Exhibit 10.1

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Verra Mobility

Annual Incentive Bonus Plan

 

Effective January 1, 2019

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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PURPOSE  

 

The Verra Mobility Corporation (the “Company” or “Verra Mobility”) Annual
Incentive Bonus Plan (the “Plan”) is an annual incentive compensation plan
intended to motivate and reward selected employees in leadership positions

 

ELIGIBILITY

 

Eligibility to Participate

 

General.  An employee is eligible to participate in the Plan if he or she (i) is
employed by Verra Mobility or one of its direct or indirect subsidiaries and, in
each case, is not covered by a Collective Bargaining Agreement; (ii) is
classified by the Company as a manager level or higher, (iii) does not
participate in a different Verra Mobility incentive or commission plan and (iv)
is approved as a participant by the Company’s Chief People Officer (“CPO”) and
Chief Executive Officer (“CEO”) for participation in the Plan for the applicable
Plan Year (a “Participant”).  A Plan Year begins on January 1 and ends on
December 31 of the same calendar year.  

 

Part Year Participation.  If an employee becomes eligible to participate in the
Plan during the Plan Year due to promotion or otherwise (as opposed to the
beginning of the Plan Year), such Participant may be entitled to a pro rata
portion of any annual incentive bonus opportunity based on the period of time
after he or she began participating in the Plan.  If during the Plan Year a
Participant becomes ineligible to participate in the Plan, the employee may be
eligible to receive a pro rata payment of any annual incentive bonus opportunity
based on the period of time before he or she became ineligible to participate in
the Plan, provided that the employee remains employed by the Company or its
direct or indirect subsidiaries on the Payment Date (as defined below) and the
other required criteria to receive an annual incentive bonus are met.

 

Eligibility to Receive Payment -- To be eligible to receive any payment under
the Plan, a Participant must be employed by the Company on both the last day of
the Plan Year and the date on which the Company actually pays incentive bonuses
under the Plan for the prior Plan Year (the “Payment Date”).  However, if the
Company terminates a Participant’s employment without cause (as determined by
the Company in its sole discretion) after the end of the relevant Plan Year but
before the Payment Date, the Company may, in its sole discretion, pay all or a
pro rata portion of the Participant’s annual incentive bonus for that relevant
Plan Year.  Any termination of employment before the Payment Date disqualifies
the Participant from receiving any payment under this Plan (with the exception
discussed in the prior sentence).

 

ANNUAL INCENTIVE BONUS COMPONENTS

 

General -- A Participant’s annual incentive bonus will be based on the following
components, which will apply and be weighted depending on the Participant’s
employment classification (See Exhibit 1):

 

 

•

Company-wide (“Consolidated”) Adjusted EBITDA (Earnings Before Interest Taxes
Depreciation and Amortization);

 

•

Business Unit (“BU”) Adjusted EBITDA;

 

•

Consolidated Revenue;

 

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•

BU Revenue; and

 

•

Individual performance.

 

The applicable EBITDA and applicable Revenue components of a Participant’s
annual incentive bonus may be calculated up to 200% (based on actual performance
against target, as shown in Exhibit 2), and the individual performance component
may be calculated up to 200%.  In no event may a Participant receive more than
200% of his or her total annual Target Bonus, with the sole exception of
payments made in connection with the Company’s requirement to payout 90% of the
Bonus Payment Accrual (as discussed below).

 

Determination of EBITDA and Revenue Targets – During the first quarter of the
Plan Year, or as reasonably practical thereafter (or after any amendment to the
Plan), the EBITDA and Revenue targets will be determined by the Company’s Chief
Financial Officer and approved by the CEO and Board of Directors, and thereafter
communicated to Participants.  

 

EBITDA Performance Threshold – A Participant will be entitled to a payment under
this Plan only if both (a) the actual level of Consolidated EBITDA performance
for the Plan Year equals or exceeds 85% of the Consolidated EBITDA target for
such Year and (b) the actual level of EBITDA performance for the Plan Year
equals or exceeds 85% of the Participant’s applicable EBITDA target for such
year (if different) (collectively, the “EBITDA Threshold”).  See Exhibit 2.  If
the EBITDA Threshold is not met, no bonus payment will be paid to the
Participant under this Plan.  

 

Total Annual Incentive Calculation -- If the EBITDA Threshold is satisfied, the
Participant’s annual incentive opportunity will be based on the components and
weighting according to the Participant’s job classification as set forth in
Exhibit 1, and for the financial components, the performance against the
applicable EBITDA and applicable Revenue targets as set forth in Exhibit 2.  A
Participant’s individual performance shall be initially determined by the
Participant’s supervisor, and is subject to the CEO’s approval and discretion,
with the exception of the CEO and Executive Officers (ELT members), whose
individual performance shall be determined by the Company’s Board of Directors
(or the Compensation Committee) in their discretion.    

 

PAYMENTS UNDER THE PLAN

 

Participant’s Annual Incentive Target Bonus and Payout Calculation -- A
Participant’s annual incentive bonus opportunity is established as a percentage
of his or her base pay (“Target Bonus”).  Participants will be notified of their
target bonus during the first quarter of a Plan Year or as reasonably practical
thereafter (or, for new hires or transfers into eligible positions during the
year, at or around the time of such eligibility) or after any amendment to the
Plan.  Employees whose job classification is changed during the plan year such
that the new job title qualifies for a higher or lower target bonus and/or the
Participant is subject to a different Division EBITDA and/or Revenue target
shall have their annual bonus pro-rated to reflect the time in each position
according to the applicable target(s).

 

The annual incentive bonus is calculated using the Participant’s base salary
actually paid during the Plan Year.

 

Final Approval of Incentive Bonuses -- All amounts paid to Participants under
the Plan must be approved by the CEO prior to payment, with the exception of the
CEO and Executive

 

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Officers (ELT members), whose payments must be approved by the Company’s Board
of Directors (or the Compensation Committee).  The total amount of all bonus
payments made for a Plan Year must equal or exceed 90% of the total amount of
bonus payments accrued as of December 31 of the Plan Year on a consolidated
basis (such total being the “Bonus Payment Accrual”).  In the event that the
calculated aggregated bonus payments scheduled to be made on the Payment Date
total less than 90% of the Bonus Payment Accrual, the Company shall, in a method
determined in its sole discretion, increase the amounts payable to eligible
Participants such that the total aggregate bonus payments actually paid on the
Payment Date equal or exceed 90% of the Bonus Payment Accrual.    

 

Payment Date -- Subject to all other requirements of this Plan, the Payment Date
shall be after the Company’s books are closed for the fiscal year, but no later
than March 15 of the year following the year for which the incentive bonus was
earned.

 

Tax Withholding -- All payments made under the Plan are subject to appropriate
federal, state and local withholding and any other deductions required by
applicable law.  Payments will generally be taxed as supplemental wages, rather
than at the wage withholding rate on regular wages.

 

401(k) Deferrals on Payments -- Unless otherwise specified in the Company 401(k)
plan, Participants will have their regular 401(k) deduction withheld from
amounts paid under the Plan according to each Participant’s 401(k) election as
in effect on the Payment Date, subject to the applicable annual maximum
contribution limit and other applicable terms of the 401(k) plan.  If a
Participant wishes to change his or her 401(k) deductions from any payment under
the Plan, it is the Participant’s responsibility to timely designate how much,
if any, additional (or reduced) 401(k) contribution should be withheld.

 

OTHER IMPORTANT INFORMATION ABOUT THE PLAN

 

Plan Year -- The Plan Year begins January 1 and ends the following December 31
of each calendar year.

 

Adjusting Performance Components—The Company shall have the absolute and
discretionary right to adjust the annual incentive bonus components, or to
exclude items from the calculation of any achieved targets, during a Plan Year
if it determines that external changes or other business conditions require
changes to be made. Any such adjustment shall apply to all Plan Participants.

 

Corporate Event -- In the event of a merger, consolidation, plan of exchange,
acquisition of property or stock, split-up, spin-off, reorganization or
liquidation, any sale, lease, exchange or other transfer (in one transaction or
a series of transactions) of all, or substantially all, the assets of the
Company, the Company will select, prior to the consummation of the transaction,
one of the following alternatives: this Plan: (a) shall remain in effect in
accordance with its terms; (b) shall remain in effect in accordance with its
terms, but shall be assumed by the surviving corporation; (c) will terminate,
along with any future accruals, as of the consummation of the transaction and
all payments under this Plan shall be pro-rated based upon the number of days
that have elapsed in the Plan Year up to the date of the Corporate Event,
calculated based on the attainment of performance criteria as of the transaction
date, and paid within 30 days after the closing of the transaction or (d) will
terminate, and all payments will be made to Plan Participants based on each
Participant’s annualized base salary (i.e., not on a pro rata basis, but rather
a full year basis),

 

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calculated based on the attainment of performance criteria as of the transaction
date, and paid within 30 days after the closing of the transaction.

 

Severability -- In the event any provision of the Plan shall be held illegal or
invalid for any reason, the illegality or invalidity shall not affect the
remaining parts of the Plan, and the Plan shall be construed and enforced as if
the illegal or invalid provision had not be included.

 

Amendment/Termination -- The Company may, from time to time, amend, suspend, or
terminate in whole or in part, and if suspended or terminated, may reinstate,
any or all of the provisions of the Plan.  The Company also has the sole and
absolute discretion to determine the standard or formula pursuant to which the
performance components and each Participant’s annual incentive bonus shall be
calculated, whether all or any portion of the bonus so calculated will be paid,
and the specific amount, if any, to be paid to each Participant.  The Company
reserves the sole and absolute right to interpret the Plan.  Any exceptions to
this Plan document must be approved in writing by both the CEO and the CPO prior
to communication to any Participant.

 

No Continued Right to Employment -- Neither the establishment of the Plan, nor
the provision for or payment of any amounts hereunder, nor any action of the
Company shall be held or construed to confer upon any Participant or other
person or entity any legal right to receive, or possess any interest in, an
incentive bonus payment, or any legal right to be continued in the employ of the
Company for any particular period of time.  Participation in the Plan does not
change the “at will” nature of a Participant’s employment with the Company.

 

Applicable Law -- All questions pertaining to the construction, regulation,
validity, and effect of the provisions of the Plan shall be determined in
accordance with the laws of the State of Arizona. This Agreement will be
construed in accordance with, and any dispute or controversy arising from any
breach or asserted breach of this Agreement will be governed by, the laws of the
State of Arizona without reference to principles of conflicts of law thereof. In
the event of any proceeding to enforce any provision of this Agreement, the
prevailing party shall recover its attorneys’ fees, expenses, and costs of
investigation.

 

Code Section 409A -- The benefits provided under this Plan shall be paid in such
a manner to satisfy the short-term deferral exception to the application of Code
Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”).  To
the extent that those benefits become subject to Section 409A of the Code, the
terms of this Plan shall be construed and administered in a manner calculated to
meet the requirements of Section 409A, or an exception thereto, and all
applicable guidance, rulings and regulations. To the extent a provision of the
Plan is contrary to or fails to address the minimum requirements of Section 409A
of the Code and all applicable guidance, rulings and regulations, the Company
may, in its sole discretion take such steps as it deems reasonable to provide
the coverage or benefits provided  under the Plan so as to comply with Section
409A of the Code and all applicable guidance rulings and regulations; provided,
however, that any and all tax liability and penalties resulting from
non-compliance with Section 409A of the Code shall remain the Participant’s sole
responsibility. Nothing in this Agreement shall be construed as a guarantee of
any particular tax treatment to a Participant. Each Participant shall be solely
responsible for his or her tax consequences with respect to all amounts payable
under this Agreement, and in no event shall the Company have any responsibility
or liability if this Agreement does not meet any applicable requirements of
Section 409A.

 

 

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Exhibit 1 – Annual Incentive Components & Corresponding Weighting by Job
Classification:

 

 

WEIGHTING OF PERFORMANCE  COMPONENTS BY JOB CLASSIFICATION

 

JOB CLASSIFICATION

Adjusted Consolidated EBITDA*

Consolidated Revenue

Adjusted BU EBITDA*

BU Revenue

Individual Performance

CEO

65%

35%

--

--

--

Shared Services ELT

50%

30%

--

--

20%

BU ELT

--

--

50%

30%

20%

Shared Services Participants (excluding ELT)

 

45%

 

25%

 

--

 

--

 

30%

BU Participants (excluding ELT)

--

--

45%

25%

30%

 

*No incentive payments will be made unless both (a) the actual level of
Consolidated EBITDA performance for the Plan Year equals or exceeds 85% of the
Consolidated EBITDA target for such Year and (b) the Participant’s applicable
EBITDA performance component (if different) exceeds the 85% Threshold.  

 

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Exhibit 2 – 2019 Adjusted EBITDA and Revenue Performance Schedule

 

Bonus payments for a Participant’s EBITDA and Revenue components are calculated
based upon the following schedule:

 

 

% of Target Goal Achieved

Payout % of Component

85

50.00

86

53.33

87

56.67

88

60.00

89

63.33

90

66.67

91

70.00

92

73.33

93

76.67

94

80.00

95

83.33

96

86.67

97

90.00

98

93.33

99

96.67

100

100.00

101

105

102

110

103

115

104

120

105

125

106

130

107

135

108

140

109

145

110

150

111

155

112

160

113

165

114

170

115

175

116

180

117

185

118

190

119

195

120

200

No Additional Payout Above This

 

 

 

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