Exhibit 10.2

  

EXHIBIT "A"

DCP HOLDING COMPANY POSITION DESCRIPTION

POSITION TITLE: 

President 

REPORTS TO:

Board of Directors 

PURPOSE: 

Responsible for the direction and administration of DCP Holding Company in
accordance with Board policy, sound business practices, and the legal
requirements of Ohio, Indiana and Kentucky.

    DUTIES AND RESPONSIBILITIES:

 

1. ADMINISTRATIVE MANAGEMENT

 

A. Direct all areas of staff and Human Resource Administration.

 

B. Prescribe duties, limitations and responsibility of staff through effective
position descriptions, encouraging success and ongoing communication.

 

C. Maintain effective, responsive and cost-conscious daily operations.

2.  BOARD RELATIONS

 

A. Develop and recommend corporate objectives, plans and policies to the Board.

 

B. Implement corporate objectives, plans and policies approved by the Board.

 

C. Plan and coordinate all Board and Board Committee meetings with the Board
Chair or Committee Chair.

 

D. Establish effective communication and rapport with all Board Members.

3.   PROVIDER RELATIONS

 

A. Recognizing providers are the DCP Holding Company product - continually
promote their skills, quality, cost-effectiveness and value to all public.

 

B. Establish leadership, stability and effective communication with all DCP
Holding Company providers.

 

C. Continued awareness that the success of DCP Holding Company and their
providers grow together.

4.   CUSTOMER RELATIONS

 

A. Actively promote DCP Holding Company in all Marketing, Sales, Public
Relations, and Community activity.

 

B. Strategize that the DCP Holding Company product is placed effectively before
the public with emphasis on "Agent/Broker"

 

C. Continually monitor the success, quality and effectiveness of DCP Holding
Company marketing

5.   CORPORATE PROFITABILITY

 

D. Develop plans for future DCP Holding Company growth while ensuring the
soundness of corporate finances and profitability.

 

 

 

JOB SPECIFICATIONS:

     - Degree in relevant field of study or related equal job experience,

     - Five to seven years of related experience in the health/dental insurance
field in an executive management position, where budgetary, policy and
operational decisions have been made.

 

 

 
 

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EXHIBIT "B" ADDENDUM TO DCP HOLDING COMPANY PRESIDENT EMPLOYMENT AGREEMENT

 

The salary range of the President shall be reviewed and adjusted annually as
recommended by the Compensation and Benefits Committee and approved by the Board
of Directors. The Base Compensation for 2014 shall be $403,000.00.

 

 

ANNUAL INCENTIVE PLAN 

 

 

 

Value

 

RSUs

CASH AWARD   15% of Base   $ 60,450.00    

Threshold

 

30% of Base

 

$120,900.00

 

 

Target

 

45% of Base

 

$181,350.00

 

 

Stretch

 

60% of Base

 

$241,600.00

 

 

Maximum

 

 

 

 

 

 

 

 

 

 

 

 

 

LONG TERM INCENTIVE PLAN

 

 

 

 

 

 

A) RSU AWARD

 

5% of Base

 

$ 20,150.00

 

23 RSUs

B) CASH AWARD

 

 

 

 

 

 

Threshold

 

5% of Base

 

$ 20,150.00

 

 

Target

 

15% of Base 

 

 $ 60,450.00 

 

 

Stretch

 

25% of Base

 

$ 100,750.00  

 

 

Maximum

 

45% of Base 

 

$181,350.00 

 

 

 

 

 
 

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2014 ANNUAL LONG TERM INCENTIVE BONUS DETAIL

 

A.     Restricted Share Unit (“RSU”) Award – Retention Based

The stock award for DCP’s President and CEO is authorized under the “DCP Holding
Company Amended and Restated 2006 Dental Care Plus Management Equity Incentive
Plan” (the “Management Incentive Plan”) and is subject to the “Dental Care Plus
and DCP Holding Company Deferred Compensation Plan”. Stock RSU’s are awarded in
an amount equal to five percent (5%) of base salary and is considered “Long
Term” as it vests incrementally over four years, 10% on December 31 of the first
year, 20% at the end of the second year, 30% at the end of the third year and
40% at the end of the fourth year. There are no performance targets other than
longevity with the Company.

 

RSU AWARD BASED ON 5% OF BASE SALARY OF $403,000.00          23 RSUs

 

B.     Cash Award – Performance Based

The Long Term Cash Incentive is a bonus designed to motivate the CEO to achieve
long term success for the company as well as assist in the retention of the
President and CEO over time. Long Term Incentive bonus compensation is based on
one criteria, “Adjusted Book Value of Common and Shareholders’ Equity” and it is
based on achieving growth of this book value over a period of three years,
January 1, 2014 through December 31, 2016.

 

BOOK VALUE OF COMMON STOCK 

(12/31/2013 BOOK VALUE=$7,543,335)

 

Level

Definition

3 Year

Ave.

Adjusted Book Value

12/31/2016

Cash

Threshold

5% of Base

10%

$ 10,040,179

$20,150.00

Target

15% of Base

12%

$ 10,597,843

$60,450.00

Stretch

25% of Base

14%

$ 11,175,783

$100,750.00

Maximum

45% of Base

16%

$ 11,774,361

$181,350.00

 

Notes:

 

1.

“Adjusted Book Value of Common Shares and Shareholders’ Equity” shall mean the
value of all classes of Common Shares, as shown on the audited financial
statements of the Company; increased by the sum of: (a) the aggregate amount of
all withhold return payment or similar payments authorized by the Board of
Directors, adjusted for the standard federal tax rate, to the extent such
payments were treated as an expense in determining Net Income for any year, plus
(b) the aggregate amount of all dividends on all classes of Common Stock, to the
extent that such dividends were taken into account in determining the “Book
Value of Common Shares and Shareholders' Equity."

 

2.

If performance is under Threshold Level, no Long Term Incentive bonus is paid.

 

3.

No additional bonus is paid for performing beyond Maximum Level.

 

4.

Actual bonus paid is calculated and paid on a continuum between any two
performance levels.

 

5.

With Board of Director approval, a new multi-year performance measurement period
begins each new year.

 

6.

In the event of a Change of Control, as defined in the Management Equity
Incentive Plan, the Adjusted Book Value of Common Shares and Stockholders’
Equity as of December 31, 2016 shall be deemed to be the portion of the
Enterprise Value of the Company, as defined in Article Fourth, Section
8(h)(ii)(C) of the Company’s Amended Articles of Incorporation allocated to the
Common Shares and Shareholders’ Equity, as of the date on which the Change of
Control occurs and the long term incentive bonus shall be determined as of that
date and paid within thirty (30) days thereafter.

 

 

 
 

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2014 ANNUAL INCENTIVE SHORT TERM BONUS DETAIL

 

The Annual Incentive (Short Term Bonus) compensation is designed to motivate the
CEO to meet and/or exceed goals for budget performance on 1) 2014 Operating
Revenue (OR), 2) 2014 Adjusted Net Operating Income (ANOI), and
3) Discretion/MOB (MOB). The CEO’s individual goals are established by the
Corporate Affairs Committee, and achievement of these goals is determined at the
discretion of the Corporate Affairs Committee. Adjusted Net Operating Income is
equal to Net Operating Income plus the amount of provider withhold return
approved by the Board of Directors during 2014. These performance criteria are
weighted respectively as 30%, 50% and 20% of the total Annual Incentive Short
Term Bonus.

 

TOTAL OPERATING REVENUE (2014 BUDGET OF $92,182,206.00)

Level

Definition

Performance

2013 OR

Bonus paid

Threshold

15% of Base

90% Budget

$ 82,963,985.00

$ 18,135.00

Target

30% of Base

100% Budget

$ 92,182,206.00

$ 36,270.00

Stretch

45% of Base

115% Budget

$ 106,009,537.00

$ 54,405.00

Maximum

60% of Base

130% Budget

$ 119,836,868.00

$ 72,480.00

 

ADJUSTED NET OPERATING INCOME (2014 BUDGET OF $2,509,114.00)

Level

Definition

Performance

2014 ANOI

Bonus paid

Threshold

15% of Base

75% Budget

$ 1,881,184.00

$ 30,225.00

Target

30% of Base

100% Budget

$ 2,509,114.00

$ 60,450.00

Stretch

45% of Base

115% Budget

$ 2,885,481.00

$ 90,675.00

Maximum

60% of Base

130% Budget

$ 3,261,848.00

$ 120,900.00

 

DISCRETION/MOB

Level

Definition

Achievement

2014 MOB

Bonus paid

Threshold

15% of Base

90% of Goals

 

$ 12,090.00

Target

30% of Base

103% of Goals

 

$ 24,180.00

Stretch

45% of Base

115% of Goals

 

$ 36,270.00

Maximum

60% of Base

130% of Goals

 

$ 48,320.00

 

Notes:

 

1.

If performance is under Threshold Level in any criteria, no bonus is paid for
that criteria.

 

2.

No additional Bonus is paid for performance beyond Maximum Level.

 

3.

Actual Bonus paid is calculated and paid on a continuum between any two
performance levels.

 

 

 
 

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EXHIBIT 10.2

  

LONG TERM INCENTIVE COMPENSATION AGREEMENT

 

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This Long Term Incentive Compensation Agreement is entered into as of January 1,
2014 by and between DCP Holding Company, an Ohio corporation, with its principal
offices at 100 Crowne Point Place, Cincinnati, Ohio 45241 ("Company"), and
Robert C. Hodgkins, Jr. ("Employee").

 

2014 ANNUAL LONG TERM INCENTIVE BONUS DETAIL

 

A.     Restricted Share Unit (“RSU”) Award – Retention Based

The stock award for DCP’s Vice President and CFO is authorized under the “DCP
Holding Company Amended and Restated 2006 Dental Care Plus Management Equity
Incentive Plan” (the “Management Incentive Plan”) and is subject to the “Dental
Care Plus and DCP Holding Company Deferred Compensation Plan”. Stock RSU’s are
awarded in an amount equal to five percent (5%) of base salary and is considered
“Long Term” as it vests incrementally over four years, 10% on December 31 of the
first year, 20% at the end of the second year, 30% at the end of the third year
and 40% at the end of the fourth year. There are no performance targets other
than longevity with the Company.

 

RSU AWARD BASED ON 5% OF BASE SALARY OF $237,000.00          13 RSUs

 

B.     Cash Award – Performance Based

The Long Term Cash Incentive is a bonus designed to motivate the Vice President
and CFO to achieve long term success for the company as well as assist in the
retention of the Vice President and CFO over time. Long Term Incentive bonus
compensation is based on one criteria, “Adjusted Book Value of Common and
Shareholders’ Equity” and it is based on achieving growth of this book value
over a period of three years, January 1, 2014 through December 31, 2016.

 

BOOK VALUE OF COMMON STOCK

(12/31/2013 BOOK VALUE = $7,543,335)

 

Level

Definition

3 Year

Ave.

Adjusted Book Value

12/31/2016

Cash

Threshold

5% of Base

10%

$ 10,040,179

$11,850.00

Target

15% of Base

12%

$ 10,597,843

$35,550.00

Stretch

25% of Base

14%

$ 11,175,783

$59,250.00

Maximum

45% of Base

16%

$ 11,774,361

$106,650.00

 

Notes:

 

1.

“Adjusted Book Value of Common Shares and Shareholders’ Equity ” shall mean the
value of all classes of Common Shares, as shown on the audited financial
statements of the Company; increased by the sum of: (a) the aggregate amount of
all withhold return payment or similar payments authorized by the Board of
Directors, adjusted for the standard federal tax rate, to the extent such
payments were treated as an expense in determining Net Income for any year, plus
(b) the aggregate amount of all dividends onall classes of Common Stock, to the
extent that such dividends were taken into account in determining the “Book
Value of Common Shares and Shareholders’ Equity."

 

 

 
 

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2.

If performance is under Threshold Level, no Long Term Incentive bonus is paid.

 

3.

No additional bonus is paid for performing beyond Maximum Level.

 

4.

Actual bonus paid is calculated and paid on a continuum between any two
performance levels.

 

5.

With Board of Director approval, a new multi-year performance measurement period
begins each new year.

 

6.

In the event of a Change of Control, as defined in the Management Equity
Incentive Plan, the Adjusted Book Value of Common Shares and Shareholders’
Equity as of December 31, 2016 shall be deemed to be the portion of the
Enterprise Value of the Company, as defined in Article Fourth, Section
8(h)(ii)(C) of the Company’s Amended Articles of Incorporation allocated to the
Common Shares and Shareholders’ Equity, as of the date on which the Change of
Control occurs and the long term incentive bonus shall be determined as of that
date and paid within thirty (30) days thereafter.

 

 

IN WITNESS WHEREOF, the parties have hereunto set their hands effective as of
the date first above written.

 

EMPLOYEE:

 

 

 

 

 

/s/ Robert C. Hodgkins, Jr.

 

COMPANY: DCP Holding Company

 

 

 

By:/s/ Stephen T. Schuler, DMD  

Stephen T. Schuler, DMD

   Chairman of the Board

Robert C. Hodgkins, Jr.

 

Date: June 19, 2014

________________________

 

 

 

Date:   June 19, 2014