exv10w30



 





Exhibit 10.30




Variable Pay Plan




TomoTherapy Inc.




 

 

 

 

 

 

 


 


Certain
performance-related confidential data omitted.
Omissions are designated as [  *  ].




 









 








About This Material




This document is intended to be used to describe the terms and goals of TomoTherapy’s variable
pay plan. The draft of this document must be approved by the Compensation Committee of the Board of
Directors before being implemented as a formal compensation program.



 









 





Contents




	 	 	 	 	 
	Variable Pay Guidelines

	 	 	1	 
	 
	 	 	 	 
	Variable Pay Program

	 	 	2	 
	 
	 	 	 	 
	Plan Administration

	 	 	8	 






 









 





Variable Pay Guidelines





 









 








Variable Pay Guidelines




Variable pay is that portion of compensation that is contingent upon the organizational
results of TomoTherapy. TomoTherapy will share a portion of its business success above a threshold
performance level with all employees.



Variable pay must be re-earned each performance period (in this case annually). Variable pay does
not increase base pay. It is an incentive to motivate all employees to focus on the corporate goals
and superior customer service.



The plan performance measures and weightings and target incentive opportunities will evolve over
time as TomoTherapy grows and changes in the future. At this time, goals will be measured at the
organizational level to determine if the plan will pay out and the amount of the plan payout.



 









 





Variable Pay Program




 









 





Variable Pay Program




Eligibility


Every active, full-time TomoTherapy employee will be eligible to participate in the variable pay
program except those TomoTherapy non-executive employees who participate in a sales commission
plan. Employees must be hired by September 30th (end of the third quarter) to be
eligible to participate. Part-time employees who are eligible for benefits will also be eligible to
participate in the plan provided that they are hired by September 30th. Temporary
employees are not eligible to participate in the plan.



Participation


If TomoTherapy achieves its organizational goals, all eligible employees will receive an incentive
payout if they are:




	•	 	Employed by TomoTherapy on the incentive payout date; and






	•	 	Not on a written corrective plan or higher during the performance period.





Part-time employees and mid-year hires employed prior to September 30th will receive a prorated
incentive payment based on their earnings during the plan year.



In addition, eligible employees on documented and approved leave, as well as eligible employees
retiring during the fiscal year, will receive an incentive payout based on their earnings during
the plan year and contingent upon organizational performance.



Performance Measures


The performance measures for this plan are intended to balance the need to:




	•	 	Focus on business results,






	•	 	Provide goals that all employees understand, and






	•	 	Ensure that the plan is easy to administer.





The performance measures chosen for the plan are:




	•	 	Operating income will be the trigger measure. This means that if the organization does
not achieve its operating income goal, no plan payout will be made. This approach is
taken because operating income is a measure of how much of a payout TomoTherapy can
afford to pay.




 









 












This measure can be impacted by any employee. Some avenues for reducing operating expenses or
cost savings include:




	 	3⁄4	 	Reducing waste,
	 
	 	3⁄4	 	Doing more with less, or
	 
	 	3⁄4	 	Improving processes to accomplish tasks in less time with fewer process steps or with
fewer resources.






	•	 	Reliability, as defined and measured as up-time. This measure is intended to demonstrate
production improvements, appropriate levels of maintenance, and timely repairs. Reliability
will be used as a multiplier to provide an opportunity for lesser or greater plan payout
potential.
	 
	 	 	We want to focus on reliability as one of the measures as reliability is fundamental to our
positive market image. It will significantly impact our future ability to grow both revenues and
operating income.





Funding Mechanism


The performance measure of operating margin is vitally important to the organization as it grows,
and funding for the plan will be based on threshold operating income. In 2007, these goals will be:



	 	 	 	 	 	 	 	 	 
	Organizational	 	Operating	 	Plan Funding
	Performance	 	Income Goal	 	Level
	 
	  75%
	 	$	[*]M	 	 	 	50	%
	100%
	 	$	[*]M	 	 	 	100	%
	125%
	 	$	[*]M	 	 	 	150	%
	 
	 	 	 	 	 	 	 	 
	 





[*]



 









 





Incentive Modifier


Because reliability is a measure that our customers and the marketplace focus on closely, we are
adding a modifier related to our achievement of reliability goals. The modifier can increase or
decrease the amount of payout employees receive if operating margin and revenue goals are achieved.



Incentive targets will be modified to reflect the achievement of the reliability measure “up-time”
as currently calculated. Up-time targets are described in the following table. Other measures may
be used as a modifier in future plan designs as market demands dictate.



	 	 	 	 	 	 	 
	Target Achievement	 	Target	 	Modifier
	 
	Below Minimum

	 	Less than [*]%
	 	0.95 (in other words, there
will be a lower payment to
reflect below 2006
reliability results
performance)
	 
	 	 	 	 	 	 
	Minimum

	 	 	[*]%	 	 	1.00 (in other words, there
will be no adjustment if
achievement is maintained at
prior year’s level)
	 
	 	 	 	 	 	 
	Target

	 	[*]% up-time
	 	1.05 (in other words, the
payout will increase by [*]% to
reflect higher than expected
reliability)
	 
	 	 	 	 	 	 
	Maximum

	 	[*]% up-time
	 	1.10 (in other words, the
payout will increase by [*]%
to reflect higher than
expected reliability)
	 





Employee Levels and Target Opportunity


The target incentive is the incentive paid to all employees when organizational performance targets
are met. Incentive targets may change over time as market conditions change. Participating
employees will receive a payout under the plan if organization performance warrants. The targeted
payout will be based on an employee’s role in the organization as defined in the following table.



	 	 	 	 	 	 	 
	 	 	 	 	Target
	Level	 	Definition	 	Opportunity
	 
	1

	 	Contributes to task-related activities in support of tactical implementation
of short-term team goals.


	 	 	[*]	%
	 

	 	Has limited knowledge of concepts, practices, and procedures of particular
field of specialization. Develops solutions to problems of limited scope and
complexity following established policies and procedures. Works under general
supervision. Role is narrow, specific in impact; and task-oriented.	 	 	 	 
	 
	 	 	 	 	 	 
	2

	 	Contributes to the tactical implementation of short term business goals. May
have some influence on the overall goals of the team.


	 	 	[*]	%
	 

	 	Responsible for applying the fundamental concepts, practices, and procedures
of particular field of specialization to the completion of varied and
moderately difficult assignments. Develops solutions based on general
technical knowledge and	 	 	 	 






 









 






	 	 	 	 	 	 	 
	 	 	 	 	Target
	Level	 	Definition	 	Opportunity
	 
	 

	 	experience. Understands related departments or
functions. Participates in determining objectives of assignments. Little or
moderate supervision required. May or may not have direct reports of limited
number. Has direct impact on short-term departmental goals.	 	 	 	 
	 
	 	 	 	 	 	 
	3

	 	Develops and implements tactical solutions to achieve short term business
goals. Manages, directs or monitors daily operations for workers or teams
engaged in a single task or multiple, but closely related tasks. Directly
impacts the short-term performance
of the unit(s) to which s/he is assigned.


	 	 	[*]	%
	 

	 	Responsible for monitoring day-to-day operations for assigned work
teams/project areas. Provides direction, leadership, coaching, and technical
expertise to group of employees. Has impact/influence on budgeting,
controlling costs, planning, scheduling, and procedural/policy changes.	 	 	 	 
	 
	 	 	 	 	 	 
	4

	 	Translates long- and short-term business goals into tactical, functional
initiatives. Manages managers or is an individual contributor viewed as the
highest level expert within field. Directly impacts the short-term success of
a function or operation. Influences the development of overall objectives of
the function or operation.


	 	 	[*]	%
	 

	 	Within a department or line of business, has direct accountability for
specific function or discipline of significant scope or technical
requirements. Trains and mentors staff; estimates staffing needs, assigns
work, and ensures projects are completed on schedule following established
procedures and schedules. Consults with manager for extraordinary and
exceptional issues. Expected to bring long-term view/perspective to individual
projects.	 	 	 	 
	 
	 	 	 	 	 	 
	5

	 	Translates long-term strategy into long- and short-term goals for a line of
business or organization-wide department.


	 	 	[*]	%
	 

	 	Has oversight and accountability for implementation of long-term departmental
business strategies. Responsible for developing function’s or department’s
objectives to achieve long- and short-term plans. Ensures overall budgets,
schedules, and performance standards are realistically set and attained. Has
wide sphere of responsibility and knowledge and a direct impact on total
department’s ability to deliver against performance goals. Generally
accomplishes results through others/lower management levels. Expected to drive
teams toward optimum balance of long-term and short-term performance and
initiatives.	 	 	 	 






 









 






	 	 	 	 	 	 	 
	 	 	 	 	Target
	Level	 	Definition	 	Opportunity
	 
	6

	 	Works cross-functionally to direct the total company towards achieving its
mission and goals. Also develops and directs the long term vision for a
specific function(s) in support of overall company mission.


	 	[*]%

	 

	 	Has shared accountability for total (global) company performance. Develops
long-term strategies in support of corporate business goals and has direct
accountability for overall operations in the department(s) s/he oversees.	 	 	 	 
	 
	 	 	 	 	 	 
	7

	 	Directs the overall vision, mission, strategic direction, and financial
results for the organization.


	 	 	[*]	%
	 

	 	Has ultimate accountability for company’s worldwide performance and reputation.	 	 	 	 






Performance Period


Performance for the 12 month period beginning January 1 will be considered for purpose of this
variable pay program. This time frame is considered the performance period. The performance period
coincides with TomoTherapy’s fiscal year.



Payout Frequency


Payouts for this plan will occur once a year if organizational performance warrants a payout.
Payouts will occur after the end of the fiscal year, once organizational results can be finally
determined for the fiscal year and determined payouts can be processed through payroll.



Board and Leadership Discretion


In all cases, the Board of Directors and management have the right, at their discretion, to adjust
incentive payouts for individual employees based on factors outside the stated goals of this plan.
Such adjustments may include recognition of above-and-beyond efforts of employees throughout the
fiscal year.



Communication of Variable Pay Plan


The variable pay plan goals and measures will be communicated as quickly as practical after the
Board of Directors has approved the variable pay plan. The organization’s leadership will provide
ongoing communication of progress toward the plan goals as possible on a quarterly basis. We will
also communicate year-end financial business results within the first quarter of the next fiscal
year.



 









 





Plan Administration





 









 








Plan Administration




Powers of the Board


Nothing in this plan constitutes a promise of employment or promise to deliver a given level of
compensation. The Board of Directors and Management have the right to cancel or discontinue this
plan at any time at their discretion. The Board of Directors, with input from Management, has broad
powers which include:




	•	 	Determining annually whether or not to recommend continuing the plan;






	•	 	Determining eligibility;






	•	 	Approving performance measures, threshold values, etc. for the applicable fiscal year;






	•	 	Approving plan funding and individual incentive awards;






	•	 	Resolving disputes or questions regarding the plan;






	•	 	Recommending amendment or termination of the plan as necessary during the fiscal year;






	•	 	Establishing the rules necessary to administer the plan;






	•	 	The Board will have discretion to construe and interpret the plan;






	•	 	All decisions of the Board will be final and binding on all persons; and






	•	 	The Board may at any time elect to amend, suspend, or terminate the plan.





Annual Program Review


TomoTherapy will review this variable pay plan on an annual basis to evaluate its impact on the
measures chosen and business success. This review process will begin in conjunction with the
business planning process in the fall with the goal of establishing any new measures or plan design
features during the first quarter of the new fiscal year.



As a result of this review process, the variable pay plan may change over time. Aspects of the
variable pay program that may be adjusted are, but not limited to:




	•	 	Employee participation and incentive opportunity;






	•	 	Performance measures—types of measures, level of organizational
performance measured, and weighting of measures; and






	•	 	Performance period and payout frequency.