Exhibit 10.1
 
2003 RMH Incentive Compensation Plan
September 2002
 
The 2003 RMH Incentive Compensation Plan is designed to provide a reasonable
return for RMH shareholders before providing any upside opportunity to the
management team. The plan will provide a mechanism for management to earn both
cash bonuses and stock option awards based on the overall operational success of
the business. The reward mechanisms are performance based and direct
management’s attention toward providing the shareholders with a consistent
return on their investment in the Company. In the event that SEC requirements
change requiring stock options to be directly expensed, the cost of the stock
options awarded, if any, will be deducted from the bonus pool. RMH management
will utilize a cost model for stock options, subject to approval by RMH Board’s
Compensation Committee, to determine the overall expense related to the options
awarded. Stock options shall be awarded when the company meets its target return
on equity (ROE) of 18% subject to approval by the Administration Committee of
the board.
 
For site management and certain corporate Managers and Directors (defined as
groups 1 & 2), awards will be based on individual business unit performance and
the attainment of specific operating objectives. Cash awards will be paid
quarterly based on an annual formula, and stock option awards will be paid
annually.
 
For Vice President level positions and above (defined as groups 3 & 4), and
certain Group 2 Directors, awards will be based on the corporate achievement of
stated Return on Equity (ROE) objectives. For these two groups, a bonus pool
will be established that will be funded entirely through the allocation of 50%
of RMH’s incremental operating income that exceeds an 18% ROE. The awards and
options for Groups 3 & 4 will be paid annually following formal approval from
The Compensation Committee.
 
The bonus pool, funded through incremental operating income, if any, will be
divided through a share allocation process. Individuals in groups 3 & 4 will be
eligible to earn 0.25 to 1.0 shares based on their position. Based on the
existing headcount in groups 3 & 4, there are a total of 12.25 shares in the
pool plus an additional 4 discretionary shares for a total of 16.25. Changes in
headcount will impact the number of shares and the compensation available to
individuals. Incentive shares for new hires will be prorated on a monthly basis.
The overall amount of the pool will be determined solely by the management
team’s ability to generate an ROE in excess of 18%. For the purposes of the
compensation plan ROE will be calculated by taking the after tax net income for
the period divided by the average shareholders equity for the period. An example
of how the distribution would be calculated and paid is attached in exhibit A.

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The Summary for Plan Year 2003, for all groups is as follows:
 
            Group 1

 
•
 
Participants: Supervisors, Relationship Managers, Outbound Sales Managers,
Production Managers, Account Managers

 
•
 
Bonus: 15% of base salary

 
•
 
Payment: Quarterly (Based on 15% annual base salary, divided by 4)

 
•
 
Maximum cumulative annual bonus of 15%

 
•
 
Objectives: financial, quality and agent attrition components weighted equally

 
            Group 2

 
•
 
Participants: General Managers, Directors

 
•
 
Bonus: 25% of base salary

 
•
 
Payment: Quarterly (same as above)

 
•
 
Maximum cumulative annual bonus of 25%

 
•
 
Objectives: financial, quality and agent attrition components weighted equally

 
            Group 3

 
•
 
Participants: Executive Vice Presidents of Operations, Vice President of
Technology, Senior Vice Presidents, Vice Presidents (excluding Sales)

 
•
 
Bonus: Participation on a share basis in a bonus pool that is calculated as
follows: 50% of operating income that exceeds an ROE hurdle rate of 18%.
Executive Vice Presidents and Vice President of Technology are eligible for (1)
share; SVPs are eligible for (0.5) share; VPs are eligible for (.25) share
(total shares: 7.25). The value of a share will be determined by dividing the
bonus pool by the total number of shares in Group 3 and Group 4.

 
•
 
Payment: Annually

 
•
 
Objective: financial, quality and agent attrition components weighted equally
for operations employees and a basic scorecard system for non- operations
employees.

 
•
 
No merit increases, or salary increases for this group should the company not
meet its 18% ROE hurdle.

 
For groups 1, 2 and 3 the percentage of goals achieved determines the percentage
of the eligible bonus share earned. Two times an individual’s base salary is the
maximum upside, 75% of objective is the floor. In addition, the company will no
longer give any employee a “guaranteed” bonus either oral or by contract.
 
Example 1

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EVP achieves 120% of financial, 100% of quality, 70% of rep attrition
objectives.
(1.2)(.333) + (1.0)(.333) + (0)(.333) = .733
EVP earns 73% of one share.
 
Example 2
Supervisor earns 100% of financial, 75% of quality, 110% of rep attrition
objectives.
(1.0)(.333) + (0.75)(.333) + (1.1)(.333) = .949
Supervisor earns 95% of 15% of their base salary.
 
        Group 4

 
•
 
Participants: CEO, COO, CFO, EVP Human Resources

 
•
 
Bonus: Participation on a share basis in a bonus pool that is calculated as
follows: 50% of operating income that exceeds an ROE hurdle rate of 18%.
Participants are eligible for one share each with an upside potential of 2x base
salary.

 
•
 
Payment: Annually.

 
•
 
Objectives: ROE of 18%

 
Stock Options
 
Beginning at the end of the 2003 fiscal year, and at each year-end thereafter,
the following employees would be eligible for stock option awards. The awards
will be granted upon attainment of the company’s primary objective of an 18%
ROE. The value and quantity of the options will be determined at that time and
the awards will be granted at the discretion of the Board and after approval by
the Administrative Committee.
 
Level

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Title

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# of Options

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1
 
Director, General Manager
 
TBD
2
 
SVP, VP
 
TBD
3
 
C – Level, EVP, VP Technology
 
TBD

 
Highly Compensated Policy
 
In the event an employee or group of employees earn in excess of $1MM, the
ceiling for the corporate tax deduction, the company will create a non-qualified
plan where the excess over $1MM would be deposited as deferred income, available
for distribution at retirement or separation. Dave Madigan will chair the
committee to establish the plan. It is the express intent, if possible, to allow
Group 3 and 4 officers to participate in this plan.