Document:

Exhibit 10.1

 

 

 

 

PHASE
FORWARD INCORPORATED

 

 

2006

Global Sales Executive Incentive

Compensation Plan

 

 

 

 

Effective
Date January 1, 2006

 

 

Phase
Forward

2006 Global Sales Executive

Incentive Compensation Plan

Effective:    January 1, 2006

1)             Purpose:

The Phase Forward Incorporated 2006 Global Sales
Executive Incentive Compensation Plan is established to incent and reward the
Participant to achieve certain Company sales and financial goals. The base
salary and incentive opportunity outlined in this plan is intended to reward
the Participant with total cash compensation that is equal to or above what is
paid for similar positions by similar companies upon achievement of the
expected level of performance.

2)             Effective Date:

This plan is effective on January 1, 2006 and applies to all
contracts entered into between January 1, 2006 and December 31, 2006
and supersedes all plans and terms previously in effect.

3)             Participation:

Global Sales Executives who are eligible to participate will receive a
plan document with a personalized schedule as Attachment A.

4)             Definitions:

 (a) Base Salary

The Participant’s base salary is a fixed amount that
is determined by the Management Development and Compensation Committee who will
take into consideration the competitive market, qualifications for the
position, and past performance. The base salary is paid in accordance with the
company’s normal payroll practices. No other “annual reviews” or other salary
adjustments will occur for participants during the course of the fiscal year.

(b) Bookings

An Order is defined as a firm legal commitment for the
value (amount) recorded (booked) in the backlog of the company for the delivery
of software, service, support or product with specified delivery dates, signed
by both parties and received at the companies headquarters.

(c) Bonus Eligible Orders

These are Orders that are accepted by the company, net
of pass-through items and net of royalty/ 3rd party product payments, in the following
categories:

·                  Software licenses: software fees or
usage fees relating to any Phase Forward products.

·                  Services:

·                  ASP
Services: study preparation, eCRF design, server hosting, CDD formatting,
provisioning, site assessment, custom reports.

·                  Consulting
Services:  project management,
training, integration services, custom reports.

·                  Customer Support:

·                  Maintenance
and customer support agreements for software transactions.

·                  Server
hosting, help desk.

 2
 

 

                (d) Accrued
Bonus

For Orders that are fixed
in nature, a bonus is accrued upon acceptance of an Order by the company. For
Orders that are variable in nature, such as estimated usage fees or future
service commitments, bonus is accrued at the time the Order becomes fixed (as
usage occurs or committed amount is fixed and determinable).

                (e) Pass-Through Items

Products, services, hardware and associated items
provided and/or sold at cost or with minimal markup.   Pass-through items are not compensated for
under the plan. Service fees associated with pass through items are eligible
for compensation.

                (f) Negative Booking

A Negative Booking is a change to an Order, which
results in the reduction of the net amount of an Order, the reversal of
previously recognized revenue, the uncollectability of an account receivable
related to previously recognized revenue, or an indication of hold status or
suspension for a period greater than (six) 6 months. Bonuses paid that
subsequently have events which result in a negative booking will have a
reversal in payment in the month or months following the quarter they become a
negative booking until full repayment is achieved. Negative bookings will be
reversed at the bonus amount that was applied at the time of the transaction,
and only for the original sales executive paid.

5)              Sales Quota:

One global annual quota
will be set for participants in this plan.

6)              Incentive Payments:

           The payment schedule and plan components are outlined on Attachment A.

           7)            Termination:

Upon termination of employment, voluntary or
involuntary, the Participant will be paid the applicable base salary through
the agreed upon termination date. Any additional payments will be in accordance
with the terms and conditions of any Executive Agreement or Employment
Agreement between the employee and the Company (or a subsidiary) in effect at
the time of termination. The Participant must also return all company documents
and property.

8)              Administration and Other Matters:

Administration of this policy
will be the responsibility of the Vice President, Finance and the Vice
President, Human Resources of the company in consultation with the the CEO.
In the case of a dispute, interpretation of the terms, conditions, goals, or
payments from this plan will be made solely by the Vice President of Human
Resources after a full review of the facts, input from affected parties, and
appreciation of the overall intent of the Plan. The decision of company management on all matters under this policy will
be final, and the company reserves the right to amend, modify, or terminate
this policy at any time without notice. Any change will be made in
writing as far in advance as possible, of the effective date of such change. In addition the company reserves the right to
make adjustments to the policy in its sole discretion in specific instances
based on unusual or special circumstances.

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, Phase Forward Incorporated will review and
modify the overall plan to conform to such law.

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 employee’s agreement signed by the company and 

 3
 

 

employee, all of the employees of the company are
employees “at will”. Participation in this plan does not confer any right to
continue in Phase Forward’s employ or limit the right of Phase Forward to
terminate the Participant at any time, with or without cause or notice.

Phase Forward Incorporated 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.

9)              Extraordinary
Events:

Any event deemed extraordinary by the Vice President,
HR or the CEO, may result in, changes to the terms and conditions of the plan,
adjustments to quota, changes in the payment structure and other events up to
and including termination of this plan, and the creation of a new plan. It
should not be expected by the Participant that events resulting in a revenue or
bookings windfall would be counted in determining performance as it relates to
the goals and quota and any payments resulting from this may be appropriately
adjusted.

I acknowledge that I have read this document,
including the Attachment A, and agree to the terms and conditions of the plan.

	
  

  	
   

  	
   

  
	
   

  	
  Date

  	
   

  
	
  Signature

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Printed Name

  	
   

  	
   

  

 

 4
 

 

Attachment A

	
  FY2006 Global Annual Bookings Target —
  [Redacted] 

  Steve Powell

  	
   

  	
   

  	
   

  
	
  Base Salary:

  	
   

  	
  £160,000

  	
   

  
	
  Target Bonus:

  	
   

  	
  £120,000

  	
   

  
	
  TAE:

  	
   

  	
  £280,000

  	
   

  

 

	
  Compensation Plan

  	
   

  	
   

  
	
  30%

  	
  Quarterly bookings performance

  	
  £36,000

  	
  Paid quarterly

  
	
  20%

  	
  Quarterly revenue performance

  	
  £24,000

  	
  Paid quarterly

  
	
  20%

  	
  YTD bookings performance

  	
  £24,000

  	
  Paid quarterly

  
	
  30%

  	
  Phase Forward Profitability

  	
  £36,000

  	
  Paid annually (Earned Quarterly)

  

            

	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  (Global MIP)

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Operating Income

  
	
  Quarterly Bookings Targets

  	
   

  	
  YTD Bookings Targets

  	
   

  	
  Quarterly Revenue Targets

  	
   

  	
  Before Bonus*

  
	
  Q-1

  	
   

  	
  [Redacted]

  	
   

  	
  Q-1

  	
   

  	
  [Redacted]

  	
   

  	
  Q-1

  	
   

  	
  [Redacted]

  	
   

  	
  Q-1

  	
   

  	
  [Redacted]

  
	
  Q-2

  	
   

  	
  [Redacted]

  	
   

  	
  Q-2

  	
   

  	
  [Redacted]

  	
   

  	
  Q-2

  	
   

  	
  [Redacted]

  	
   

  	
  Q-2

  	
   

  	
  [Redacted]

  
	
  Q-3

  	
   

  	
  [Redacted]

  	
   

  	
  Q-3

  	
   

  	
  [Redacted]

  	
   

  	
  Q-3

  	
   

  	
  [Redacted]

  	
   

  	
  Q-3

  	
   

  	
  [Redacted]

  
	
  Q-4

  	
   

  	
  [Redacted]

  	
   

  	
  Q-4

  	
   

  	
  [Redacted]

  	
   

  	
  Q-4

  	
   

  	
  [Redacted]

  	
   

  	
  Q-4

  	
   

  	
  [Redacted]

  

 

	
  Payment
  Schedule Quarterly Booking Targets

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Achievement%

  	
   

  	
  Payout

  
	
  <80%

  	
   

  	
  0

  
	
  >80%
  -100%

  	
   

  	
  50% + 2.5% for each% achieved

  
	
  >100%

  	
   

  	
  .01 times actual achievement dollars over target

  

 

	
  Payment
  Schedule Quarterly Revenue Targets

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Achievement%

  	
   

  	
  Payout

  
	
  <95%

  	
   

  	
  0

  
	
  >95%
  -100%

  	
   

  	
  Actual%

  
	
  >100%

  	
   

  	
  .01 times actual achievement dollars over target

  

 

	
  Payment
  Schedule YTD Bookings Components

  	
   

  
	
   

  	
   

  	
   

  
	
  Achievement%

  	
   

  	
  Payout

  
	
  <80%

  	
   

  	
  0

  
	
  >80% - 100%

  	
   

  	
  Actual% achieved

  
	
  >100% -125%

  	
   

  	
  3% for each% achieved over 100%

  
	
  >125%

  	
   

  	
  2% for each% achieved over 125%

  

 

The
maximum combined quarterly payout on all components is £70,000

*This component is paid in
accordance with the Phase Forward 2006 Management Incentive Plan.

 5Exhibit
10.2

 

Phase Forward Incorporated

Management Incentive Plan

Effective January 1, 2006

 

 

Phase Forward Incorporated

Management Incentive Plan

Phase Forward
Incorporated

Management Incentive Plan (MIP)

Plan Document

Effective January 1, 2006

 

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.

  	
   

  	
  Transition Issues

  	
   

  	
  3.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  VII.

  	
   

  	
  Administration

  	
   

  	
  4.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Plan Exhibits

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  A.

  	
   

  	
  Plan Components

  	
   

  	
  5.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  B.

  	
   

  	
  Participant Notification & Acknowledgement
  Sheet

  	
   

  	
  6.

  
							

 2
 

 

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, 2006. 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 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 weighting is set forth in Exhibit A.

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

 3
 

 

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.

 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 and stock based 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.

This component is
earned on a quarterly basis but paid annually, by the end of the March following
the end of the plan year. For the first and second quarters a minimum
achievement or “threshold” of 105% of global performance in each quarter is
required for payout of the component applicable to that quarter.  Payments are paid according the following
schedule:

	
  Achievement%   

  	
   

  	
  Payout%

  
	
  <105%

  	
   

  	
  0%

  
	
  3105%

  	
   

  	
  20% + 4% for each additional % achieved

  

 

For the third and
fourth quarters, a minimum achievement or “threshold” of 80% of global
performance in each quarter is required for payout for the component applicable
to that quarter. Payments are paid according to the following schedule:

	
  Achievement%

  	
   

  	
  Payout%

  
	
  <80%

  	
   

  	
  0%

  
	
  80% - 99.9%

  	
   

  	
  50% + 2.5% for each
  additional % achieved

  
	
  3100

  	
   

  	
  100% + 2% for each additional % achieved

  

 

For Illustration Purposes:
(Quarters are not weighted equally)

Q-1 Achievement of 110% would result in a payout
of 40% of target

Q-2 Achievement of 125% would result in a payout
of 100% of target

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 110% of target

 5
 

 

Exhibit B

Participant Notification Sheet

Certificate of Acknowledgement

2006
Management Incentive Plan

	
  Name of
  Participant:

  	
   

  	
  John Smith

  
	
   

  	
   

  	
   

  
	
  Base
  Salary as of 4-1-06

  	
   

  	
  $170,000

  
	
   

  	
   

  	
   

  
	
  Target
  Participation Percentage:

  	
   

  	
  35%

  
	
   

  	
   

  	
   

  
	
  MIP
  Target Payout Annualized:

  	
   

  	
  $59,500

  

 

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.

 

 

Plan Components
and Weighting:

100% Operating
Income Before Bonus and Stock Based Expenses (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

  

 

 

 6

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