Cable One (CABO) DEF 14ADefinitive proxy

Please join us for Cable One, Inc.’s Annual Meeting of Stockholders on Friday, May 19, 2023, at 8:00 a.m., Eastern Time. The Annual Meeting will be held at 4521 Highwoods Parkway, Glen Allen, Virginia 23060 as well as via live audio webcast on the internet at www.virtualshareholdermeeting.com/CABO2023. If joining the Annual Meeting virtually, you will be able to vote your shares electronically and submit your questions during the Annual Meeting during the live audio webcast.

Included with this letter are a Notice of Annual Meeting of Stockholders and Proxy Statement, which describe the business to be conducted at the Annual Meeting. This Proxy Statement and the enclosed proxy card and annual report are first being sent to stockholders on or about April 11, 2023. We urge you to read the accompanying materials regarding the matters to be voted on at the meeting and to submit your voting instructions by proxy.

Whether or not you plan to attend the meeting, your vote is important to us. You may vote your shares by proxy on the internet, by telephone, or by completing, signing and promptly returning a proxy card or voting instruction form in the envelope provided. If you plan to attend the Annual Meeting, kindly so indicate in the space provided on the proxy card or voting instruction form or when prompted if voting over the internet or by telephone. We encourage you to vote by internet, by telephone, or by proxy card or voting instruction form in advance even if you plan to attend the Annual Meeting. By doing so, you will ensure that your shares are represented and voted at the Annual Meeting.

Thank you for your continued support of Cable One, Inc.

The 2023 Annual Meeting of Stockholders of Cable One, Inc. (the “Company”) will be held on Friday, May 19, 2023, at 8:00 a.m., Eastern Time. You can attend the Annual Meeting in person or via live audio webcast. If joining virtually, you can vote your shares electronically and submit your questions during the Annual Meeting by visiting www.virtualshareholdermeeting.com/CABO2023. You will need to have your 16-Digit Control Number included on your proxy card or the instructions that accompanied your proxy materials in order to join the Annual Meeting. The Annual Meeting is being held for the following purposes:

The Board of Directors of the Company has fixed the close of business on April 3, 2023, as the record date for the determination of stockholders entitled to notice of and to vote at the Annual Meeting.

It is important that your shares be represented and voted at the Annual Meeting. Please sign and return your proxy card or voting instruction form at your earliest convenience. You may also vote your shares by telephone or over the internet. If you choose to vote your shares by telephone or over the internet, please follow the instructions in the enclosed Proxy Statement and proxy card or voting instruction form. You may revoke your proxy at any time before it has been voted at the Annual Meeting. For shares held through a broker, bank or other nominee, you may vote by submitting voting instructions as provided by your broker, bank or other nominee.

 

These proxy solicitation materials, including this Proxy Statement and the accompanying proxy card or voting instruction form, were first distributed and made available on or about April 11, 2023, to stockholders entitled to vote at the Annual Meeting.

Stockholders of record as of the close of business on April 3, 2023 (the “Record Date”) may vote at the Annual Meeting. Each of your shares—whether held (i) directly in your name as stockholder of record or (ii) in street name—entitles you to one vote with respect to each proposal to be voted on at the Annual Meeting. However, street name stockholders generally cannot vote their shares directly and instead must instruct the broker, bank or nominee how to vote their shares. 

 

The Board of Directors (the “Board”) of Cable One, Inc. (the “Company, “we,” “us,” “our” or “Cable One”) recommends you vote as follows:

We believe our performance-based compensation philosophy for executive officers provides incentives to achieve both short- and long-term business objectives; aligns the interests of our executive officers and long-term stockholders; and enables us to hire and retain talented individuals in a competitive marketplace.

The following tables present certain information, as of April 3, 2023, concerning each nominee for election as a director at the Annual Meeting.

 

The following table provides summary information regarding the aggregate fees billed to the Company for professional services rendered by PwC for 2022 and 2021.

We are asking our stockholders to approve an advisory resolution on the compensation of our NEOs as reported in this Proxy Statement. Although the say-on-pay vote is advisory and non-binding, the Board and the C&TM Committee value the input of our stockholders and will review and consider the voting results when making future decisions regarding our executive compensation program. At our 2022 Annual Meeting of Stockholders, approximately 97% of the votes cast were in favor of our say-on-pay proposal.

We are asking our stockholders to cast a non-binding, advisory vote on the frequency with which we should ask stockholders to approve an advisory resolution on NEO compensation. You may cast a vote as to whether future say-on-pay votes should occur every one, two, or three years. Although the say-on-frequency vote is advisory and non-binding, the Board and the C&TM Committee value the input of our stockholders and will review and consider the voting results when determining the frequency of future say-on-pay votes.

This Proxy Statement contains information relating to the Annual Meeting of Cable One, Inc. or any adjournments thereof, for the purposes set forth in the accompanying Notice of Annual Meeting of Stockholders. The Board is making this proxy solicitation.

 

The nominees for election as director, to serve until the 2024 Annual Meeting of Stockholders and until their successor is elected and qualified, are Brad D. Brian, Deborah J. Kissire, Julia M. Laulis, Mary E. Meduski, Thomas O. Might, Sherrese M. Smith, Wallace R. Weitz, and Katharine B. Weymouth. All nominees are currently directors of the Company.

Our Board was originally divided into three classes, designated Class I, Class II and Class III, with staggered three-year terms, such that the term of one class expires at each annual meeting of stockholders. At our 2020 Annual Meeting of Stockholders, our stockholders approved our Charter to declassify the Board beginning with the 2021 Annual Meeting and provide for the annual election of all directors phased in over a three-year period. In accordance with this phase-in period, the nominees listed above and at each subsequent annual meeting are being proposed for election to one-year terms (until the first annual meeting of stockholders next following the director’s election and until the director’s successor is elected and qualified). Our Board will be fully declassified following the Annual Meeting, and all directors will be elected annually beginning with the Annual Meeting. Our Charter and By-laws provide that the number of the directors of the Company will be fixed from time to time by the Board. In addition, effective at the time of the 2023 Annual Meeting, the size of the Board will be reduced to eight members.

The candidates for election have been nominated by the Board based on the recommendation of the Nominating and Governance Committee. In choosing directors and nominees, we seek individuals of the highest personal and professional ethics, integrity, business acumen and commitment to representing the long-term interests of our stockholders and other stakeholders.

In respect of its composition, the Board considers the diversity, skills and experience of prospective nominees in the context of the needs of the Board and seeks directors who are “independent” under applicable law and listing standards. Although our Corporate Governance Guidelines and the Nominating and Governance Policy Statement do not prescribe specific standards regarding Board diversity, the Board considers, as a matter of practice, the diversity of prospective nominees (including incumbent directors), both culturally and in terms of the variety of viewpoints on the Board, which may be enhanced by a mix of different professional and personal backgrounds and experiences. While diversity and the variety of viewpoints, backgrounds and experiences represented on the Board are always considered, the Board believes that a prospective nominee should not be chosen nor excluded solely or principally because of factors such as race, creed, color, religion, national origin, sex/gender, affectional or sexual orientation, gender identity, age or disability.

The Board is committed to evaluating diverse candidates for every vacancy, and it will include women and/or persons of color in each candidate pool from which non-incumbent director nominees are selected, consistent with its past practice. Over the last four years, the Board has elected three new female directors, including one who is African American.

Directors are elected by the affirmative vote of a majority of the votes cast at the Annual Meeting. The Board knows of no reason that would cause any nominee to be unable to act or to refuse to accept their nomination or election. In the event that any nominee for election withdraws or for any reason is not able to serve as a director, the individuals acting as your proxies may vote for such other person as the Board may nominate.

In addition to the information presented below regarding each nominee’s specific qualifications, skills, attributes and experience that led the Board to conclude that they should serve as a director, the Board believes that each nominee has demonstrated established records of accomplishment in areas relevant to our strategy and operations and share characteristics identified in our Corporate Governance Guidelines and the Nominating and Governance Policy Statement as essential to a well-functioning deliberative body, including honesty, integrity, judgment, acumen, ethics, financial literacy, independence, competence, diligence and commitment to the interests of our stockholders to build long-term stockholder value.

All of the directors and nominees have held senior positions as leaders of complex organizations and gained expertise in core skill areas, such as industry experience, operations and customer service, technology and innovation, leadership and strategy, corporate governance, talent management and development, brand management, financial literacy or expertise, risk management, and legal or regulatory. They have significant experience in enterprise compliance oversight through their positions as senior executives and as directors of public companies and other institutions. These skills and experience are pertinent to our current and evolving business strategies, as well as to the Board’s oversight role, and enable the directors to provide diverse perspectives with respect to the complex issues we face.

The following matrix and biographies highlight significant qualifications, skills, attributes and experience of each of our directors who is a nominee for election as a director at the Annual Meeting. The matrix is a summary only; therefore, it does not include all of the qualifications, skills, attributes and experience that each director offers, and the fact that a particular qualification, skill, attribute or experience is not listed does not mean that a director does not possess it.

Mr. Brian brings to the Board his experience as a high-stakes litigator and enterprise risk advisor for numerous Fortune 500 corporations and his extensive understanding of complex legal matters.

Ms. Kissire brings to the Board her significant experience in public company financial reporting, accounting and internal control matters, risk management of financial, accounting and tax matters, including related digital security matters, as well as significant experience in governance, strategy, and talent management and development.

Ms. Laulis has been Chair of the Board since January 2018, CEO and a member of the Board since January 2017 and President of Cable One since January 2015.

Ms. Laulis joined Cable One in 1999 as Director of Marketing – NorWest Division. In 2001, she was named Vice President of Operations for the Southwest Division. In 2004, she became responsible for starting up Cable One’s Phoenix Customer Care Center. Ms. Laulis was named Chief Operations Officer in 2008, responsible for the Company’s three operation divisions and two call centers. In 2012, Ms. Laulis was named Chief Operating Officer, adding sales, marketing and technology to her responsibilities. In January 2015, she was promoted to President and Chief Operating Officer.

 

 

In addition to being our President and CEO, Ms. Laulis brings to the Board her significant operational and leadership experience as well as intimate knowledge and perspective about the strategic and operational opportunities and challenges, economic and industry trends, and competitive and our financial positioning, based on her various executive roles at Cable One and her experience in the industry.

Ms. Meduski brings to the Board her significant leadership, financial, strategic and operating experience in the communications, media and technology industries.

Mr. Might has been a member of the Board of Cable One, Inc. since 1995. Prior to his retirement from Cable One in December 2017, Mr. Might served as Executive Chairman in 2017, as Chairman of the Board from 2015 to 2017, as CEO from 1994 to 2016 and as President from 1994 to 2014.

Mr. Might joined The Washington Post Company (now named Graham Holdings Company) in 1978 as assistant to publisher Donald E. Graham after serving a summer internship at the newspaper in 1977. He was promoted to Vice President-Production in 1982 and served in that position until 1987, when he became Vice President-Production and Marketing. In 1991, Mr. Might was named Vice President-Advertising Sales. In 1993, Mr. Might was promoted to President and Chief Operating Officer (“COO”) of Cable One. He became President and CEO of Cable One in 1994 and was elected to the Board in 1995. Mr. Might was a Combat Engineer Officer in the U.S. Army from 1972 to 1976. He graduated from Georgia Tech with a bachelor’s degree in industrial engineering and has an MBA from Harvard Business School.

Mr. Might brings to the Board leadership and management oversight skills as well as intimate knowledge and perspective about our history, strategic and operational opportunities and challenges, economic and industry trends, and our competitive and financial positioning, based on his various executive roles at Cable One.

Ms. Smith has served as a corporate partner at Paul Hastings LLP since August 2013 and currently serves as Managing Partner of the firm. She is a member of the firm’s media, technology and telecommunications practice and serves as Vice-Chair of the firm’s data privacy and cybersecurity practice. Ms. Smith regularly counsels companies on complex transactional and regulatory issues, including data privacy and cybersecurity and breach response issues across various jurisdictions (including the U.S., EU, and Asia). Prior to joining Paul Hastings, Ms. Smith served as Chief Counsel to Chairman Julius Genachowski at the Federal Communications Commission (the “FCC”) from July 2009 to June 2013. She was Vice President and General Counsel of Washington Post Digital from July 2002 to July 2009. Ms. Smith serves on the boards of Gen Digital Inc., a leading provider of consumer cyber safety solutions, America’s Public Television Stations (APTS) and the Philip Merrill College of Journalism at the University of Maryland. She is also an Active Member of the Northwestern Law Board. Ms. Smith graduated from Northwestern University Pritzker School of Law and the University of South Carolina.

Ms. Smith brings to the Board her experience in counseling companies on complex transactional and regulatory issues involving media, communications and technology companies, including regarding data privacy and cybersecurity, as well as her insights from having previously served at the FCC.

Mr. Weitz founded the investment management firm Weitz Investment Management, Inc. in 1983 and has since served in various roles at Weitz Investment Management, including Chief Investment Officer, President and Portfolio Manager. Mr. Weitz manages the Partners III Opportunity Fund and co-manages the Partners Value Fund and Hickory Fund, each of which is managed by Weitz Investment Management. Mr. Weitz has served as a Trustee of the Weitz Funds since 1986. Mr. Weitz began his career in New York as a securities analyst before joining Chiles, Heider & Co. in Omaha, Nebraska in 1973. There, he spent 10 years as an analyst and portfolio manager. Mr. Weitz is the Chair of the board of trustees for Carleton College and serves on various other non-profit boards. Additionally, he serves as a director of Berkshire Hathaway Inc. He graduated from Carleton College with a bachelor’s degree in economics.

Mr. Weitz brings to the Board his substantial leadership and financial experience as the founder of Weitz Investment Management as well as his extensive experience as an investor in public companies.

     

 

 

Ms. Weymouth brings to the Board (i) leadership, management, and CEO experience gained through numerous leadership positions at The Washington Post, including Publisher and CEO, and as the former COO and former CEO of The Chef Market (formerly dineXpert); (ii) strategy and marketing experience from her eight years in the advertising department at The Washington Post, where as Vice President of Advertising she led the transformation of The Washington Post from a print newspaper business to a digital content business; and (iii) historical knowledge of our business, strategy and corporate culture from her time as a director of Graham Holdings Company, our parent company prior to our July 2015 spin-off.

 

 

On May 20, 2022, we held our 2022 Annual Meeting of Stockholders (the “2022 Annual Meeting”). At the 2022 Annual Meeting, Katharine Weymouth, one of our nominees for election as a director at the Annual Meeting, received approximately 61% of the votes cast in favor of her election and approximately 39% of the votes cast against her election. We believe the votes cast against Ms. Weymouth were driven primarily by the “overboarding” policies of certain institutional investors that set limits on the number of public company boards of directors on which a nominee for director may serve. These “overboarding” policies are general policies that various institutional investors and corporate governance firms apply to all public companies, often without regard to individual circumstances.

In addition to serving as a member of the Board, during 2022 Ms. Weymouth served, and currently continues to serve, on the boards of Republic Services, Inc., Xometry, Inc., Graham Holdings Company, (our parent company prior to our July 2015 spin-off), and the Sequoia Fund, Inc., a mutual fund company.

Prior to the Board’s review and determination of the director nominees for the Annual Meeting, we conducted stockholder outreach during the first quarter of 2023. As part of the outreach efforts, we contacted stockholders estimated to hold over 70% of our outstanding shares of common stock to solicit feedback regarding our governance matters, including any “overboarding” concerns.

The Board’s decision to renominate Ms. Weymouth for election at the Annual Meeting was based on a number of factors, including, but not limited to:

The standing committees of the Board consist of the Audit Committee, the C&TM Committee, the Executive Committee, and the Nominating and Governance Committee. As discussed in more detail below, each of the Audit, C&TM and Nominating and Governance Committees is comprised entirely of independent directors, consistent with the definition of “independent” under NYSE listing standards and SEC rules applicable to boards of directors generally, and board committees in particular.

 

The following table summarizes the membership of our current 10-person Board and each of its committees, as well as the number of times the Board and each committee met during 2022.

Each director attended at least 75% of the total number of meetings of the Board and the committees of the Board on which the director served during their term of service in 2022.

 

The Board has determined that all members of the Audit Committee are non-employee, “financially literate,” “independent” directors within the meaning of the listing standards of the NYSE. All members of the Audit Committee have also been determined to be “independent” within the meaning of the SEC rules applicable to service on audit committees. None of the members of the Audit Committee has accepted, other than in such person’s capacity as a Board or Board committee member, any consulting, advisory or other compensatory fee from the Company or its affiliates.

All members of the C&TM Committee are non-employee directors and have been determined to be “independent” within the meaning of the listing standards of the NYSE and SEC rules applicable to service on compensation committees.

 

All members of the Nominating and Governance Committee are non-employee directors and have been determined to be “independent” within the meaning of the listing standards of the NYSE.

Our Corporate Governance Guidelines provide a framework for our corporate governance. Among other things, our Corporate Governance Guidelines address: director qualifications; Board operations, structure and leadership; director compensation; management review and succession; and director orientation and continuing education. The Corporate Governance Guidelines also provide for annual self-evaluations by the Board and its committees.

The Board has not established limits on the number of terms a director may serve prior to their 75th birthday; however, no director may be nominated to a new term if they would be age 75 or older at the time of the election, unless the Board, upon recommendation of the Nominating and Governance Committee, determines that it is in the best interests of the Company and its stockholders for the director to continue to serve on the Board for an additional term.

Our By-laws permit a stockholder, or a group of up to 20 stockholders, owning at least three percent of our outstanding stock continuously for at least three years to nominate and include in our annual meeting proxy materials director nominees constituting up to the greater of two directors or twenty-five percent of the Board, subject to certain conditions and provided that the stockholder(s) and nominee(s) satisfy all eligibility, procedural and disclosure requirements specified in the By-laws, including that each director nominee submitted through the proxy access by-law must meet the qualifications to be an independent director.

The Nominating and Governance Committee will consider director candidates recommended by stockholders. Our By-laws provide that any stockholder of record entitled to vote for the election of directors at the applicable meeting of stockholders may nominate persons for election to our Board, if such stockholder complies with the applicable notice procedures.

Our Corporate Governance Guidelines and the Nominating and Governance Policy Statement contain information concerning the responsibilities of the Nominating and Governance Committee with respect to identifying and evaluating future director candidates. It is Committee’s policy to apply the same criteria in reviewing candidates proposed by stockholders as it employs in reviewing candidates proposed by any other source. The Nominating and Governance Policy Statement sets forth our Nominating and Governance Committee’s general policy regarding the consideration of candidates proposed by stockholders; a description of the minimum criteria used by the Nominating and Governance Committee in evaluating candidates for the Board; a description of the Nominating and Governance Committee’s process for identifying and evaluating director nominees; and the general process for communications between stockholders and the Board.

Our By-laws provide for majority voting in uncontested director elections, and any incumbent director who fails to receive a majority of the votes cast must submit an offer to resign from the Board no later than two weeks after the Company certifies the voting results. In that case, the remaining members of the Board would consider the resignation offer and may either (i) accept the offer or (ii) reject the offer and seek to address the underlying cause(s) of the majority-against vote. The Board must decide whether to accept or reject the resignation offer within 90 days following the certification of the stockholder vote, and, once the Board makes its decision, the Company must promptly make a public announcement of the Board’s decision (including a statement regarding the reasons for its decision in the event the Board rejects the offer of resignation).

As set forth in our Corporate Governance Guidelines, the majority of our directors must be “independent” according to the criteria for independence established by the NYSE. Our Corporate Governance Guidelines also require that all members of each of the standing committees of the Board (other than the Executive Committee) must be independent, including any enhanced independence standards applicable to a particular committee, and none of the members of the standing committees (other than the Executive Committee) may have a material relationship with the Company. In order to determine that a director is independent, the Board must make an affirmative determination that the director satisfies applicable regulatory and NYSE listing requirements to be an independent director of the Company and that the director is free of any other relationship that would interfere with the exercise of independent judgment by such director. The Board has affirmatively determined that, with the exception of Ms. Laulis, all of the members of the Board and all nominees are “independent.”

The listing standards of the NYSE call for the non-management directors of the Company to meet at regularly scheduled executive sessions without management. Mr. Gayner currently serves as Lead Independent Director of the Board, and he presides at the executive sessions of the Board. In 2022, the non-management directors regularly met in executive sessions outside the presence of any employee director or management, and the non-management directors expect to meet in executive session in 2023 as appropriate.

As set forth in our Corporate Governance Guidelines, the Board supports flexibility in determining its leadership structure by not requiring the separation of the roles of Chair of the Board and CEO. The Board believes that the Company and its stockholders are best served by maintaining this flexibility rather than mandating a particular leadership structure.

We currently do not separate the roles of Chair of the Board and CEO as Ms. Laulis serves in both roles. The Board believes that Ms. Laulis’ service as both Chair of the Board and CEO is in the best interests of the Company and that this structure is appropriate because Ms. Laulis possesses in-depth strategic and operational knowledge of the opportunities and challenges we face and has played a critical role in our growth during her more than 20-year career at the Company through her experiences as an employee, executive and director. Her dual role promotes decisive leadership, accountability and clarity in the overall direction of our business strategy as well as effective decision-making and strategic alignment between the Board and our senior management. The Board also believes that this approach facilitates clear and consistent communication of our strategy to all stakeholders and that, in consultation with our Lead Independent Director, Ms. Laulis is best positioned to develop agendas that focus on matters that merit Board attention.

As provided in our Corporate Governance Guidelines, to ensure the Board’s independence and proper functioning, the Board also appoints a Lead Independent Director who must be independent according to the criteria for independence established by the NYSE. Mr. Gayner currently serves in this capacity. The Lead Independent Director typically chairs executive sessions of Board meetings and consults with Ms. Laulis and senior management regarding issues to be included in Board meeting agendas. The Lead Independent Director is also expected to collaborate with Ms. Laulis, along with the other members of the Executive Committee, in reviewing key operational and other matters and to act as a liaison between Ms. Laulis and the non-management directors. The role of the Lead Independent Director is to provide strong leadership of the non-management directors and help the Board provide effective independent oversight of the Chair of the Board and CEO.

We are in the process of declassifying our Board over a three-year phase-in period as discussed in greater detail in Proposal 1 and below. Pursuant to the Charter, the phase-in had or will have the following effects:

As a result, our Board will be fully declassified following the Annual Meeting.

The Board as a whole actively considers strategic decisions proposed by management, including matters affecting the business strategy and our competitive and financial positions, and monitors our risk profile. Board meetings are focused on strategic matters affecting major areas of our business, including operational, execution and competitive risks and risk management initiatives. The Board fulfills certain risk oversight functions through its standing committees. For example, the Audit Committee plays a key role in risk oversight, particularly with respect to financial reporting, accounting, and compliance matters; the C&TM Committee addresses the risk profile of our compensation program and arrangements as well as various human capital programs, policies and practices; and the Nominating and Governance Committee oversees corporate governance-related risk associated with our governance practices and profile, as well as our risks and practices related to cybersecurity and environmental matters, including climate related risks.

Risk oversight activities are supported by internal reporting structures designed to surface directly to the Board key matters that can affect our risk exposures as well as by our leadership structure as described above. We have a Disclosure Controls Committee that reports directly to the Audit Committee on certain matters relating to our public disclosures. We also have an enterprise risk management (“ERM”) program designed to identify, assess, prioritize, manage and mitigate major risk exposures that could affect our ability to execute on our corporate strategy and fulfill our business objectives. Our ERM program is administered by a risk council made up of members of our senior management supported by subject matter experts within our organization. Representatives of the risk council provide reports to the Audit Committee to establish a mutual understanding of the effectiveness of our risk management practices and capabilities, to review our risk exposure and tolerance and to elevate certain key risks for oversight at the Board level.

The Board does not have a policy of requiring directors to attend annual meetings of stockholders; however, we generally schedule a Board meeting in conjunction with our annual meeting of stockholders and encourage directors and nominees for director to attend each annual meeting of stockholders. All of our directors attended our 2022 Annual Meeting.

Messrs. Brian and Weitz and Mses. Miller and Weymouth served as members of the C&TM Committee in 2022. None of these individuals has ever been employed by us. During 2022, none of our executive officers served on the board of directors or compensation committee of any other entity for which a member of our Board or C&TM Committee served as an executive officer. During the fiscal year ended December 31, 2022, there were no relationships or transactions between the Company and any member of the C&TM Committee requiring disclosure hereunder.

 

The Audit Committee of the Board is directly responsible for the appointment, compensation, retention and oversight of the independent registered public accounting firm retained to audit our financial statements. Our Audit Committee has appointed PwC to serve as our independent registered public accounting firm for the fiscal year ending December 31, 2023. PwC, an independent registered public accounting firm, has audited our financial statements for the fiscal year ended December 31, 2022, has served as our independent auditor since 2014, and has the requisite understanding of our business, accounting policies and practices, and internal control over financial reporting. As a result, the Board and its Audit Committee consider PwC well qualified to serve as our independent registered public accounting firm. Further, the Board believes the continued retention of PwC is in our best interest and the best interest of our stockholders and recommends that stockholders vote in favor of the ratification of such appointment. Although ratification is not required by our By-laws or otherwise, the Board is submitting the selection of PwC to our stockholders for ratification as a matter of good corporate governance. If the appointment is not ratified, the Audit Committee will consider whether it is appropriate to select another independent registered public accounting firm. Even if the appointment is ratified, the Audit Committee, in its discretion, may select a different independent registered public accounting firm at any time during the year if it determines that such a change would be in our best interest and the best interest of our stockholders.

We anticipate that representatives of PwC will be present at the Annual Meeting, will have the opportunity to make a statement if they desire to do so with respect to our financial statements for the fiscal year ended December 31, 2022, and the firm’s relationship with the Company and will be available to respond to appropriate questions from stockholders.

The Audit Committee’s charter provides that the duties and responsibilities of the Audit Committee include the pre-approval of audit and non-audit services performed by the independent registered public accounting firm in order to assure that the provision of such services does not impair our auditor’s independence. Any proposed services exceeding pre-approved cost levels requires specific pre-approval by the Audit Committee. The term of any pre-approval is 12 months from the date of pre-approval, unless the Audit Committee specifically provides for a different period. The Audit Committee will periodically review and pre-approve the services that may be provided by the independent registered public accounting firm as well as revise the list of pre-approved services from time to time, based on subsequent determinations.

The Audit Committee will not delegate to management responsibilities to pre-approve services performed by the independent registered public accounting firm. The Audit Committee may delegate pre-approval authority to one or more of its members. The annual audit services engagement terms and fees will be subject to the specific pre-approval of the Audit Committee. The Audit Committee will approve, if necessary, any changes in terms, conditions and fees resulting from changes in audit scope, Company structure or other matters. In addition to the annual audit services engagement specifically approved by the Audit Committee, the Audit Committee may grant pre-approval for other audit services, which are those services that only the independent auditor reasonably can provide. The Audit Committee will not approve any non-audit services prohibited by applicable SEC regulations.

Audit-related services are assurance and other services that are reasonably related to the performance of the audit or review of the Company’s financial statements or that are traditionally performed by the independent registered public accounting firm. The Audit Committee has determined that the provision of audit-related services reflected in the table below does not impair the independence of the independent registered public accounting firm.

The Audit Committee believes that the independent registered public accounting firm can provide tax services to the Company, such as tax compliance, tax planning and tax advice, without impairing such auditor’s independence. However, the Audit Committee will not permit the retention of the independent registered public accounting firm in connection with a transaction initially recommended by the independent auditor, the purpose of which may be tax avoidance and the tax treatment of which may not be supported in the Code, and related regulations.

The Audit Committee may grant pre-approval of those permissible non-audit services classified as “All Other” services that it believes are routine and recurring services and would not impair the independence of the auditor.

Requests or applications to provide services that require specific approval by the Audit Committee will be submitted to the Audit Committee by the CFO (or other designated officer) and must include a statement from that individual as to whether, in their view, the request or application is consistent with the SEC’s rules on auditor independence. All audit fees, audit-related fees and all other fees were preapproved by the Audit Committee.

The following table provides the aggregate fees for professional services billed by PwC for the fiscal years ended December 31, 2022 and 2021.

This Compensation Discussion and Analysis describes the compensation of our “named executive officers” or “NEOs” as listed below.

Below is a summary of best practices that we have implemented with respect to the compensation of our NEOs, which we believe support our compensation philosophy and are in the best interests of our stockholders.

Our 2022 executive compensation program supports our performance-based pay philosophy, which is described below, with limited fixed compensation and an emphasis on at‐risk compensation. Target total direct compensation remained significantly below median peer levels while our financial and operating performance compared favorably to our industry peers across key performance metrics that were evaluated, including revenue growth, EBITDA growth, and EBITDA margin. For 2022:

We believe that our executive compensation program is appropriately designed to advance stockholder interests through performance-based incentives tied to key financial drivers of long-term stockholder value along with appropriate retention incentives. The primary components of our compensation program and associated purposes are as follows:

Under our executive compensation program, performance-based incentive compensation comprises a substantial portion of target annual compensation, with approximately 82% of 2022 target total direct compensation for our NEOs being at-risk. The C&TM Committee considers each component of compensation collectively when establishing the forms and levels of compensation for our NEOs. In determining the appropriate mix of compensation elements for each NEO, our executive compensation program seeks to balance rewarding performance through annual performance-based cash incentive compensation that encourages achieving and exceeding annual goals and milestones and through long-term equity incentive compensation that is designed to advance our long-term growth strategy and align our NEOs’ interests with those of our stockholders.

We believe our performance-based compensation philosophy for executive officers provides incentives to achieve both short- and long-term business objectives; aligns the interests of our executive officers and long-term stockholders; and enables us to hire and retain talented individuals in a competitive marketplace.

The purpose of the C&TM Committee is to: (i) assist the Board in discharging its responsibilities relating to the compensation of our executive officers and the Board; (ii) oversee the administration of our compensation and benefit plans; (iii) prepare any report on executive compensation required by the rules and regulations of the SEC or other applicable rules or regulations; and (iv) perform such other duties or responsibilities as may be delegated to the committee from time to time by the Board. In addition, the C&TM Committee oversees our human capital programs, policies and practices, which may include associate development, talent management, organizational culture and diversity and inclusion initiatives, in each case, except with respect to matters that are within the scope of responsibility of another committee of the Board. The C&TM Committee annually reviews and approves the corporate goals and objectives upon which our executive compensation program is based. The C&TM Committee evaluates the CEO’s performance in light of these goals and objectives. Furthermore, the C&TM Committee reviews and makes recommendations to the Board with respect to any incentive compensation plans, including equity-based plans, to be adopted or submitted to our stockholders for approval.

The C&TM Committee generally meets at least quarterly throughout the year and may meet more often, as required, to address ongoing events. In 2022, the C&TM Committee met four times. Meeting agendas are determined by the Chair of the C&TM Committee with the assistance of our CEO and our Senior Vice President, Human Resources. Our CEO attended all C&TM Committee meetings held during 2022. At the C&TM Committee held in the fourth quarter of 2022, our CEO made recommendations to the C&TM Committee regarding the annual base salary, cash incentive compensation and equity compensation of our NEOs (other than herself) for 2023. In general, a representative from the C&TM Committee’s independent compensation consultant, FW Cook, and legal counsel also attend C&TM Committee meetings. C&TM Committee meetings include an executive session, where matters are discussed without management present.

The C&TM Committee has the sole authority to retain and dismiss an independent compensation consultant. In 2022, the C&TM Committee engaged FW Cook, a national executive compensation consulting firm, as its independent consultant. FW Cook reviewed and provided recommendations concerning all of the elements of our executive compensation programs for 2022. FW Cook performs services solely on behalf of the C&TM Committee and has no relationship with the Company or management except as it may relate to performing such services. The C&TM Committee assessed the independence of FW Cook pursuant to the rules of the SEC and the NYSE and concluded that FW Cook is independent and no conflict of interest exists with respect to the services it provided to the C&TM Committee.

In assessing the competitiveness of compensation provided to our NEOs, FW Cook utilized comparative data disclosed in peer companies’ publicly available proxy statements along with other documents filed with the SEC.

We regularly monitor the composition of our peer group and make changes when appropriate. For 2022, the following changes were made to the composition of our peer group: (i) three companies in related industries were added the inclusion of which helped position us in a median size range in the peer group – Arista Networks, Inc., Frontier Communications Parent, Inc. and Lumen Technologies, Inc.; and (ii) five companies were removed – ATN International, Consolidated Communications Holding, Inc. and Shenandoah Telecommunications (each of which fell below the applicable size criteria), and Cincinnati Bell and GCI Liberty (each of which were acquired and are no longer publicly traded). Both Frontier Communications Parent, Inc. and Lumen Technologies, Inc. were used to help understand typical market practices with respect to incentive plan design, but were not used in benchmarking the pay levels of our senior executives.

 

In determining the structure of our 2022 executive compensation program as well as the individual pay levels of our NEOs, the C&TM Committee considered competitive market data that compared the various elements of compensation provided to our NEOs to amounts paid to individuals holding similar positions at companies in our executive compensation peer group, except that Frontier Communications Parent, Inc. and Lumen Technologies, Inc. were excluded when assessing the competitiveness of peer company senior executive pay levels. FW Cook worked with management to assess the data and review our compensation practices.

For 2023 compensation determinations, no changes were made to the composition of our peer group.

 

The C&TM Committee reviews executive officer base salaries each year (or otherwise at the time of a new hire or promotion) and makes any adjustments it deems necessary. In setting annual base salary levels, the C&TM Committee takes into account competitive considerations, changes in responsibilities, individual performance, executive experience, internal pay equity, succession planning, Company performance, market data for individuals in similar positions, retention, and advice from the C&TM Committee’s independent compensation consultant. The C&TM Committee gives no specific weighting to any one factor in setting the level of base salary and the process ultimately relies on the C&TM Committee’s judgment. For 2022, each of our NEOs received the base salary increases indicated in the table below based on individual and Company performance and tenure with our Company, and to address shortfalls compared to competitive market levels.

Our annual cash incentive program is intended to motivate and reward our NEOs to achieve and exceed annual goals and milestones that are expected to advance our long-term growth strategy. Under our “One Team, One Goal” overall compensation philosophy, we utilized the same performance goals (Adjusted EBITDA growth and adjusted capital expenditures as a percentage of Adjusted EBITDA) to determine the 2022 annual cash incentive opportunities for substantially all of our full-time associates, including our front-line associates under our “Stronger Together” annual cash incentive program. In 2022, we also increased the annual target incentive opportunity for our front-line associates to 5% of annual base pay, with a maximum payout opportunity of 6.5% of annual base pay.

Payouts are capped at 200% of target, and the C&TM Committee retains discretion to reduce any payouts based on its subjective assessment of Company and/or individual performance results. An NEO must generally be employed on the payment date in order to be eligible to receive a bonus payout under the plan.

We believe that the combination of Adjusted EBITDA growth and adjusted capital expenditures as a percentage of Adjusted EBITDA reflect our performance across several key dimensions, including profitability, cash outflows for capital expenditures, and our ability to fund operations and make additional investments with internally generated funds. As such, performance on these measures was the basis for determining earned bonuses under the 2022 Bonus Plan using the table below.

On March 1, 2023, the C&TM Committee certified the results of the performance goals and approved a performance factor of 100.4% for the 2022 Bonus Plan based on Adjusted EBITDA growth of 4.5% and adjusted capital expenditures as a percentage of Adjusted EBITDA of 34.8%. The C&TM Committee applied the following pre-established adjustments described above in calculating the performance results under the 2022 Bonus Plan:

The C&TM Committee considers long-term equity incentives to be a critical component of our executive compensation program as they motivate and reward executive officers over the long-term and align their interests with those of our stockholders. Since 2020, our practice has been to grant our annual equity awards in the form of both PSAs and RSAs in early January of each year in order to further support our pay-for-performance philosophy, as well as the competitive and retentive aspects of our executive compensation program.

Our NEOs each received a 2022 PSA grant with a target grant date fair value as reflected in the table below. Each 2022 PSA grant is subject to the terms and conditions of the 2015 Plan and the respective award agreement. PSAs grants are earned based on the achievement of the performance goals described above with respect to 2022, but are at-risk and will cliff-vest on the third anniversary of the grant date, generally subject to the executive’s continued employment through that date.

For 2022, the C&TM Committee approved RSA grants of 646 shares to Ms. Laulis; 281 shares to Mr. Bowker; 341 shares to Mr. Cochran; 185 shares to Mr. Koetje; 193 shares to Mr. Johnson; and 193 shares to Mr. Lardy, all of which vest in equal annual installments over the four anniversaries of the grant date. The grant date fair value of each RSA grant (computed in accordance with Topic 718) was as follows: Ms. Laulis, $1,127,000; Mr. Bowker, $490,000; Mr. Cochran, $595,000; Mr. Koetje, $322,000; Mr. Johnson, $336,000; and Mr. Lardy, $336,000. Mr. Cochran forfeited the unvested portion of his 2022 RSA award upon his departure from the Company on January 31, 2023.

We maintain the Cable One 401(k) Plan, which is a tax-qualified defined contribution plan. As of January 1, 2023, we provide fully-vested matching contributions on up to 5% of an employee’s eligible compensation, including our NEOs, up to the salary limit applicable to tax-qualified plans ($20,500 in 2022), no longer requiring a one-year waiting period for the vesting of matching contributions as we historically required.

 

 

As part of our annual executive compensation review process, effective January 1, 2023, the C&TM Committee approved base salary amounts for our continuing NEOs that reflect increases as shown in the table below. The C&TM Committee made its determinations based on individual and Company performance and executive experience, and to address significant continued shortfalls compared to competitive market levels despite the efforts made in 2022 to enhance the competitiveness of our executive compensation program.