Exhibit 10.1


 


Summary
of 2005 Success Sharing Bonus Plan


 


Overview and Purpose


 


The 2005 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 2005 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, the Compensation Committee and the Board of Directors at
the end of each fiscal year.  The Success
Sharing Payout Percentage is based on the Company’s level of achievement in
four 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 Board of Directors 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


 


Four categories of performance measures have
been established for 2005.  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 four categories
of performance measures are:


 


Sales Growth, comparing
current year’s sales to last year’s sales;


 


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;


 


2005 Board Approved Plan, including business and
financial objectives established by the Board of Directors; and


 


Overall Company Evaluation, based on the Company’s
performance in light of its strategic and business outlook for future years.


 


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Calculation of Individual Bonus
Payouts


 


Each employee’s individual bonus potential (the “Bonus Potential”) is
equal to his or her 2005 pay times an eligibility level percentage based on
such employee’s job position, which for officers is 30% and for the CEO is 40%.  The amount of 2005 pay to be included in the
calculation of Bonus Potential for officers and the CEO is equal to the
employee’s actual earning for 2005 (less any incentive bonus, disqualifying
dispositions from the sale of incentive stock option shares, gift certificate
amounts or referral bonuses).  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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