Exhibit 10.1


 


Phase
Forward Incorporated


 


 


Management
Incentive Plan


Effective
January 1, 2009


 


 

















 


Phase
Forward Incorporated


Management
Incentive Plan (MIP)


Plan
Document


Effective
January 1, 2009


 


TABLE OF
CONTENTS


 


	
  Section

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  
	
  I.

  	
  Purpose

  	
  3.

  
	
   

  	
   

  	
   

  
	
  II.

  	
  Effective Date

  	
  3.

  
	
   

  	
   

  	
   

  
	
  III.

  	
  Eligibility

  	
  3.

  
	
   

  	
   

  	
   

  
	
  IV.

  	
  Bonus Determination

  	
  3.

  
	
   

  	
   

  	
   

  
	
  V.

  	
  Payment and Transition Issues

  	
  4.

  
	
   

  	
   

  	
   

  
	
  VI.

  	
  Administration

  	
  4.

  
	
   

  	
   

  	
   

  
	
  VII.

  	
  Return of Excess Distributions

  	
  5.

  



 


 


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Phase Forward
Incorporated


Management
Incentive Plan (MIP)


Plan
Document


 


I.             Purpose


 


This Management Incentive
Plan (the “MIP”) is intended to recognize and 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. 
The MIP is for the benefit of Covered Employees (as defined below).


 


II.            Effective Date


 


The effective date for
implementation of the MIP shall be January 1, 2009.  A MIP year is equivalent to a calendar year.
The MIP 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


 


From time to time, the
executive management of the Company and/or the Management Development and
Compensation Committee may select certain employees (the “Covered Employees”),
whose roles and responsibilities are deemed by executive management to be
critical to operations and/or who are at a management level in the Company, to
be eligible to receive bonuses hereunder.


 


IV.          Bonus Determinations


 


A Covered Employee may
receive a bonus payment under the MIP based upon the attainment of performance
targets which are established by executive management of the Company and
approved by the Management Development and Compensation Committee.  The performance targets will relate to
financial and operational metrics with respect to the Company or any of its
subsidiaries (the “Performance Goals”), including the following:  earnings per share, revenues, EBITDA
(earnings before interest, taxes, depreciation and amortization), net income
(loss) (either before or after interest, taxes, depreciation and/or
amortization), changes in the market price of the Stock, economic value-added,
funds from operations or similar measure, sales or revenue, acquisitions or
strategic transactions, proforma operating income (loss), cash flow (including,
but not limited to, operating cash flow and free cash flow), return on capital,
assets, equity, or investment, stockholder returns, return on sales, gross or
net profit levels, productivity, expense, margins, operating efficiency,
customer satisfaction, working capital, sales or market shares, bookings and
number of customers, any of which may be measured either in absolute terms or
as compared to any incremental increase or as compared to results of a peer
group.


 


Covered Employees will be
assigned a target payout for the MIP, expressed as a percentage of total base
salary.  This percentage represents the
potential dollar award that could be earned upon achievement of Performance
Goals and will vary according to the participant’s position. Each Covered
Employee shall have a targeted bonus opportunity for each performance
period.  The


 


 


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actual dollar award may
exceed the target payout in the event of over-achievement of Performance Goals
subject to a maximum of 200% of the Covered Employee’s bonus opportunity;
provided, however, such limitation shall be 300% for any performance targets
based on bookings, sales quotas or similar sales metrics.


 


The performance targets
may change as approved by the Management Development and Compensation Committee
in its sole discretion, for items, such as an acquisition or other
extraordinary corporate event.


 


Except as otherwise set
forth in this Section IV:  (i) any
bonuses paid to Covered Employees under the MIP shall be based upon objectively
determinable bonus formulas that tie such bonuses to one or more performance targets
relating to the Performance Goals, (ii) bonus formulas for Covered Employees
shall be adopted in each performance period by the Management Development
Compensation Committee and communicated to each Covered Employee at the
beginning of each bonus period and (iii) no bonuses shall be paid to Covered
Employees unless and until the executive management of the Company (and
Management Development and Compensation Committee with respect to the Company’s
executive officers) makes a determination with respect to the attainment of the
Performance Goals.


 


Notwithstanding the
foregoing, the Company may adjust bonuses payable under the MIP based on
achievement of individual performance goals or pay bonuses (including, without
limitation, discretionary bonuses) to Covered Employees under the MIP based
upon such other terms and conditions as the Management Development and
Compensation Committee may in its discretion determine.


 


V.            Payment and Transition Issues


 


The achievement of
Performance Goals will be measured when or shortly after the Company publicly
reports its financial results for the applicable performance period.  If the Performance Goals are met, payments
will be made no later than March 15. 
Payment dates are typically during 
February or March following the end of the performance period.


 


The payment of a bonus to
a Covered Employee with respect to a performance period shall be conditioned
upon the Covered Employee’s employment by the Company on the payment date.  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
based on the number of months in the eligible position and earnings accrued
during those months.  Since the
performance targets are calculated on base salary as of December 31 of the
performance period, bonuses will be pro-rated for those eligible Covered
Employees who join the MIP during the year, prior to October 1.  Employees hired or promoted for the first
time into bonus eligible positions after October 1 will not be eligible to
participate in the MIP for that performance period.  The Management Development and Compensation
Committee may make exceptions to the requirements of this paragraph, in its
sole discretion, including, without limitation, in the case of a Covered
Employee’s termination of employment, retirement, death or disability.


 


VI.          Administration


 


The executive management
of the Company shall have the discretion and authority to administer and
interpret the MIP, subject to the oversight (and approval with respect to the
Company’s


 


 


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executive officers) of
the Management Development and Compensation Committee.  All matters of interpretation of the MIP
should be directed to the Senior Vice President of 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.


 


The adoption, eligibility
and participation in this MIP in no way infers or reflects any guarantee of a
contract of employment.  Except as
expressly set forth in any Covered Employee’s employee agreement signed by the
Company and employee, all of the employees of the Company are employees “at
will”. Participation in the MIP 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
(subject to the approval of the Management Development and Compensation
Committee with respect to the Company’s executive officers) 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 Covered Employees as soon as possible after the need for
such change is determined.


 


If any term or condition
of this MIP 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 MIP. 
However, the Company will review and modify the overall MIP 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.


 


VII.         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 performance period covered by this MIP, 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 an executive officer (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 VII
shall survive the termination or expiration of this MIP.


 


 


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