Exhibit 10.2


 


2006 Compensation Arrangements
for Named Executive Officers


 


Set
forth is a summary of fiscal 2006 compensation arrangements between Fargo
Electronics, Inc. (the “Company”) and certain of its executive officers
who are expected to constitute the Company’s “named executive officers”
(defined in Regulation S-K Item 402(a)(3)) for the year.  Generally, the salaries of named executive
officers are set at industry averages and variable compensation is provided for
through cash bonuses. The form of compensation provided to members of the named
executive officers varies based on their position and their ability to
influence performance.  All of the
Company’s executive officers are at-will employees, whose compensation and
employment status may be changed at any time in the discretion of the Company’s
Board of Directors, subject only to the terms of the Amended and Restated
Employment Agreement between the Company and Mr. Holland, and the terms of
the Officers Agreements (concerning a change in control of the Company) between
the Company and the other executive officers (the forms of which have been
filed as exhibits to the Company’s annual report on Form 10-K).


 


The
Compensation and Human Resources Committee has discretion to set executive
compensation at levels warranted by external, internal and individual
circumstances. The Committee has solicited through Mr. Holland, and
reviewed periodically, compensation surveys for officer positions in the
electronics industry. Although such data provides a base for comparison, it is
not necessarily used as the basis for the compensation actually awarded.


 


The
Company’s executive officer compensation program can be separated into several
elements: base salary, annual cash incentive compensation, and various benefits,
including medical and retirement savings plans generally available to
employees.


 


Base Salary


 


The
Company’s policy is to set the base salaries of its executives at the industry
average.  Effective as of January 1,
2006, the named executive officers are scheduled to receive the following
annual base salaries in their current positions:


 


	
  Name and Current Position

  	
   

  	
  Base Salary

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Gary R.
  Holland

  	
   

  	
  $

  	
  343,500

  	
   

  
	
  (Chairman of
  the Board of Directors, President and Chief Executive Officer)

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Kathleen L.
  Phillips

  	
   

  	
  $

  	
  185,000

  	
   

  
	
  (Marketing
  and Distribution)

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Thomas C.
  Platner

  	
   

  	
  $

  	
  185,000

  	
   

  
	
  (Engineering
  and Manufacturing)

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Paul W.B.
  Stephenson

  	
   

  	
  $

  	
  200,000

  	
   

  
	
  (Chief
  Financial Officer)

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Jeffrey D.
  Upin

  	
   

  	
  $

  	
  185,000

  	
   

  
	
  (Business Development,
  General Counsel and Secretary)

  	
   

  	
   

  	
   

  



 


Annual Cash Incentive Compensation


 


The
Compensation and Human Resources Committee establishes a bonus plan annually
for the Chief Executive Officer and all other Company employees.  For 2006, the Company’s Compensation and
Human Resources Committee approved, and the Board of Directors ratified, an
incentive bonus plan for


 


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all
of our employees, known as the “Success Sharing Bonus Plan” (the “SSB Plan”).  The SSB Plan is based on the Company’s
overall strategic, business and financial performance.


 


The
following table illustrates the calculation of the Bonus Potential (as defined
in the SSB Plan) for each named executive officer.  The Bonus Potential is multiplied by the
Success Sharing Payout Percentage (determined by the Board of Directors to be
between 0% and 250%) to determine the actual bonus payout for each employee.


 


	
  Name

  	
   

  	
  Annualized

  Salary

  	
   

  	
  Eligibility

  Percentage

  	
   

  	
  Bonus

  Potential

  	
   

  	
  Maximum Possible

  Bonus Payout

  (250% of Bonus Potential)

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Gary R.
  Holland

  	
   

  	
  $

  	
  343,500

  	
   

  	
  50%

  	
   

  	
  $

  	
  171,750

  	
   

  	
  $

  	
  429,375

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Kathleen L.
  Phillips

  	
   

  	
  $

  	
  185,000

  	
   

  	
  35%

  	
   

  	
  $

  	
  64,750

  	
   

  	
  $

  	
  161,875

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Thomas C.
  Platner

  	
   

  	
  $

  	
  185,000

  	
   

  	
  35%

  	
   

  	
  $

  	
  64,750

  	
   

  	
  $

  	
  161,875

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Paul W.B.
  Stephenson

  	
   

  	
  $

  	
  200,000

  	
   

  	
  35%

  	
   

  	
  $

  	
  70,000

  	
   

  	
  $

  	
  175,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Jeffrey D.
  Upin

  	
   

  	
  $

  	
  185,000

  	
   

  	
  35%

  	
   

  	
  $

  	
  64,750

  	
   

  	
  $

  	
  161,875

  	
   

  



 


Further
information regarding the SSB Plan is contained in Exhibit 10.1 to this
Current Report on Form 8-K.


 


Benefits


 


The
Company provides medical, dental and life and disability insurance benefits as
well as a 401(k) retirement plan (including a Company match as determined by
the Board of Directors) to its executive officers.  The same benefits are available to all Company
employees.


 


Mr. Holland
receives an annual car allowance in the amount of $12,000 annually.


 


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