exv10w2



 






	 	 	 	 	 



Exhibit 10.2




Executive Officer Compensation Summary

August 08, 2005





     Renaissance Learning, Inc.’s (the “Company’s”) executive officers consist of Mr. John Hickey,
President and Chief Executive Officer; Mr. Steven Schmidt, Executive Vice President; Ms. Mary
Minch, Chief Financial Officer; Mr. Terrance Paul, Co-Chairman of the Board; and Ms. Judith Paul,
Co-Chairman of the Board.



     The compensation structure for executive officers of the Company consists of base salary, cash
bonus, stock option grants and/or restricted stock awards. The Company’s Incentive Bonus Plan
permits participants in the plan to receive a cash bonus based on a percentage of their base salary
which is tied to the performance of the Company. Bonus awards are subject to a four year vesting
period, vesting 25% per year beginning one year from the date of the initial award. The vested
portion of the award is then paid out promptly upon vesting. Options granted under the Company’s
Stock Incentive Plan are granted at the fair market value of the stock on the date of grant, are
subject to a vesting schedule determined by the Compensation Committee, and expire 10 years from
the date of grant (subject to earlier termination in the event of termination of employment; but
see discussion of Mr. Hickey’s option grants below).



     Each executive receives a base salary, but only Mr. Schmidt and Ms. Minch participate in the
Company’s Incentive Bonus Plan. Mr. Hickey, Mr. Schmidt and Ms. Minch participate in the Company’s
Stock Incentive Plan. In addition, each executive is entitled to receive 401(k) plan and
supplemental executive retirement plan (“SERP”) matching amounts contributed by the Company. The
Company does not have employment agreements with any of its executive officers.



     Compensation decisions affecting the Company’s executive officers are typically made in July
of each year by the Compensation Committee of the Board of Directors. In April 2005 and July 2005,
the Compensation Committee approved the terms of compensation to be paid to the Company’s executive
officers for the 12 month period ending in July 2006, as follows:




	 	•	 	Mr. Hickey. The Committee approved a 4% increase in Mr. Hickey’s base salary, as
well as an 8.8% increase in the current dollar value of stock options granted to him.
As a result of these increases, Mr. Hickey’s base salary is now $457,000 and the
current dollar value of stock options granted to him in July 2005 (as of the date of
grant) was $2,000,000. All such options were fully vested on the date of grant.
Regarding Mr. Hickey’s options, so long as he remains employed with the Company until
July 17, 2008, he will be permitted to continue to exercise his options for their full
10 year term.
	 
	 	•	 	Mr. Schmidt. The Committee approved a 4% increase in Mr. Schmidt’s base salary, as
well as a 4.8% increase in the current dollar value of stock options granted to him.
As a result of these increases, Mr. Schmidt’s base salary is now $298,116 and the
current dollar value of stock options granted to him in July 2005 (as of the date of
grant) was $220,000. All such options were fully vested on the date of grant. The
Committee also approved a cash bonus for Mr. Schmidt of up to 100% of his base salary.
The measurement period for calculating the bonuses payable to Mr. Schmidt and Ms. Minch
under the Incentive Bonus Plan, formerly a calendar year period, was changed to the
period from July 1 to June 30;
as a result, the Incentive Bonus Plan was not effective for them for the period from
January 1, 2005 to June 30, 2005.
	 
	 	•	 	Ms. Minch. The Committee approved an 8% increase in Ms. Minch’s base salary. As a
result of this increase, Ms. Minch’s base salary is now $165,780. The Committee also
approved a cash bonus for Ms. Minch of up to 70% of her base salary. In addition, the
Committee granted a stock option to Ms. Minch in July 2005 with a current dollar value
of approximately $40,000 (which was fully vested on the date of grant) and granted a
restricted stock award to Ms. Minch in July 2005 of 987 shares of common stock (which
is subject to a four year vesting period, vesting 25% per year beginning one year from
date of the initial award).
	 
	 	•	 	Mr. Paul. The Committee made no changes to the base salary of Mr. Paul, which remains at $250,000.
	 
	 	•	 	Ms. Paul. The Committee made no changes to the base salary of Ms. Paul, which remains at $175,000.