Exhibit 10.1
RealNetworks, Inc. Executive MBO Plan – Section 16(b) Executive Officers
OBJECTIVE OF THE PLAN
The objective of the RealNetworks’ Executive MBO Plan is to reward participants
for their contribution to the company’s success and ensure market
competitiveness as we work to attract and retain high caliber talent.
RealNetworks has adopted this plan applicable to the first six months of 2015 to
reward high performance consistent with our core business objectives. The
Executive MBO Plan is administered under RealNetworks’ 2005 Stock Incentive
Plan, as amended and restated.
EFFECTIVE DATE
The effective date of the 2015 Executive MBO Plan is January 1, 2014 – June 30,
2015. Payout, if earned, will be made by no later than March 15, 2016.
PLAN METRICS
Total attainment for the target period is based on (i) revenue (weighted at
60%), (ii) adjusted EBITDA (weighted at 20%), and (iii) strategic business
objectives (weighted at 20%).
Adjusted EBITDA is a non-GAAP measure that we define as operating income (loss)
including other income (expense) net, but excluding depreciation and
amortization; acquisition-related intangible asset amortization; stock-based
compensation; restructuring and other charges; lease exit and related charges;
and extinguishment of liability.
A discretionary modifier of +/- 25% is reserved for Compensation Committee
discretion to adjust the calculated payout of an individual executive officer
upward or downward by up to 25%. The basis for the modifier being applied is
entirely at the discretion of the Compensation Committee when reviewing such
things as: shareholder value creation, revenue growth, cash flow generation, use
of capital, etc. Notwithstanding the preceding, the Compensation Committee will
not have discretion to increase the payment for any Section 162(m) Participant.
MBO PAYOUT MECHANICS
Any bonuses payable pursuant to the Plan will be payable in the form of
restricted stock awards, rather than cash.
Revenue Metric:
 
•
 
In order to encourage revenue growth year over year, performance under 90% of
the revenue target goal will not be rewarded.

 
 
 
Attainment
 
Incentive Payout
< 90%
 
No Payout
90% - 100%
 
50% - 100%
100% - 120%+
 
100% - 200%*

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*
Payout for revenue results will have a maximum payout of 200%. Payout is capped
at 100% if adjusted EBITDA is attained at less than 100% of target.

Adjusted EBITDA Metric for Games Business Executive:
 
•
 
In order to maintain fiscal responsibility, performance lower than $500,000
below adjusted EBITDA target will not be rewarded.

 
 
 
Attainment
 
Incentive Payout
> $500,000 below budget
 
No Payout
$500,000 below budget up to budget
 
50% - 100%
Budget up to $2 million over budget*
 
100% - 200%*

*
Payout for adjusted EBITDA results will be capped at 100% until revenue
attainment reaches 100%, and will have a maximum payout of 200%.

Adjusted EBITDA Metric for Other Executives:
 
•
 
In order to maintain fiscal responsibility, performance lower than $2,000,000
below adjusted EBITDA target will not be rewarded.

 
 
 
Attainment
 
Incentive Payout
> $2 million below budget
 
No Payout
$2 million below budget up to budget
 
50% - 100%
Budget up to $2 million over budget*
 
100% - 200%*

*
Payout for adjusted EBITDA results will be capped at 100% until revenue
attainment reaches 100%, and will have a maximum payout of 200%.

TERMS AND CONDITIONS

 
•
 
2015 Executive MBO Plan calculations and payments are completed and made after
the end of the plan year with payout timing approximately 30 - 45 days after the
close of the plan year. In all circumstances, any payouts that are earned in the
plan year will be paid by March 15 of the following year, at the latest.

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•
 
You must be in an eligible position on the first and last day of the month to
participate in the plan for that month.

 
•
 
Salary, eligible position changes and/or transfers from one eligible group to
another within a month will be based on status at the beginning of the month.
Changes after the first day of the month will be reflected in the next month.

 
•
 
In order to receive a payout from the plan you must be on the company’s payroll
as of the last day of the plan year and on the company’s payroll as of the date
the award is scheduled to be paid, subject to the following. If your employment
terminates due to your total and permanent disability or death, you or your
estate, still may, in the discretion of the Compensation Committee be eligible
to receive any payout that otherwise was earned.

 
•
 
Notwithstanding any other provision of the plan, the Compensation Committee may,
in its sole discretion, increase (other than for a Section 162(m) Participant),
reduce or eliminate a participant’s award at any time before it is paid, whether
or not calculated on the basis of pre-established performance goals or formulas.

 
•
 
The Compensation Committee has all power and discretion to interpret and
administer the plan, including (but not limited to) the power to determine who
is eligible for the plan and the size of any payouts.

 
•
 
The Compensation Committee may delegate all or any part of its powers under the
plan to the company’s chief executive officer or head of human resources, except
that such individual may not administer the plan with respect to participants
who are executive officers of the company. (For this purpose, an individual will
be considered an executive officer of the company if his or her role at the
company falls within the definition of “officer” under Rule 16a-1(f) promulgated
under the Securities Exchange Act of 1934, as amended.)

 
•
 
The Compensation Committee reserves the right to adjust targets/measurements
based on acquisition or disposition of businesses/assets.

 
•
 
The Section 162(m) Participants are the company’s chief executive officer, chief
financial officer, and any president or executive vice president.

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