Exhibit 10.13


 


Phase Forward Incorporated


 


 


Management Incentive Plan


 


 


 


 


Effective January 1, 2008


 


 

















 


Phase Forward Incorporated


Management Incentive Plan (MIP)


Plan Document


Effective January 1, 2008


 


TABLE
OF CONTENTS


 


 




	
  Section

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  
	
  I.

  	
  Purpose

  	
  3.

  
	
   

  	
   

  	
   

  
	
  II.

  	
  Effective Date of Plan

  	
  3.

  
	
   

  	
   

  	
   

  
	
  III.

  	
  Eligibility

  	
  3.

  
	
   

  	
   

  	
   

  
	
  IV.

  	
  MIP Target Payouts

  	
  3.

  
	
   

  	
   

  	
   

  
	
  V.

  	
  Measurement

  	
  3.

  
	
   

  	
   

  	
   

  
	
  VI.

  	
  Payment and Transition Issues

  	
  3.

  
	
   

  	
   

  	
   

  
	
  VII.

  	
  Administration

  	
  4.

  
	
   

  	
   

  	
   

  
	
  VIII.

  	
  Excess Distributions

  	
  4.

  
	
   

  	
   

  	
   

  
	
  Plan Exhibits

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  A.

  	
  Plan Components

  	
  5.

  
	
   

  	
   

  	
   

  
	
  B.

  	
  Participant Notification

  & Acknowledgement Sheet

  	
  6.

  






 


 


2

















Phase Forward


Management Incentive Plan (MIP)


Plan Document


 


I.       Purpose


 


The objective of the
Management Incentive Plan (MIP) is to recognize and to reward the achievement
of financial performance goals that are essential to the success of Phase
Forward. This program, in conjunction with base salary, is designed to offer
designated employees of Phase Forward Incorporated and/or its subsidiaries (the
“Company”) total cash compensation opportunities that are fully competitive
with market levels.


 


II.     Effective Date of Plan


 


The effective date for
implementation of the Plan shall be January 1, 2008.  A Plan year is equivalent to a calendar year.
The Plan may be modified or terminated at any time by the Management
Development and Compensation Committee or their designee in its or their sole
discretion, without notice or consent of the Participants.


 


III.   Eligibility


 


Certain employees,
designated by executive management in its sole discretion, whose roles and
responsibilities are deemed by executive management to be critical to
operations and/or who are at a management level in the organization are
eligible for participation in the MIP. Target Participation Percentage is
defined by the position.


 


IV.    MIP Target Payout


 


Participants will be
assigned a target payout for the MIP, expressed as a percentage of total base
salary, set forth in Exhibit B. This percentage represents the potential
dollar award that could be earned upon achievement of goals for all Plan
components.  The target payout percentage
will vary according to the Participant’s position.  Actual Plan payments will vary based on
performance and time in position.


 


V.     Measurement


 


The MIP consists of one
component for all Participants.  The
Participant will be assigned a target payout, expressed as a percentage of base
salary, to be used to calculate an amount (i.e. 10 % of $90,000 base salary
equals $9,000).  The Plan component and
quarterly weighting is set forth in Exhibit A.


 


VI.             Payment and Transition Issues


 


A Participant in the Plan
must be actively employed by the company through payment dates to receive any
payout under the plan. Payment dates are typically during the month of March following
the end of the Plan year. Payments
will be made no later than 75 days after the close of the Plan year. Since the
annual components are calculated on base salary as of December 31 of the
plan year, payouts for annual components will be pro-rated for those eligible
Participants who join the plan during the year, prior to October 1.
Employees who transfer out of an eligible position during the year into a
non-eligible position in the company, but who are still employed as of the
payment date, will be considered for an award 


 


 


3

















 


based on the number of
months in the eligible position and earnings accrued during those months.


 


Employees hired or
promoted for the first time into bonus eligible positions after October 1
will not be eligible to participate in any component of the Plan for that plan
year.


 


VII.        Administration


 


The adoption, eligibility
and participation in this Plan in no way infers or reflects any guarantee of a
contract of employment.  Except as
expressly set forth in any Participant’s employee agreement signed by the
company and employee, all of the employees of the company are employees “at
will”. Participation in this plan does not confer any right to continue in the
company’s employ or limit the right of the company to terminate the participant
at any time, with or without cause or notice.


 


The financial targets
assigned and recognized as goals on any of the performance factors may be
revised or otherwise modified by the executive management of the company at any
time to account for any material change in the business of the company.  Any such revisions or modifications will be
made in writing to all Participants as soon as possible after the need for such
change is determined.


 


If any term or condition
of this Plan is found to be in non-conformance with a given state, federal, or
country law, that term or condition will be non-enforceable but will not negate
other terms and conditions of the Plan. 
However, the company will review and modify the overall plan to conform
to such law.


 


The company is an Equal
Opportunity Employer committed to a diverse workforce.  The company will not discriminate on the
basis of race, color, religion, age, sexual orientation, national origin,
physical or mental disability, or veteran status.


 


All matters of MIP
interpretation should be directed to the VP, Human Resources, and will be
resolved at his/her discretion subject to the approval of the CEO and where
necessary the Management Development and Compensation Committee.


 


VIII.
Return of Excess Distributions (Applies to Executive Officers only)


 


Notwithstanding any
provision hereof to the contrary, if the company restates its financial results
for any period covered by this Plan, the company will re-measure the
achievement of performance targets using the restated financial results. Following
such recalculation, if the aggregate amount of a previously paid bonus to a
Participant identified on Schedule B (a “Senior Participant”) exceeds
the aggregate amount of his or her bonus actually earned, such excess shall be
deemed to constitute a “bonus overpayment”. The company shall notify each
Senior Participant of the amount of his or her bonus overpayment as soon as
reasonably practical. The amount of such bonus overpayment shall be, at the
company’s election, either (i) repaid to the company by the Senior
Participant within 30 days of receipt of the notice of bonus overpayment or (ii) deducted
from the Senior Participant’s future compensation. The provisions of this
section shall survive the termination or expiration of this Plan.


 


 


4

















 


Exhibit A


 


Plan Component


The Plan Component is:


 


1.              Operating Income before Bonus and
Stock Based Expenses


 


This relates to the
global performance by the Company against the Company’s planned earnings for
the fiscal year corresponding to the Plan year, as established by the Board at
the beginning of the Plan year. The specific criteria upon which any bonuses
may be earned during the Plan year is based on operating income before bonus,
stock based compensation expenses and acquisition purchase price amortization expenses.  The achievement of performance targets will
be measured when or shortly after the Company publicly reports its financial
results for the applicable period.   All
Participants are measured on this component. The targets may change as approved
by the Board of Directors in its sole discretion, for items such as an
acquisition or other extraordinary corporate event.


 


For acquisitions during the Plan year, the approved operating income
(loss) of the acquired company for the remainder of the Plan year will be added
(subtracted) to the Plan target income.


 


This component is earned
on a quarterly basis but paid annually, by the end of the March following
the end of the plan year. A minimum achievement or “threshold” of 80% of global
performance in each quarter is required for payout of the component applicable
to that quarter.  Total payments for the
year may not exceed 200% of the Target Payout. Payments are paid according the
following schedule:


 




	
   

  	
  First, Second and Third Quarter
  Payment Schedule

  
	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Achievement %

  	
   

  	
  Payout %

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  <80%

  	
   

  	
  0%

  
	
   

  	
  80% - 99.9%

  	
   

  	
  50% + 2.5% for each additional % achieved

  
	
   

  	
  >100

  	
   

  	
  100% + 3% for each additional % achieved

  






 




	
   

  	
  Fourth Quarter Payment Schedule

  
	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Achievement %

  	
   

  	
  Payout %

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  <80%

  	
   

  	
  0%

  
	
   

  	
  80% - 99.9%

  	
   

  	
  50% + 2.5% for each additional % achieved

  
	
   

  	
  >100

  	
   

  	
  100% + 2.5% for each additional % achieved

  






 


For Illustration Purposes: (Quarters are not weighted equally)


Q-1 Achievement of 110% would result in a payout of
130% of target


 


Q-2 Achievement of 100%
would result in a payout of 100% of target


 


 


5

















 


Q-3 Achievement of 85%
would result in a payout of 62.5% of target


 


Q-4 Achievement of 105%
would result in a payout of 112.5% of target


 


 


6

















 


 


Exhibit B


Participant Notification Sheet


Certificate of Acknowledgement


 






2008
Management Incentive Plan


 


	
  Name
  of Participant:

  	
   

  
	
   

  	
   

  
	
  Base Salary as of 3-1-08

  	
  $

  
	
   

  	
   

  
	
  Target Participation
  Percentage: 

  	
    %

  
	
   

  	
   

  
	
  MIP Target Payout Annualized:

  	
  $

  



 


The information above is for
illustration purposes only and assumes annualized participation. Actual
payments will be made in accordance with the plan and will vary based on actual
achievement of targets.


 






 


Plan Components and Weighting:


 


100% Operating Income Before Bonus, Stock Based
Expenses and acquisition purchase price amortization expense (earned quarterly
as follows):


 




	
   

  	
  Q-1

  	
  10%

  
	
   

  	
  Q-2

  	
  15%

  
	
   

  	
  Q-3

  	
  30%

  
	
   

  	
  Q-4

  	
  45%

  






 


The information above is for
illustration purposes only and actual payments will be made in accordance with
the plan and will vary based on actual achievement of targets.


 






 


 


I,                                               ,
hereby certify that I have read the Phase Forward Incorporated Management
Incentive Plan.  I understand and agree
to the terms of the plan.


 


 


	
   

  	
   

  	
   

  
	
  Signature

  	
   

  	
  Date

  



 


 


7