[sflylogo.jpg]2013 Quarterly Bonus Plan
__________________________________________________________________________________________________________________________________________________________________________
Shutterfly, Inc. Quarterly Bonus Plan
The Shutterfly, Inc. quarterly bonus plan is designed to recognize and reward
employees who consistently exceed our high standards and who are committed to
delivering world-class products and services.

Key Plan Components
•
Performance objectives will be set, measured and rewarded on a quarterly basis.
These measurement periods allow all participants to focus and execute on key
objectives.

•
Each quarter is measured independently. Quarters 1-3 will each provide 20% of
the annual opportunity. Q4 will provide 40% to align rewards with cash-flow,
revenue and profit, and to encourage achievement of any full-year objectives.

•
Objectives will be set for both Company financial targets and individual
performance objectives. Specific financial targets are not communicated to
participants during the quarter.

•
The Company must achieve its minimum financial objectives in order for any
bonuses to be paid.

•
Initial bonus guidelines are based upon the table below, subject to further
modification determined at the discretion of management (individual awards may
vary from the guidelines shown below):

 
 
Bonus guidelines (as a % of Quarterly target)

Company Performance
>= Financial Maximum
Up to 80%
Up to 130%
Up to 200%
At Financial Target
Up to 60%
Up to 100%
Up to 150%
At Financial Minimum
Up to 40%
Up to 80%
Up to 120%
 
 
Did Not Consistently Meet High Expectations
Consistently Met High Expectations
Consistently Exceeded High Expectations
 
 
Individual Performance Rating

Bonus calculation example:

Determine the quarterly bonus target opportunity
Annual Base Pay    x Bonus Target    = Annual Bonus Target    x Quarterly
Weight    = Quarterly Target
$60,000    x 5%    = $3,000    x 20%*    = $600

If Company performance is at Target and you Meet Expectations…
Quarterly Target    x Matrix Payout %    = Guideline Bonus
$600    x Up to 100%    = Up to $600

If Company performance is at Maximum and you Exceed Expectations…
Quarterly Target    x Matrix Payout %    = Guideline Bonus
$600    x Up to 200%    = Up to $1,200
*This example uses a 20% quarterly weight. The plan uses 20% for Q1-Q3 and 40%
in Q4.

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

[sflylogo.jpg]2013 Quarterly Bonus Plan
__________________________________________________________________________________________________________________________________________________________________________

Plan Details
Participation: Eligible positions are identified each year. Eligibility in one
year does not guarantee eligibility in future years. Employees may contact Human
Resources to determine whether or not they are eligible. Employees hired or
promoted into eligible positions before the start of a quarter are eligible to
earn a bonus for the next quarter if performance criteria are met. Employees
hired on or after the start of a quarter are not eligible to participate for
that current quarter. Employees who participate in another bonus plan are not
eligible. This Plan replaces any prior quarterly bonus program.
Bonus Target: Participants are assigned an incentive bonus target based on their
position in the Company. This target is identified as a percentage of the ending
quarterly base salary.
Performance Plan: Participants meet with their managers at the start of a
quarter to establish a performance plan, identifying specific objectives and
expected achievements. At the end of a quarter, managers assign a performance
rating to each participant based upon performance.
Company Performance: Each quarter, Company financial objectives will be
established, including a minimum EBITDA margin and a minimum revenue amount. In
order for any bonuses to be earned, the Company must meet or surpass both
measures. The better the Company performs - the more bonus funding is available.
Individual Performance: Individual performance ratings are calculated each
quarter based upon performance and achievement of objectives and competencies.
The better an individual does - the larger the percentage of their target
available to them.
Payments: Plan awards are determined based on both Company performance and
individual performance, and are subject to additional modifications, including
possible reductions, based on management discretion. If the Company fails to
achieve the minimum financial objectives, or the participant fails to meet the
necessary individual performance conditions, no bonus will be earned for that
measurement period.
Payment Eligibility Conditions: In addition to meeting at least the minimum
thresholds for Company performance and individual performance, participants are
also subject to the following conditions:
•
A participant on an approved leave of absence during any portion of the
performance period shall be eligible for a pro-rated bonus.

•
Bonuses are not earned until paid. A participant whose employment ends before
the payment date will not be eligible to earn a bonus. Plan awards will
generally be paid on the next regular payday following the public announcement
of quarterly financial performance and after the bonus is reasonably calculable.
Plan awards are subject to all applicable taxes and withholdings.

Plans Changes: To the extent permitted by law, the Company reserves complete
discretion and rights to amend, modify or terminate this program at any time
without notice.
Recoupment Policy: The Company's Executive Officer Recoupment Policy, in
addition to any requirements imposed pursuant to applicable law, including the
Sarbanes-Oxley Act of 2002 and the Dodd-Frank Wall Street Reform and Consumer
Protection Act, shall apply to all bonuses paid from this plan.

—————————————————————————————————————————————————
The Company will not be bound by or liable to any employee for any
representation, promise or inducement made by any person that is not embodied in
this program or in any authorized written modification or amendment to this
plan. Nothing here alters the “at will” employment relationship with the
Company, as described in the employee handbook. Neither the program nor the
transactions authorized under the program constitute an express or implied
promise of continued employment for any period. Nothing in the program shall
interfere with or limit in any way the right of the employee or the Company to
terminate employment at any time, with or without cause or notice.