EXHIBIT 10.2

 

TELEGLOBE INTERNATIONAL HOLDINGS LTD

ANNUAL INCENTIVE PLAN FOR EXECUTIVES

 

1. Purpose.

 

The principal purpose of the Teleglobe International Holdings Ltd Annual
Incentive Plan (the “Plan”) for Executives is to advance the interests of
Teleglobe International Holdings Ltd (the “Company” or “Teleglobe”) and its
subsidiaries by providing for annual incentive compensation for executives of
the Company and its subsidiaries who are designated as participants in the Plan
by the Compensation Committee of the Board of Directors from time to time in the
manner hereinafter provided, so as to attract and retain such individuals, make
their compensation competitive and provide them with an incentive to strive to
achieve the Company’s financial and other business objectives.

 

The program is designed so that each Participant in the Plan shall be eligible
to receive a Target Incentive Award, if any, for the Plan Period as may be
payable pursuant to the performance criteria approved by the Compensation
Committee of Teleglobe in consultation with the Chief Executive Officer (other
than any decision with the respect to the CEO’s Target Incentive Award).

 

The Plan measures performance using the actual achievement of the defined
corporate performance objectives.

 

The Plan defines the conditions and the method of paying annual incentive
compensation to the Company’s Executives of the business worldwide that do not
participate in another plan.

 

2. Definitions.

 

As used in the Plan and any Exhibits to the Plan, the following terms have the
meaning stated below:

 

“Affiliate,” means a company that directly or indirectly controls, is controlled
or is under common control with Teleglobe, and has adopted the Plan with the
approval of Teleglobe. A company “controls” another company if it holds or is
beneficially entitled to hold, directly or indirectly, other than by way of
security interest only, more than 50% of the voting rights, income or capital.

 

“Board of Directors” or “Board” means the Board of Directors of Teleglobe.

 

“CEO” means the Chief Executive Officer of Teleglobe.

 

“Company” means Teleglobe and any Affiliate.

 

“Compensation Committee” or “Committee” means the committee of the Board
appointed to discharge the Board’s responsibilities relating to the directors,
executive officers, and employees compensation and employment benefit plans,
policies and programs of the Company.

 

“Disability” means “totally disabled” as defined in the applicable Company’s
long-term disability insurance plan, as from time to time in effect.

 

“Executive” means an individual who is actively employed by the Company on a
full-time basis during the Plan Period as determined by the Compensation
Committee from time to time. Executives who participate in another Teleglobe
plan and are not designated as participants in the Plan by the Compensation
Committee will not be eligible to receive awards under this Plan.

 

“Executive Officer” means any Participant who has been designated by the Board
of Directors as an executive officer pursuant to Rule 3b-7 under the Securities
and Exchange Act of 1934, as amended.

 

“Incentive Compensation Award” means the award to be paid to a Participant based
on the Participant’s Target Incentive Award and the Company’s business
achievement factors, as determined by the Compensation Committee annually.

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“Not Actively Employed” means the earlier of:

 

(a) The date on which the Company gives to the Employee notice of termination
(whether or not for cause);

 

(b) The date of termination of employment (whether or not for cause); or

 

(c) The date on which salary continuation or severance pay commences under any
severance plan or policy of the Company.

 

“Participant” means any Executive who is eligible for a Target Incentive Award
and employed before November 1 of each year with payment of the Incentive
Compensation Award, if any, made during the first quarter of the following
year(excluding any executive who participates in a sales incentive compensation
plan sponsored by a Company or an Affiliate). The definition of “Participant”
may be modified to include special provisions describe in an individual
retention or employment agreement.

 

“Performance Goal(s)” shall mean the criteria and objectives, which must be met
during the Plan Period as a condition of the Participant’s receipt of payment
with respect to a Target Incentive Award.

 

“Target Incentive Award” means the applicable amount set for each Participant in
accordance with the applicable company’s compensation structure; the payment of
any such award shall be contingent upon the attainment of business Performance
Goals with respect to the Plan Period.

 

“Teleglobe” means Teleglobe International Holdings Ltd.

 

3. Target Incentive Awards.

 

Target Incentive Awards will be set for each Participant in accordance with the
applicable Company’s compensation structure.

 

4. Performance Measurement and Award Determination.

 

The Compensation Committee of the Board of Directors will approve the business
achievement factors for the Plan Period, the method of measuring performance and
the corresponding payout formula for awards under the Plan. Performance will be
measured as a percentage of the actual business achievement against the
financial target for the Plan Period as determined by the Compensation Committee
from time to time.

 

The Incentive Compensation Award to be paid a Participant shall not exceed 200%
of each Participant’s Target Incentive Award; provided that the Incentive
Compensation Award for the CEO shall not exceed 100% of his Target Incentive
Award.

 

The CEO (with respect to Participants who are not Executive Officers) and the
Compensation Committee (with respect to Executive Officers) may, in their
respective sole discretion, (i) award or increase the amount of Target Incentive
Award payable to one or more Participants even though not earned in accordance
with the Performance Goals established or (ii) decrease the amount of Target
Incentive Award otherwise payable to one or more Participants even though earned
in accordance with the Performance Goals.

 

5. Death or Retirement.

 

If a Participant’s employment terminates due to (i) death, (ii) retirement at
the age of 55 or older with at least 10 years of service with the Company or an
affiliate, (iii) eligible to receive Teleglobe retirement benefits (more than 30
years of service), the Participant will be entitled to a prorated Incentive
Compensation Award equal to what he or she would have been entitled to receive
as a Participant up to the date of the Participant’s death or retirement.

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6. Leaves of Absence and Disability.

 

If a Participant is on short or long term disability or a leave of absence in
excess of 60 working days during the relevant period, the period of absence over
60 days will not be included in the Incentive Compensation Award calculation and
the Incentive Compensation Award paid will be prorated. The CEO and the
Compensation Committee may, in their respective sole discretion, modify the
period.

 

7. Plan Provision

 

The Company will establish a provision to accrue Incentive Compensation Awards
to be paid at the end of the period. The provision will generally be sufficient
to cover Incentive Compensation Awards at 100% of achievement. The CEO will
periodically review Company performance with the Chief Financial Officer and
make adjustments to such provision as necessary to ensure the adequacy of the
provision to cover the accrual for the Incentive Compensation Awards.

 

8. Participant’s Interest.

 

A Participant’s interest in any Target Incentive Award hereunder shall at all
times be reflected on the Company’s books as a general unsecured and unfunded
obligation of the Company subject to the terms and conditions of the Plan. The
Plan shall not give any person any right or security interest in any asset of
the Company or any fund in which any deferred payment is deemed invested. The
Company, the Committee and the Board shall not be responsible for the adequacy
of the general assets of the Company to discharge the payment of its obligations
hereunder. In addition, the Company shall not be required to reserve or set
aside funds therefore.

 

9. Participant’s Rights.

 

Nothing contained in the Plan shall confer upon any Participant any right to be
continued in the employ of the Company or any of its Affiliates or interfere in
any way with the right of the Company or any of its Affiliates to terminate a
Participant’s employment at any time, unless superceded by the laws of
jurisdiction where the employee resides.

 

10. Amendment/Termination.

 

The Compensation Committee may in its sole discretion terminate or amend the
Plan from time to time without liability to pay incentive compensation under the
Plan, unless otherwise specified in the employment contract of an Executive.

 

11. Non-Alienation of Benefits/Benefits Designation.

 

All rights and benefits under the Plan are personal to the Participant and
neither the Plan nor any right or interest of a Participant or any other person
arising under the Plan is subject to voluntary or involuntary alienation, sale,
transfer, or assignment.

 

12. Plan Administration.

 

The Plan will be administered by the Compensation Committee or, if the name of
the Compensation Committee is changed, the Plan will be administered by such
successor committee. For all Executives other than Executive Officers, the
Compensation Committee may delegate all or a portion of its responsibilities
within its sole discretion by resolution to the CEO. Any reference in this Plan
to the Committee or its authority will be deemed to include the CEO (other than
with respect to Executive Officers). From time to time, the CEO may delegate the
administration of the Plan to one or more executives of the Company. The
interpretation and construction of the provisions of the Plan by the
Compensation Committee and/or the CEO will be final and binding.

 

The Committee will have the right to interpret the terms and provisions of the
Plan and to determine any and all questions arising under the Plan, including,
without limitation, the right to remedy possible ambiguities,

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inconsistencies, or omissions by a general rule or particular decision. The
Committee will have authority to adopt, amend and rescind rules consistent with
the Plan, to make exceptions in particular cases to the rules of eligibility for
participation in the Plan (except with respect to Executive Officers), and to
delegate authority for approval of participation of any Executive except for
Executive Officers. The Committee will take all necessary action to establish
annual Performance Benchmarks and approve the timing of payments, as necessary.

 

Any determination by the Committee of the financial targets including but not
limited to EBIDTA, year end cash balance, any other performance measure, and the
level and entitlement to Incentive Compensation Awards, and any interpretation,
rule, or decision adopted by the Committee under the Plan or in carrying out or
administering the Plan, will be final and binding for all purposes and upon all
interested persons, their heirs, and personal representatives. The Committee may
rely conclusively on determinations made by the Company and its auditors to
determine EBITDA, year end cash balance, any other performance measure and
related information for administration of the Plan, whether such information is
determined by the Company, auditors or a third-party vendor engaged specifically
to provide such information to the Company. This subsection is not intended to
limit the Committee’s power, to the extent it deems proper in its discretion, to
take any action permitted under the Plan.

 

All expenses incurred in the administration of the Plan will be borne by the
Company.

 

The Plan and decisions made pursuant to the Plan will be construed under and
governed by the laws of the Commonwealth of Virginia for employees located in
the United States, the laws of the Province of residence for employees located
in Canada and the laws of the country of residence for employees outside the
U.S. and Canada.

 

13. Distribution of Incentive Compensation Awards.

 

The Company will pay to each Participant the amount of Incentive Compensation
Award earned by the Participant, after deducting from the Participant’s
Incentive Compensation Award all required federal, state, provincial, local or
other withholding taxes, amounts required to be withheld by law or amounts owed
by the Participant to the applicable Company. Being an active employee of the
Company or an Affiliate on the day the bonus is paid is a condition precedent
for each Participant to receive an Incentive Compensation Award unless otherwise
set forth in an Executive’s employment agreement. Any Participants whose
individual performance is unsatisfactory will not be paid an Incentive
Compensation Award even if the financial targets are achieved by the Company.
Incentive Compensation Awards will be paid prior to the end of the first quarter
of each year.

 

14. Spendthrift Clause.

 

Except as may be otherwise required by law, no award or payment under this Plan
will be subject in any manner to anticipation, alienation, sale, transfer,
assignment, pledge, encumbrance or charge, whether voluntary or involuntary, and
no attempt so to anticipate, alienate, sell, transfer, assign, pledge, encumber
or charge the same will be valid, nor will any such benefit or payment be in any
way liable for or subject to debts, contracts, liabilities, engagements or torts
of any person entitled to such benefit or payment, or subject to attachment,
garnishment, levy, executive or other legal or equitable process.