EX-10.6



 EXHIBIT 10.6 

 
 



 
 ANNUAL INCENTIVE PLAN: 2012 TERMS AND CONDITIONS 

 

			
	Award Purpose	  	 The Truven Health Analytics Incentive Plan (the “Plan”) aligns the interests of Plan participants (the
“Participants”) with the interests of Truven Health Analytics by linking financial performance with pay. It also links Participants’ individual performance with pay to further reinforce our pay for performance philosophy.

 
 An “Award” is an opportunity to participate in the Plan to earn an
incentive calculated based on a target percentage of a Participant’s Eligible Earnings, defined below, subject to Truven Health Analytics financial performance and a Participant’s own individual performance. Awards are intended to provide
total compensation that is competitive with other corporations and reflect prevailing market practice.
  
 Award Payouts, defined below, are provided in cash and are subject to all applicable deductions and withholdings.

 

	Plan Year	  	 January 1, 2012 – December 31, 2012

 

	Eligibility	  	 Except as specified in these terms and conditions, a Participant must be an employee of Truven Health Analytics on the date that Award
Payouts are made.
  
 Truven Health Analytics may designate certain employees
to be participants in the Plan based on the recommendations of management. No person shall be automatically entitled to participant in the Plan.
  

Employees hired on October 1, 2012 or later are not eligible to participate in the 2012 Plan.

 

	 Interpretation/Compliance

With Applicable Law
	  	 Participation in the Plan and Award Payout determinations are made in Truven Health Analytics sole discretion. Truven Health
Analytics has the right to set rules and regulations for the Plan and may make any necessary determinations, including but not limited to Award Payouts, for the administration of the Plan. Determinations under the Plan need not be uniform and may be
made selectively among Participants who are eligible for Award Payouts under the Plan. All Plan Provisions are subject to applicable law.

 

	Target Award	  	A Participant’s “Target Award” is a specified percentage of the Participant’s “Eligible Earnings”, as defined below.









			
	Award Payout	  	 An “Award Payout” is the actual payment a Participant receives. An Award Payout may be higher or lower than the Target Award
based on a Participant’s individual performance and “Financial Performance”.
  

	Financial Performance	  	 Financial Performance is determined in Truven Health Analytic’s discretion and is weighted at the Corporate level based on
performance against our 2012 Plan for:
  
 •   Revenues – 45%
  

•   EBITDA – 45%

 
 •   Free Cash
Flow ( FCF) – 10%
  
 Financial Performance below the Corporate and
at or below the business unit level may be expressed in terms of, or based on, one or more pre-established financial or operational criteria or measures. This means that Financial Performance may be based on the above criteria or may include, or be
based solely upon, the financial performance or other criteria or measures of a segment or business unit.
  

	Thresholds	  	 Where Financial Performance is based on Revenues, EBITDA and FCF, unless Revenues and EBITDA performance are each at or above the
specified threshold levels, the Participant will not receive an Award Payout. For example, if EBITDA performance is below threshold, the Participant will not receive an Award Payout, even if performance for Revenues exceeds threshold.

 
 Minimum performance levels must be met or exceeded for both the Revenues and EBITDA
measures in order to achieve an above-target payout. For example, if performance is above target for Revenues but below the minimum performance level for EBITDA, the Revenues part of the Award will be capped at the target level (45% of the target
opportunity). FCF is not subject to this minimum performance requirement.
  

	Eligible Earnings	  	 “Eligible Earnings” include a Participant’s base salary paid in calendar year 2012, but do not include payments
for any awards, commissions, incentives, relocation payments, tuition or expense reimbursements, severance payments, unused vacation paid at termination, or any other benefit payment or award. Any salary continuation received while on short-term
disability or other paid leaves of absence will be included in Eligible Earnings. (Depending on payroll cycle, Eligible Earnings may not equal a Participant’s quoted annual salary.) Outside of the U.S. and Canada, “Eligible
Earnings” are defined as pro-rated salaries in 2012 for the Award Eligible period.
  

	Pro-rated Awards	  	If a Participant was hired or rehired by Truven Health Analytics between January 1, 2012 and September 30, 2012 that Participant will be eligible to receive a pro-rated
Award Payout based on the Participant’s Eligible Earnings during 2012.









			
	Intra-company Transfers	  	 If a Participant moves from one Plan-eligible position to another with a different Target Award on or before September 30, 2012,
any Award Payout that Participant receives may be pro-rated based on the time in each position (transfer date). If a Participant moves from one Plan-eligible position to another with a different Target Award on or after October 1, 2012, the
Award Payout will be calculated using solely the Financial Performance of the business the employee transferred from, however, the target percentage will be prorated based on time in each position (transfer date).

 

	Approval, Certification and Timing of Award Payouts	  	 As soon as practicable after the end of 2012 and before any Award Payouts are made, our independent auditors (PricewaterhouseCoopers
LLP) will review the relevant calculations.
  
 Award Payouts will be made as
soon as administratively practicable after Truven Health Analytics annual audited financial statements for 2012 are completed. Award Payouts will be subject to the approval of the HR Committee of the Truven Health Analytics Board of Directors or its
authorized designees.
  
 Award Payouts generally are expected to be made
during March 2013.
  

	Effect of Termination or Resignation from Truven Health Analytics	  	 Subject to the terms of any applicable separation agreement, in the event of termination of a Participant’s employment for any
reason other than cause or voluntary termination:
  
 •     If such termination date occurs between January 1, 2012 and June 30, 2012, no Award Payout will be made.

 
 •     If such
termination date occurs on or after July 1, 2012 but on or before November 30, 2012, an Award Payment, pro-rated through the date of termination based on the Participant’s Target Award, will be made to the Participant as soon as
administratively practicable following the Participant’s termination date.
  
 •     If such termination date occurs on or after December 1, 2012, but before Award Payouts are typically made in or about March 2013, and an Award would have been earned if
the Participant had been in active status at the time of the payment, an Award Payout will be made in or about March 2013 based upon the Participant’s Target Award modified by Financial Performance only and not the Participant’s individual
performance.
  

•     If such termination date occurs on or after Award Payouts are typically made
in or about March 2013, an Award Payout will be made in or about March 2013 based on the Participant’s Target Award modified by the Participant’s individual performance and Financial Performance.










			
		  	 A Participant will not be eligible for an Award Payout if the Participant is terminated for cause, as determined by Truven Health
Analytics. A Participant will not be eligible for an Award Payout if the Participant voluntarily terminates employment and the termination date is prior to the payment date in or about March 2013. For purposes of this Plan, retirement is not
considered resignation or voluntary termination of employment.
  

	Adjustments	  	 Truven Health Analytics in its sole and absolute discretion, may adjust Financial Performance (up or down) for items such as
acquisitions or disposals, or if Truven Health Analytics determines that external changes or other non-recurring or unanticipated business conditions have materially affected the fairness of the goals or have unduly influenced the ability to meet
them.
  

	No Right to Employment	  	 Participation in the Plan or any action taken under the Plan does not give the Participant a right to continue to be employed by Truven
Health Analytics or interfere in any way with the right of Truven Health Analytics or a subsidiary to terminate the Participant’s employment at any time for any reason.
  

	Amendments	  	 Truven Health Analytics may amend or terminate the Plan or any of its provisions at any time and in any way, except that no amendment or
termination will materially and adversely affect any previously-granted Awards to a Participant unless the Participant provides his or her consent. Notwithstanding the foregoing, Truven Health Analytics may from time to time amend Awards without the
consent of affected Participants to comply with applicable laws, regulations, stock exchange rules or accounting rules and to make changes that do not materially decrease the value of Awards Payouts.

 

	The Plan	  	 2012 Award Payouts are made pursuant to the Plan.
  

In the event of a conflict or inconsistency between the Plan and these terms and conditions, the terms of the Plan will prevail.