Exhibit 10.2

 

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2013 Management Incentive Plan (MIP)

Corporate SG&A for

Managers and Above

 

Effective:  January 1, 2013

 

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2013 Stream Global Services Management Incentive Plan

Corporate SG&A for Managers and Above

 

1.              Purpose

 

The objective of the 2013 Stream Global Services Management Incentive Plan
Corporate SG&A for managers and above (the “Plan”) is to recognize and reward
the achievement of company-wide growth and profitability objectives that are
essential to the success of Stream Global Services, Inc. (“Stream” or the
“Company”).

 

2.              Effective Date

 

The effective date for implementation of the Plan shall be January 1, 2013.

 

3.              Eligibility

 

Employees in Corporate SG&A at the manager level and above whose roles and
responsibilities are deemed by executive management to be critical to operations
and/or who have direct responsibility for achieving the financial results of the
Company are eligible for participation in the Plan.  (Each such designated
person is called a “Participant” in this Plan.)  Target payouts, plan components
and component weightings are defined by the Participant’s position, as further
set forth below.  All eligibility and target payouts will be exercised fairly.

 

Stream will issue all Participants a notice of their eligibility and their
individual components by providing a document in the form of Appendix B (the
“Plan Notice”). Other eligibility requirements are listed in Section 7 below,
and an individual may only become a Participant by complying with those
requirements.

 

4.              Target and Target Components

 

Participants will be assigned an annual target payout for the Plan as specified
in the applicable Plan Notice (the “Target”). The Target will vary according to
the Participant’s position and may be expressed as a percentage of base salary
or as a specified amount. The Target represents the potential financial award
that will be earned at 100% achievement of goals for all Plan components, as
described below, at year-end.

 

Actual Plan payouts will be based on the following Plan components: (a) the
achievement of the Company of its 2013 Revenue Plan (“Revenue Performance”)
(b) the performance of the Company against its Customer Value Pass Rate
objectives in 2013 (“CV Pass Rate Performance”) and (c) the performance of the
individual Participant in 2013 (“Individual Performance”).  Plan payouts will be
calculated based upon the 2013 annual financial performance of the Company and
its affiliates (“Corporate Financial Performance”).  Targets are weighted based
on the Participant’s job level in accordance with Table 1 below to reflect the
Participant’s ability to influence Company performance.

 

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TABLE 1

Performance Percentages by Job Level

 

Job Level

 

Revenue
Performance

 

CV Pass Rate
Performance

 

Individual
Performance

 

Executive

 

90

%

10

%

0

%

Senior Vice President/Vice President

 

80

%

10

%

10

%

Sr. Director & Director

 

70

%

15

%

15

%

Sr. Manager & Manager

 

50

%

25

%

25

%

 

5.              Measurement and Payment

 

Each Participant’s Target payout shall be determined after the end of the 2013
calendar year based upon achievement of the individual performance objectives
applicable to the Participant.  In the event that any of the Revenue
Performance, CV Pass Rate Performance or Individual Performance objectives is
not achieved for a Participant, the Participant shall not be eligible to receive
any Target payout with respect to such objective.  After determination of the
objectives that were achieved for the Participant in 2013, the Participant’s
Target shall be adjusted to reflect only those applicable objectives that were
achieved (the “Achieved Target”).  For example, if a Director Participant did
not achieve the Individual Performance objective but the Revenue Performance and
CV Pass Rate Performance objectives were achieved, the Participant’s Achieved
Target would be equal to 85% of the Target (i.e., the Target less the 15%
attributable to the Director’s Individual Performance).

 

Calculation of any target payout will be subject to the completion of the Stream
Global Services 2013 external audit by the company’s independent auditing firm
and the 2013 Performance Management process.  In the event that the Company
fails to achieve the Corporate Financial Performance Threshold, as defined
below, no Plan payouts will be made, regardless of the achievement of the
Revenue Performance objective, the CV Pass Rate Performance objective or the
Individual Performance objective.

 

Following the completion of the 2013 external audit of the Company, the Plan
payouts that are due to each Participant will be calculated in accordance with
this Plan and paid in accordance with the Company’s normal payroll practices.

 

6.             The Plan Components

 

The Plan payout for each Participant will be dependent upon the Participant’s
role in the Company and determined based upon achievement against the following
metrics, as set forth

 

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in Table 1 above: Revenue Performance, CV Pass Rate Performance and Individual
Performance.  In addition, Plan payments will be paid at a percentage determined
by Corporate Financial Performance.  These components are further described
below.

 

A.            CORPORATE FINANCIAL PERFORMANCE:

 

The Corporate Financial Performance funding mechanism is determined by the
Company’s financial performance in 2013. The Company’s financial performance
measurement for MIP purposes shall be the Company’s 2013 Operating Income, plus
depreciation and amortization, plus any employee stock compensation charges
(including charges recorded under FAS 123R or other similar provisions related
to stock compensation charges), and plus any non-recurring one-time items
(initially contemplated as severance and related stock option acceleration,
significant litigation settlements, site closure costs, and transaction costs
related to M&A activity) (collectively, “Adjusted EBIDTA”).  The Board of
Directors and/or Compensation Committee shall review any such non-recurring
“one-time” items and shall have the right to include or exclude such items in
the determination of Adjusted EBITDA for MIP purposes in their sole discretion. 
In addition, the Board of Directors and/or Compensation Committee shall have the
right to review the market lease adjustment to reduce such adjustment by any
foreign exchange gains that may occur in 2013.

 

Plan payments will be determined in accordance with Table 2 below based on
achievement by the Company of a targeted Adjusted EBITDA of $[***] in United
States Dollars (the “Corporate Financial Performance Metric”).

 

TABLE 2

 

Corporate Financial “EBITDA” Performance and Plan Percentage Funding

 

Actual Adjusted EBITDA Achieved

 

Actual Percentage
Funded

 

$[***], or greater

 

130

%

$[***], but less than$[***]

 

110

%

$[***], but less than$[***]

 

100

%

$[***], but less than$[***]

 

80

%

$[***], but less than$[***]

 

60

%

Less Than $[***]

 

No Funding

 

 

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*Achievement of Adjusted EBITDA between the milestones above will result in a
pro-rated funding percentage (i.e., Adjusted EBITDA of $[***] will result in 70%
funding).

 

The CEO, subject to approval and ratification by the Compensation Committee,
during or following completion of the 2013 calendar year, may recommend
increases to the bonus pool (up to 20%) based upon factors such as
(1) overachievement of Adjusted EBITDA targets for 2013, (2) efforts that
position the Company for potential expansion in future years regarding revenue
and/or margins, and (3) superior performance by individuals meriting incentive
compensation beyond their stated merit bonus percentage.

 

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If the Company does not achieve an ‘Adjusted EBITDA’ of at least $[***]
(“Corporate Financial Performance Threshold”), no payouts will be made in
respect of the Plan.

 

In the event that Company achieves Adjusted EBITDA of at least $[***] or
greater, the Participant shall be eligible to receive the Achieved Target
funding percentage as set forth in the Plan Percentage Funded column of Table 2
based on the Adjusted EBITDA achieved (the “Actual Percentage Funded”).

 

B.            REVENUE PERFORMANCE

 

The Revenue Performance component is determined by whether the Company achieves
the goal of its Revenue Plan as determined by the Chief Executive Officer of the
Company.  The Revenue Plan for 2013 is set at $[***].

 

The Revenue Performance objective will be measured and funding awarded as set
forth in the Plan Percentage Funded column of Table 3 below based on the Actual
Revenue achieved (the “Actual Percentage Funded”), as may be adjusted by the
Corporate Financial EBITDA Performance Funding.

 

Revenue is contemplated at constant currency rates as set-out in the budget.

 

TABLE 3

 

Corporate Revenue Performance and Plan Percentage Funding

 

Actual Revenue Achieved

 

Actual Percentage
Funded*

 

$[***], or greater

 

100

%

$[***], but less than $[***]

 

90

%

$[***], but less than $[***]

 

80

%

$[***], but less than $[***]

 

70

%

$[***], but less than $[***]

 

60

%

Less Than $[***]

 

50

%

 

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*These amounts represent milestones, so that to achieve a particular level the
Company must achieve at least the revenue amount for that level (no pro rata
between milestones).

 

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C.            CV PASS RATE PERFORMANCE

 

The CV Pass Rate Performance component is determined by whether the target
identified on the Participant’s Plan Notice achieves the CV Pass rate, as
further described in Appendix B.  The CV Pass Rate Performance target shall be
binary (i.e., the assigned level achieved the required improvement or not).  If
the CV Pass Rate Performance objective is achieved, the Participant shall be
eligible to receive the CV Pass Rate Performance portion of the Target, as may
be adjusted by the Actual Percentage Funded.

 

D.            INDIVIDUAL PERFORMANCE

 

The Individual Performance component is determined by the participants direct
manager and is based on a discretionary assessment of the individuals overall
performance during 2013.  The Manager may award performance on individual
performance between 75% and 100% achievement. The Participant will not receive
any payout in respect of the Individual Performance component if the Participant
is assessed as Does Not Meet Expectations.  The Participant shall be eligible to
receive the Individual Performance portion of the Target, as may be adjusted by
the Actual Percentage Funded, if the Participant is assessed as Meets
Expectations or better.

 

7.              Conditions and Eligibility Requirements

 

A.                 The 2013 Plan has required financial conditions that must be
met for any payments to be made under the Plan.  The conditions are as follows:

 

i.                                          In order for a Participant to be
eligible for any Plan payment, the Company must achieve the Corporate Financial
Performance Threshold. In the event that the Company does not achieve the
Corporate Financial Performance Threshold, no Plan payment will be made to any
Participants.

 

ii.                                       In the event that the Company
achievement exceeds the threshold Adjusted EBITDA of $[***], any payout under
the Plan will be adjusted to reflect the Plan Percentage Funded as indicated on
Table 2.

 

B.                 Participants eligible to participate in the Plan must be in
benefit eligible positions and be considered as manager or above in the Company
or its affiliates.  Any exceptions to this must be approved by the Executive
Vice President of Human Resources and the CEO.

 

C.                 To be eligible for any Plan payment, the Participant must be
an active employee of the Company in good standing on the date actual Plan
payments are made.

 

D.                 Individuals who are on a formal Performance Improvement Plan
will not be eligible to receive a bonus payout in 2013.

 

E.                  Subject to paragraph 7F below, new employees and current
employees newly promoted to Plan eligible positions will participate on a
pro-rated basis depending on the number of days they are employed as an eligible
Plan Participant beginning on the first day of the month following the hire or
promotion date and through December 31, 2013.

 

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F.                   Employees hired or promoted for the first time into Plan
eligible positions on or after October 1, 2013 will not be eligible to
participate in any component of the Plan.

 

G.                 A Participant shall not receive any Plan payments for days
during which the Participant was on leave (i.e., excluding paid sick days).  No
Participant who is on leave will receive a Plan payout unless and until the
Participant returns from leave.

 

H.                Retroactive pay adjustments will not be applied.  Payments
will be calculated based on the base salary in effect at December 31, 2013 for
Targets expressed as a percentage of base salary.

 

I.                     Payment on any particular occasion of any bonus amount
under this Plan shall not create the presumption that any further bonus amount
will be paid to the Participant thereafter under this Plan or otherwise.

 

J.                     Employees who transfer out of an eligible position during
the year into a non-eligible position in the Company but who are still employed
as of the Plan payment date, will be considered for a pro rata award based on
the number of days in the eligible position and earnings accrued during such
days as a ratio to the full year.  Employees who transfer from one position to
another during the year will be considered for a pro rata award based on the
number of days in each position.

 

K.                Participants who live and work in a non-United States location
will have their Plan payout calculations performed at corporate headquarters
(i.e., comparisons against metrics will be local currency denominated) and
payouts will be issued in their local currency, unless a specific international
assignment or other employment agreement specifically provides otherwise.

 

L.                  All payouts are subject to applicable withholding taxes for
the respective tax jurisdiction.

 

8.              Administration

 

A.                   The adoption of this Plan shall not be deemed to be an
employment agreement between the Company and any Participant, and shall not give
any employee the right to continued employment.  The adoption of this Plan shall
not interfere with the right of the Company to dismiss any employee at any time,
for any reason not prohibited by law and it shall not be deemed to give the
Company the right to require any employee to remain in its employ.

 

B.                   Payments under this Plan are not part of the Participant’s
base salary, severance or other benefits.

 

C.                   The targets assigned and recognized as goals on any of the
performance factors may be removed, revised or otherwise modified by the Chief
Executive Officer or the Compensation Committee of the Board of Directors of the
Company at any time for any reason.

 

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D.                   A Participant’s right to receive payment of an award under
the Plan shall be no greater than the right of an unsecured general creditor of
the Company. All awards under the Plan shall be paid from the general funds of
the Company, and no special or separate fund shall be established and no
segregation of assets shall be made to assure payment of such awards.

 

E.                    The Company reserves the right to amend, terminate and
modify this Plan at any time in its sole discretion with appropriate notice. 
Stream management’s interpretation of the Plan is final and in the sole and
absolute discretion of management.  The Company reserves the right to make final
and binding decisions regarding the amount of incentive, if any, to be paid to
each Participant in its sole and absolute discretion.

 

F.                    No Participant or third party acting on behalf of or
through a Participant shall have any power or right to transfer, assign,
anticipate, hypothecate, mortgage, commute, modify or otherwise encumber in
advance any amounts that may be payable hereunder, nor shall any of said amounts
be subject to seizure for payment of debt, judgments, alimony or separate
maintenance owed by a Participant, or be transferable by operation of law in the
event of a bankruptcy, or otherwise.

 

G.                   This Plan is administered by, and all decisions regarding
any payments hereunder shall be made by Stream, its management and the
Compensation Committee of the Board of Directors.

 

H.                  All matters of Plan interpretation should be directed to the
Executive Vice President, Human Resources or their designee.  If any term or
condition of this plan is found to be in non-conformance with a given state,
federal or other law, that term or condition will be non-enforceable but will
not negate other terms and conditions of the plan.

 

I.                       The Plan shall be governed by and construed in
accordance with the laws of the Commonwealth of Massachusetts, USA, without
regard to its conflicts of laws principles.

 

J.                       The plan will be normalized for FX and measured on a
fixed dollar basis or constant currency.

 

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Appendix A

2013 MIP Payout Example

 

Participant Name:

 

John Doe

 

 

 

 

 

Job Title:

 

Director, Finance

 

CV Pass Participant Level:

 

Region

 

Manager Name:

 

Jane Smith

 

Base Salary:

 

100,000

 

Department:

 

Finance

 

2013 MIP Target Percentage:

 

[***]

 

Eligibility Date:

 

January 1, 2013

 

2013 MIP Total Target Amount:

 

[***]

 

Corporate/Region:

 

Americas

 

Revenue Target (70%):

 

[***]

 

Country:

 

United States

 

CV Pass Rate Target (15%):

 

[***]

 

Site Location:

 

Colonnade

 

Individual Target (15%):

 

[***]

 

 

Corporate Financial Performance Funding

 

2013 Adjusted EBITDA Achieved: $[***]

Actual Percentage Funded: [***]% (Based on achievement as applied to Table 2 on
page 4)

Annual Target Bonus is $[***] and at [***]% funding level the actual funded
bonus is $[***].

 

Revenue Performance

 

Measurement 

 

% of Bonus
Target

 

Funded
Bonus
Target

 

Revenue Plan
Target

 

Revenue Plan
Achieved

 

Percentage
Earned

 

Year-end
Payout
Amount

 

Revenue Performance

 

70

%

[***]

 

$

[***]

 

Y

 

100

%

[***]

 

Total

 

70

%

 

 

 

 

 

 

 

 

[***]

 

 

CV Pass Rate Performance

 

Measurement 

 

% of Bonus
Target

 

Annual
Bonus
Target

 

CV Pass Rate
Target
Achieved (Y/N)

 

Percentage
Earned

 

Year-end
Payout
Amount

 

CV Pass Rate Performance

 

15

%

[***]

 

Y

 

100

%

[***]

 

Total

 

15

%

 

 

 

 

 

 

[***]

 

 

Individual Performance

 

Measurement

 

% of
Bonus
Target

 

Annual
Bonus
Target

 

Actual
Achievement

 

Achievement
Percentage
Earned

 

Year-end
Payout
Amount

 

Individual Performance

 

15

%

[***]

 

Exceeds Expectations

 

[***]

%

[***]

 

Total

 

15

%

 

 

 

 

 

 

[***]

 

 

2013 Plan Total Payout: $[***]

 

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2013 Stream Global Services Management Incentive Plan

Corporate SG&A for Managers and Above

 

Appendix B

 

Plan Notice

 

Participant Name:

 

Job Title:

 

Eligibility Date:

 

Functional Department:

 

CV Pass Level:

 

Annual Bonus Target:

 

 

 

 

EBITDA Goal

 

Revenue

 

CV Pass Rate

 

Target Goal

 

$

[***]

 

$

[***]

 

[***]

%

Threshold Goal

 

$

[***]

 

N.A.

 

N.A.

 

 

Note: CV Pass assigned based on participation level of Global or Regional

 

EBITDA Performance

 

Actual Adjusted EBITDA Achieved

 

Actual Percentage 
Funded

 

$[***], or greater

 

130

%

$[***], but less than$[***]

 

110

%

$[***], but less than$[***]

 

100

%

$[***], but less than$[***]

 

80

%

$[***], but less than$[***]

 

60

%

Less Than $[***]

 

No Funding

 

 

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