EXHIBIT 10.18 

HealthStream, Inc.

Board of Directors

Compensation Committee

Amended 2019 Executive and Corporate Management Cash Incentive Bonus Plan

 

Overview:

 

Pursuant to the HealthStream, Inc. 2016 Omnibus Incentive Plan, the Compensation
Committee (the “Committee”) of the Board of Directors of HealthStream, Inc. (the
“Company”) hereby establishes this Amended 2019 Executive and Corporate
Management Cash Incentive Bonus Plan (the “Plan”).  The Plan is the cash-based,
short-term incentive portion of HealthStream's incentive compensation structure
for certain executive officers, as well as the vice presidents, associate vice
presidents, and directors who are assigned to a corporate function, as opposed
to a business unit specific function (such individuals referred to collectively
as “Management”).  The purpose of the Plan is to specify appropriate
opportunities to earn a cash bonus with respect to the Company’s 2019 fiscal
year in order to reward Management for the Company’s financial performance
during fiscal year 2019 and to further align their interests with those of the
shareholders of the Company.

 

Definitions:

 

 

•

Actual Operating Income before bonuses – The Company’s Operating Income achieved
in fiscal 2019, excluding bonuses.

 

 

•

Annual Bonus – The annual bonus paid to Management after the Committee
determines the applicable financial measure has been achieved.

 

 

•

Incremental Operating Income - Actual Operating Income before bonuses less
Target Operating Income.

 

 

•

Operating Income – The Company’s operating income for the 2019 fiscal year
calculated in accordance with generally accepted accounting principles under ASC
606 and consistent with the Company’s past practice and presented in the
Company’s audited financial statements, provided the following are excluded from
the calculation of Operating Income: (i) acquisition and divestiture expenses
incurred within the calendar year to the extent such expenses are in excess of
the amount originally allocated to such purpose in the Company’s 2019 budget;
(ii) operating income (loss) from acquisitions and divestitures consummated
during the calendar year; and (iii) expenses in connection with the stock
contribution from Robert A. Frist, Jr. to the Company on or about June 26, 2019
and the associated stock issuance from the Company to non-executive officers of
the Company on or about July 25, 2019 (collectively, the “Excluded
Expenses”).  The Committee has the negative discretion to include the Excluded
Expenses in the calculation of Operating Income.

 

 

•

Target Operating Income – Operating Income for the 2019 fiscal year in an amount
established by the Committee by resolution within the first 90 days of the
Company’s 2019 fiscal year.

 

 

2019 Financial Measure and Plan Principles:

 

 

1.

The financial measure for 2019 is Operating Income - Operating Income will be
the financial measure for 2019.

 

 

2.

The Annual Bonus is funded by Incremental Operating Income - The Annual Bonus
will be earned from the amount of Incremental Operating Income.

 

The Plan

 

Eligibility

 

 

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Three groups are eligible for participation in the Plan:

 

 

•

Executive Team – The maximum Annual Bonus that Executive Team members, other
than the Chief Executive Officer of HealthStream and the President & Chief
Operating Officer of HealthStream, shall be eligible to receive under the Plan
shall be an amount equal to 30% of such member’s base salary; provided the CEO
and the President & COO shall be eligible to receive an amount equal to 40% of
their base salary.  Unless otherwise excluded below, the Executive Team eligible
for participation includes the Chief Executive Officer, President & Chief
Operating Officer, and Senior Vice Presidents of the Company.

 

 

•

      Leadership Team (Vice Presidents and Associate Vice Presidents) – The  

      maximum Annual Bonus that Vice Presidents and Associate Vice Presidents
of    

      the Business Unit shall be eligible to receive under the Plan shall be an
amount

      equal to 16% of such Vice President or Associate Vice President’s base
salary.

 

 

•

Directors - The maximum Annual Bonus that Directors of the Business Unit shall
be eligible to receive under the Plan shall be an amount equal to 4% of such
Director’s base salary.  For purposes of clarity, Directors do not include
members of the Board of Directors, but are management-level employees of the
Company.

 

 

•

      Employment Requirements – Participants in the Plan who were employed
with  

the Company through December 31, 2019 shall be eligible to receive bonus
payments, if any, under the Plan regardless of whether such employees are
employed on the date such payments are actually made.  Notwithstanding the
foregoing, in the case of death or disability, the participant’s pro rata share
from January 1, 2019 through the date of participant’s death or disability shall
be awarded.

 

 

•

Exclusions - Members of the Executive Team with a commission based incentive
compensation plan shall not be eligible to participate in the Plan.
Additionally, members of the Executive Team who are eligible to participate in
any one of the following shall not be eligible to participate in the Plan:  (i)
the 2019 Workforce Development Cash Bonus Incentive Plan, or (ii) the 2019
Provider Solutions Cash Bonus Incentive Plan.

 

Payout

 

Payouts under the Plan shall be determined as follows:

 

 

1.

Incremental Operating Income will be determined by subtracting the Target
Operating Income from Actual Operating Income before bonuses.  The Incremental
Operating Income will then be multiplied by 30% of base salary for each member
of the Executive Team other than the Chief Executive Officer and the President &
COO, 40% of base salary for the CEO and the President & COO, 16% of base salary
for each member of the Leadership Team, and 4% of base salary for each Director.

 

 

2.

Any Annual Bonus payouts made to the Executive Team, Leadership Team, or
Directors pursuant to the Plan shall be payable at such time as bonuses are paid
generally to executive officers of the Company.