Exhibit 10.1

 

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MONOTYPE IMAGING HOLDINGS INC.

2012 Executive Incentive Compensation Plan

 

 

 

Overview

The compensation philosophy of Monotype Imaging is to pay competitive base
salaries and to provide the potential to significantly overachieve market
average compensation through incentive compensation if performance of both the
organization and the individual exceed expectations. Base compensation and total
compensation targets are set based on peer group data and area market survey
data.

Incentive Compensation Goals

 

•  

Provide incentive to Executives to exceed annual net adjusted EBITDA and revenue
targets established by the Board of Directors.

 

•  

Provide incentive to Executives to achieve individual goals that have a direct
relationship to Monotype Imaging’s organizational success.

 

•  

Motivate exceptional performance at all organizational levels.

 

•  

Pay for performance. No guarantees of bonus if performance does not warrant.

 

•  

Significant differentiation in bonus payments between less than expected
performance and exceptional performance.

Eligibility

 

•  

Employees who, for purposes of compensation, are classified by the President and
Chief Executive Officer or the Management Development and Compensation Committee
as “Executives” for FY 2012, unless the Management Development and Compensation
Committee determines that any such Executive shall be eligible for incentive
compensation under an alternative Company plan.

 

•  

Executives hired after January 1, 2012 will be prorated based on date of hire.

 

•  

An Executive must be employed by the Company on December 31, 2012 to be eligible
to receive any incentive compensation payment under this plan.

Total Incentive Compensation Pool

The total incentive compensation pool available to Executives under this plan is
based on the Company’s achievement of specific net adjusted EBITDA and revenue
targets established by the Board of Directors for 2012. At each pre-determined
net adjusted EBITDA and revenue percentage achievement, beginning at 90% of the
applicable target, an incentive compensation pool is established and will be
paid on a sliding scale up to a maximum of 105% of each of targeted net adjusted
EBITDA and revenue, subject to Section VII below, as follows:

 

     Pool Based
on Revenue      Pool Based
on
naEBITDA      Total
Potential
Payout  

At 90% Achievement of Target

   $ 296,500       $ 296,500       $ 593,000   

At 100% Achievement of Target

   $ 780,000       $ 780,000       $ 1,560,000   

At Achievement of the maximum % of Target

   $ 1,170,500       $ 1,170,500       $ 2,341,000   

 

 

 

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The Total Potential Payment amount may be allocated if either (i) the Company
achieves at least 105% of the revenue target and 105% of the naEBITDA target or
(ii) the Company achieves at least 100% of the revenue target and achieves 110%
of the naEBITDA target with payment scaling beginning in excess of 105% up to
110% of such target.

Calculation of the incentive compensation pool at each level is based upon the
number of Executives on the date this plan is approved by the Management
Development and Compensation Committee. If the Management Development and
Compensation Committee determines that the total number of Executives
participating in this plan increased or decreased during 2012, the Management
Development and Compensation Committee may, but is not required to, adjust the
incentive compensation pool at any or all levels.

Individual Incentive Compensation for Executives - Target Incentive
Compensation:

 

•  

President/CEO =70% of his or her base salary

 

•  

Executive Vice President = 50% of his or her base salary

 

•  

Sr. Vice President/Chief Financial Officer = 45% of his or her base salary

 

•  

Other Executives = Varies based on position and will range from 30 – 40% of his
or her base salary.

 

•  

Actual incentive compensation payments to an Executive will depend on (i) the
satisfaction of the Company’s net adjusted EBITDA and revenue targets, (ii) the
satisfaction of the Executive’s individual pre-determined performance
objectives, and (iii) the Executive’s overall performance during 2012.

 

•  

The satisfaction of the individual performance objectives of the President and
Chief Executive Officer, and his overall performance in 2012, will be reviewed
by the Management Development and Compensation Committee.

 

•  

The satisfaction of the individual performance objectives, and overall
performance in 2012, of all other Executives will be reviewed by the President
and Chief Executive Officer, together with the Executive’s supervisor.

 

•  

All bonus recommendations will be made by the President and Chief Executive
Officer to the Management Development and Compensation Committee for approval.

 

 

 

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Payments

 

•  

Payments will be made to Executives following approval of such payments by the
Management Development and Compensation Committee and receipt by the Company of
audited financial statements for the year ended December 31, 2012; provided,
however, that such payments, if any, shall be made to Executives between
January 1st and March 15th of 2012. In the event that there is a subsequent
change in the Company’s audited financial statements that impacts whether the
bonus targets were satisfied, Executives will be required to repay to the
Company any amount that was paid based solely on the satisfaction of a bonus
target that was not, after such change, satisfied. While the Management
Development and Compensation Committee shall have no discretion to determine
whether or not the repayment obligations shall be enforced, the final amounts to
be repaid by each Executive shall be determined by the Management Development
and Compensation Committee.

Plan Guidelines

 

•  

Total Executive incentive compensation pool is amount budgeted and accrued for
plan year 2012.

 

•  

Organization must achieve 90% of net adjusted EBITDA or revenue target in order
for any incentive compensation to be paid under this plan.

 

•  

The Management Development and Compensation Committee will make the final
determination on all Executive bonus payments.

 

•  

The Executive compensation pool set forth in Section IV may be increased by the
Management Development and Compensation Committee without amendment of this
plan, but solely from amounts allocated by the Company to other Company
incentive compensation plans in the event any such amounts are not paid or
distributed under such other plans. In addition, in the event the Executive
compensation pool is decreased or not fully allocated or paid to Executives,
such amounts may be added by the Company to other non-executive Company
incentive compensation plans.

 

•  

Although it is the intent of the Company to continue this compensation plan
through FY2012, any Monotype Imaging compensation plan may be changed, amended,
modified or terminated at the sole discretion of the Management Development and
Compensation Committee.

 

•  

No Monotype Imaging compensation plan represents a contract of employment,
implied or otherwise.

 

 

 

Monotype Imaging Holdings Inc. Confidential   Page 3