2008 Incentive Plan Corporate Management of Insurance Auto Auctions, Inc.



 Exhibit 10.38 
 Insurance Auto Auctions, Inc. 
 2008 Incentive Plan 
 Corporate Management 







 Insurance Auto Auctions, Inc. 
 2008 Incentive Plan 
 SECTION 1 OBJECTIVE 
 The purpose of this Plan is to motivate and reward key executives and management personnel responsible for the successful achievement of Company financial goals along
with specific personal goals during the Plan year. Performance will be evaluated against pre-determined financial objectives so that each Participant will know what specific performance will be required to achieve an incentive award. 
 SECTION 2 EFFECTIVE DATE 
 This Plan is effective
January 1, 2008. The Company reserves the right to revise or terminate the Plan at any time, with or without advance notice. 
 SECTION 3
PARTICIPATION 
 The Company's Chief Executive Officer (CEO) will approve all Plan Participants in accordance with the authorities granted by the
Compensation Committee of the Board of Directors. Only personnel whose responsibilities and accomplishments can be directly identified with the achievement of major business goals are eligible to participate. 
 No employee shall have a right to be selected as a Participant in any year, or having been selected as a Participant for one year, to be a Participant in any other year.
Participation does not constitute a guarantee of employment for the entire Plan year, or any specific time period. 
 SECTION 4 ELIGIBILITY 

 Key managers are eligible to participate in the Program provided the Chief Executive Officer approves them. The Company's Chief Executive Officer shall
approve individual participants and their Target Incentive Opportunity for the Plan year as well as any changes in Target Incentive Opportunities during the Plan year, as changes in assignments warrant. 
 The Company’s Chief Executive Officer must approve additions to the Executive Incentive Plan after the start of the Plan year and prior to October 1, 2008.
After October 1, 2008 additional Participants will not be added to the Plan until the beginning of the next Plan year. The amount of incentive award paid will be pro-rated based on the employee's date of Plan entrance or employment. These same
guidelines apply to employees who are promoted into an incentive plan position during the year. 
 SECTION 5 INCENTIVE OPPORTUNITY 

Incentive opportunities are expressed as a percentage of total base salary for the plan year and vary by organization level. 
  

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 SECTION 6 INCENTIVE AWARDS 
 Incentive awards are earned based on achievement of specific objectives. For the remainder of the 2008 fiscal year, each participant’s incentive award will be based on a target of $ million of adjusted EBITDA.

 Each year budgets are prepared and submitted to the Company's Chief Executive Officer and the Board of Directors for review and approval. In order for the
incentive plan to be truly motivational and assist in achieving corporate growth objectives, two principles will be adhered to closely: 
  

	 	•	 	 Budgets must be realistic, yet rigorous. Budgets should set attainable goals; yet, to attain these goals above average performance will be required. Presumably,
base salary is being paid for average performance and is thus sufficient. 


  

	 	•	 	 Equity requires that each budget have relatively equal “stretch”. The 


 Chief Executive Officer will review each budget to evaluate the “stretch”. 
 Incentive Awards will be based on achievement of specific objectives using the formula in Exhibit A. The Company must achieve at least 90% of the adjusted EBITDA target
before any incentive awards are earned. Overall percentage achievement above plan will be factored up 100% to arrive at the payout percentage. Overall percentage achievement below plan will be factored down by 50% to arrive at the payout percentage.
For example, the incentive factor would require payout at 120% of target for 10% above plan performance. 
 Maximum achievement will be 130%. Using the
incentive factors, this will result in an initial payout of 85% of target once the threshold is achieved to a maximum payout of 160% of target. 
 The CEO
has the right to designate individual goals and objectives for specific participants as a part of their incentive calculation. 
 SECTION 7
DEFINITION OF FINANCIAL PERFORMANCE 
 The financial performance measurement for awards under this Plan shall be calculated based on attaining an adjusted
EBITDA target of $ million. 
 EBITDA is defined as earnings before interest, tax, depreciation, amortization and certain transaction related costs, merger
expenses and other items consistent with the companies’ presentation of adjusted EBITDA. The EBITDA calculation shall be adjusted for transaction costs and merger related expenses. The board’s determination on the EBITDA calculation shall
be final and conclusive. 
  

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 SECTION 8 PLAN ADMINISTRATION 
 The Chief Executive Officer of Insurance Auto Auctions, Inc. will approve final bonus recommendations and authorize the distribution of incentive bonus checks to participants after approval. The CEO, acting under the
direction of the Compensation Committee, is the final authority to resolve any issues or disputes that arise in the administration of the plan. 
 Adjustments to the Incentive Plan Awards may be made to reflect changes in responsibility, account reassignment, etc., at the discretion of the Company. Any amendments to the Plan or adjustments to an award must be approved by IAA’s
Chief Executive Officer. 
 The cost of the incentive pool will be recognized through the monthly accrual of funds equivalent to the total target award
payment for all participants divided by 12 months. Accruals will be adjusted based on actual financial performance against financial plan goals. 
 SECTION 9 INCENTIVE AWARD PAYMENT 
 Incentive payments to eligible participants will be made within 90 days after year-end (but
not before completion of the annual audit of the Company’s financial statements). 
 Participants must be on the payroll and in good standing on the
date awards are paid to be eligible for an award payment. 
 SECTION 10 TERMINATIONS 
 The following provisions will cover participants whose employment with the Company terminates during the Plan Year: 
  

	 	•	 	 Participants voluntarily terminating their employment or Participants discharged for cause forfeit all rights to any incentive award payment under this Plan. IAA
shall have the sole right to determine what constitutes "cause" for purposes of this paragraph. 


  

	 	•	 	 Pro-rated incentive awards will be paid to Participants whose employment with the company terminates during the Plan year due to retirement, permanent and total
disability, or death. Pro-rated incentive awards will be also be paid to Participants who are granted a leave of absence during the Plan year. 


  


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 SECTION 11 ASSIGNMENTS AND TRANSFERS 
 The rights and interests of a Participant under the Plan may not be assigned, encumbered or transferred except, in the event of the death of a Participant, to his/her designated beneficiary, or in the absence of such
designation by will or the laws of descent and distribution. 
 SECTION 12 PLAN DEVIATION 
 The Chief Executive Officer, acting under the direction of the Compensation Committee, at their discretion, may make adjustments as they deem advisable in order to give
consideration to distinguished performance, changes in accounting rules, principles, or methods, changes in portfolio, disputes that may arise, or other extraordinary events (including weather-related natural disasters) and to adjust Financial
Performance measures in recognition of such occurrence. 
  

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 Exhibit A 
 Example Incentive Calculation 
  

			
	Actual EBITDA	    	$100.04 million
	Target EBITDA	    	$105.3 million
		
	Percentage Achievement	    	95%
	Incentive Factor	    	1.5x
	Payout Percentage	    	92.5%
		
	Employee Salary	    	$75,000
	Bonus @ Target	    	25%
		
	Incentive Payout	    	$17,344
	(92.5% × 25% × $75,000)	    	

  

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