Exhibit 10.1

The athenahealth Executive Incentive Plan

I.

 

Purpose – The purpose of the Executive Incentive Plan (the “Plan”) of
athenahealth, Inc. (the “Company”) is to:

a.

attract, retain, and motivate the highest quality executives;

b.

provide participants with a significant incentive that focuses their work
efforts on the Company’s business strategy to maximize revenue, manage expenses,
and enable the Company to produce long-term growth, thereby increasing its value
to the Company’s shareholders; and

c.

foster a cooperative teaching and learning environment that focuses on
delivering shareholder value, providing the highest level of service to our
clients, and respecting each other.

II.

Overview – The Plan has two parts, one for the Chief Executive Officer (the
“CEO”) and another plan for the heads of the Corporate/Divisional areas. These
plans are designed to reward the Company’s executives who satisfy the
eligibility requirements of Section IV (each, a “Participant”) specifically for
annual performance that furthers the Company’s business strategy. Individual
award amounts are determined by the results of the overall Company
results.  Awards are paid annually for the CEO Incentive and quarterly for the
Corporate/Divisional Incentive.

III.

Plan Period – The Plan will be effective from the effective date set forth on
the last page of this Plan through December 31st of the year in which that
effective date occurs (the “Plan Period”).

a.

For the CEO Incentive Plan payments of awards will be made annually and it is
the intent of the Plan that the payment shall be paid within 73 days of the
close of the Plan Period.

b.

For the Corporate/Divisional Incentive Plan payments of awards will be made
quarterly and it is the intent of the Plan that payments for quarters 1, 2 and 3
be paid within 30 days of the close of that quarter.  In the case of the 4th
Quarter award, it is the intent of the Plan that payments shall be paid within
73 days of the close of the Plan Period.

IV.

Plan Eligibility – In order to be considered eligible for an award under the
Plan, a Participant must:

a.

on both September 30th during the Plan Period and the date on which the award is
to be paid out (the “Award Date”), be an active regular full-time or regular
part-time employee of the Company or one of its subsidiaries in one of the
Cohorts listed in the Appendix to this Plan;

b.

for the CEO Incentive Plan, be the Company’s named Chief Executive Officer;

c.

for the Corporate/Divisional Incentive Plan, be a Senior Vice President or
Executive Vice President in charge of a division of the Company or with
Company-wide responsibilities;

d.

not be a participant in another stand-alone incentive plan of the Company or any
of its subsidiaries; and

e.

not be on written or oral performance warning on the Award Date.

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V.

 

Change of Control – Participants who are terminated as the result of a change in
control of the Company, as determined in the sole and absolute discretion of the
Company’s Board of Directors and Chief Executive Officer (the “CEO”), will be
eligible for payment of awards pro-rated for that portion of the Plan Period
during which he or she participated in the Plan prior to his or her termination.

VI.

Death – If a Participant’s employment is terminated by reason of death, that
Participant shall cease to be a Participant in the Plan as of the date of death
but will remain eligible for payment of an award pro-rated for that portion of
the Plan Period during which he or she participated in the Plan prior to his or
her death.  The award will be paid to the Participant’s estate or other legally
designated beneficiary.

VII.

Disability/Retirement – If a Participant’s employment is terminated by reason of
disability or retirement, he or she shall cease to be a Participant in the Plan
on the effective date of such disability or retirement but will remain eligible
for payment of an award pro-rated for that portion of the Plan Period during
which he or she participated in the Plan prior to his or her disability or
retirement.

VIII.

New Hires/Transfers In – An employee becomes a Participant upon being hired or
transferred into a Plan-eligible position on or before September 30th during the
Plan Period and qualifies for payment of an award as outlined in Section XIII,
Individual Awards.

IX.

Promotions/Other Changes in Positions (to Eligible Positions) – An employee
whose position changes (lateral transfer, promotion, etc.) within the Company to
a position eligible for participation in the Plan during the Plan Period shall,
if already a Participant, remain a Participant in the Plan and, if not already a
Participant, become a Participant on the effective date of such promotion/change
in position.  The employee shall be eligible for payment of an award using the
target levels for his or her new position, pro-rated for that portion of the
Plan Period during which he or she participates in the Plan in that new
position.  If the employee was already a Participant, he or she will remain
eligible for payment of an award using the target levels in effect prior to the
change in position, pro-rated for that portion of the Plan Period during which
he or she participated in the Plan in the prior position.

X.

Promotions/Other Changes in Positions (to Ineligible Positions) – A Participant
whose position changes (lateral transfer, demotion, etc.) within the Company to
a position ineligible for participation in the Plan during the Plan Period shall
cease to be a Participant in the Plan on the effective date of such
demotion/change in position, but will remain eligible for payment of an award
pro-rated for that portion of the Plan Period during which he or she
participated in the Plan prior to his or her demotion/change in position.

XI.

Termination – If a Participant’s employment with the Company is terminated prior
to the Award Date other than due to death, disability, or retirement, he or she
shall forfeit any unpaid awards.  This rule applies regardless of whether it was
the Participant or the Company that terminated the employment and whether the
termination was with or without cause.

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XII.

 

Funding

a.

Overall Plan Funding – The Plan begins to fund as the Company starts to attain
its threshold Corporate scorecard targets.  The Plan funds fully upon
achievement of the Company’s corporate scorecard targets.  The funding of the
Plan may be increased or decreased based on Company performance, as determined
by the Compensation Committee of the Company, the Board of Directors, and the
CEO in their absolute discretion.

b.

CEO Award Pool Funding – The Board of Directors in their absolute discretion
will determine the criteria for the allocation of the Overall Plan
Funding.  Performance is based on the level of Net Income.  Finance determines
the level of awards based upon Net Income achievement and will make award
recommendations to the Board of Directors, accordingly.

c.

Payment – It is the Company’s intent to pay the Award Pool out fully, without
reduction due to changes in the number of Participants between December 31 and
the Award Date.

XIII.

Individual Awards –

a.

CEO Award

i.

The Board of Directors in their absolute discretion will determine the general
criteria that apply to the allocation of the CEO Award.

ii.

Participants are subject to maxima for awards as determined by the size of the
Award Pool and/or guidelines allocated to the CEO.

1.

The Participant will have performance targets set in relation to the division in
which he or she works.

2.

The Participant’s awards will be based on that Participant’s contribution to
Corporate objectives as well as individual business goals.

3.

Total cash compensation (base salary plus incentive award) is considered and may
affect the final award.

iii.

Actual awards will depend on the Company’s Net Income and the performance of the
Participant.

iv.

Final awards are subject to the approval of the Board of Directors.

v.

Awards are paid in cash unless otherwise designated by the Board of Directors.

b.

Corporate Awards

i.

The CEO in his or her absolute discretion will determine the general criteria
that apply to the allocation of individual awards.

ii.

Participants are subject to maxima for awards as determined by the size of the
Award Pool and/or guidelines allocated by the CEO.

1.

Each Participant will have individual performance targets set in relation to the
division in which he or she works.

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2.

Each Participant’s awards will be based on that Participant’s contribution to
Company as well as individual business goals.

3.

Total cash compensation (base salary plus incentive award) is considered and may
affect the final awards.

iii.

Actual awards will depend on the Company’s overall performance and the
performance of the individual Participants.

iv.

Final awards are subject to the approval of the CEO.

v.

Awards are paid in cash unless otherwise designated by the CEO.

XIV.

Legal Statement

a.

Employment and Governing Law – The Plan is subject to the laws of the
Commonwealth of Massachusetts and does not imply any form of continued
employment.

b.

Amending the Plan – This Plan may be subject to change in part or in whole
without notice at the discretion of the Company’s Board of Directors and the CEO
(the “Plan Administrators”).  The Plan Administrators also reserve the right to
terminate the Plan at any time without notice.

c.

Tax Withholding – No part of any award shall be required to be delivered until
the applicable Participant (or, if that Participant is deceased, his or her
estate or legally appointed beneficiary) has had the full amount of required tax
withholding due in connection with such award delivery withheld or has made
other provisions satisfactory to the Company for the required tax withholding
due in connection with such award delivery.

d.

Benefits – The award amounts may not be counted as part of any pension,
retirement, or benefits plan unless specifically stated within the plan document
of that particular pension, retirement, or benefits plan.

This Plan Document is effective 1/1/2011 and supersedes any prior annual
incentive plan document

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Appendix

2011 SVP Corporate Incentive Plan Targets and Weightings

          Executive

Low
(“Below”
Rating)

Target
(“Meets”
Rating)

High
(“Exceeds”
Rating)

Corporate
Weighting

Divisional
Executives

40% 60% 70% 100%

Chief
Operating
Officer

50% 70% 80% 100%

Notes:

 * The above table describes the levels and weightings by the Participant’s
   position.
 * Actual awards are a factor of Company funding based on the performance of
   Company results against plan (the scorecard); and
 * The Low, Target and High award percentages listed above are applicable to
   each Participant and are based upon their performance appraisal rating as
   determined by the CEO from the prior Plan Year.
 * For every percentage point over (or under) the weighted Company target, the
   Participant’s Incentive target will increase (or in the case of being under
   target, decrease) by 2 percentage points for a maximum potential award of
   100% of the eligible earned base salary.