exv10w5



 





Exhibit 10.5




EXECUTIVE AND SENIOR MANAGEMENT INCENTIVE PLAN



OBJECTIVES: To provide annual and long term incentive plans for both the executive and
senior management groups as defined by the Compensation Committee.



-Incentives should be an appropriate mix of cash and stock based incentives



-Incentives whether cash or stock based should be linked to a combination of personal performance,
corporate performance and shareholder returns.



METHODOLOGY: Target Overall Compensation Market Positioning based on Mercer compensation
survey as follows:




	 	 	 	 	 
	 

	 	 	 	     Range
	CEO +

	 	-Salary
	 	2nd Quartile
	Executive

	 	-Annual
	 	3rd Quartile
	 

	 	-Long term
	 	4th Quartile
	 
	 	 	 	 
	Senior Mgt

	 	-Salary
	 	3rd Quartile
	 

	 	-Annual
	 	3rd Quartile
	 

	 	-Long term
	 	3rd Quartile





ASSUMPTIONS/DEFINITIONS

Annual Incentive

-All personal and performance based incentives (cash and stock based) that vest based on financial
performance or employment objectives within first 12 months.



Long Term Incentive

-All personal and performance based incentives that vest based on financial performance or
employment (including time based) objectives beyond 12 months.




PROPOSED INCENTIVE PROGRAM DESIGNS




I. CASH BASED PERFORMANCE INCENTIVE




     Proposed Design




	 	A)	 	Target incentive as % of salary
	 
	 	(i)	 	CEO-25%
	 
	 	(ii)	 	Other Exec (8)-25%
	 
	 	(iii)	 	Mid management (3)-25%
	 
	 	B)	 	50% of cash incentive paid on achievement of current year financial metrics against
approved budget





 









 






	 	(i)	 	Revenue-90%-120% achievement of annual operating plan-factor-.9-1.20
	 
	 	(ii)	 	EBITDA-90%-120% achievement of annual operating plan-factor-.9-1.2
	 
	 	(iii)	 	Operating Plan-90%-120% achievement of annual operating plan-factor-.9-1.2





	 	 	 	 	 	 	 
	          Total financial metric factor =

	 	(i)+(ii)+(iii)
	 	 
	 

	 	 	3	 	 	 







	 	C)	 	50% of annual incentive paid on achievement of current year personal objectives as
determined by executive team and approved by comp committee
	 
	 	(i)	 	personal objectives-50%-120% achievement of personal objectives-factor .5-1.2

	 
	 	(ii)	 	Total personal objective factor = (i)
	 
	 	D)	 	Total annual incentive award
	 
	 	=	 	salary x (target annual incentive %)
	 	x	 	financial metric factor
	 	x	 	total personal objective factor








Note: if either total financial metric factor or personal objective factor = zero then there is no
incentive pay out.




II. STOCK BASED PERFORMANCE INCENTIVE




     Proposed Design




	 	A.	 	Target stock based performance incentive as a % of salary






	 	(i)	 	CEO-420%
	 
	 	(ii)	 	Exec-300%
	 
	 	(iii)	 	Senior Mgt-120%






	 	B.	 	4 year Restricted Stock (RS) Program

-Restricted stock may be awarded in the form of restricted stock units (RSUs) or
restricted stock awards (RSAs) as determined by the compensation committee and as
allowed by the applicable stock incentive plan.

-The actual amount of the equity incentive award is calculated by first multiplying the
target award by the executive’s personal objective factor used for calculating the cash
based performance incentive. A personal objective factor below 50% will result in no
stock based incentive award. After the personal objective factor is applied to the
target, the following factors are applied to determine the actual stock based incentive
award.

-1/3 time vested over 4 years (50% cliff vest 2 years-remaining 50% monthly over years
3 and 4)

-2/3 current year financial performance based vested over 4 years (I year cliff vesting
remaining 75% vesting monthly over years 2, 3, 4)





2









 






	 	 	-1/3 revenue current financial performance based

-1/3 EBITDA current financial performance based

-1/3 Operating plan current financial performance based





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III. VESTING SCHEDULE




	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	Annual	 	Long Term	 	 	 	 	 	 
	 	 	(Year 1)	 	(Year 2-4)	 	 	 	 	 	 
	CEO	 	Year	 	Year	 	Year	 	Year	 	LONG	 	TOTAL
	 	 	1	 	2	 	3	 	4	 	TERM	 	INCENTIVE
	 	 	 	 	 	 	 	 	 	 	TOTAL	 	PROGRAM
	Cash
	 	25	 	—	 	—	 	—	 	—	 	25
	RS-Time Vesting
	 	—	 	70	 	35	 	35	 	140	 	140
	-Financial
Performance
	 	70	 	70	 	70	 	70	 	210	 	280
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	TOTAL
	 	95	 	140	 	105	 	105	 	350	 	445
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	Annual 3Q Target
	 	75-100%	 	 	 	 	 	 	 	 	 	 
	Long Term 4Q Target
	 	 	 	 	 	 	 	 	 	300-450%	 	(75th)






	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	Annual	 	Long Term	 	 	 	 	 	 
	 	 	(Year 1)	 	(Year 2-4)	 	 	 	 	 	 
	EXECUTIVE	 	Year	 	Year	 	Year	 	Year	 	LONG	 	TOTAL
	 	 	1	 	2	 	3	 	4	 	TERM	 	INCENTIVE
	 	 	 	 	 	 	 	 	 	 	TOTAL	 	PROGRAM
	Cash
	 	25	 	—	 	—	 	—	 	 	 	25
	RS-Time Vesting
	 	—	 	50	 	25	 	25	 	100	 	100
	-Financial Performance
	 	50	 	50	 	50	 	50	 	150	 	200
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	TOTAL
	 	75	 	100	 	75	 	75	 	250	 	325
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	Annual 3Q Target
	 	50-75%	 	 	 	 	 	 	 	 	 	 
	Long Term 4Q Target
	 	 	 	 	 	 	 	 	 	200-300%	 	(75th)






	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	Annual	 	Long Term	 	 	 	 	 	 
	 	 	(Year 1)	 	(Year 2-4)	 	 	 	 	 	 
	SENIOR MANAGEMENT	 	Year	 	Year	 	Year	 	Year	 	LONG	 	TOTAL
	 	 	1	 	2	 	3	 	4	 	TERM	 	INCENTIVE
	 	 	 	 	 	 	 	 	 	 	TOTAL	 	PROGRAM
	Cash
	 	25	 	—	 	—	 	—	 	—	 	25
	RS-Time Vesting
	 	—	 	20	 	10	 	10	 	40	 	40
	-Financial
Performance
	 	20	 	20	 	20	 	20	 	60	 	80
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	TOTAL
	 	45	 	40	 	30	 	30	 	100	 	145
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	Annual 3Q Target
	 	25-50%	 	 	 	 	 	 	 	 	 	 
	Long Term 3Q Target
	 	 	 	 	 	 	 	 	 	(N/A)	 	 






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	SUMMARY EXPENSE	 	TOTAL	 
	Cash Incentive Annual Cost at 100% Target
	 	$	525,000	 
	 
	 	 	 	 
	Stock Based Incentive Cost (at time of grant)
	 	$	4,800,000	 
	 
	 	 	 
	 
	 	$	5,325,000	 
	 
	 	 	 






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