Exhibit 10.1

 

Phase Forward Incorporated

 

 

Management Incentive Plan

Effective January 1, 2009

 

 

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Phase Forward Incorporated

Management Incentive Plan (MIP)

Plan Document

Effective January 1, 2009

 

TABLE OF CONTENTS

 

Section

 

Page

 

 

 

I.

Purpose

3.

 

 

 

II.

Effective Date

3.

 

 

 

III.

Eligibility

3.

 

 

 

IV.

Bonus Determination

3.

 

 

 

V.

Payment and Transition Issues

4.

 

 

 

VI.

Administration

4.

 

 

 

VII.

Return of Excess Distributions

5.

 

 

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Phase Forward Incorporated

Management Incentive Plan (MIP)

Plan Document

 

I.             Purpose

 

This Management Incentive Plan (the “MIP”) is intended to recognize and 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.  The MIP is for the benefit of Covered Employees (as defined
below).

 

II.            Effective Date

 

The effective date for implementation of the MIP shall be January 1, 2009.  A
MIP year is equivalent to a calendar year. The MIP 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

 

From time to time, the executive management of the Company and/or the Management
Development and Compensation Committee may select certain employees (the
“Covered Employees”), whose roles and responsibilities are deemed by executive
management to be critical to operations and/or who are at a management level in
the Company, to be eligible to receive bonuses hereunder.

 

IV.          Bonus Determinations

 

A Covered Employee may receive a bonus payment under the MIP based upon the
attainment of performance targets which are established by executive management
of the Company and approved by the Management Development and Compensation
Committee.  The performance targets will relate to financial and operational
metrics with respect to the Company or any of its subsidiaries (the “Performance
Goals”), including the following:  earnings per share, revenues, EBITDA
(earnings before interest, taxes, depreciation and amortization), net income
(loss) (either before or after interest, taxes, depreciation and/or
amortization), changes in the market price of the Stock, economic value-added,
funds from operations or similar measure, sales or revenue, acquisitions or
strategic transactions, proforma operating income (loss), cash flow (including,
but not limited to, operating cash flow and free cash flow), return on capital,
assets, equity, or investment, stockholder returns, return on sales, gross or
net profit levels, productivity, expense, margins, operating efficiency,
customer satisfaction, working capital, sales or market shares, bookings and
number of customers, any of which may be measured either in absolute terms or as
compared to any incremental increase or as compared to results of a peer group.

 

Covered Employees will be assigned a target payout for the MIP, expressed as a
percentage of total base salary.  This percentage represents the potential
dollar award that could be earned upon achievement of Performance Goals and will
vary according to the participant’s position. Each Covered Employee shall have a
targeted bonus opportunity for each performance period.  The

 

 

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actual dollar award may exceed the target payout in the event of
over-achievement of Performance Goals subject to a maximum of 200% of the
Covered Employee’s bonus opportunity; provided, however, such limitation shall
be 300% for any performance targets based on bookings, sales quotas or similar
sales metrics.

 

The performance targets may change as approved by the Management Development and
Compensation Committee in its sole discretion, for items, such as an acquisition
or other extraordinary corporate event.

 

Except as otherwise set forth in this Section IV:  (i) any bonuses paid to
Covered Employees under the MIP shall be based upon objectively determinable
bonus formulas that tie such bonuses to one or more performance targets relating
to the Performance Goals, (ii) bonus formulas for Covered Employees shall be
adopted in each performance period by the Management Development Compensation
Committee and communicated to each Covered Employee at the beginning of each
bonus period and (iii) no bonuses shall be paid to Covered Employees unless and
until the executive management of the Company (and Management Development and
Compensation Committee with respect to the Company’s executive officers) makes a
determination with respect to the attainment of the Performance Goals.

 

Notwithstanding the foregoing, the Company may adjust bonuses payable under the
MIP based on achievement of individual performance goals or pay bonuses
(including, without limitation, discretionary bonuses) to Covered Employees
under the MIP based upon such other terms and conditions as the Management
Development and Compensation Committee may in its discretion determine.

 

V.            Payment and Transition Issues

 

The achievement of Performance Goals will be measured when or shortly after the
Company publicly reports its financial results for the applicable performance
period.  If the Performance Goals are met, payments will be made no later than
March 15.  Payment dates are typically during  February or March following the
end of the performance period.

 

The payment of a bonus to a Covered Employee with respect to a performance
period shall be conditioned upon the Covered Employee’s employment by the
Company on the payment date.  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.  Since the performance targets are calculated on base salary as of
December 31 of the performance period, bonuses will be pro-rated for those
eligible Covered Employees who join the MIP during the year, prior to October
1.  Employees hired or promoted for the first time into bonus eligible positions
after October 1 will not be eligible to participate in the MIP for that
performance period.  The Management Development and Compensation Committee may
make exceptions to the requirements of this paragraph, in its sole discretion,
including, without limitation, in the case of a Covered Employee’s termination
of employment, retirement, death or disability.

 

VI.          Administration

 

The executive management of the Company shall have the discretion and authority
to administer and interpret the MIP, subject to the oversight (and approval with
respect to the Company’s

 

 

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executive officers) of the Management Development and Compensation Committee. 
All matters of interpretation of the MIP should be directed to the Senior Vice
President of 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.

 

The adoption, eligibility and participation in this MIP in no way infers or
reflects any guarantee of a contract of employment.  Except as expressly set
forth in any Covered Employee’s employee agreement signed by the Company and
employee, all of the employees of the Company are employees “at will”.
Participation in the MIP 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 (subject to the approval of the Management Development and Compensation
Committee with respect to the Company’s executive officers) 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 Covered Employees as
soon as possible after the need for such change is determined.

 

If any term or condition of this MIP 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 MIP. 
However, the Company will review and modify the overall MIP 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.

 

VII.         Return of Excess Distributions (Applies to Executive Officers only)

 

Notwithstanding any provision hereof to the contrary, if the Company restates
its financial results for any performance period covered by this MIP, the
Company will re-measure the achievement of performance targets using the
restated financial results. Following such recalculation, if the aggregate
amount of a previously paid bonus to an executive officer (a “Senior
Participant”) exceeds the aggregate amount of his or her bonus actually earned,
such excess shall be deemed to constitute a "bonus overpayment". The Company
shall notify each Senior Participant of the amount of his or her bonus
overpayment as soon as reasonably practical. The amount of such bonus
overpayment shall be, at the Company's election, either (i) repaid to the
Company by the Senior Participant within 30 days of receipt of the notice of
bonus overpayment or (ii) deducted from the Senior Participant's future
compensation. The provisions of this Section VII shall survive the termination
or expiration of this MIP.

 

 

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