EX-10.16






Exhibit 10.16




TECHTEAM GLOBAL, INC.

ANNUAL INCENTIVE PLAN

Amended Effective September 24, 2008




Purpose




The Annual Incentive Plan (“Plan”) has been established to provide opportunities for
eligible employees to receive annual incentive compensation as a reward for high levels of Company
and individual performance that exceeds the ordinary standards compensated through Base Salary.



Participants




Participation in the Plan is limited to the officers of the Company who are subject to Section 16
of the Securities Exchange Act of 1934, as amended (“Executive Officers”), and employees of
the Company who are designated by the Company’s Chief Executive Officer (“CEO”) as eligible
for participation in the Plan (all together “Participants”). Participants may be added to the Plan
during the Measurement Period. For Participants who begin employment during a Measurement Period,
any Bonus Payment shall be paid pro rata, based on the length of the individual’s employment during
the Measurement Period.



Bonus Pool; Reserve for Plan Liabilities




The Payout is limited to 30% of the Adjusted Net Income of the Company for the Measurement Period
(the “Bonus Pool”). If the Bonus Pool is insufficient to fund the Payout for any
Measurement Period, the Bonus Payment for each Participant shall be multiplied by a percentage, (a)
the numerator of which shall be the Bonus Pool, and (b) the denominator of which shall be the
Payout. The Company’s Chief Financial Officer (“CFO”) shall review quarterly the status of
the Plan and record any liabilities and reserves for the Plan necessary in the Company’s interim
financial statements.



Bonus Targets




A Participant’s potential bonus is based upon the Participant’s responsibilities within the
Company. Accordingly, prior to the commencement of the Measurement Period, the Administrator, for
Executive Officers, and the Company’s Chief Executive Officer (“CEO”), for all other
Participants, shall designate a Participant’s Bonus Target Percentage and Bonus Group. The tables
below set forth the Bonus Target Percentage and the Bonus Group for determining each Participant’s
Bonus Payment.



Table 1. Bonus Target Percentage




	 	 	 	 	 
	 	 	Bonus Target
	Level	 	Percentage
	Level 1
	 	50% and above
	Level 2
	 	40% up to 50%
	Level 3
	 	30% up to 40%
	Level 4
	 	15% up to 30%






 









 






Table 2. Bonus Group




	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	Business Unit	 	Company	 	 	 	 	 	Personal
	 	 	Adjusted Net	 	Adjusted Net	 	Personal	 	Performance
	Bonus Group	 	Income	 	Income	 	Performance	 	Modifier
	Global
	 	 	 	 	 	 	80	%	 	 	20	%	 	 	1.0 to 1.5	 
	Business Unit
	 	 	40	%	 	 	40	%	 	 	20	%	 	 	1.0 to 1.5	 






Setting Performance Target




Prior to the commencement of the Measurement Period, the Company’s Board of Directors shall set the
Adjusted Net Income Targets. The Board of Directors may make reasonable and proportionate
adjustments to the Adjusted Net Income Targets for any Measurement Period for Extraordinary Events.
Any such adjustment shall be made within thirty (30) days after the occurrence of an Extraordinary
Event. The Administrator shall have the authority to modify business unit Adjusted Net Income
Targets for legitimate business purposes, as long as the Board approved Company Adjusted Net Income
Target is not affected.



Personal Performance




The Participant and his/her manager shall establish Personal Performance goals appropriate for the
Participant’s job function in light of the Business Plan prior to the commencement of the
Measurement Period. A Participant’s Personal Achievement shall be measured by the individual’s
direct supervisor, who shall recommend a Personal Performance Modifier. The CEO shall modify or
approve the Personal Performance Modifier and report it to the Administrator. The CEO shall (a)
report to the Administrator the Personal Achievement and (b) recommend a Personal Performance
Modifier for all other Executive Officers, which shall be amended or approved by the Administrator.
The Chief Executive Officer’s Personal Performance Goals shall be set and Personal Achievement
determined (including consideration of any Personal Performance Modifier) by the Board of Directors
based upon the advice of the Administrator.



Calculation of Bonus




The Company must achieve at least 75% of its Adjusted Net Income Target before any Payout is
required under the Plan. The Bonus Payment for any Measurement Period shall be calculated for each
Participant as follows:




	 	1.	 	For Participants in the Global Bonus Group, a Participant’s:






	 	a.	 	Target Bonus multiplied by (i) .80, and (ii) the Company’s
Achievement Level for the Measurement Period; plus
	 
	 	b.	 	Target Bonus multiplied by (i) .20, (ii) such Participant’s Personal
Achievement and (iii) the Personal Performance Modifier.






	 	2.	 	For Participants in a Business Unit Bonus Group, a Participant’s:






	 	a.	 	Target Bonus multiplied by (i) .40, and (ii) the Company’s
Achievement Level for the Measurement Period; plus
	 
	 	b.	 	Target Bonus multiplied by multiplied by (i) .40, and (ii) the
Business Unit’s Achievement Level for the Measurement Period; plus
	 
	 	c.	 	Target Bonus multiplied by (i) .20, (ii) such Participant’s Personal
Achievement, and (iii) the Personal Performance Modifier.




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Process for Determination of Bonus




The CFO shall be responsible for determining and reporting to the Administrator whether the Company
has achieved at least 75% of its Adjusted Net Income Target, and, if so, the Achievement Level for
the Company as a whole and for each Business Unit. As soon as practical after the close of the
Measurement Period, the Administrator shall review and certify in writing, whether, and to what
extent, the Adjusted Net Income Targets for the Measurement Period have been achieved. The CEO and
CFO shall together recommend to the Administrator the Bonus Payments for all Participants in
accordance with the Plan. If the Adjusted Net Income Targets have been achieved, the Administrator
shall certify in writing the amount of the Bonus Payment earned by each Participant.



The Administrator reserves the right to make Bonus Payments to any Participant, upon recommendation
of the CEO, outside of the guidelines of this Plan.



Termination of Employment, Entitlement and Funding




Except for death, Total Disability, or Retirement, no Bonus Payment is required to be made to any
individual who is not a Participant on the last day of the Measurement Period and employed with the
Company when the Bonus Payments are made. In the event of death, Total Disability, or Retirement
of a Participant during the Measurement Period, the Bonus Payment shall be paid to the individual’s
beneficiary and shall be based on the pro-rata length of the individual’s employment during the
Measurement Period and paid at the time of all other Bonus Payments.



Nothing in this Plan will require the Company to purchase assets or place assets in trust or other
entity to which contributions are made or otherwise segregate assets for the purpose of satisfying
obligations under the Plan. Participants will have no rights under the Plan other than as
unsecured general creditors.



Nothing in this Plan will be construed as creating any contract of employment, conferring upon any
Employee any right to continue in the employ or service of the Company, limit the right of the
Company to change the Employee’s compensation or other benefits, or to terminate employment or
other service of such person with or without cause.



Payment Terms; Right to Amend or Terminate




Bonus Payments shall be made in cash, subject to all required federal and local tax withholdings,
no later than the March 15 immediately following each Measurement Period. The Administrator
reserves the right to amend or terminate this Plan in any respect for (but not during) any
Measurement Period.



Definitions




“Achievement Level” means the percentage of the Adjusted Net Income Target achieved by the
Company or any Business Unit during the Measurement Period.



“Adjusted Net Income” is the net income of the Company for the Measurement Period as
reported in the Company’s Annual Report on Form 10-K, excluding the recognition of the expense and
the associated tax benefit of the Bonus Pool and net interest income or expense and the associated
tax liability or benefit resulting from that net interest income or expense.



“Adjusted Net Income Target” means the Adjusted Net Income to be achieved by the Company
and/or each Business Unit for any Measurement Period, as set by the Company’s Board of Directors,
based upon the financial plan approved by the Board of Directors for the Measurement Period.



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“Administrator” means the Compensation Committee of the Board of Directors of the Company,
which shall be responsible for the administration and maintenance of the Plan.



“Base Salary” means the salary of the Participant during any Measurement Period. If the
Base Salary for any Participant changes during any Measurement Period the Bonus Payment for that
Participant shall be calculated based upon the Participant’s Base Salary at the end of the
Measurement Period.



“Bonus Payment” means the annual incentive compensation determined under this Plan for any
Measurement Period.



“Bonus Pool” shall be 30% of the Company’s Adjusted Net Income for any Measurement Period.



“Bonus Target Percentage” shall mean a percentage of the Participant’s Base Salary.



“Business Plan” means the financial and operational goals of the Company for the
Measurement Period as adopted by the Board of Directors of the Company and approved by the
Administrator before commencement of the Measurement Period.



“Company” shall be defined TechTeam Global, Inc., a Delaware corporation, and any of its
subsidiaries, sub-subsidiaries, or successors thereto.



“Extraordinary Events” means, as recommended by CEO and approved by the Board of Directors,
any of the following: (1) mergers, acquisitions, divestitures and corporate reorganizations; (2)
any extraordinary gains or losses, including gains and losses resulting from accounting changes,
and (3) any extraordinary and/or nonrecurring items or charges.



“Measurement Period” shall be defined as the Company’s fiscal year.



“Participation Level” is defined as the level of participation designated by the CEO for
the Participant which, in conjunction with Table 1, determines the Participant’s Bonus Target.



“Payout” means the amount of money required to pay all Participants based on target
achievement for any Measurement Period.



“Personal Achievement” means the percentage by which a Participant has achieved his or her
Personal Performance Goals during any Measurement Period, as determined by the CEO, or by the
Administrator as appropriate.



“Personal Performance Goals” means goals appropriate for the Employee’s job function in
light of the Business Plan, as established by the Employee and his/her manager, or by the
Administrator in the case of Executive Officers.



“Retirement” means a termination from employment with the Company after reaching the age of
sixty-five (65).



“Target Bonus” means the Participant’s Base Salary multiplied by the Participant’s Bonus
Target Percentage.



“Total Disability” means a Participant’s becoming physically or mentally disabled such that
the Participant, in the good faith judgment of a medical doctor retained by the Company and
reasonably acceptable to Participant, is unable perform their employment duties for a period of 90
consecutive days or for 90 days during any six month period.




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