Exhibit 10.23
The 2014 Rosetta Stone Executive Bonus Plan

I. Plan Goals

The purpose of the 2014 Rosetta Stone Executive Bonus Plan (the “Plan”) is to
motivate senior management to achieve key financial and strategic business
objectives of Rosetta Stone Inc. and its subsidiaries (“Rosetta Stone” or the
“Company”).

II. Plan Participants, Administration and Effective Date

The following executives (each, an "Executive" and collectively, the
"Executives”) are eligible to participate in the Plan: Chief Executive Officer
(“CEO”); Chief Financial Officer (“CFO”); Chief Information Officer (“CIO”);
Chief Product Officer (“CPO”); Chief Legal Officer and Secretary; Senior Vice
President, Human Resources; Senior Vice President, Consumer; President, Global
Enterprise & Education and other executives as approved by the Compensation
Committee of the Board of Directors (the “Compensation Committee”).

An Executive is eligible to participate in the Plan only if all of the following
criteria are met:
•
Designated as eligible to participate by the Compensation Committee;

•
Hired, rehired or moved into an eligible position on or before November 1st of
the plan year, and

•
Renders overall satisfactory work performance.

The Compensation Committee is responsible for overseeing the administration of
the Plan, including establishing performance targets and determining whether a
bonus will be paid pursuant to the Plan. The Compensation Committee may, at its
sole discretion, and without prior notice, modify, change, alter or terminate
the Plan or determine whether or not a bonus will be paid. No bonus payment will
be made unless the Compensation Committee determines: (a) that all material
terms of the Plan have been satisfied; and (b) that payment to the participant
in the stated amount is appropriate under the Plan.
In the event of a claim or dispute brought forth by a participant, the decision
of the Compensation Committee as to the facts in the case and the meaning and
intent of any provision of the Plan, or its application, shall be final, binding
and conclusive.

The Plan is subject to the Rosetta Stone Clawback Policy in effect as of January
1, 2014.
  
The Plan shall be effective from January 1st, 2014 to December 31st, 2014 (the
“Bonus Period”).

III. Components of the Plan and Individual Bonus Targets
Individual bonus targets for participants will be a percentage of a
participant’s eligible base salary in effect as of the last day of the Bonus
Period. Eligible base salary is defined as base salary before both deductions
for taxes or employee benefits and deferrals of compensation pursuant to any
Rosetta Stone sponsored benefit plans. Bonus targets are as specified by the
Compensation Committee, however, individual payouts may be greater than or less
than the bonus target based on actual achievements against Plan objectives and
targets.
As a participant in the Plan, each Executive will be eligible for a bonus award
based on the attainment of key financial targets and strategic business
objectives.

All objectives under both the Non Line of Business and Line of Business Plans
are mutually exclusive and structured such that executives may be paid a portion
of their annual incentives for achievement relative to one or more objectives,
even if threshold performance is not attained for another objective.

Umbrella Goal

--------------------------------------------------------------------------------

There is an Umbrella Goal for the 2014 Executive Bonus Plan, in order to protect
the company’s tax deductibility in compliance with Section 162(m) of the
Internal Revenue Code for Section 16 officers only. The Umbrella Goal is not a
trigger to fund the bonus plan.

•
The Umbrella Goal = 2014 revenue of at least $270M

Executive Bonus Structure - Non Line of Business Executives
•
70% - Corporate Financial Bonus

•
30% - Corporate Non-Financial Strategic Goals Bonus

Seventy Percent (70%) of a non-line of business executive’s bonus award will be
based upon the achievement of the financial targets as outlined in the Plan (the
“Financial Goals Bonus”). Thirty Percent (30%) of a non-line of business
executive’s bonus award will be based upon the execution and results of
corporate strategic non-financial business objectives (the “Corporate Strategic
Goals Bonus”). These combined factors will determine the total target potential
bonus award on an individual basis. The bonus award for a non line of business
executive cannot exceed 150% of the employee’s bonus target.

Corporate Financial Goals Bonus
For all non-line of business executives, the award of the Corporate Financial
Goals Bonus (70% of the total target potential bonus award) will be determined
as follows.

•
40% Bookings(1) (millions)

•
Threshold: $300 = 80% Funding

•
Target: $333 = 100% Funding

•
Max Funding: $350 or more = 150% Funding

•
40% Adjusted EBITDA(2) (millions)

•
Threshold: $17 = 80% Funding

•
Target: $20 = 100% Funding

•
Max Funding: $23 or more = 150% Funding

•
20% Percentage Global DTC Web Sales(3) (Q4 2014 exit rate)

•
Threshold: 50% = 80% Funding

•
Target: 60% = 100% Funding

•
Max Funding:70% or more = 150% Funding

(1)
“Bookings” means executed sales contracts by the Company that are either
recorded immediately as revenue or as deferred revenue.

(2)
“Adjusted EBITDA” is GAAP net income/(loss) plus interest income and expense,
income tax benefit and expense, depreciation, amortization and stock-based
compensation expense plus the change in deferred revenue less the change in
deferred commissions.  In addition, Adjusted EBITDA excludes any items related
to the litigation with Google Inc., restructuring costs and transaction and
other costs associated with mergers and acquisitions as well as all adjustments
related to recording the non-cash tax valuation allowance for deferred tax
assets. 

(3)
“Percentage Global Digital Sales” means the percentage of all new unit sales of
Global Consumer that are downloaded (e.g.,

TOTALe), online (e.g., OSUB, TOSUB, ReFLEX), renewals and paid Apps.

Corporate Non-Financial Strategic Goals Bonus
For all non-line of business executives, the award of the Corporate
Non-Financial Strategic Goals Bonus (30% of the total target potential bonus
award) will be determined as follows.

•
33.3% - E&E Cross Selling of approximately $28M (Non TOTALe Sales)

•
Advanced English

•
Tell Me More

•
Lexia

•
Custom Content

•
33.3% - Consumer Cross Selling of approximately $12M

•
Brain fitness (Fit Brains)

•
Tell Me More

--------------------------------------------------------------------------------

•
Lexia

•
Consumer Kids

•
Project X

•
33.3% - Launch of Consumer Kids literacy product(s) with bookings of
approximately $3M

Non-Line of Business Executive Bonus Targets

Job Title
Target Bonus
CEO
110%
CFO
75%
SVP, Human Resources
50%
CIO
50%
Chief Legal Officer and Secretary
60%
Other Executives, as approved by the Compensation Committee
TBD by the Compensation Committee

Executive Bonus Structure - Line of Business Lead
•
60% - Line of Business Financial Goals Bonus

•
20% - Corporate Financial Goals Bonus

•
20% - Corporate Non-Financial Strategic Goals Bonus

Sixty Percent (60%) of a line of business executive’s bonus award will be based
upon the achievement of line of business financial targets as outlined in the
Plan (the “Line of Business Financial Goals Bonus”). Twenty Percent (20%) of a
line of business executive’s bonus award will be based upon the achievement of
corporate financial targets as outlined in the Plan (the “Corporate Financial
Goals Bonus”) and Twenty Percent (20%) of a line of business executive bonus
award will be based on achievement of corporate strategic goals as outlined in
the Plan (the “Corporate Strategic Goals Bonus”). These combined factors will
determine the total target potential bonus award on an individual basis.

Line of Business Executive Bonus Targets

Job Title
Target Bonus
President, Global Enterprise & Education
75%
SVP, Consumer
75%
CPO
60%

Line of Business Financial Goals Bonus

For the following Line of Business Executives, the Line of Business Financial
Goals Bonus award (60% of the total target potential bonus award) will be
determined as follows with a maximum award of 250%.

SVP, Consumer

•
30% - Bookings (millions)

•
Threshold: $186 = 80% Funding

•
Target: $212.9 = 100% Funding

•
Max Funding: $532.25 or more = 250% Funding

--------------------------------------------------------------------------------

•
30% - Adjusted EBITDA (millions)

•
Threshold: $65.84 = 80% Funding

•
Target: $82.3 = 100% Funding

•
Max Funding: $205.75 or more = 250% Funding

•
20% - Percentage Global DTC Web Sales (Q4 2014 Exit rate)

•
Threshold: 50% = 80% Funding

•
Target: 60% = 100% Funding

•
Max Funding: 70% or more = 250% Funding

•
20% Cross Selling (Kids, Project X, Tell Me More, FitBrains and Lexia)

•
Threshold: $9.6 = 80% Funding

•
Target: $12 = 100% Funding

•
Max Funding: $30 or more = 250% Funding

President, Global Enterprise & Education

•
40% - Bookings (millions)

•
Threshold: $86 = 80% Funding

•
Target: $99.4 = 100% Funding

•
Max Funding: $248.5 or more = 250% Funding

•
40% - Adjusted EBITDA (millions)

•
Threshold: $34.96 = 80% Funding

•
Target: $43.7 = 100% Funding

•
Max Funding: $109.25 or more = 250% Funding

•
20% - E&E Cross Selling (Tell Me More, Lexia, etc)

•
Threshold: $22.4 = 80% Funding

•
Target: $28 = 100% Funding

•
Max Funding: $70 or more = 250% Funding

Line of Business Financial Goals Bonus - Product

For the following Line of Business Executives, the Line of Business Financial
Goals Bonus award (60% of the total target potential bonus award) will be
determined as follows with a maximum award of 150%. Discretionary funding from 0
to 150%; Based on approval by the CEO and the Compensation Committee

•
70% Delivery of the Product Roadmap - Key Milestones

•
Tell Me More Refresh

•
LiveMocha

•
Kids by September 1st, 2014

•
30% Deliver Product Roadmap within Budget

•
Budget = $30.8M

Line of Business Strategic Goals Bonus

For all Line of Business Executives, the award of the Corporate Strategic Goals
Bonus (20% of the total target potential bonus award) will be determined as
follows.

•
33.3% - E&E Cross Selling of approximately $28M (non-TOTALe sales)

•
Advanced English

•
Tell Me More

•
Lexia

•
Custom Content

--------------------------------------------------------------------------------

•
33.3% - Consumer Cross Selling of approximately $12M

•
Brain fitness (Fit Brains)

•
Tell Me More

•
Lexia

•
Consumer Kids

•
Project X

•
33.3% - Launch of Consumer Kids literacy product(s) with bookings of
approximately $3M

IV. Achievement of Plan Targets

Financial Bonus Goals Funding

If any financial metric component is below the “Threshold” level, then no
funding will be achieved for that portion of the bonus. The financial metric
components are mutually exclusive. Therefore, if one financial metric is above
its “Threshold” level, and the others are not, the bonus will be funded for the
financial metric component that was achieved.

Actual award funding between Threshold, Target and Maximum goals will be
interpolated based on actual results as set forth in the chart below.

The maximum amount payable under the Financial Bonus for Non-Sales Executive is
150% of the overall total target potential Financial Bonus.

The maximum amount payable under the Line of Business Financial Bonus award for
Sales Executives is 250% of the overall total target potential Line of Business
Financial Bonus. The maximum amount payable under the Corporate Financial Bonus
for Sales Executives is 150% of the overall total target potential Corporate
Financial Bonus.

 
Bookings (M)
 
Adjusted EBITDA (M)
 
Percentage Global DTC Web Sales (Q4 2014 Exit Rate) (%)
 
Attainment Against Target
Payout
 
Attainment Against Target
Payout
 
Attainment Against Target
Payout
 
$299.99 and below
No Payout
 
$16.99 and below
No Payout
 
49.99% and below
No Payout
Threshold
$300
80%
 
$17
80%
 
50%
80%
Target
$333
100%
 
$20
100%
 
60%
100%
Maximum
$350 and above
150%
 
$23 and above
150%
 
70% and above
150%

Strategic Goals Bonus Funding

Plan funding for the Strategic Goals Bonus target for Non-Line of Business
Executives and the Line of Business Strategic Goals Bonus target for Executives
will be based on the attainment percentage of the specified goals as outlined in
Section III above. Final achievement percentages against the strategic goals
targets, overall approval of attainment of goals, and subsequent bonus payouts,
will be determined by the Compensation Committee.

V. Mid-Year Events and Proration

Prorated Bonus Awards

--------------------------------------------------------------------------------

A bonus payout will be based on the amount of time the eligible participant is
actively and continuously employed in a bonus eligible position during the Bonus
Period. In some cases, bonus awards will be calculated, as detailed below.
•
New Hires and Rehires - Newly hired or rehired employees will participate in the
Plan on a daily prorated basis. In the case of rehires, there is no credit for
prior service and the rehire date must occur on or prior to November 1st of the
Bonus Period in order for the participant to be eligible under the Plan for the
Bonus Period.

•
Leaves of Absence - Bonus awards are not prorated for approved leaves of
absence.

•
Promotions and Demotions - If the action results in a movement from one
bonus-eligible position to another bonus-eligible position (with either a higher
or lower bonus target) the bonus target as of December 31st will be the target
used to determine the bonus award. If an action results in a movement from a
Non-Line of Business Executive to Line of Business Executive bonus eligibility
or vice versa, a daily pro-rated bonus will be calculated. If an Executive moves
to a non-executive bonus plan, a daily pro-rated bonus award will be calculated
based on tenure in the eligible position.

•
Termination

◦
If a participant voluntarily terminates prior to the date the bonus awards are
actually paid, the participant will not be entitled to any bonus payment for the
Bonus Period during which the termination occurs, except as otherwise provided
by contractual or statutory obligation or directed by the Compensation
Committee. Bonuses are not considered earned until they are approved by the
Compensation Committee and are actually paid by Rosetta Stone.

◦
If during the Bonus Period the Executive’s employment is terminated by the
Company without Cause or by the Executive with Good Reason, then the Company
shall pay to Executive, at the times specified in their contract, the pro rata
portion, if any, of the Executive's Annual Bonus earned up until such
Termination Date in accordance with the terms of the then-current Company bonus
policy.  “Good Reason” shall mean Executive’s resignation from employment with
the Company after the occurrence of any of the following events without
Executive’s consent: (i) a material diminution in Executive’s Annual Base
Salary, duties, authority or responsibilities from the Annual Base Salary,
duties, authority or responsibilities as in effect at the commencement of the
Service Term, (ii) a material breach of the Agreement by the Company, or (iii) a
relocation of Executive’s primary place of employment to a geographic area more
than fifty (50) miles from the Executive's then current office;  provided, that
the foregoing events shall not be deemed to constitute Good Reason unless
Executive has notified the Company in writing of the occurrence of such event(s)
within sixty (60) days of such occurrence and the Company has failed to have
cure such event(s) within thirty (30) business days of its receipt of such
written notice and termination occurs within one hundred (100) days of the
event.

VI. Plan Change Provision

This Plan is subject to modification or termination at any time for any reason
deemed appropriate by the Compensation Committee. No modification may increase
the amount of actual compensation payable upon attainment of a goal that has
been established under the Plan. However, discretion to reduce an award is
permitted.

VII. Payment

Bonuses will be paid to Executives after review and approval by the Compensation
Committee, on or before March 15th of the year immediately following the end of
the Bonus Period, provided the Executive is employed with the Company on the
actual payment date or by contractual obligation. The bonus will be in a single
lump sum cash payment, subject to all required federal, state and local tax of
withholdings. Executives have no right to the bonus under the Plan until actual
payment.

--------------------------------------------------------------------------------

VIII.     Transferability

An Executive shall not have any right to transfer, sell, alienate, assign,
pledge, mortgage, hypothecate, collateralize or otherwise encumber any of the
payments provided by this Plan.

IX.    No Employment Rights
This Plan is not intended to be a contract of employment. Both the Executives
and the Company have the right to end their employment or service relationship
with or without cause or notice. The payment of a bonus award shall not obligate
the Company to pay any Executive any particular amount of remuneration, to
continue the employment or services of the Executive after the payment, or to
make further payments to the Executive at any time thereafter.
I.
Compliance with IRC Section 409A

It is the intent of the Company that any payment made under the Plan be exempt
from Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”),
to the maximum extent permitted under Section 409A of the Code. However, if any
such amounts are considered to be “nonqualified deferred compensation” subject
to Section 409A of the Code, such amounts shall be paid and provided in a
manner, and at such time and form, as complies with the applicable requirements
of Section 409A of the Code to avoid the unfavorable tax consequences provided
therein for non-compliance. No action will be taken to accelerate or delay the
payment of any amounts in any manner which would not be in compliance with
Section 409A of the Code.
In the event an Executive qualifies as a “specified employee” for purposes of
Section 409A(a)(2)(B)(i) of the Code at the time of the Executive’s separation
from service, payments to be made in connection with such Executive’s
“separation from service” (as determined for purposes of Section 409A of the
Code) that constitute nonqualified deferred compensation subject to Section 409A
of the Code shall not be made until the earlier of (i) the Executive’s death or
(ii) six (6) months after the Executive’s separation from service to the extent
required by Section 409A of the Code. The Company shall, to the extent required,
consult with the Executive in good faith regarding the implementation of the
provisions of this section; provided that neither the Company nor any of its
employees or representatives shall have any liability to the participant with
respect to any tax consequences related to the Plan.

II.
Disclaimer

In the event of a situation not covered or clarified by the Plan guidelines, the
Compensation Committee and the CEO will make the final and binding determination
regarding eligibility and bonus calculations. The Compensation Committee must
approve all bonus payments.

An Executive shall not have any rights to transfer, sell, alienate, assign,
pledge, mortgage, hypothecate, collateralize or otherwise encumber any of the
payments provided by the Plan except as may be required by State or Federal law.

Benefits under the Plan shall be paid from the general funds of the Company, and
Executives shall have no special or priority right to any assets of the Company.
Nothing in the Plan shall require the Company to segregate or set aside any
funds or other property for the purpose of paying any portion of an award. No
Participant, beneficiary or other person shall have any right, title or interest
in any amount awarded under the Plan prior to the payment of such award to him
or her. It is not intended that a participant’s interest in the Plan will
constitute a security or equity interest within the meaning of any state or
federal securities laws.

The Compensation Committee determines, at its sole discretion, whether bonuses
will be paid. Rosetta Stone, with the approval of the Compensation Committee,
reserves the right to amend and/or terminate this or any other bonus, reward,
and recognition plan at any time without notice. This

--------------------------------------------------------------------------------

Plan is not a promise, guarantee, announcement, contract or agreement that a
bonus will be paid, nor is it a contract of employment.