PAETEC CORP.
Exhibit 10.18
PAETEC CORP.
Description of Management Compensatory Plans and Arrangements
Components of Executive Compensation
The 2005 executive compensation program of PAETEC Corp. includes a base salary, the potential for semi-annual cash bonuses in accordance with our annual bonus plan and long-term incentive compensation in the form of stock options and potentially other equity-based awards that are authorized for issuance under the PAETEC Corp. Sixth Amended 2001 Stock Option and Incentive Plan. Our executive officers also are eligible to participate in our 401(k) plan and health plans, each of which is available to all of our regular employees.
The Compensation Committee of the Board of Directors makes determinations concerning all compensation for Arunas A. Chesonis and for all equity-based compensation for Bradford M. Bono, Edward J. Butler and Keith M. Wilson. Following consideration of recommendations made by Mr. Chesonis, the Compensation Committee also makes determinations concerning all other compensation for Messrs. Bono, Butler and Wilson. Mr. Chesonis makes determinations concerning all compensation for Joseph D. Ambersley, Christopher Bantoft, John P. Baron, Richard J. Padulo, Daniel J. Venuti, Timothy J. Bancroft and Jeffrey L. Burke. All executive compensation determinations are based on an evaluation of the executive officer’s responsibilities, performance, experience and knowledge, and the competitive marketplace for executive talent.
2005 Compensation for Executives
We have not entered into written employment agreements with any of our executive officers. All of our executive officers have entered into a Non-Solicitation, Non-Compete and Confidentiality Agreement in substantially the form filed as Exhibit 10.6 to this Registration Statement on Form S-1.
For 2005, each executive officer is entitled to receive the base salary set forth beside the name of such executive officer in the table below.
| Executive Officer | Title | 2005 Base Salary (as of July 11, 2005) | |||
| Arunas A. Chesonis | Chairman of the Board, President and Chief Executive Officer | $ | 500,000 | ||
| Bradford M. Bono | Executive Vice President and Director | $ | 330,000 | ||
| Executive Officer | Title | 2005 Base Salary (as of July 11, 2005) | |||
| Edward J. Butler, Jr. | Executive Vice President | $ | 330,000 | ||
| Keith M. Wilson | Executive Vice President and Chief Financial Officer | $ | 330,000 | ||
| Joseph D. Ambersley | Executive Vice President | $ | 230,000 | ||
| Christopher Bantoft | Executive Vice President | $ | 230,000 | ||
| John P. Baron | Executive Vice President | $ | 250,000 | ||
| Richard J. Padulo | Executive Vice President | $ | 210,000 | ||
| Daniel J. Venuti | Executive Vice President, Secretary and General Counsel | $ | 250,000 | ||
| Timothy J. Bancroft | Executive Vice President and Treasurer | $ | 200,000 | ||
| Jeffrey L. Burke | Executive Vice President | $ | 250,000 | ||
Each executive officer also is eligible for semi-annual cash bonuses in accordance with the terms of our annual bonus plan and, at the discretion of the Compensation Committee or Mr. Chesonis, as applicable, for long-term incentive compensation pursuant to the 2001 Stock Option and Incentive Plan. In connection with our contemplated initial public offering of common stock, each executive officer is entitled, subject to stockholder approval of an amendment to the 2001 Stock Option and Incentive Plan to increase the number of shares of Class A common stock issuable thereunder and to the completion of the initial public offering, to receive the long-term incentive compensation set forth opposite the name of such executive officer in the table below. Each of such awards will vest with respect to 25% of the shares of Class A common stock subject to such awards on each of the first four anniversaries of the date of grant, which will be on or about the day we sign a purchase agreement for the initial public offering. The exercise price of all options shown will equal the fair market value on the date of grant.
| Executive Officer | Value of options($)(2) | Value of Restricted Shares($)(2) | ||
| Arunas A. Chesonis | 750,000 | 250,000 | ||
| Bradford M. Bono | 375,000 | 125,000 | ||
| Edward J. Butler, Jr. | 225,000 | 62,500 | ||
| Keith M. Wilson | 225,000 | 125,000 | ||
| Joseph D. Ambersley | 84,375 | 28,124 | ||
| Christopher Bantoft | 112,500 | 37,500 | ||
| John P. Baron | 112,500 | 37,500 | ||
| Richard J. Padulo | 84,375 | 28,124 | ||
| Daniel J. Venuti | 225,000 | 62,500 | ||
| Timothy J. Bancroft | 112,500 | 37,500 | ||
| Jeffrey L. Burke | 84,375 | 28,124 | ||
| (1) | The number of options to purchase common stock will equal the amounts shown divided by the product of (x) .50 multiplied by (y) the initial public offering price. |
| (2) | The number of restricted shares will equal the amounts shown divided by the initial public offering price per share of common stock. |
In addition, upon completion of the initial public offering and subject to the stockholder approval described above, Keith M. Wilson is entitled to receive an additional award of restricted shares that will be equal to 576,000 divided by the initial public offering price. All of such shares will vest on the third anniversary of the date of grant.
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