Document:

Exhibit 10.3

 

ABC/DTC/ABF

 Long-Term (3-Year) Incentive Compensation Plan

 

Pursuant to the Arkansas Best Corporation (“ABC” or “Company”) 2005 Ownership Incentive Plan, the Compensation Committee of the Arkansas Best Corporation Board of Directors (the “Compensation Committee”) has adopted the “Long-Term Incentive Compensation Plan” (the “Plan”) and has determined that the Plan will include the following components for the three-year period beginning 1/1/[       ] and ending 12/31/[       ]:

 

	
ROCE   Component
    	
50% weighting
    
	
Total   Shareholder Return (“TSR”) Component
    	
50% weighting
    

 

The ROCE Component weighting and TSR Component weighting are determined by the Compensation Committee for each Measurement Period.

 

I.          Defined Terms

 

Base Salary. Base Salary for participants other than Executive Officers is defined as total base salary paid, while an eligible participant in the Plan, for the Measurement Period divided by the number of months in the Measurement Period multiplied by twelve. Base Salary is not reduced by any voluntary salary reductions or any salary reduction contributions made to any salary reduction plan, defined contribution plan or other deferred compensation plans of the Company, but does not include any payments under the Plan, any stock option or other type of equity plan, or any other bonuses, incentive pay or special awards.

 

Base Salary for Executive Officers.  Base Salary for Executive Officers (Executive Officer for this purpose is defined as an employee who, as of the last day of the applicable Plan Year, is covered by the compensation limitations of Code Section 162(m) or the regulations issued thereunder)  is defined as total base salary paid, while an eligible participant in the Plan, for the Measurement Period divided by the number of months in the Measurement Period multiplied by twelve, but in no event shall the Base Salary for an Executive Officer exceed the monthly base salary for the Executive Officer as most recently approved by the Compensation Committee as of the end of the day on which the Plan is approved for the Measurement Period, multiplied by twelve, multiplied by 200%.  Base Salary is not reduced by any voluntary salary reductions or any salary reduction contributions made to any salary reduction plan, defined contribution plan or other deferred compensation plans of the Company, but does not include any payments under the Plan, any stock option or other type of equity plan, or any other bonuses, incentive pay or special awards.

 

Cause.  Cause shall mean (i) Participant’s gross misconduct or fraud in the performance of Participant’s duties to the Company or any Subsidiary; (ii) Participant’s conviction or guilty plea or pleas of nolo contendere with respect to any felony or act of moral turpitude; (iii) Participant’s engaging in any material act of theft or material misappropriation of Company or any Subsidiary’s property, or (iv) Participant’s material breach of the Company’s Code of Conduct, as such Code may be revised from time to time.

 

Disability.  Disability shall mean a condition under which the Participant either (A) is unable to engage in any substantial gainful activity by reason of medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than twelve months, or (B) is, by reason of any medically determinable physical or mental impairment that can be  expected to result in death or can be expected to last for a continuous period of not less than three months under an accident or health plan covering employees of the Company or any Subsidiary.

 

Good Reason. Good Reason shall mean (i) any material adverse diminution in Participant’s title, duties, or responsibilities; (ii) any reduction in Participant’s base salary or employee benefits (including reducing Participant’s

 

 

level of participation or bonus award opportunity in the Company’s or a Subsidiary’s incentive compensation plans) or (iii) a relocation of Participant’s principal place of employment by more than 50 miles without the prior consent of Participant.

 

Measurement Period.  The Measurement Period is 1/1/[       ] to 12/31/[       ].

 

Retirement.  Retirement shall mean Participant’s retirement from active employment at or after age 65 or retirement from the Company or Subsidiary at or after age 55, so long as the Participant has, as of the date of such retirement, at least 10 years of service with the Company or any Subsidiary.

 

II. Participants

 

Participants in the Plan (who are not active participants in ABC or a Subsidiary’s Supplemental Benefit Plan or Deferred Salary Agreement program or who selected Option 1 for their 12/31/2009 SBP Freeze election) are listed in Appendix C and certain employees may be specifically included or excluded by the Compensation Committee.

 

An employee may not become a Participant after the end of the 12th month of the Measurement Period.

 

If an Eligible Participant in the Plan also participates in the Arkansas Best Corporation 2012 Change in Control Plan, the terms of the Arkansas Best Corporation 2012 Change in Control Plan shall govern.

 

III. Corporate Performance Metrics

 

ROCE Component: The Individual Award Opportunities provided by the ROCE Component are based on (a) achieving certain levels of performance for ABC’s consolidated Return on Capital Employed (“ROCE”) and (b) your Target Payout Factor.  The formula below illustrates how your incentive is computed:

 

Your Incentive Payment = [Performance Factor Earned x Your Target Payout Factor x Your Base Salary x the ROCE Component Weighting].

 

If your job position changes during the Measurement Period, your Incentive Payment will be prorated based on the Base Salary you receive while you are in an eligible Job Position listed in the Plan, the applicable Performance Factor Earned and Your Target Payout Factor. If you die, are Disabled or Retire as provided for under Section IV of the ROCE Component, your Incentive Payment will be prorated based on the Base Salary you receive from the beginning of the Measurement Period until the applicable date of death, Disability or retirement date.

 

A.      Performance Factor Earned. Performance Factor Earned is shown in Appendix A and depends on the ROCE achieved by ABC for the Measurement Period.

 

B.      Target Payout Factor. Your Target Payout Factor is a percentage of your Base Salary.  The Target Payout Factors are listed in Appendix C.

 

TSR Component: The Individual Award Opportunities provided by the TSR Component are based on (a) the percentile rank of the Company’s Compounded Annual Growth Rate (“CAGR”) of Total Shareholder Return relative to the Peer Companies over the Measurement Period and (b) your Target Payout Factor.  At the end of the Measurement Period, the percentile rank of the Company’s CAGR Total Shareholder Return will be calculated. Any Peer Company that is no longer publicly traded shall be excluded from this calculation. The formula below illustrates how this portion of your incentive is computed:

 

Your Incentive Payment = [Performance Factor Earned x Your Target Payout Factor x Your Base Salary x TSR Component Weighting].

 

2

 

If your job position changes during the Measurement Period, your Incentive Payment will be prorated based on the Base Salary you receive while you are in an eligible Job Position listed in the Plan, the applicable Performance Factor Earned and Your Target Payout Factor. If you die, are Disabled or Retire as provided for under Section IV of the TSR Component, your Incentive Payment will be prorated based on the Base Salary you receive from the beginning of the Measurement Period until your date of death, Disability or retirement date.

 

A.      Performance Factor Earned.  The Performance Factor Earned is shown in Appendix B and depends on the Company’s Compounded Annual Growth Rate of Total Shareholder Return over the Measurement Period as compared to the Peer Companies.

 

B.      Target Payout Factor. Your Target Payout Factor is a percentage of your Base Salary. The percentage varies for each level of management within the Company.  The Target Payout Factors are listed in Appendix C.

 

If the performance result falls between two rows on Appendix A or Appendix B, interpolation is used to determine the factor used in the computation of the incentive.

 

In no event will the Target Payout Factor used to calculate the incentive amount exceed the maximum factor of 85% provided in Appendix C.

 

The Compensation Committee has established maximum incentive amounts based on a maximum Performance Factor Earned of 200% for the TSR Component and 300% for the ROCE Component subject to the applicable weighting for each component as provided in Appendix A and Appendix B.

 

The terms of the Long-Term Incentive Compensation Plan — ROCE Component and the Long-Term Incentive Compensation Plan — TSR Component are incorporated into the Plan.

 

IV. Payment of Award

 

Payment will be made as soon as practicable following the end of the Measurement Period,  and in any event, no later than 2 1⁄2 months after the end of the Measurement Period.

 

3

 

V. 2005 Ownership Incentive Plan

 

Defined terms in this Plan shall have the same meaning as in the 2005 Ownership Incentive Plan, except where the context otherwise requires.

 

No term or provision in this Plan may conflict with any term or provision of the 2005 Ownership Incentive Plan. It is specifically intended that the Plan, ROCE Component and TSR Component be an “Award Agreement” and the incentives paid hereunder be an “Award” under the terms of the 2005 Ownership Incentive Plan.

 

VI. Discretionary Adjustments

 

Prior to a Change In Control, the Compensation Committee may reduce any Participant’s Final Award if the Compensation Committee determines, in its sole discretion, that events have occurred or facts have become known which would make a reduction appropriate and equitable.

 

VI. Effect of Termination of Employment; Change in Control

 

(a)         General. Except as provided in subparts (b) or (c), upon a termination of Participant’s employment with the Company or any Subsidiary for any reason prior to the completion of the Measurement Period, the Participant shall not be entitled to any Incentive Payment under the Plan.

 

(b)         Death; Disability; Retirement.  Upon termination of Participant’s employment with the Company or any Subsidiary by reason of Participant’s death, Disability or Retirement (as defined in the Plan), Participant’s Incentive Payment shall be prorated based on the period of participation in the Plan, provided that Participant’s Incentive Payment shall be computed and paid in the normal course of business after the end of the Measurement Period. Provided, however, an employee must have completed at least 12 months of the Measurement Period to be entitled to a Incentive Payment under this Section IV(b).

 

(c)          Change in Control. Upon the occurrence of a Change in Control, Participant shall be entitled to immediate payment of the greater of the following:

 

(A)                 The amount computed under the Plan based on 100% of the Participant’s “Target Payout Factor” in Appendix C using the date of the Change in Control as the end of the Measurement Period, or

 

(B)                 The amount computed under the Plan based on the actual percentage of Performance Factor Earned in Appendix A and Appendix B, calculated as if the Measurement Period ended on the date of the Change in Control and using the Company share price as of the date of the Change in Control to calculate TSR rather than the 60-day average price for the ending of the Measurement Period.

 

4

 

ABC/DTC/ABF

LTIP - ROCE Component

 

The Compensation Committee of the Arkansas Best Corporation Board of Directors has adopted this ROCE Component of the Plan (“ROCE Component”), including the following Individual Award Opportunities, Performance Measures and Participants for Arkansas Best Corporation and its subsidiaries for the three-year period beginning 1/1/[       ] and ending 12/31/[       ].

 

I. Performance Measure

 

ROCE for ABC is calculated as the following ratio for the Measurement Period:

 

Net Income + After-tax Effect of Interest Expense + After-tax Effect of Imputed Interest Expense + After-tax Effect of Amortization of intangibles and depreciation of the June 15, 2012 cost of Intrans software related to purchase of Panther — After-tax Effect of Income from Cash and Short-term Investments Attributable to the reduction in Average Debt

Average Equity + Average Debt + Average Imputed Debt

 

Divided by 3

 

“Net Income” for the ROCE calculation is consolidated net income for the Measurement Period determined in accordance with Generally Accepted Accounting Principles after taking into account the Section II Required Adjustments.

 

“Interest Expense” for the ROCE calculation is (i) interest on all long and short-term indebtedness and other interest bearing obligations and (ii) deferred financing cost amortization and other financing costs, including letters of credit fees for the Measurement Period, reduced by the amount of interest expense on debt not included in Average Debt as defined below.

 

“Imputed Interest Expense” consists of the interest attributable to Average Imputed Debt assuming an interest rate of 7.5% for the Measurement Period.

 

“Average Equity” is the average of the beginning of the Measurement Period and the end of the Measurement Period stockholder’s equity.

 

“Average Debt” is the average of the beginning of the Measurement Period and the end of the Measurement Period current and long-term debt, with beginning of the Measurement Period and end of the Measurement Period current and long-term debt reduced by the respective amount of the beginning of the Measurement Period and end of the Measurement Period total of unrestricted cash, cash equivalents and short-term investments, and limited to a reduction of debt to zero.

 

“Average Imputed Debt” consists of the average of the beginning of the Measurement Period and the end of the Measurement Period present value of all payments determined using an interest rate of 7.5% on operating leases of revenue equipment with an initial term of more than two years.

 

“Amortization of intangibles and depreciation of the June 15, 2012 cost of Intrans software related to purchase of Panther” consists of the amortization and depreciation expense attributable to the June 15, 2012 allocated value of Panther intangible assets and Intrans software and includes any impairment charge related to those assets.

 

5

 

“Income from Cash and Short-term Investments Attributable to the reduction in Average Debt” consists of income earned on the amount by which Average Debt is reduced at the average interest rate earned in cash and short-term investments for the measurement period.

 

II. Required Adjustments

 

The following adjustments shall be made when calculating ROCE:

 

	
(i)
    	
add   back the after-tax total long-term incentive compensation accruals during the   Measurement Period for any Long-term Incentive Compensation Plan for nonunion   employees of ABC and any of its Subsidiaries when determining Net Income;
    
	
(ii)
    	
add   back after-tax direct third party expenses associated with an acquisition by   ABC or any of its Subsidiaries, to the extent the items were added back under   the [      ], [      ] and [      ] ABC and any of its Subsidiaries   Annual Incentive Compensation Plans;
    
	
(iii)
    	
exclude   the operating results (all revenue and expenses) for any business acquired   between the beginning of the Measurement Period and the end of the   Measurement Period from the calculation of Net Income in the numerator of the   ratio for the period from the acquisition date to the next December 31st (operating results of acquired businesses   are included thereafter) and exclude any Acquisition Debt attributable to the   business acquired (either directly held by the business or incurred to   acquire the business) included in the denominator based on the weighted   average of the Acquisition Debt for the period for which operating results   are excluded from the numerator.
    
	
(iv)
    	
exclude   decreases in Net Income resulting directly from reorganization and   restructuring programs for which amounts are publicly disclosed;
    
	
(v)
    	
exclude   increases or decreases in Net Income resulting from an extraordinary, unusual   or non-recurring item as described in the Accounting Standards Codification   topic(s) that replaced or were formerly known as Accounting Principles   Board Opinion No. 30, as amended or superseded;
    
	
(vi)
    	
exclude   increases or decreases in Net Income resulting from any change in accounting   principle as defined in the Accounting Standards Codification   topic(s) that replaced or were formerly known as Financial Accounting   Standards Board (“FASB”) Statement 154, as amended or superseded;
    
	
(vii)
    	
exclude   the effect on ROCE of changes to net income, equity and debt as a result of   any change in accounting principle as defined in the Accounting Standards   Codification topic(s) that replaced or were formerly known as Accounting   Principles Board Opinion No. 30, as amended or superseded;
    
	
(viii)
    	
exclude   any loss from a discontinued operation as described in the Accounting   Standards Codification topic(s) that replaced or were formerly known as   FASB 144, as amended or superseded;
    
	
(ix)
    	
exclude   the effect of changes in federal income tax law or regulations affecting   reported results during the Measurement Period including increases or   decreases in tax rates or the addition or elimination of tax credits. A   change for this purpose will be as compared to the laws and regulations in   effect on January 1, [     ],   without consideration of any retroactive changes in tax law that affect   January 1, [     ] tax law;
    
	
(x)
    	
exclude   goodwill impairment charges; and
    
	
(xi)
    	
exclude   settlement accounting charges incurred that relate to the qualified defined   benefit pension plan.
    

 

6

 

ABC/DTC/ABF

 

LTIP - TSR Component

 

The Compensation Committee of the Arkansas Best Corporation Board of Directors has adopted this Total Shareholder Return Component of the Total Plan (“TSR Component”), including the following Individual Award Opportunities, Performance Measures, and Participants for Arkansas Best Corporation and its subsidiaries for the three-year period beginning 1/1/[       ] and ending 12/31/[       ].

 

I. Performance Measure

 

Total Shareholder Return. (“TSR”). Total Shareholder Return with respect to the Company and each Peer Company equals the annualized rate of return reflecting price appreciation between the beginning 60-day average share price (ending December 31 of the year immediately prior to the beginning of the Measurement Period) and the ending 60-day average share price (ending December 31 of the final year of the Measurement Period), adjusted for dividends paid and the compounding effect of dividends paid on reinvested dividends (the calculation assumes that all dividends paid are reinvested). Any Peer Company that is no longer publicly traded shall be excluded from this calculation.

 

Compounded Annual Growth Rate (“CAGR”). Compounded Annual Growth Rate converts the total return into a value that indicates what the return was on an annual basis for the 3 year period.

 

Peer Companies. The Peer Companies are the following publicly traded companies:

 

·                              Con-Way, Inc.

·                              Echo Global Logistics, Inc.

·                              Forward Air Corp.

·                              Hub Group Inc.

·                              JB Hunt Transport Services, Inc.

·                              Landstar System Inc.

·                              Old Dominion Freight Line, Inc.

·                              Roadrunner Transportation Systems, Inc.

·                              SAIA, Inc.

·                              Swift Transportation Corporation

·                              Werner Enterprises

·                              XPO Logistics, Inc.

·                              YRC Worldwide, Inc.

 

II. Adjustments

 

In the event that there is any change in the common stock of the Company or the Peer Companies as the result of any stock dividend on, dividend of or stock split or stock combination of, or any like change in, stock of the same class or in the event of any change in the capital structure of the Company or the Peer Companies all share amounts and the TSR calculation will be adjusted appropriately.

 

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Appendix A

 

[       ]-[       ] LTIP — ROCE Component

 

	
 
    	
 
    	
Three-Year Average Return on Capital 
   Employed
   (“ROCE”)
    	
 
    	
Performance Factor Earned
    
	
 
    	
 
    	
Less than 3%
    	
 
    	
0%
    
	
Threshold
    	
 
    	
3%
    	
 
    	
30%
    
	
 
    	
 
    	
4%
    	
 
    	
40%
    
	
 
    	
 
    	
5%
    	
 
    	
50%
    
	
 
    	
 
    	
6%
    	
 
    	
60%
    
	
 
    	
 
    	
7%
    	
 
    	
70%
    
	
 
    	
 
    	
8%
    	
 
    	
80%
    
	
 
    	
 
    	
9%
    	
 
    	
90%
    
	
Target
    	
 
    	
10%
    	
 
    	
100%
    
	
 
    	
 
    	
11%
    	
 
    	
140%
    
	
 
    	
 
    	
12%
    	
 
    	
180%
    
	
 
    	
 
    	
13%
    	
 
    	
220%
    
	
 
    	
 
    	
14%
    	
 
    	
260%
    
	
Maximum
    	
 
    	
15%
    	
 
    	
300%
    
	
 
    	
 
    	
Greater than 15%
    	
 
    	
300%
    

 

ROCE Component Weighting: 50%

 

8

 

Appendix B

 

[       ]-[       ] LTIP — TSR Component

 

	
 
    	
 
    	
Percentile ranking of the Company’s 
   Compounded Annual Growth Rate TSR 
   relative to Peer Companies over the 
   Measurement Period
    	
 
    	
Performance Factor Earned
    
	
 
    	
 
    	
Below 25th Percentile
    	
 
    	
0%
    
	
Threshold
    	
 
    	
25th Percentile
    	
 
    	
25%
    
	
Target
    	
 
    	
50th Percentile
    	
 
    	
100%
    
	
Maximum
    	
 
    	
75th Percentile
    	
 
    	
200%
    
	
 
    	
 
    	
Above 75th Percentile
    	
 
    	
200%
    

 

TSR Component Weighting: 50%

 

9

 

Appendix C

 

LTIP Target Payout Factors

 

	
Participants/Job Title
    	
 
    	
Target Payout Factor
    
	
ABC   — President & CEO
    	
 
    	
[   ]%
    
	
ABF   Freight — President & CEO

ABF   Logistics — President 
    	
 
    	
[   ]%
    
	
ABC   SVP — Tax & Chief Audit Executive

ABC   SVP — CFO & CIO

ABC   SVP — Enterprise Customer Solutions 
    	
 
    	
[   ]%
    
	
ABC   VP — General Counsel & Corporate Secretary
    	
 
    	
[   ]%
    
	
ABC   VP — Controller

ABC   VP — Economic Analysis

ABC   VP — Human Resources

ABF   VPs

DTC   President
    	
 
    	
[   ]%
    

 

10Exhibit 10.1

 

Depomed, Inc. Bonus Plan

 

Depomed’s Bonus Plan is designed to provide employees with a performance-based plan that aligns performance with annual Corporate Goals and rewards the achievement of Corporate and Personal Goals.  The Bonus Plan is administered at the absolute discretion of the Company’s Management, including its Board of Directors, which may, at its discretion, choose not to fund the Bonus Plan or to fund it at a reduced level.

 

Background

Depomed has a history of rewarding its high performing employees for their efforts and accomplishments.  We have formalized the structure of employees’ activities to be consistent with Depomed’s Corporate Goals and have defined a specific process for calculating bonuses consistent with the Company’s performance and the employees’ performance and individual contributions.  Management and the Board of Directors maintain absolute discretion in administering this plan so that it remains flexible in meeting the changing needs of the organization.

 

All levels of Depomed employees establish Personal Goals consistent with Depomed’s Corporate Goals and their Department Goals.  By following their defined goals, employees will align their activity with the annual Corporate Goals and major Department Deliverables.  Personal Goals are to be reviewed together by employees and their supervisors, with oversight from Department Heads, on an ongoing basis throughout the calendar year.  The review period for accomplishing the Personal Goals ends on December 31.

 

Eligibility

All regular employees who work at least 30 hours per week will be eligible to participate in the Annual Bonus Plan.  New employees who join the company by October 1 will be eligible to participate in the current year’s plan on a pro-rated basis based on the number of full calendar months worked.  If the bonus target level of an employee changes during the plan year (i.e. the employee was promoted), the final bonus target level would be calculated based on the months the employee worked at each bonus target level at the base compensation they received while at each level.  Employees on an approved leave of absence of more than 16 weeks they will have their annual bonus award prorated to reflect the amount of time they were away from work.

 

Bonus Target

A “Bonus Target” has been identified for different levels of personnel and is based on a percentage of annual base pay.  The Bonus Target is based on two elements, i.e., the employee’s achievement of Personal Goals and the achievement of Corporate Goals.

 

Corporate Goals and Multiplier

The portion of the Bonus Target attributed to the Corporate Goals will be subject to a “Corporate Multiplier,” which will reflect the Company’s overall success and fiscal considerations.  In a year where all the corporate goals are met and the Company’s finances are on target, the Corporate Multiplier would usually be 100%.  Conversely, in a year where only a portion of the 

 

 

corporate goals are met or finances are not on target, a corporate multiplier of 75%, 50% or zero, for example, might be applied to the Bonus Target.  If The Company has exceeded Corporate Goals and finances are above target, the Corporate Multiplier may be more than 100%.  After the end of each calendar year, the Company’s performance will be evaluated by the CEO, CFO, and Vice President of Human Resources.  These three members of the Executive Team will recommend a Corporate Multiplier to the Board of Directors.  The Board of Directors will have final authority and discretion on determining the Corporate Multiplier.

 

The Bonus Targets have been set as follows:

 

	
Level
    	
 
    	
Bonus Target
    	
 
    	
Weighting of 
   Corporate 
   Goals
    	
 
    	
Weighting of 
   Personal 
   Goals
    	
 
    
	
CEO 
    	
 
    	
70
    	
%
    	
100
    	
%
    	
 
    	
 
    
	
CFO
    	
 
    	
40
    	
%
    	
65
    	
%
    	
35
    	
%
    
	
General Counsel
    	
 
    	
40
    	
%
    	
65
    	
%
    	
35
    	
%
    
	
Vice Presidents
    	
 
    	
35
    	
%
    	
65
    	
%
    	
35
    	
%
    
	
Sr. Directors / Directors 
    	
 
    	
25
    	
%
    	
60
    	
%
    	
40
    	
%
    
	
Associate Directors 
    	
 
    	
20
    	
%
    	
55
    	
%
    	
45
    	
%
    
	
Sr. Managers / Managers
    	
 
    	
15
    	
%
    	
50
    	
%
    	
50
    	
%
    
	
Supervisors 
    	
 
    	
10
    	
%
    	
40
    	
%
    	
60
    	
%
    
	
Senior Scientific / Technical Individual   Contributors
    	
 
    	
10
    	
%
    	
30
    	
%
    	
70
    	
%
    
	
Individual Contributors 
    	
 
    	
5
    	
%
    	
30
    	
%
    	
70
    	
%
    

 

Personal Goals

Employees may have up to six Personal Goals.  Each Personal Goal will be assigned a weight reflecting the significance and impact of the goal and the contribution towards Corporate and Department Goals.  The minimum weight assigned to each goal is 10% and the combined weight of the different goals shall equal 100%.  Personal Goals will be approved by the next level Manager.  When establishing the weight for a given goal, attention should be paid to the significance of the goal and the impact an individual or team has on that goal.  For instance, a new multi-million dollar deal with a new partner might be weighted at 70%, regardless of the time involved to finalize the terms.  Or, a goal to streamline a new procedure in the lab and resulting in significant time savings might result in a weight of 50% (given that the impact on the company is significant and long-lasting).

 

Personal Goal Bonus Calculation

Throughout the year and at year-end, employees’ goals and achievements will be assessed by management.  Management determines the final award for the achievement of personal goals An employee who fully achieved a personal goal could receive full credit for the goal or a “1.0” multiplier; a goal that is well under way, but has not been fully achieved could receive a multiplier of “0.5” for partial credit; a goal not achieved will receive a multiplier of “0” for no credit.  An employee who not only achieved his or her goal, but exceeded expectations, resulting in tangible evidence of significant improvement of the well being of the company, could receive a multiplier up to “1.25” for a particular goal.

 

 

Performance Assessment and Payment of Bonuses

Each January / February following the plan year, Personal Goals and Corporate Goals will be assessed and performance reviews will be prepared and delivered to employees.  Employees receiving an overall performance rating of Partially Meets Expectations will receive no more than 50% of their target bonus payout.  Employees who receive an overall performance rating of Fails to Meet Expectations will not be eligible to receive any bonus payout.  Bonuses will be calculated and payment of bonuses will be made to eligible employees no later than March 15.

 

Executive Team Members will make the final recommendation of the bonus award for Personal Goals subject to approval by the President & CEO.  Management maintains absolute discretion in determining the scope and impact of accomplishments and determining the final bonus payout for all employees.

 

Employees must be employed by Depomed on the day payment is made to be eligible for a bonus payment, since the payments are intended to incentivize successful employees to remain with Depomed.  Employees who have received formal disciplinary action during a plan year may have their bonus payout reduced or eliminated for that plan year, at the sole discretion of Management.

 

Depomed retains the right to alter or eliminate the Plan and its terms and conditions at any time and for any reason, before, during or after the plan year.  All decisions made by Management, including the Board of Directors, will be in their absolute discretion, final and not subject to dispute.

 

No participant shall have any vested right to receive any payment until actual delivery of such compensation.  This plan does not constitute a contract or other agreement concerning employment with Depomed.  Employment at Depomed is “at will” and may be terminated at any time by Depomed or by the employee, either with or without cause.

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