Exhibit 10.2

 

Phase Forward Incorporated

Management Incentive Plan

Effective January 1, 2006

 

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Phase Forward Incorporated
Management Incentive Plan

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Phase Forward Incorporated
Management Incentive Plan (MIP)
Plan Document
Effective January 1, 2006

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TABLE OF CONTENTS

Section

 

 

 

Page

I.

 

Purpose

 

3.

 

 

 

 

 

II.

 

Effective Date of Plan

 

3.

 

 

 

 

 

III.

 

Eligibility

 

3.

 

 

 

 

 

IV.

 

MIP Target Payouts

 

3.

 

 

 

 

 

V.

 

Measurement

 

3.

 

 

 

 

 

VI.

 

Transition Issues

 

3.

 

 

 

 

 

VII.

 

Administration

 

4.

 

 

 

 

 

Plan Exhibits

 

 

 

 

 

 

 

 

 

 

 

A.

 

Plan Components

 

5.

 

 

 

 

 

B.

 

Participant Notification & Acknowledgement Sheet

 

6.

2

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Management Incentive Plan (MIP)
Plan Document

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I.                    Purpose

The objective of the Management Incentive Plan (MIP) is to recognize and to
reward the achievement of financial performance goals that are essential to the
success of Phase Forward. This program, in conjunction with base salary, is
designed to offer designated employees of Phase Forward Incorporated and/or its
subsidiaries (the “Company”) total cash compensation opportunities that are
fully competitive with market levels.

II.                Effective Date of Plan

The effective date for implementation of the Plan shall be January 1, 2006. A
Plan year is equivalent to a calendar year. The Plan may be modified or
terminated at any time by the Management Development and Compensation Committee
or their designee in its or their sole discretion, without notice or consent of
the Participants.

III.            Eligibility

Certain employees, designated by executive management in its sole discretion,
whose roles and responsibilities are deemed by executive management to be
critical to operations and who are at a management level in the organization are
eligible for participation in the MIP. Target Participation Percentage is
defined by the position.

IV.           MIP Target Payout

Participants will be assigned a target payout for the MIP, expressed as a
percentage of total base salary, set forth in Exhibit B. This percentage
represents the potential dollar award that could be earned upon achievement of
goals for all Plan components. The target payout percentage will vary according
to the Participant’s position. Actual Plan payments will vary based on
performance and time in position.

V.               Measurement

The MIP consists of one component for all Participants. The Participant will be
assigned a target payout, expressed as a percentage of base salary, to be used
to calculate an amount (i.e. 10 % of $90,000 base salary equals $9,000).   The
Plan component and weighting is set forth in Exhibit A.

VI.           Transition Issues

A Participant in the Plan must be actively employed by the company through
payment dates to receive any payout under the plan. Payment dates are typically
during the month of March following the end of the Plan year. Since the annual
components are calculated on base salary as of December 31 of the plan year,
payouts for annual components will be pro-rated for those eligible Participants
who join the plan during the year, prior to October 1. Employees who transfer
out of an eligible position during the year into a non-eligible position in the
company, but who are still employed as of the payment date, will be considered
for an award based on the number of months in the eligible position and earnings
accrued during those months.

3

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Employees hired or promoted for the first time into bonus eligible positions
after October 1 will not be eligible to participate in any component of the Plan
for that plan year.

VII.       Administration

The adoption, eligibility and participation in this Plan in no way infers or
reflects any guarantee of a contract of employment. Except as expressly set
forth in any Participant’s employee agreement signed by the company and
employee, all of the employees of the company are employees “at will”.
Participation in this plan does not confer any right to continue in the
company’s employ or limit the right of the company to terminate the participant
at any time, with or without cause or notice.

The financial targets assigned and recognized as goals on any of the performance
factors may be revised or otherwise modified by the executive management of the
company at any time to account for any material change in the business of the
company. Any such revisions or modifications will be made in writing to all
Participants as soon as possible after the need for such change is determined.

If any term or condition of this Plan is found to be in non-conformance with a
given state, federal, or country law, that term or condition will be
non-enforceable but will not negate other terms and conditions of the Plan.
However, the company will review and modify the overall plan to conform to such
law.

The company is an Equal Opportunity Employer committed to a diverse workforce.
The company will not discriminate on the basis of race, color, religion, age,
sexual orientation, national origin, physical or mental disability, or veteran
status.

All matters of MIP interpretation should be directed to the VP, Human Resources,
and will be resolved at his/her discretion subject to the approval of the CEO
and where necessary the Management Development and Compensation Committee.

4

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Exhibit A
Plan Component

The Plan Component is:

1.                 Operating Income before Bonus and Stock Based Expenses

This relates to the global performance by the Company against the Company’s
planned earnings for the fiscal year corresponding to the Plan year, as
established by the Board at the beginning of the Plan year. The specific
criteria upon which any bonuses may be earned during the Plan year is based on
operating income before bonus and stock based expenses. The achievement of
performance targets will be measured when or shortly after the Company publicly
reports its financial results for the applicable period.  All Participants are
measured on this component. The targets may change as approved by the Board of
Directors in its sole discretion, for items such as an acquisition or other
extraordinary corporate event.

This component is earned on a quarterly basis but paid annually, by the end of
the March following the end of the plan year. For the first and second quarters
a minimum achievement or “threshold” of 105% of global performance in each
quarter is required for payout of the component applicable to that quarter.
 Payments are paid according the following schedule:

Achievement%  

 

Payout%

<105%

 

0%

³105%

 

20% + 4% for each additional % achieved

 

For the third and fourth quarters, a minimum achievement or “threshold” of 80%
of global performance in each quarter is required for payout for the component
applicable to that quarter. Payments are paid according to the following
schedule:

Achievement%

 

Payout%

<80%

 

0%

80% - 99.9%

 

50% + 2.5% for each additional % achieved

³100

 

100% + 2% for each additional % achieved

 

For Illustration Purposes: (Quarters are not weighted equally)

Q-1 Achievement of 110% would result in a payout of 40% of target

Q-2 Achievement of 125% would result in a payout of 100% of target

Q-3 Achievement of 85% would result in a payout of 62.5% of target

Q-4 Achievement of 105% would result in a payout of 110% of target

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Exhibit B
Participant Notification Sheet
Certificate of Acknowledgement

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2006 Management Incentive Plan

Name of Participant:

 

John Smith

 

 

 

Base Salary as of 4-1-06

 

$170,000

 

 

 

Target Participation Percentage:

 

35%

 

 

 

MIP Target Payout Annualized:

 

$59,500

 

The information above is for illustration purposes only and actual payments will
be made in accordance with the plan and will vary based on actual achievement of
targets.

 

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Plan Components and Weighting:

100% Operating Income Before Bonus and Stock Based Expenses (earned quarterly as
follows):

Q-1

 

10%

Q-2

 

15%

Q-3

 

30%

Q-4

 

45%

 

The information above is for illustration purposes only and actual payments will
be made in accordance with the plan and will vary based on actual achievement of
targets.

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I, _______________________, hereby certify that I have read the Phase Forward
Incorporated Management Incentive Plan. I understand and agree to the terms of
the plan.

 

 

Signature

 

Date

 

 

6

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