayproposal would cause our Company to day leadershipincur undue cost and performance of the Company, while the Lead Independent Director consults with the Chairman and CEO and presides over meetings of the board of directors when the Chairman and CEO is not presentadministrative burden, as well as providing leadership forcompetitive harm given thenon- A/N level of detail it seeks andnon- Liberty Broadband directors.
Furthermore, ournon-management directors meet regularly in executive sessions that are chaired by our Lead Independent Director with no member of management present.Non-management directors use these executive sessions to discuss matters of concern, as well as evaluations the complexity of the CEO and senior management, management and board successions, matterspolitical advocacy process, without commensurate benefit to be included on board agendas, and additional information the board would like management to provide to them.
The chairs and all members of the board committees are independent directors. These chairs shape the agenda and information presented to their committees. Oversight of critical issues within these committees is owned by the independent directors. All directors have full access to all members of management and all employees on a confidential basis.
We believe that the board of directors should have the flexibility to select the structure of leadership best suited to meet the needs of Charter and its stockholders at any given time. In addition, given Charter’s robust governance practices, including our strong Lead Independent Director, the board believes that adoption of an Independent Chair Policy is unnecessarily rigid and not in the best interest of the company or its stockholders.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE “AGAINST” THIS PROPOSAL.
62Charter Communications | 77 | 2024 Proxy Statement
Tabular Disclosure of Pay Versus Performance (1) | ||||||||||||||||||||
Value of Initial Fixed $100 Investment Based On: | ||||||||||||||||||||
Year | Summary Compensation Table Total for CEO (Rutledge) (2)(3) | Compensation Actually Paid to CEO (Rutledge) (2)(3) | Summary Compensation Table Total for CEO (Winfrey) (2)(3) | Compensation Actually Paid to CEO (Winfrey) (2)(3) | Average Summary Compensation Table Total for Other NEOs (2)(3) | Average Compensation Actually Paid to Other NEOs (2)(3) | Charter Total Shareholder Return | Primary Peer Group Total Shareholder Return | Net Income ($M) | Adjusted EBITDA ($M) | ||||||||||
| 2023 | n/a | n/a | $89,077,078 | $93,575,272 | $25,243,133 | $27,459,371 | $80 | $96 | $5,261 | $21,894 | ||||||||||
| 2022 | $39,213,350 | ($35,738,207) | $15,626,967 | ($7,482,444) | $7,482,328 | ($4,316,044) | $70 | $84 | $5,849 | $21,616 | ||||||||||
| 2021 | $41,860,263 | $39,859,417 | n/a | n/a | $8,196,657 | $11,663,225 | $134 | $114 | $5,320 | $20,630 | ||||||||||
| 2020 | $38,846,705 | $251,702,262 | n/a | n/a | $16,403,815 | $74,038,050 | $136 | $113 | $3,676 | $18,518 | ||||||||||
| (1) | See the “Description of Disclosure Requirements” section below for additional information on the requirements for this Pay Versus Performance Disclosure and the required Tabular List of Additional Performance Metrics. |
| (2) | Mr. Rutledge served as Chairman and CEO in each of 2020, 2021 and 2022 and is therefore included as the CEO in the table for each such year. Mr. Winfrey served as President and CEO from December 1, 2022 and is therefore included as the CEO for 2022 and 2023 only. The average values for Other NEOs pertain to the following executives and their roles for each year: |
| (3) | The table below provides a reconciliation of the adjustments to Summary Compensation Table Totals to Compensation Actually Paid; refer to the “Determination of Compensation Actually Paid” section below for additional information on the methodology and assumptions for determining the fair value of stock and option awards. |
Chief Executive Officer | Other Named Executive Officers | |||||||||||||||||||||||||||||
2020 (Rutledge) | 2021 (Rutledge) | 2022 (Rutledge) | 2022 (Winfrey) | 2023 (Winfrey) | 2020 | 2021 | 2022 | 2023 | ||||||||||||||||||||||
Summary Compensation Table Total | $38,846,705 | $41,860,263 | $39,213,350 | $15,626,967 | $89,077,078 | $16,403,815 | $8,196,657 | $7,482,328 | $25,243,133 | |||||||||||||||||||||
Less | ($176,085 | ) | ($59,302 | ) | $249,614 | $0 | $0 | ($33,655 | ) | ($11,136) | $0 | $0 | ||||||||||||||||||
Plus | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |||||||||||||||||||||
Less | ($30,005,695) | ($30,004,409) | ($30,005,043) | ($12,001,909) | ($83,653,337 | ) | ($12,999,065) | ($4,000,613) | ($5,325,719) | ($22,689,724) | ||||||||||||||||||||
Plus year-end (a) | $39,025,852 | $32,007,744 | $9,911,059 | $5,490,586 | $87,091,096 | $16,074,306 | $4,093,165 | $2,034,016 | $23,621,816 | |||||||||||||||||||||
Plus year-end or the vesting date, if earlier(b) | $204,011,485 | ($3,944,879 | ) | ($55,107,188 | ) | ($16,598,088 | ) | $1,060,435 | $54,592,650 | $3,385,151 | ($8,506,669) | $1,284,147 | ||||||||||||||||||
Compensation Actually Paid (c) | $251,702,262 | $39,859,417 | ($35,738,207 | ) | ($7,482,444 | ) | $93,575,272 | $74,038,050 | $11,663,225 | ($4,316,044) | $27,459,371 | |||||||||||||||||||
| (a) | The values for each of years 2020 – 2022 have been adjusted from the amounts disclosed in our 2023 Proxy Statement, which incorrectly presented the change in fair value of such awards instead of the fair value at year end. |
| (b) | The 2020 value for Rutledge and the 2022 value for Winfrey have been adjusted from the amounts disclosed in our 2023 Proxy Statement due to an incorrect award valuation being used for each amount when calculating the values for the 2023 Proxy Statement. |
| (c) | As a result of the adjustments described in footnotes (a) and (b), above, the values for Compensation Actually Paid for each of years 2020 – 2022 are different than the amounts disclosed in our 2023 Proxy Statement for those years. |
| (1) | The ratio of Compensation Actually Paid to Summary Compensation Table Total is calculated based on the corresponding CEO and Other NEO values disclosed in the Tabular Disclosure of Pay Versus Performance. |
2020 – Strong stock price performance resulted in increased value for NEOs. • Charter stock price performance outperformed Primary Peers (with a $100 fixed investment on 12/31/2019 increasing to $136 for Charter and $113 for Primary Peers, representing returns of 36.4% and 12.8%, respectively) and resulted in Compensation Actually Paid that was 6.5x the Summary Compensation Table Total for the CEO and 4.5x for the other NEOs.• The significant upside leverage observed in Compensation Actually Paid was driven by Charter’s philosophy to deliver the substantial majority of NEO compensation in the form of stock options, including performance-based equity awards granted in 2016 and vesting based upon the achievement of stock price hurdles, a substantial portion of which were still unvested and outstanding in 2020 and therefore included in this analysis.• Strong financial performance results for this year, with 9.9% Adjusted EBITDA growth and 84.5% growth in Net Income(1) , correlated with stock price performance achievement and also aligned with executive pay outcomes. |
2021 – Flat stock price performance resulted in flat value for NEOs relative to the prior year. • Charter’s stock price continued to grow for most of the year before declining to essentially flat performance by year-end (the closing stock price of $661.55 on 12/31/2020 increased to a high of $821.01 on 9/2/2021 and then fell to $651.97 on 12/31/2021), with similar flat stock price performance observed among Primary Peers; the value of an initial $100 investment made in Charter on 12/31/2019 fell 1.5% over 2021 (from $136 to $134) versus a 0.8% increase (from $113 to $114) for such an investment among Primary Peers. |
• Consistent with the change in stock price performance relative to 2020, Charter’s Compensation Actually Paid as a proportion of Summary Compensation Table Totals was much lower than in the prior year – declining from 6.5x to 1.0x for the CEO and 4.5x to 1.4x for the other NEOs. In addition, and consistent with Charter’s observed pay versus performance outcomes for 2021, Compensation Actually Paid should generally trend near 1.0x of Summary Compensation Table Totals for a short-term, single-year period of flat stock price performance, since the corresponding valuations of stock option and RSU awards should also remain flat over that period.• The higher ratio of Compensation Actually Paid to Summary Compensation Table Totals for other NEOs (1.4x) relative to Mr. Rutledge as CEO (1.0x) was driven primarily by the timing of when the 2016 performance-based awards vested during the year. In particular, Mr. Rutledge’s awards vested in April and were valued for purposes of calculating Compensation Actually Paid based on a fair market value of $654.88 (the average of the high and low prices on the vesting date, approximately equal to the year-ending fair market value of $655.55), and the awards for the other NEOs vested in June and were valued based upon a fair market value of $691.87 (the average of the high and low prices on the vesting date and approximately 5.5% above the year-ending fair market value).• Financial performance results were strong in 2021 – with 11.4% Adjusted EBITDA growth and 44.7% growth in Net Income – and initially correlated with strong stock price performance. However, in the latter half of the year, challenging macroeconomic conditions and an inflationary environment drove stock price declines among Charter, Primary Peers, and the broader market as a whole. |
2022 – Declining stock price performance resulted in a significant contraction of value for NEOs. |
• Stock prices for both Charter and Primary Peer companies continued to fall over the course of 2022; the value of an initial $100 investment made in Charter on 12/31/2019 fell 48.0% over 2022 (from $134 to $70) versus a 26.3% decline (from $114 to $84) for such an investment among Primary Peers.• The decline in stock price had a significant impact on Charter’s levels of Compensation Actually Paid, with all NEOs recognizing overall negative values of Compensation Actually Paid (i.e., the net losses in equity value driven by the declining stock price exceeded the Summary Compensation Table Totals).• Charter continued to achieve annual growth in both Net Income (increasing 9.9% from the prior year) and Adjusted EBITDA (increasing 4.8% from the prior year), albeit at lower growth rates than in prior years. As such growth in financial performance did not correspond to an increase in stock price, these results had no direct impact on Compensation Actually Paid.• As a result of Charter’s philosophy to deliver the substantial majority of compensation in the form of stock options, the pay versus performance outcome in 2022 (negative Compensation Actually Paid resulting from a decline in stock price) mirrored that which was observed in 2020 (high levels of Compensation Actually Paid resulting from stock price growth) and demonstrated alignment between shareholder returns and value realized by NEOs under differing performance scenarios. |
2023 – The near-term positive stock price performance over the year did not immediately translate into growth in value for NEOs due to the long-term, performance-based nature of Charter’s compensation program. • Over the year, stock prices for both Charter and Primary Peer companies recovered from multi-year lows in 2022, with the value of an initial $100 investment made in Charter on 12/31/2019 increasing 14.6% over 2023 (from $70 to $80), approximately equal to the corresponding 15.0% increase (from $84 to $96) in such an investment among Primary Peers.• The increase in stock price did not translate into meaningfully higher Compensation Actually Paid levels relative to Summary Compensation Table Totals, with the ratio of Compensation Actually Paid to Summary Compensation Table Totals equal to 1.1x for the CEO and 1.0x for the other NEOs. This outcome was driven primarily by awards under the 2023 Performance Equity Program, which were granted in February 2023, providing value equivalent to 5.0x each participating NEO’s annual LTI target in a single grant (net of the grant value from time-vested awards delivered earlier in January 2023), and with vesting tied to the achievement of stock price hurdles over a 3 to 5-year period following the grant date. The grant value of these awards therefore represented the substantial portion of unvested equity value for NEOs (including unvested grants from prior years), but saw limited appreciation in their fair market value between the |
grant date and year-end due to (i) the longer-time horizon for vesting (between 3 to 5 years) and (ii) aggressive stock price hurdle vesting requirements, with the lowest stock price hurdle of $507 representing approximately 30% appreciation relative to the fair market value of Charter stock atyear-end ($390.73, equal to the average of Charter’s high and low stock price on December 29, 2023).• Charter’s Net Income decreased by 10.1% from $5.8 billion to $5.3 billion and Adjusted EBITDA increased 1.3% from $21.6 billion to $21.9 billion. As noted above, financial performance achievement only impacts Charter’s Compensation Actually Paid to the extent that such results translate into stock price performance. However, the mixed performance results reflected in these earnings measures – a $500 million decline in Net Income against a $300 million increase in Adjusted EBITDA – do align with the flat relationship between Compensation Actually Paid and Summary Compensation Table Totals. In particular, the limited change in equity value over 2023 resulted in Compensation Actually Paid that was approximately the same as the Summary Compensation Table Totals, and this is an appropriate outcome given the mixed earnings results.• The pay versus performance outcome in 2023 continues to demonstrate the high degree of performance accountability in Charter’s compensation program, with Compensation Actually Paid levels being comparable to Summary Compensation Table Totals in spite of stock price growth over the year (a similar outcome to 2021 but with positive versus flat stock price performance). In addition, given the multi-year nature of the 2023 Performance Equity Program – which is heavily tied to stock price performance through an option-heavy mix and stock price vesting hurdles – the awards made under the program will continue to be key drivers of pay versus performance outcomes in future years. |
| (1) | Based on 2019 Adjusted EBITDA of $16.855 billion and Net Income of $1.992 billion. |
Pay | Summary Compensation Table Total Total compensation disclosed in the Summary Compensation Table. Generally representative of target compensation for NEOs, with the main exception being that amounts in the non-equity incentive compensation plan column represent actual payout levels under the annual incentive plan(1) . | |
Compensation Actually Paid The Summary Compensation Table Total adjusted to reflect: (i) the replacement of the aggregate change in present value of defined benefit plans with the annual service cost for defined benefit plans, including modifications, (ii) the replacement of the amounts disclosed in the Stock Awards and Option Awards columns (which represent the fair value of awards at grant) with the fair value of such awards as of the end of the year, and (iii) the addition of the change in fair value of stock and options awards granted in prior years and either vesting during the year or outstanding at the end of the year. |
Performance | Total shareholder return (TSR) for Charter and Primary Peer companies | |||||||
Equals the change in value of a notional $100 investment in Charter and a $100 investment in Primary Peer organizations (1) (with such investment weighted between peers based on market capitalization) from the beginning of the pay versus performance analysis period through the end of each year of the analysis. | ||||||||
Charter’s GAAP net income | ||||||||
Consolidated net income as disclosed in Charter’s annual report on Form 10-K for each year. | ||||||||
An additional financial performance measure considered to be the most important non-TSR related metric in determining compensation (Adjusted EBITDA) | ||||||||
Charter identified Adjusted EBITDA, as disclosed in Charter’s annual report on Form 10-K for each year, as the appropriate metric based on the higher weighting of Adjusted EBITDA in the annual bonus plan relative to other metrics(1) . Adjusted EBITDA is defined as net income attributable to Charter shareholders plus net income attributable to noncontrolling interest, net interest expense, income taxes, depreciation and amortization, stock compensation expense, other income (expenses), net and other operating (income) expenses, net, such as special charges and (gain) loss on sale or retirement of assets. | ||||||||
Identification of three to seven additional performance metrics most important for assessing pay | ||||||||
Although not included in the analysis of pay and performance, regulations require the identification of additional performance measures tied to compensation, which for Charter applies to five performance metrics in the annual bonus plan (1) and listed belowTabular List of Additional Performance Metrics | ||||||||
Metric | Description | |||||||
| Revenue | Financial metric used in 2020 – 2023 bonus designs for all NEOs | |||||||
| Capital and Free Cash Flow Management | Non-financial metric used in 2020 – 2023 bonus designs for all NEOs | |||||||
| Network Expansion and Evolution | Non-financial metric used in 2023 bonus design for all NEOs | |||||||
| (1) | Refer to the Compensation Discussion and Analysis for a description of Charter’s Primary Peer group and the annual bonus plan design and performance metrics. |
| common stock on such date, the volatility and risk-free rate assumptions that were in effect for the given year, and the expected life assumption that was in effect on the original grant date of the stock options, less the time that had elapsed since the grant date. |
CEO Pay Ratio
Charter’s CEO to Median Employee pay ratio for 20172023 was calculated pursuant to Item 402(u) of RegulationS-K, comparing total annual compensation for the CEO to that of the Median Employee. ForIn 2022, a new Median Employee was identified for purposes of calculating our CEO Pay Ratio, as the pay ratio,prior analysis from which the Median Employee had been selected was selectedconducted in 2020, and the regulations require that a Median Employee be identified once every three years. The Median Employee for 2022 was identified using the same methodology as in prior years and based on an analysis of the median 20172022 W-2 Box 1 income among allthe 101,700 full and part-time U.S. employees, other than the CEO, who were actively employed by Charter as of December 31, 2017.2022 (Charter has no employees outside of the U.S.). No adjustments were applied toW-2 Box 1 income for purposes of determining the Median Employee, such as for employees who were employed for only part of the year or on unpaid leave of absence at some point during the year. Charter’s employees outside of the U.S. were excluded from this analysis on the basis that they collectively represented less than 5% of Charter’s total employee population – asAs of December 31, 2017,2023, Charter had 95,064101,100 full and part-time active U.S. employees, globally, with 403 located outsideother than the CEO.
In 2023, the Median Employee identified in 2022 for purposes of calculating our CEO Pay Ratio had no material change in role or compensation since the U.S., primarily inoriginal analysis, and this individual therefore continued to be used as the U.K. and India.Median Employee for purposes of calculating this year’s pay ratio. Our CEO Pay Ratio is a reasonable estimate calculated in a manner consistent with Item 402(u). However, due to the flexibility afforded by Item 402(u) in calculating the CEO Pay Ratio, our CEO Pay Ratio may not be comparable to the CEO pay ratios presented by other companies.
TheFor 2023, the Median Employee had total annual compensation of $52,722,$54,476, calculated using the same methodology as applied for the CEONEOs in the Summary Compensation Table. Full-time Charter employees in the U.S., including the Median Employee, are also eligible to participate in Company-sponsored retirement and health and welfare benefits programs and receive complimentary cable services, which provide significant additional value but are not included in the measure of total annual compensation used to calculate the pay ratio.
The ratio of the CEO’s total annual compensation as disclosed in the Summary Compensation Table relative to that of the Median Employee was as follows:
CEO Total Annual Compensation | $ | 7,813,316 | $ | 89,077,078 | ||||
Median Employee Total Annual Compensation | $ | 52,722 | $ | 54,476 | ||||
Ratio of CEO to Median Employee Total Annual Compensation | 148 : 1 | 1,635.2 |
As approximately 75% of the CEO’s compensation disclosed in the Summary Compensation Table was from equity awards made under the 2023 Performance Equity Program – which is intended to provide value over a multi-year period and described in further detail in the in the Compensation Discussion and Analysis – an alternative pay ratio was calculated by annualizing the value delivered under the program over the 5-year vesting period for such awards. The resulting alternative ratio of the CEO’s total annual compensation relative to that of the Median Employee would be as follows:
Alternative CEO Total Annual Compensation | $ | 35,753,917 | ||
Median Employee Total Annual Compensation | $ | 54,476 | ||
Alternative Ratio of CEO to Median Employee Total Annual Compensation | 656.3 |
63Charter Communications | 85 | 2024 Proxy Statement
Section 16(a) Beneficial Ownership Reporting Requirement
Section 16 of the Exchange Act requires our directors and certain of our officers, and persons who own more than 10% of our common stock, to file initial reports of ownership and reports of changes in ownership of our common stock and other of our equity securities with the SEC. Such persons are required by SEC regulations to furnish us with copies of all Section 16(a) forms they file. Based solely on our review of the copies of such forms furnished to us and written representations that no other reports were required, we believe that all Section 16(a) filing requirements applicable to our officers, directors and greater than 10% beneficial owners were complied with during the 2017 fiscal year, except (1) Mr. Conn had a Form 4 reporting a sale that was not timely filed, and (2) Mr. Newhouse had twelve Form 4 filings related to repurchases of common stock held by Advance/Newhouse Partnership, for which Mr. Newhouse disclaims beneficial ownership, which Form 4’s were delayed in being filed.
Code of Ethics
We have adopted a Financial Code of Ethics within the meaning of federal securities regulations for our employees, including all executive officers and directors. We also established a hotline and website for reporting alleged violations of the Financial Code of Ethics, established procedures for processing complaints and implemented educational programs to inform our employees regarding the Financial Code of Ethics. A copy of our Financial Code of Ethics is available on the “Investors” section of our website at www.charter.com. ir.charter.com.
Delinquent Section 16(a) Reports
To the Company’s knowledge, with respect to the fiscal year ended December 31, 2023, all applicable filings were timely made.
Stockholder Proposals for 20182025 Annual Meeting
If you want to include a stockholder proposalTo be included in the proxy statement for the 20192025 annual meeting, ita stockholder proposal must be delivered to the Corporate Secretary at the Company’s executive offices no later than November 15, 2018.14, 2024. The federal proxy rules specify what constitutes timely submission and whether a stockholder proposal is eligible to be included in the proxy statement.
If a stockholder desires to bring business before the meeting that is not the subject of a proposal timely and properly submitted for inclusion in the proxy statement or to make a nomination of a person for election to the boardBoard of directors,Directors, the stockholder must follow procedures outlined in the Company’s Bylaws. One of the procedural requirements in the Bylaws is timely notice in writing of the business the stockholder proposes to bring before the meeting. To be timely with respect to the 20192025 annual meeting, such a notice must be delivered to the Company’s Corporate Secretary at the Company’s executive offices no earlier than January 4, 2019the close of business on December 24, 2024 and no later than the close of business on January 29, 2019.23, 2025. However, in the event that the Company elects to hold its next annual meeting more than 30 days before or more than 70 days after the anniversary of this annual meeting, such stockholder proposals would have to be received by the Company not earlier than 120 days prior to the next annual meeting date and not later than 90 daysthe later of (i) close of business on the 90th day prior to the next annual meeting date.date or (ii) the tenth day following the day on which public announcement of the date of such meeting is first made by the Company.
Such notice must include:include the information required by the Company’s Bylaws, including: (1) for a nomination for director, all information relating to such person that is outlined in the Company’s Bylaws, including all information required to be disclosed in a proxy for election of directors; (2) as to any other business, a description of the proposed business, the text of the proposal, the reasons therefore, and any material interest the stockholder may have in that business; and (3) certain information regarding the stockholder making the proposal. These requirements are separate from the requirements a stockholder must meet to have a proposal included in the Company’s proxy statement. In addition, stockholders who intend to solicit proxies in support of director nominees other than the Company’s nominees must also comply with the additional requirements of Rule 14a-19(b).The foregoing time limits also apply in determining whether notice is timely for purposes of rules adopted by the SEC relating to the exercise of discretionary voting authority.
Any stockholder desiring a copy of the Company’s Bylaws will be furnished one without charge upon written request to the Corporate Secretary. A copy of the amended and restated Bylaws was filed as an exhibit to the Company’s CurrentQuarterly Report on Form8-K10-Q filed on May 19, 2016,October 27, 2023 and is available at the SEC Internet site (http://www.sec.gov).
64
Other Matters
At the date of mailing of this proxy statement, we are not aware of any business to be presented at the annual meeting other than the matters discussed above. If other proposals are properly brought before the meeting, any proxies returned to us will be voted as the proxyholder sees fit.
Charter Communications | 86 | 2024 Proxy Statement
Our Annual Report on Form10-K for the year ended December 31, 20172023 is available without charge by accessing the “Investor Relations”“Investors” section of our website at ir.charter.com. ir.charter.com. You also may obtain a paper copy of the Form10-K, without exhibits, at no charge by writing to the Company at 400 Atlantic Street,Washington Blvd., Stamford, CT 06901,06902, Attention: Investor Relations.
In addition, certain financial and other related information, which is required to be furnished to our stockholders, is provided to stockholders concurrently with this Proxy Statement in our 20162023 Annual Report. The SEC has enacted a rule that allows the Company to deliver only one copy of our Proxy Statement and 20162023 Annual Report to multiple security holders sharing an address if they so consent. This is known as “householding.” The Householding Election,householding election, which appears on your proxy card, provides you with a means for you to notify us whether you consent to participate in householding. By marking “Yes” in the block provided, you will consent to participate in householding and by marking “no” you will withhold your consent to participate. If you do nothing, you will be deemed to have given your consent to participate in householding. Your consent to householding will be perpetual unless you withhold or revoke it. You may revoke your consent at any time by contacting Broadridge Financial Solutions (“Broadridge”), either by writing to Broadridge, Householding Department, 51 Mercedes Way, Edgewood, New York 11717, or by calling(800) 542-1061. (866) 540-7095. We will remove you from the householding program, following which you will promptly receive an individual copy of our Annual Report and this Proxy Statement. Even if your household receives only one Annual Report and one Proxy Statement, a separate proxy card will be provided for each stockholder. If you vote using the proxy card, please sign and return it in the enclosed postage-paid envelope. If you vote by Internet or telephone, there is no need to mail the proxy card.
All trademarks used in this report remain the property of their respective owners.
65Charter Communications | 87 | 2024 Proxy Statement
Appendix A: Non-GAAP Financial Measures
| The Company uses certain measures that are not defined by U.S. generally accepted accounting principles (“GAAP”) to evaluate various aspects of its business. Adjusted EBITDA and free cash flow are non-GAAP financial measures and should be considered in addition to, not as a substitute for, net income attributable to Charter shareholders and net cash flows from operating activities reported in accordance with GAAP. These terms, as defined by Charter, may not be comparable to similarly titled measures used by other companies. Adjusted EBITDA and free cash flow are reconciled to net income attributable to Charter shareholders and net cash flows from operating activities, respectively, below. Adjusted EBITDA is defined as net income attributable to Charter shareholders plus net income attributable to noncontrolling interest, net interest expense, income taxes, depreciation and amortization, stock compensation expense, other income (expense), net and other operating (income) expense, net, such as special charges and (gain) loss on sale or retirement of assets. As such, it eliminates the significant non-cash depreciation and amortization expense that results from the capital-intensive nature of the Company’s businesses as well as other non-cash or special items, and is unaffected by the Company’s capital structure or investment activities. However, this measure is limited in that it does not reflect the periodic costs of certain capitalized tangible and intangible assets used in generating revenues and the cash cost of financing. These costs are evaluated through other financial measures. Free cash flow is defined as net cash flows from operating activities, less capital expenditures and changes in accrued expenses related to capital expenditures. Management and Charter’s Board of Directors use Adjusted EBITDA and free cash flow to assess Charter’s performance and its ability to service its debt, fund operations and make additional investments with internally generated funds. In addition, Adjusted EBITDA generally correlates to the leverage ratio calculation under the Company’s credit facilities or outstanding notes to determine compliance with the covenants contained in the facilities and notes (all such documents have been previously filed with the SEC). For the purpose of calculating compliance with leverage covenants, the Company uses Adjusted EBITDA, as presented, excluding certain expenses paid by its operating subsidiaries to other Charter entities. The Company’s debt covenants refer to these expenses as management fees, which were $1.4 billion for each of the years ended December 31, 2023 and 2022. A reconciliation of Adjusted EBITDA and free cash flow to net income attributable to Charter shareholders and net cash flows from operating activities, respectively, is as follows (dollars in millions):
The above schedule is presented in order to reconcile Adjusted EBITDA and free cash flow, non-GAAP measures, to the most directly comparable GAAP measures in accordance with Section 401(b) of the Sarbanes-Oxley Act.
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Charter Communications | 88 | 2024 Proxy Statement
APPENDIX B
SECOND AMENDMENT TO
CHARTER COMMUNICATIONS, INC.
2019 STOCK INCENTIVE PLAN
THIS SECOND AMENDMENT (this “Second Amendment”) to the Charter Communications, Inc. 2019 Stock Incentive Plan, as amended January 28, 2020 (the “Plan”), is dated as of April 23, 2024 (the “Amendment Effective Date”).
1. Stock Subject to the Plan; Grant Limitations. Section 4.2 of the Plan is hereby amended and restated as follows:
Subject to adjustment pursuant to Section 13, the maximum number of Shares that may be made the subject of Options and Awards granted under the Plan is 23,000,000. Following the effective date of this Plan (as described in Section 20.3 hereof), no additional awards shall be made under the Amended and Restated 2009 Stock Incentive Plan, as amended through May 18, 2016. The Company shall reserve for the purposes of the Plan, out of its authorized but unissued Shares or out of Shares held in the Company’s treasury, or partly out of each, such number of Shares as shall be determined by the Board in its discretion. The aggregate number of Shares that may be issued pursuant to the exercise of Incentive Stock Options granted under this Plan shall not exceed 23,000,000 which number shall be calculated and adjusted pursuant to Section 13 only to the extent that such calculation or adjustment will not affect the status of any Option intended to qualify as an Incentive Stock Option under Code Section 422.
2. Effective Date. This Amendment shall become effective as of the Amendment Effective Date. Except as expressly set forth herein, the Plan shall remain in full force and effect in accordance with its terms.
[End of Document]
Charter Communications | 89 | 2024 Proxy Statement
CHARTER COMMUNICATIONS, INC.
400 WASHINGTON BLVD.
STAMFORD, CT 06902
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CHARTER COMMUNICATIONS, INC. Annual Meeting of Stockholders April This proxy is solicited by the Board of Directors The stockholders hereby appoint This proxy, when properly executed, will be voted in the manner directed herein. If no such direction is made, this proxy will be voted in accordance with the Board of Directors’ recommendations. Continued and to be signed on reverse side CHARTER COMMUNICATIONS, INC. 400 WASHINGTON BLVD. STAMFORD, CT 06902 VOTE BY INTERNET - www.proxyvote.com or scan the QR Barcode above Use the Internet to transmit your voting instructions and for electronic delivery of information. Vote by 11:59 p.m. Eastern Time on April 22, 2024 for shares held directly and by 11:59 p.m. Eastern Time on April 19, 2024 for shares held in a Plan. Have your proxy card in hand when you access the web site and follow the instructions to obtain your records and to create an electronic voting instruction form. ELECTRONIC DELIVERY OF FUTURE PROXY MATERIALS If you would like to reduce the costs incurred by our company in mailing proxy materials, you can consent to receiving all future proxy statements, proxy cards and annual reports electronically via e-mail or the Internet. To sign up for electronic delivery, please follow the instructions above to vote using the Internet and, when prompted, indicate that you agree to receive or access proxy materials electronically in future years. VOTE BY PHONE - 1-800-690-6903 Use any touch-tone telephone to transmit your voting instructions. Vote by 11:59 p.m. Eastern Time on April 22, 2024 for shares held directly and by 11:59 p.m. Eastern Time on April 19, 2024 for shares held in a Plan. Have your proxy card in hand when you call and then follow the instructions. VOTE BY MAIL Mark, sign and date your proxy card and return it in the postage-paid envelope we have provided or return it to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717. TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: V31575-P04612-Z86853 KEEP THIS PORTION FOR YOUR RECORDS — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — DETACH AND RETURN THIS PORTION ONLY THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
Please sign exactly as your name(s) appear(s) hereon. When signing as attorney, executor, administrator, or other fiduciary, please give full title as such. Joint owners should each sign personally. All holders must sign. If
Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting: The Notice and Proxy Statement and Annual Report are available at www.proxyvote.com. — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — V31576-P04612-Z86853 CHARTER COMMUNICATIONS, INC. Annual Meeting of Stockholders April 23, 2024 8:30 AM Mountain Daylight Time This proxy is solicited by the Board of Directors The stockholders hereby appoint Christopher L. Winfrey, Jamal H. Haughton and Thomas E. Proost or any This proxy, when properly executed, will be voted in the manner directed herein. If no such direction is made, this proxy will be voted in accordance with the Board of Directors’ recommendations. Continued and to be signed on reverse side | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||