Exhibit 10.1


 


Summary of 2006 Success Sharing
Bonus Plan


 


Overview and Purpose


 


The 2006 Success Sharing
Bonus Plan (the “SSB Plan”) provides opportunities for all employees of Fargo
Electronics, Inc. (the “Company”) to share in the Company’s success by offering
incentive compensation for the Company’s achievement of specified performance
measures.


 


Eligibility


 


All Company employees, both
full time and part time, are eligible to participate in the 2006 SSB Plan.  Employees must be employed by the Company on
the SSB payout date to receive the bonus payout.


 


Administration


 


The specified performance
measures are defined each year by the CEO and approved by the Board of
Directors.  At the end of each plan year,
the CEO, the Compensation and Human Resources Committee and the Board of
Directors review the performance measures against the Company’s actual
performance to determine the Success Sharing Payout Percentage (defined below)
for such plan year.


 


Success Sharing Payout
Percentage


 


The “Success Sharing Payout
Percentage” is determined by the CEO and the Compensation and Human Resources Committee
at the end of each fiscal year.  The
Success Sharing Payout Percentage is based on the Company’s level of
achievement in two categories of performance measures.  While there is no set formula to establish
the final Payout Percentage level, Company leadership follows suggested
guidelines to determine success or failure under each measure.  The Compensation and Human Resources
Committee has the discretion to use, not use or modify the Payout Percentage
determined under the suggested guidelines.


 


The Success Sharing Payout
Percentage may range from 0% to 250%, which is then applied to each eligible
employee’s Bonus Potential (defined below) to determine the actual bonus payout
for each employee.


 


Performance Measures


 


Two categories of
performance measures have been established for 2006.  Company leadership assigns a percentage “score”,
ranging from 0% to 250%, for each category. 
The scores are then averaged on a weighted basis according to the
guidelines to calculate the overall Success Sharing Payout Percentage.  The two categories of performance measures
are:


 


Return on Net Assets before
Interest and Taxes and  Sales Growth,
Return on Net Assets before Interest and Taxes (calculated by dividing
operating profit by the net assets employed in the business), reflecting the
Company’s return on its investment in the business, referenced with Sales
Growth, comparing current year’s sales to last year’s sales; and


 


2006 Board Approved Plan, including business and financial objectives
established by the Board of Directors.


 


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Calculation of Individual
Bonus Payouts


 


Each employee’s individual
bonus potential (the “Bonus Potential”) is equal to his or her 2006 pay times
an eligibility level percentage based on such employee’s job position, which
for officers is 35% and for the CEO is 50%. 
The amount of 2006 pay to be included in the calculation of Bonus
Potential for officers and the CEO is equal to the employee’s base salary for
2006.  The Company communicates
eligibility rates to employees at the time they are hired, and communicates
changes in these rates in writing after they have approved by the Company’s
Director of Human Resources and the Chief Financial Officer.  As noted above, the Bonus Potential is
multiplied by the Success Sharing Payout Percentage to determine the actual
bonus payout for each employee.  SSB
payouts are subject to deductions for applicable federal and state taxes,
Employee Stock Purchase Plan elections and 401(k) contributions.


 


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