Exhibit 10.15

Adopted by the Compensation Committee of the Board March 7, 2006

 

Scientific Learning Corporation

2006 Management Incentive Plan

 

Purpose

To provide significant cash awards to participants for the achievement and
over-achievement of Scientific Learning’s collective financial goals, as well as
each participant’s individual goals and overall performance in adding value for
shareholders, customers and employees.

 

Participants

All members of the Leadership Team, director-level employees and selected
manager-level employees. The total number of participants at March 2006 is
approximately 39 persons. The regional sales directors who are included in sales
incentive compensation plans are excluded from this Plan.

 

Target Incentive Awards

Intended to deliver market average incentive compensation at 100% achievement of
goals. Awards increase for overachievement.

 

 

 

Title

Target Award

(% of Base Salary Awarded at 100% Achievement of Goals)

Max Award

(Max % of Base Salary Awarded

on Overachievement)

CEO

50%

100%

VP, Sales K-12

50%

100%

CFO

40%

80%

Chief Ed. Officer,
Other VPs

30%

60%

Directors

20%

30%

Managers

10%

15%

 

Goals

All participants in the Plan will have shared Company financial goals and
individual goals closely related to the individual’s own area of responsibility.

 

Shared Goals

Shared goals for the 2006 Plan are:

 

 

Hurdle Level (Minimum for Payment of Bonus)

Target Level (100% Goal Achievement)

Max. Overachievement Level

Operating Cash Flow*

Break even

$2.5 million

$5.4 million

Booked sales

$38.0 million

$47.5 million

$50.0 million

 

* Operating cash flow is defined as GAAP net cash from operating activities less
capital spending.

 

Individual Goals

Individual goal performance under the 2006 Plan is based on both the following:

 

•

Achievement of agreed-upon individual goals closely related to the individual’s
area of responsibility. These goals will be agreed in writing between the
participant and his/her manager.

 

•

Contribution to adding value for shareholders, customers and employees.

 

•

Hurdle level for individual goals is 80%. Maximum overachievement level is 200%.

 

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Adopted by the Compensation Committee of the Board March 7, 2006

 

 

Weighting of Shared Goals and Individual Performance

 

 

Goal

% of Target Award
Allocated to Goal

Operating cash flow

30%

Booked sales

40%

Individual performance

30%

 

Note: For managers and director-level employees, the CEO has discretion to
allocate the bonus opportunity differently among the various goals to reflect
the priorities and responsibilities of that particular person.

 

Hurdles and Scaling

 

The bonus payout starts for each goal when the specified hurdle level for that
goal is achieved. At the hurdle level, 50% of that goal’s portion of the target
award is earned. At 100% of the goal, then 100% of that goal’s target award is
earned. Between the hurdle level and 100% achievement of the goal, the portion
of the award earned is scaled ratably.

 

Overachievement

 

 

•

Officers can double their bonus through overachievement and directors and
managers can increase their bonuses by 50% through overachievement.

 

•

The overachievement potential is divided among the goals in the same percentage
as the bonus for achievement.

 

•

The maximum overachievement award is paid at the maximum overachievement levels
specified above.

 

•

Between 100% achievement and the maximum bonus overachievement level, each
goal’s portion of the award is scaled ratably.

 

Illustration

 

The attached chart illustrates, for particular positions, the percentage of base
salary payable for each goal, at the hurdle, 100% and maximum overachievement
levels.

 

Timing

 

Awards will be paid in the first quarter of 2007, following the completion of
the 2006 audit. Plan participants must be employed at Scientific Learning in a
position that is eligible for an award under this Plan when the awards are paid
in order to receive an award. Participants hired or promoted into a MIP eligible
position prior to October 1, 2006 will be eligible for a pro-rated award (unless
otherwise agreed to, in writing, at the time of the employment action).

 

Compensation Committee Discretion

 

The Compensation Committee has discretion to pay awards to reflect achievement
even if specific goals are not met, and to interpret the terms of the Plan.

 

 

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Adopted by the Compensation Committee of the Board March 7, 2006

 

 

% of Base Salary Available as MIP Award at Specified Levels of Achievement of
Goals

 

 

 

% of Base Salary Available as Bonus

 

Operating Cash Flow

Booked Sales

Individual Goals

Total

 

At Hurdle

100%

Max Over

At Hurdle

100%

Max Over

At Hurdle

100%

Max Over

At Hurdle

100%

Max Over

CEO

VP Sales K-12

7.5%

15%

30%

10%

20%

40%

7.5%

15%

30%

25%

50%

100%

CFO

6%

12%

24%

8%

16%

32%

6%

12%

24%

20%

40%

80%

Chief Ed Officer, other VPs

4.5%

9%

18%

6%

12%

24%

4.5%

9%

18%

15%

30%

60%

Directors*

3%

6%

9%

4%

8%

12%

3%

6%

9%

10%

20%

30%

Managers*

1.5%

3%

4.5%

2%

4%

6%

1.5%

3%

4.5%

5%

10%

15%

 

* Subject to adjustment by the CEO, as described above.

 

 

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