Exhibit 10.1

 

 

SUMMARY OF FISCAL 2019 EXECUTIVE SHORT TERM INCENTIVE PLAN AND FISCAL 2019
EXECUTIVE LONG TERM INCENTIVE PLAN

Fiscal 2019 Executive Short Term Incentive Plan

 

Under the Fiscal 2019 Executive Short Term Incentive Plan (the “Executive Short
Term Incentive Plan”), the Company’s key executives, including the named
executive officers, can earn annual incentive cash compensation, at the
discretion of the Management Development, Compensation and Stock Option
Committee (“Committee”), to be paid from a bonus pool funded under the terms of
the plan. The amount of the bonus pool available for payment to the Company’s
key executive, at the discretion of the Committee, will be determined based upon
the Company’s achievement of specified results with respect to corporate revenue
and operating income targets for Fiscal 2019.

 

The targets and weightings relevant to the bonus pool determination for Fiscal
2019 under the Executive Short Term Incentive Plan will be as follows:

 

Fiscal 2019 Financial Targets Weighting Company Revenue 50% Company Operating
Income Before Incentive Compensation 50%

 

The Company’s Operating Income Before Incentive Compensation must be at least
75% of the target level under the Company’s Fiscal 2019 Operating Budget for any
bonus pool to be funded under the Executive Short Term Incentive Plan.

 

The financial targets include progressive threshold (90% of target for Company
Revenue and 75% of target for Company Operating Income Before Incentive
Compensation), target and maximum (110% of target for Company Revenue and 150%
of target for Company Operating Income Before Incentive Compensation) incentive
objectives. The Committee may adjust the calculation of the Company Revenue
target and the Company Operating Income Before Incentive Compensation target to
account for unforeseen, unanticipated, unusual and/or non-ordinary course events
and issues.

 

If the threshold objectives are met, the Company will fund a bonus pool under
the Executive Short Term Incentive Plan. The bonus pool amount will be
calculated as follows: the aggregate predetermined participation levels of all
participants, which is a percentage of base salary of each participant (55% for
our President and Chief Executive Officer and 35% for the other officers),
multiplied by the Percentage of the Bonus Target Earned. The Percentage of the
Bonus Target Earned is calculated as follows: (i) Percentage of Company Revenue
Bonus Target Earned multiplied by 0.50 plus (ii) Percentage of Company Operating
Income Before Incentive Compensation Bonus Target multiplied by 0.50. The
Percentage of Company Revenue Bonus Target earned and Percentage of Company
Operating Income Before Incentive Compensation Bonus Target Earned will be
determined as follows:

 

 

 

 

Page 2 of 4

 

 

  Company Revenue
(50% Weighting) Company Operating Income
(50% Weighting)   Performance Level

% of Bonus

Target Earned

Performance Level

% of Bonus

Target Earned

Threshold 90% 50% 75% 75% Target 100% 100% 100% 100% Maximum 110% 150% 150% 200%

 

For performance between the performance levels, the percentage will be
determined based upon interpolation between the performance levels. The bonus
pool amount cannot be in excess of the maximum levels specified above. The
aggregate payouts under the Executive Short Term Incentive Plan payable to all
participants cannot exceed the bonus pool amount.

 

The Committee will establish individual performance objectives for each of the
participants. The Committee will use the level of actual achievement of those
individual performance goals in determining the bonus amount to be paid to each
of the participants in the Executive Short Term Incentive Plan.

 

After completion of fiscal 2019, the Committee, in its discretion, will
determine the extent to which the financial targets have been achieved, the
amount of the bonus pool, each participant’s individual performance level of
achievement as compared to their individual performance objectives and the
actual cash amounts to be paid under the Executive Short Term Incentive Plan to
each participant in the plan.

 

The Committee reserves the right, in its sole and absolute discretion, to change
the eligibility for participation under the Executive Short Term Incentive Plan,
to revise, eliminate or otherwise modify the manner in which the bonus pool
amount is calculated, to modify any predetermined participation level, or
otherwise to increase, decrease or eliminate any incentive payouts to any
participant under the Executive Short Term Incentive Plan, regardless of the
level of performance targets that have been achieved. Except to the extent
otherwise provided by separate agreement, participants must be employed by the
Company at the date of the payment in fiscal 2020, which is expected to be by
September 15, 2019.

 

Participants under the Executive Short Term Incentive Plan must be employed on
or before December 31, 2018 in order to be eligible.

 

Fiscal 2019 Executive Long Term Incentive Plan

 

Under the Fiscal 2019 Executive Long Term Incentive Plan (the “Executive Long
Term Incentive Plan”), the Company’s key executives, including the named
executive officers, can earn incentive restricted stock units and performance
share award units under the 2004 Stock Incentive Plan. The equity awards granted
under the Executive Long Term Incentive Plan will be targeted to be 50% in the
form of restricted stock units and 50% in the form of performance share award
units.

 

 

 

Page 3 of 4

 

 

The equity awards were granted on December 20, 2018. The specific number of
shares of restricted stock units and the specific target number of performance
share award units that each participant receives will be determined by dividing
an award amount denominated in dollars by the closing price of the Company’s
Common Stock on the Nasdaq Stock Market’s Global Market on the date the
restricted stock units and performance share award units are awarded. The award
amount is equal to a predetermined percentage of the participant’s base salary
(40% for our President and Chief Executive Officer and 30% for the other
executive officers).

 

The restricted stock units vest 33-1/3% on October 1, 2019, 33-1/3% on October
1, 2020 and 33-1/3% on October 1, 2021, provided the participant remains
employed with the Company on each of the relevant vesting dates. The restricted
stock units will become fully vested in the event a successor corporation
refuses to assume the restricted stock units or the participant’s employment is
terminated without Cause (as defined in the award agreement) in connection with
or within three years following a Change in Control of the Company (as defined
in the award agreement).

 

Subject to the Company’s achievement of specified results with respect to
corporate revenue and operating income targets for plan years 2019, 2020 and
2021 (the “Performance Measures”), performance share award units vest 33-1/3%
based upon the achievement of Performance Measures for plan year 2019, 33-1/3%
based upon the achievement of Performance Measures for plan year 2020 and
33-1/3% based upon the achievement of Performance Measures for plan year 2021,
provided the participant remains employed with the Company on each of the
relevant vesting dates. Plan year 2019 is from October 1, 2018 to September 30,
2019, plan year 2020 is from July 1, 2019 to June 30, 2020 and plan year 2021 is
from July 1, 2020 to June 30, 2021. The Performance Measures are set at the date
of grant based upon the Company’s 3 Year Long Range Plan. The weightings of the
Performance Measures for determining the number of performance share award units
that will vest for each participant in plan years 2019, 2020 and 2021 will be as
follows:

 

Performance Measure Weighting Company Revenue 50% Company Operating Income
Before Incentive Compensation 50%

 

The financial targets included in the Performance Measures include progressive
threshold (90% of target for Company Revenue and 75% of target for Company
Operating Income Before Incentive Compensation), target and maximum (110% of
target for Company Revenue and 150% of target for Company Operating Income
Before Incentive Compensation) performance level incentive objectives. The
Committee may adjust the calculation of the Company Revenue target and the
Company Operating Income Before Incentive Compensation target to account for
unforeseen, unanticipated, unusual and/or non-ordinary course events and issues.

 

 

 

Page 4 of 4

 

 

Performance share award units will vest under the Executive Long Term Incentive
Plan only if Company Operating Income Before Incentive Compensation for the plan
year equals or exceeds 75% of the target performance level. The number of
performance share award units that will vest each plan year will equal the
number of performance share awards units granted for that year (33-1/3% of the
total units granted) multiplied by the Percentage of the Award Goal Earned. The
Percentage of the Award Goal Earned is calculated as follows: (i) Percentage of
Company Revenue Award Goal Earned multiplied by 0.50 plus (ii) Percentage of
Company Operating Income Before Incentive Compensation Goal Earned multiplied by
0.50. The Percentage of Company Revenue Award Goal Earned and Percentage of
Company Operating Income Before Incentive Compensation Award Goal Earned will be
determined as follows:

 

  Company Revenue
(50% Weighting) Company Operating Income
(50% Weighting)   Performance Level

% of Bonus

Target Earned

Performance Level

% of Bonus

Target Earned

Threshold 90% 50% 75% 75% Target 100% 100% 100% 100% Maximum 110% 150% 150% 200%

 

For performance between the performance levels, the percentage will be
determined based upon interpolation between the performance levels. Participants
earn a cool incentive in excess of the maximum levels specified above.

 

After completion of each of plan years 2019, 2020 and 2021, by December 1, 2019
for plan year 2019 and October 1, 2020 and 2021 for plan years 2020 and 2021,
respectively, the Committee will determine the extent to which the Performance
Measures for that year have been achieved and the actual number of performance
share award units vesting in that year.

 

The performance share award units will become fully vested at the target level
in the event a successor corporation refuses to assume the performance share
award units or the participant’s employment is terminated without Cause (as
defined in the award agreement) (or, in the case of the President and Chief
Executive Officer, the executive officers and certain other executives, if they
terminate for Good Reason (as defined in the award agreement)) in connection
with or within three years following a Change in Control of the Company (as
defined in the award agreement). In the event a successor corporation assumes
the performance share award units, the unvested portions of the performance
share award units shall vest at the time and in the amount they would have
vested at if the Performance Measures had been achieved at the target level for
those years.

 

Participants under the Executive Long Term Incentive Plan must be employed on or
before December 31, 2018 in order to be eligible.