Exhibit 10.13
ZipRealty Inc. Management Incentive Plan — Fiscal Year 2006
General Purpose: This ZipRealty Inc. (“Company”) Management Incentive Plan —
Fiscal Year 2006 (this “Plan”) is designed to motivate the Company’s Management
(defined below) to achieve the Company’s financial and operational goals for
Fiscal Year 2006, as well as to retain such persons in the employ of the
Company.
Duration: This Plan will be in effect for the Company’s fiscal year ending
December 31, 2006 (“Fiscal Year 2006”), meaning that the performance period
determining whether bonuses will be paid upon satisfaction of performance
objectives is Fiscal Year 2006 (thought such payments, if earned, will be made
following the end of this Fiscal Year as set forth below).
Plan Administrator: The Compensation Committee (the “Committee”) of the Board of
Directors (the “Board”) shall administer this Plan with respect to participating
persons who are executive officers of the Company, and the Company’s President
and Chief Executive Officer, in consultation with the Committee, shall
administer this Plan with respect to other participants (as applicable, the
“Administrator”).
Eligible Persons: For the purposes of this Plan, “Management” includes all
employees of the Company holding the position of Vice President or higher, and
all headquarters-based Directors and Managers, in each case, and as a condition
to such each such person earning and becoming entitled to any bonus payment
hereunder, provided that such person is employed by the Company both (i) on
December 31, 2006, and (ii) on the date following the end of Fiscal Year 2006 on
which the Plan Administrator completes its review of Fiscal Year 2006
performance and approves the payment of bonuses under this Plan. “Management”
specifically excludes all District Directors, District Managers and all other
employees not specifically identified above in this paragraph.
Proration: In the sole discretion of the Administrator, an incentive bonus may
be paid under this Plan on a pro-rated basis for any member of Management who
became eligible to participate in the Plan after the beginning of Fiscal Year
2006.
Incentive Pool Requirement: The Committee will establish an incentive pool of
funds available for payout under this Plan only if the Company achieves both
(i) the minimum revenue threshold, as determined by the Committee on adoption of
this Plan, and (ii) a minimum of 85% of Target. “Target” for this purpose means:

•   The Company’s targeted net operating income before taxes less certain
one-time, extraordinary charges (such as, without limitation, charges related to
litigation or restructuring matters) for Fiscal Year 2006, as determined by the
Committee on adoption of this Plan. The determination of any extraordinary
charges referred to in the preceding sentence shall be determined in the sole
discretion by the Board or the Committee. The net operating income factor shall
be weighted at 25% in calculating the amount of bonuses to be paid hereunder
(but subject to adjustment as set forth in the second bullet point below).

•   Specified other corporate performance objectives relating to revenue and
certain other strategic initiatives as established by the Administrator. The
separate components of these other corporate performance objectives shall be
equally weighted in determining the value for this “other corporate performance
objectives” factor, which shall in the aggregate be weighted at 25% of the
amount of bonuses to be paid hereunder (but subject to adjustment as set forth
in the following bullet point).

•   Such individual performance objectives (meaning, objectives determined based
upon an individual participant’s own performance) as shall be determined with
respect to any participant by the Administrator. This “individual performance
objectives” factor shall generally be weighted at 50% of the amount of bonuses
to be paid hereunder.

     Incentive Eligibility: Subject to the terms and conditions of this Plan,
members of Management will be eligible to receive payment of a bonus amount (the
“Target Incentive Amount”), determined as a percentage of such individual’s
annual base salary at December 31, 2006 (“Base Salary”), upon the Company’s 100%
achievement of Target:

 

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              Position     Target Incentive Amount at 100% Achievement of Target
          (“Target Incentive Percentage”)     President and CEO     50% of Base
Salary     Executive Vice President     25% of Base Salary     Senior Vice
President     25% of Base Salary     Vice President     25% of Base Salary    
HQ Directors     10% of Base Salary     HQ Managers     5% of Base Salary    

Reduction in Target Incentive Amount for less than 100% Achievement of Target:
If the Company achieves a performance level for Fiscal Year 2006 of at least 85%
but less than 100% of Target, a participant’s Target Incentive Amount shall be
reduced as follows:

              Percentage of Target Achieved     “Adjusted Incentive Amount"    
At least 85% but less than 90%     81.25% of Target Incentive Percentage     At
least 90% but less than 95%     87.5% of Target Incentive Percentage     At
least 95% but less than 100%     93.75% of Target Incentive Percentage    

No payment hereunder shall be made for Target achievement at less than 85% and
all participants’ Incentive Amounts hereunder shall in such case be $0.
Likewise, no payment hereunder shall be made if the minimum revenue threshold is
not met.
Increase in Target Incentive Amount for greater than 100% Achievement of Target.
If the Company achieves a performance level for Fiscal Year 2006 that exceeds
100% of Target, then the Administrator shall have discretion (but not the
obligation) to increase a participant’s Target Incentive Amount as follows:

              Percentage of Target Achieved     “Adjusted Incentive Amount"    
More than 105% but less than 110%     106.25% of Target Incentive Percentage    
More than 110% but less than 115%     112.5% of Target Incentive Percentage    
More than 115% but less than 120%     118.75% of Target Incentive Percentage    
More than 120%     125% of Target Incentive Percentage    

Performance achievement for Fiscal Year 2006 above 100% but less than 105% will
result in a Target Incentive Amount equal to the Target Incentive Percentage (as
set forth in the first table above).
Performance Adjustment: In addition to the adjustments reflected in the
preceding two tables, the Administrator will have the discretion to adjust any
individual participant’s Target or Adjusted Incentive Amount as a result of
corporate or individual performance results for Fiscal Year 2006 by reducing or
increasing such amount otherwise determined as set forth in the above tables by
up to 10%.

 

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Calculation and Approval. An individual’s Target or Adjusted Incentive Amount,
as determined in the manner set forth above, is that individual participant’s
“Actual Incentive” with respect to Fiscal Year 2006. All calculations of each
participant’s Actual Incentive must be approved by the Administrator with
respect to such participant and the total amount of the aggregate incentive pool
to be paid hereunder to all participants must be approved by the Committee after
such consultation with the Board as it deems appropriate.
Payouts: All amounts, if any, to be paid out hereunder shall be paid by
March 14, 2007, following determination by the Committee that there shall be a
pool from which to make such payments with respect to Fiscal Year 2006.
Future Incentive Periods: This Plan is in effect only with respect to Fiscal
Year 2006. Nothing in this Plan provides for or implies the establishment or
payment of any bonuses with respect to future periods.
Merger or Acquisition: The Board of Directors may modify this Plan, including
terminate it without making payments hereunder, with respect to Fiscal Year 2006
in its sole discretion in the event of a merger or acquisition of the Company.
Administration: The Committee has sole and exclusive discretionary authority to
interpret this Plan and adopt such rules and regulations for carrying out this
Plan as it deems necessary and appropriate. Decisions by the Committee are final
and binding on all parties to the maximum extent allowed by law.
Employment is Terminable At Will: Nothing in this Plan will interfere with or
limit in any way the right of the Company or the right of any individual to
terminate the employment relationship at any time, with or without cause.
General Terms and Conditions: Amounts to be paid under this Plan will be paid
from the general funds of the Company. Nothing in this Plan will be construed to
create a trust or establish any evidence of any individual’s claim of any right
to payment other than as an unsecured general creditor of the Company. All
payments will be made in the currency in which the individual is regularly paid
and will be subject to the satisfaction of applicable federal, state, local or
similar income withholding requirements and to any employment tax withholding
requirements. The Company shall withhold all applicable amounts required by law
from any payments hereunder.
Governing Law; Severability: This Plan will be construed, administered and
governed in all respects in accordance with the internal laws of the State of
California. In the event that any provision of this Plan is held illegal or
invalid for any reason, such holding will not affect the remaining provisions of
this Plan, and this Plan will be construed and enforced as if the illegal and
invalid provision had not been included.
Entire Agreement. This Plan, and any resolutions of the Compensation Committee
amending the Plan, is the entire understanding between the Company and any
participant regarding the subject matter of this Plan and supersedes all prior
bonus or commission incentive plans, or employment contracts whether with any
subsidiary or affiliate, or any written or verbal representations regarding the
subject matter of this Plan. Participation in this Plan during the Plan Year
will not convey any entitlement to participate in this or future plans or to the
same or similar bonus benefits. Payments under this Plan are an extraordinary
item of compensation that is outside the normal or expected compensation for the
purpose of calculating any extra benefits, termination, severance, redundancy,
end-of-service premiums, bonuses, long-service awards, overtime premiums,
pension or retirement benefits or other similar payment.