Exhibit 10.32
APRIA HEALTHCARE GROUP INC.
2008 EXECUTIVE BONUS PLAN
This document sets forth the terms of the 2008 Executive Bonus Plan (the “Plan”)
of Apria Healthcare Group Inc. (the “Company”).
Operation of the Plan
Potential Bonus. The Company’s Chief Executive Officer, President and Chief
Operating Officer and Executive Vice Presidents, as well as the officers of
Coram, Inc. designated by the Compensation Committee of the Company’s Board of
Directors (the “Committee”) as participating in the Plan, may be eligible to
receive a bonus under the Plan (the “bonus opportunity”). The target aggregate
bonus opportunity for any such participant under the Plan is equal to 100% of
the participant’s annualized rate of base salary as in effect on January 1, 2008
(the participant’s “2008 rate of base salary”), and the maximum aggregate bonus
opportunity for any such participant under the Plan is equal to 150% of the
participant’s 2008 rate of base salary.
Components of Potential Bonus and their Relative Weights. The portion of a
participant’s bonus opportunity that is actually paid out will depend upon the
achievement of Company and individual performance goals established for calendar
2008; provided that the bonus opportunity for one or more participants may be
based entirely on Company performance (with no individual goals). Company
performance will be determined based on the actual level of the Company’s
[confidential financial performance measures omitted] (each, a “Company
performance measure”) for calendar 2008 compared to the target level of such
Company performance measures for 2008 (as set forth below). For purposes of the
Plan, all of such Company performance measures will be determined on a
consolidated basis in accordance with generally accepted accounting principles
as applied in the Company’s financial reporting. Individual performance will be
determined based on the actual level of achievement of individual performance
goals (each, an “individual performance measure”) for calendar 2008 (as set
forth in the participant’s individual award notice). The “weighting” between
Company performance measures and individual performance measures for each
participant are set forth in the participant’s individual award notice. Specific
weightings and individual performance measures may vary from participant to
participant. The form of individual participant award notice is attached hereto
as Schedule A.
For each Company performance measure (and, if applicable and so provided in the
applicable bonus opportunity, for one or more individual performance measures),
there is a minimum performance goal that must be achieved (a “threshold”) in
order for a bonus to be payable with respect to that performance measure, a
target performance goal (a “target”) that must be achieved for the bonus to be
paid at the target level with respect to that performance measure, and a maximum
performance goal (a “maximum”) that must be achieved for the bonus to be paid at
the maximum level with respect to that performance measure. If the threshold
level for a particular performance measure is not met, no bonus will be payable
with respect to

 

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that performance measure. If the target level for a particular measure is met,
then 100% of the portion of the participant’s bonus opportunity that is payable
with respect to that performance measure will be payable, subject to the other
terms and conditions of the Plan. Except as provided in the following paragraph,
if the maximum level for a particular measure is met or exceeded, then 150% of
the portion of the participant’s bonus opportunity that is payable with respect
to that performance measure will be payable, subject to the other terms and
conditions of the Plan.
If the Company or the individual, as applicable, meets or exceeds the threshold
level for a particular performance measure but does not meet the target or
maximum level for that measure, then the portion of the bonus opportunity that
will be payable with respect to that performance measure will be determined by
linear interpolation with (i) 50% of the portion of the bonus opportunity
payable with respect to the performance measure for achievement at the threshold
level, (ii) 100% of the portion of the bonus opportunity payable with respect to
the performance measure for achievement at the target level and (iii) 150% of
the portion of the bonus opportunity payable with respect to the performance
measure for achievement at the maximum level. Notwithstanding the foregoing,
even if the actual achievement levels of the      *      performance measures
are in excess of the target levels for those measures, the payment of the bonus
opportunity payable with respect to those measures shall not exceed the target
levels unless actual achievement of the      *      measure meets or exceeds the
     *      target level.
The threshold, target and maximum levels for each Company performance measure
are set forth in the following chart:

              Threshold, Target and Maximum Levels for Performance Measures
[confidential financial performance measures omitted]
Weighting
  *   *   *
Threshold Level
  *   *   *
Target Level
  *   *   *
Maximum Level
  *   *   *

The portion of a participant’s bonus opportunity that is to be determined based
on Company performance will be allocated among the three Company performance
measures in proportion to the weighting indicated in the table above with
respect to each performance measure.
Payment Terms
Award Payment and Timing. As soon as administratively practicable after the
Company’s audited financial statements for 2008 have been prepared, the
Committee will determine whether and the extent to which bonuses are payable
pursuant to the Plan. No payment shall be made with respect to the Plan unless
 

*   Performance measure omitted.

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and until the Committee has certified, by resolution or other appropriate action
in writing, that the amount of any such bonus has been accurately determined in
accordance with the terms, conditions and limits of the Plan and that the
applicable performance condition(s) were, in fact, satisfied at the applicable
level(s). To the extent a participant is entitled to a bonus under the Plan,
such bonus shall be paid promptly following such determination by the Committee
and in no event before January 1, 2009 or later than December 31, 2009.
Payment shall be made in cash; provided, however, that as to a participant who,
at the time the Committee makes its bonus determination as to that participant,
is subject to but is not then in compliance with the applicable target level of
Company stock ownership required pursuant to the Company’s Stock Ownership
Requirements for Senior Executive Officers (the “Requirements”), the Committee
shall pay up to one-half of the participant’s bonus that would otherwise be paid
in cash in Company common stock (with the balance paid in cash). In the event of
any stock payment and subject to adjustment pursuant to Section 7.1 of the Plan
(adjustments for stock splits and similar changes in capitalization), the number
of shares to be delivered to the participant shall equal (1) the portion
(expressed as a cash amount) of the participant’s bonus to be paid in the form
of Company common stock, divided by (2) the fair market value (as such term is
defined in the Plan) of a share of Company common stock on the date such bonus
determination is made by the Committee, and rounded down to the nearest whole
share (with any fractional share amount to be settled in cash). Any such shares
so delivered (or such lesser portion of such shares as is required to bring the
participant into compliance with the applicable target level of Company stock
ownership required pursuant to the Requirements) shall be retained by the
participant to satisfy the Requirements for so long as the participant is
subject to the Requirements.
Other Rules
Termination of Employment Rules. Except as provided below, a participant must be
employed by the Company or one of its affiliates or subsidiaries on the date
that bonus payments are actually made under the Plan in order to be eligible to
receive a bonus under the Plan (subject to the achievement of the applicable
performance measures), and a participant will have no right to a Plan bonus (or
any partial bonus) if the participant’s employment terminates or is terminated
(regardless of the reason, whether with or without cause) prior to the time that
bonuses are paid under the Plan.
In the event that, subsequent to June 30, 2008 but prior to the date in 2009
that bonus payments are made, a participant’s employment with the Company or one
of its affiliates is terminated by the Company or the affiliate that employs the
participant other than for Cause (as defined below) and other than on account of
the participant’s death or Disability (as defined below), the participant will
be entitled to a bonus under the Plan equal to (1) the bonus the participant
would have received under the Plan had the participant remained employed with
the Company or one of its affiliates through the time that bonuses are actually
paid under the Plan, multiplied by (2) a fraction, the numerator of which is the
number of calendar days in

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2008 that occurred prior to the termination of the participant’s employment and
the denominator of which is 365. Payment of the bonus will be made at the same
time as the payment of Plan bonuses generally.
For purposes of the Plan, “Cause” and “Disability” shall have the respective
meanings assigned to such terms in the participant’s Executive Severance
Agreement or Employment Agreement.
Change in Control Event. Notwithstanding anything to the contrary in the Plan,
in the event a Change in Control Event (as defined below) occurs in 2008, the
Plan will immediately terminate upon the event, and a participant who is
employed by the Company or one of its affiliates immediately prior to such event
will be entitled to a bonus under the Plan equal to (1) the participant’s target
bonus opportunity, multiplied by (2) a fraction, the numerator of which is the
number of calendar days in 2008 that occurred prior to the Change in Control
Event and the denominator of which is 365. In such event, Plan bonuses
(including any pro-rated bonus to a terminated participant who is entitled to a
bonus pursuant to the foregoing termination of employment rules) will be paid
entirely in cash on the effective date of the Change in Control Event. For
purposes of the Plan, the term “Change in Control Event” means a Change in
Control Event as defined in the Company’s 2003 Performance Incentive Plan that
also qualifies as either (1) a “change in the ownership or effective control” of
the Company or (2) a change “in the ownership of a substantial portion of the
assets” of the Company within the meaning of Section 409A of the Internal
Revenue Code (“Section 409A”).
Code Section 409A. It is intended that any amounts payable under the Plan and
the Company’s exercise of authority or discretion hereunder shall either be
exempt from or comply with Section 409A so as not to subject any participant to
payment of any interest or additional tax imposed under Section 409A.
Notwithstanding any provision of the Plan to the contrary, if the participant is
a “specified employee” (within the meaning of Treasury Regulation
Section 1.409A-1(i)) and the participant is entitled to payments in connection
with his or her separation from service (within the meaning of Treasury
Regulation Section 1.409A-1(h)), the participant shall not be entitled to any
payments upon a separation from service until the earlier of (1) the date which
is six (6) months after the participant’s separation from service with the
Company for any reason other than death, or (2) the date of the participant’s
death. Any amounts otherwise payable to the participant in connection with the
participant’s separation from service that are not so paid by reason of the
preceding sentence shall be paid as soon as practicable (and in no event more
than 30 days) after the date that is six (6) months after the participant’s
separation from service (or, if earlier, the date of the participant’s death).
The provisions of this paragraph shall only apply if, and to the extent,
required to comply with Section 409A.
No Assignment. The rights, if any, of a participant or any other person to any
payment or other benefits under the Plan may not be assigned, transferred,
pledged, or encumbered except by will or the laws of descent or distribution.

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Taxation. Bonus payments will be taxed as ordinary income (wages) in the year of
payment. All payments will be subject to required income, employment and other
tax withholdings and any other authorized deductions. Without limiting the
generality of the preceding sentence, in the event any bonus is paid in a
combination of cash and Company common stock, the Company may reduce the amount
of cash otherwise payable by the amount of such tax withholdings and any other
authorized deductions on the total amount otherwise payable (including the
portion to be paid in Company common stock).
Amendment. The Committee reserves the right to amend and/or terminate the Plan
at any time and in any manner, with or without notice; provided, however, that
the consent of a participant will be required to the extent such amendment or
termination materially and adversely affects the participant’s rights under the
Plan. Adjustments pursuant to the “Adjustment” section below shall not require
participant consent. No amendment shall be binding upon the Company unless
approved by the Committee and set forth in writing.
No Fiduciary Relationship. Nothing contained in the Plan and no action taken
pursuant to the provisions of the Plan shall create or be construed as creating
a trust or any kind of fiduciary relationship between the Company and any of its
affiliates, or the Committee, on one hand, and any participant or any other
person on the other hand.
No Right to Bonus or Continued Employment. Nothing contained in the Plan or any
related document constitutes an employment or service commitment by the Company
(or any affiliate), affects an employee’s status as an employee at will who is
subject to termination without cause, confers upon any participant any right to
remain employed by or in service to the Company (or any affiliate), or
interferes in any way with the right of the Company (or any affiliate) to
terminate a participant’s employment or to change the participant’s compensation
or other terms of employment at any time. The Plan does not constitute a
contract and does not confer upon any person any right to receive a bonus or any
other payment or benefit. There is no commitment or obligation on the part of
the Company (or any affiliate) to continue any bonus plan (similar to the Plan
or otherwise) in any future fiscal year.
Administration. The Committee shall administer the Plan, select participants for
the Plan, determine the applicable performance measures, relative weights of
those measures, specific performance goals, and bonus opportunities, determine
performance and the extent to which any applicable goals have been satisfied,
determine whether any bonus is actually payable under the Plan and, subject to
the express limitations of the Plan, the amount of each bonus, and determine the
time or times at which and the form and manner in which bonuses will be paid.
The Committee shall have the authority to construe and interpret the Plan and
any agreement or other document relating to the Plan. All actions taken and all
interpretations and determinations made by the Company in respect of the Plan
shall be conclusive and binding on all persons and shall be given the maximum
deference permitted by law. Bonuses under the Plan are granted pursuant to

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Section 5.2 of the Company’s 2003 Performance Incentive Plan (the “Stock Plan”)
and are intended to qualify as “performance-based compensation” within the
meaning of Section 162(m) of the Internal Revenue Code (“Section 162(m)”). The
Plan will be construed in accordance with the applicable provisions of the Stock
Plan and Section 162(m) and any applicable regulations thereunder.
Agreements Regarding Noncompetition and Nonsolicitation. Notwithstanding
anything else contained herein to the contrary, the right of any current or
former participant in the Plan to a bonus or with respect to any bonus that is
payable or has, at the relevant time, previously been paid pursuant to the Plan
to the participant is subject to the terms and conditions of the participant’s
“Noncompetition and Nonsolicitation Agreement” with the Company (or any similar
or successor agreement, as applicable), including any such agreement that may be
entered into after the effective date of the Plan (the participant’s
“Noncompetition and Nonsolicitation Agreement”). The Plan is one of the
participant’s Incentive Compensation Plans as defined in such Noncompetition and
Nonsolicitation Agreement. By accepting any bonus payment made pursuant to the
Plan, the participant affirms his or her representations, covenants and
agreements set forth in his or her Noncompetition and Nonsolicitation Agreement
and agrees that his or her rights with respect to such payment are and shall
continue thereafter to be subject to such Noncompetition and Nonsolicitation
Agreement.
Adjustments. The Committee shall, to the extent it determines appropriate in
order to preserve the intended incentives, adjust the performance thresholds,
targets and maximum levels to mitigate the unbudgeted impact of material,
unusual or nonrecurring gains and losses, accounting changes or other
extraordinary events not foreseen at the time the targets were established,
including without limitation the effects of any unbudgeted changes in government
reimbursement rates, [sensitive competitive information deleted].
Notwithstanding the foregoing, the Committee will not make any change or
adjustment under the Plan to the extent it would cause Plan bonuses to cease to
qualify as “performance-based compensation” within the meaning of
Section 162(m). No adjustments may be made on or following the occurrence of a
Change in Control Event, except by the Committee as constituted immediately
prior to such Change in Control Event within a reasonable period of time
following the occurrence of such Change in Control Event.

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Schedules A and B contain sensitive competitive information
and have been omitted from this filing.

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