Cincinnati Bell’s magical compensation lamp…

Employment agreements are, no doubt, the result of serious negotiations between a company, an employee, and a gaggle of attorneys and staff from Human Resources.

The filing that caught our attention this time concerns an 8-K that Cincinnati Bell, Inc. (CBB) filed earlier this week. But before we disclose what popped out of the magical compensation lamp, here’s a little background on the relationship between the company and its top executive.

According to this proxy filed in March, 2009, John F. Cassidy has served as Cincinnati Bell’s president/CEO since July, 2003. He became a director in 2002, but he has actually been with various divisions of the company since 1997.

Cassidy’s most recent Amended and Restated Employment Agreement is dated January 1, 2009. (You—ll find it as an attachment to the 10-K, filed February 27, 2009.) It provides for some nice terms: Besides the usual benefits, he gets an annual base salary of $645,000, a —Bonus target— of not less than $968,000—, and the promise that at least once a year he—ll get a review ——and be considered for Base Salary and/or Bonus target increases.

What’s not mentioned anywhere in past filings — until Monday — was any reference to a retention bonus.

Then — poof! Suddenly, on February 5, 2010, a new subsection is added to the 2009 Employment Agreement which states that the company is giving Cassidy a $2.1 million retention bonus — and it’s giving it to him that same day. The 8-K states that —The amendment was approved by the Company’s Board of Directors to reward Mr. Cassidy’s performance and encourage his long-term employment with the Company.

The most curious thing isn—t that the company wants to reward a long-tenured employee. It’s that the agreement and the payment of the bonus occurred so suddenly — and seemingly out of thin air. Perhaps there was another job offer that Cassidy was considering, though you’d never know it from the filings.

There’s also the not-too-minor fact that Cincinnati Bell’s stock performance hasn’t exactly been retention-bonus worthy under Cassidy’s tenure as CEO, falling nearly 60% since he took the company’s helm which raises the question of why it’s so important to retain him.

Image source: Magic Lamp Dance Studio