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Exhibit 10.23    
  

         

  

ALLIANCE DATA SYSTEMS CORPORATION  

 2003 Incentive Compensation Plan  

(As Amended and Restated Effective January 1, 2003)  

 
Table of Contents  

	PLAN PHILOSOPHY	 	3
	

EFFECTIVE DATE	
 	

3
	

ELIGIBILITY	
 	

3
	

BASE COMPENSATION USED IN CALCULATING IC PAYOUT	
 	

4
	

DETERMINING IC TARGETS	
 	

4
	

IC COMPONENTS	
 	

4
	

STANDARD WEIGHTINGS CHART FOR IC COMPONENTS	
 	

5
	

DETERMINING PAYMENT CALCULATIONS	
 	

6
	

TIMING OF PAYMENT	
 	

6
	

STATUS CHANGES THAT MAY AFFECT IC TARGETS AND PAYOUTS	
 	

6
	

OTHER TERMS AND CONDITIONS	
 	

8
	

ATTACHMENT A—ASSOCIATE SATISFACTION INDEX (ASI) INFORMATION	
 	

A-1
	

ATTACHMENT B—EXAMPLE INDIVIDUAL EXPECTATIONS WORKSHEET	
 	

B-1
	

ATTACHMENT C—PERFORMANCE/PAYOUT TABLE FOR REVENUE, EBITDA AND INDIVIDUAL EXPECTATIONS	
 	

C-1

2

 

Plan Philosophy  

        The intent of the Alliance Data Systems Incentive Compensation ("IC") Plan ("Plan") is to: 

	•
	Provide
IC to round out an eligible associate's total compensation package in order to attract and retain high performing associates;

	•
	Improve
organizational performance by driving financial and individual performance and increasing associate satisfaction;

	•
	Improve
the alignment between strategic imperatives and initiatives with the Alliance Scorecard; and

	•
	Provide
an opportunity for associates to share in the success they help create. 

        Participation
in this Plan reflects the importance of an associate's position and the impact that the associate's performance can have on the success of the Company. 

Effective Date  

        The Plan Year is January 1, 2003 through December 31, 2003. 

Eligibility  

        Associates are covered by this Plan if they are: 

	•
	Employed
by Alliance Data Systems Corporation or any of its subsidiaries (collectively, the "Company").

	•
	A
member of the Alliance Senior Leadership Team, as defined by the title Director through Chairman & CEO.

	•
	In
an Exempt position that is designated by Corporate Compensation as IC eligible (currently jobs in pay grades 8-11, 21-23, and
32-35).

	•
	Employed
by Alliance before October 1, 2003.

	•
	Newly
hired associates or associates promoted into IC eligible pay grades for the first time before October 1, 2003.

	•
	On
active status on the date of the award distribution or eligible under the guidelines for retirement, disability or leave of absence.

	•
	Part-time
associates in one of the specified pay grades listed above and working a schedule equal to a minimum of 25 hours per week. 

        Associates
are not eligible if they: 

	•
	Are
participating in a sales commission or other incentive plan, unless approved by the appropriate Executive Vice President of a Line of Business ("LOB") or
of a Business Support Group ("BSG") and confirmed by the Senior Vice President of Human Resources and Corporate Compensation.

	•
	Are
temporary or contract employees.

	•
	Are
hired on or after October 1, 2003 or are promoted into an IC eligible pay grade on or after
October 1, 2003.

	•
	Are
on a documented performance improvement plan as of the date of award distribution. 

3

 

Base Compensation Used in Calculating IC Payout  

        Annualized base pay as of October 1, 2003 will be used as part of the IC calculation. The IC target percentage(s) will be applied to October 1, 2003
base salary for purposes of calculating the dollar target amount. 

Determining IC Targets  

        Each participant has an IC target. The Compensation Committee of the Board of Directors assigns IC targets for the Executive Committee members. IC targets for
other positions are determined by the participant's manager using the guidelines established by Corporate Compensation in the following table: 

	Grade Level
	 	IC Target

	Executive Committee Member	 	Determined by the Board's Compensation Committee
	(Senior Vice President) 3	 	35% or 40% or 45%
	(Vice President) 4	 	25% or 30% or 35%
	(Director/Senior Director) 5	 	15% or 20% or 25%
	8-10, 21-23, and 33-35	 	10% or 15%
	11 & 32	 	5% or 10%

        IC
targets are set in 5% increments. When determining the appropriate target, the following are considered: 

	•
	The
associate's position relative to those of other participants in the department;

	•
	The
associate's anticipated contribution to the organization's success; and

	•
	Targeted
total compensation package that is competitive with similar positions in the appropriate labor market or industry. 

        IC
targets will be set at the beginning of the Plan year or at time of hire. If the IC target percentage changes, the manager will explain how the target will be prorated for payout
purposes (if appropriate) and whether or not the performance expectations and weightings will change for the current Plan year. 

IC Components  

        All performance goals should be established and communicated to the participant at the beginning of the Plan year or within 30 days of becoming a
participant in the Plan. The degree to which these performance goals are accomplished have an impact on the actual incentive earned from the Plan. 

        Alliance Revenue and EBITDA Targets:    The Revenue and Earnings Before Interest, Taxes, Depreciation and Amortization
("EBITDA") targets make up 25%-75% of a participant's IC payment (see Standard Weightings Chart below). The Board of Directors of the Company approves the Revenue and EBITDA targets. 

        LOB Revenue and EBITDA Targets:    There are a number of financial measures that can be used to determine success for a
particular area or individual. The appropriate Executive Vice President, along with the Senior Vice President of Human Resources and Corporate Compensation will determine if sub-measures
will be used for a particular LOB or a particular individual. However, it is intended that the Board of Directors approve the achievement of LOB Revenue and EBITDA for payout purposes. 

        Associate Satisfaction Index:    The annual administration of the Associate Survey and the tracking of data (i.e., improvement
expectations) are designed to motivate ongoing attention to issues that affect 

4

 

quality of client service, as well as the development and retention of associates. The Associate Satisfaction Index ("ASI") is a component of the Associate Survey process. The ASI component is
designed to recognize and incent critical non-financial organizational factors that contribute to sustainable business performance and provide a competitive advantage in recruiting,
developing and retaining high performing associates. Targets are set at the beginning of each year along with a payout schedule. See Attachment A for more information. 

        Individual Expectations:    The Weightings Chart identifies those participants that have 25%-50% of their IC payments based upon
the achievement of individual expectations or team strategic imperatives (or
action steps to accomplish the strategic imperatives) as determined between the participant and his or her manager. A sample worksheet has been provided in Attachment B. 

Standard Weightings Chart for IC Components  

        IC objectives are weighted to drive financial and individual performance and increase associate satisfaction. LOBs have the ability to use specific components
that closely reflect Alliance Scorecard measurements. In addition, LOBs may adjust the standard components to include measurable financial drivers, such as bad debt or specific client revenue goals,
with review and approval by the appropriate Executive Vice President, along with the Senior Vice President of Human Resources and Corporate Compensation. The participant's grade/job level as of
October 1, 2003 will be used to determine the overall weightings. 

2003 IC Plan

Standard Components and Weightings  

	 
	 	 
	 	Senior Leadership Team1
	 	Exempts with Direct Supervisory Responsibility
	 	All Other Exempts2
	 
	LOB	 	LOB EBITDA	 	50	%	25	%	25	%
	 	 	LOB Revenue	 	25	%	25	%	25	%
	 	 	Associate Satisfaction3	 	25	%	25	%	0	%
	 	 	Individual Expectations4	 	0	%	25	%	50	%
	

BSG	
 	

Alliance EBITDA	
 	

50	
%	

25	
%	

25	
%
	 	 	Alliance Revenue	 	25	%	25	%	25	%
	 	 	Associate Satisfaction3	 	25	%	25	%	0	%
	 	 	Individual Expectations4	 	0	%	25	%	50	%

	1
	The
LOB/BSG executive has some flexibility to establish targets—by individual—that are important for the success of his or her respective area. The
Individual Expectations weighting should not be used for SLT members unless it is used to drive financial performance. Any changes to the standard components, weightings or payout tables should be
sent to Corporate Compensation for approval by the appropriate Executive Vice President, along with the Senior Vice President of Human Resources and Corporate Compensation.

	2
	The
LOB/BSG has some flexibility in reassigning Revenue targets for those associates who fall into an all other eligible exempt category or in unique cases.

	3
	Some
participants, such as National Account Managers ("NAMs"), may have more emphasis on client relationships than Associate Satisfaction. LOB/BSG executives can determine
how they want to distribute the weightings for these positions.

	4
	Eligible
exempt associates below the Director level should have Individual Expectations that support strategic imperatives ensuring the success of their LOB/BSG and the
Company. 

5

 

Determining Payment Calculations  

        Attachment A:    ASI Information 

        Identifies
the relationship between level of performance and the percentage to be paid for achievement of 2003 Associate Satisfaction Survey target results. For the ASI component to be
paid over 100%, both the applicable EBITDA and Revenue targets must be achieved at 100% or greater. 

        Attachment B:    Example Individual Expectations Worksheet 

        The
sample form is provided to facilitate the setting of the Individual Expectations. If a participant is being held accountable for a Company-level strategic imperative (or an action
item to accomplish the strategic imperative for the LOB/BSG), that form may also be used. Regardless of the form used, an overall percentage of achievement of the Individual Expectations will be
required at the end of 2003 in order to determine the dollar payment for this IC component. 

        Attachment C:    Performance/Payout Table for Revenue, EBITDA and Individual Expectations 

        Identifies
the relationship between level of performance and the percentage to be paid for the achievement of the Alliance Revenue & Alliance EBITDA, LOB Revenue & LOB
EBITDA, and Individual Expectations targets. A minimum of 80% must be achieved for any payment to be received; performance of 120% or greater receives the maximum payment of 150%. Percentages are
rounded to the nearer whole number. 

        For
BSGs, both the Alliance EBITDA and Alliance Revenue targets must be achieved at 100% or greater in order for Individual Expectations to be paid above 100% of target. For LOBs, both
the LOB EBITDA and LOB Revenue targets must be achieved at 100% or greater in order for Individual Expectations to be paid above 100% of target. 

Timing of Payment  

        IC earned for the 2003 Plan year is paid in the first quarter of the following year. A participant must be actively employed on the date payment is made to
receive his or her award. Any participant who is
on an approved leave of absence or disability but still on active status will receive his or her payment even if he or she is not actively at work on the date payment is made. 

Status Changes That May Affect IC Targets and Payout  

        Status changes can affect the amount of incentive a participant receives. Status changes include: 

	•
	Transfers;

	•
	New
Hires;

	•
	IC
Target Changes;

	•
	Leaves
of Absence; and

	•
	Terminations.

        Transfers:    The LOB or BSG a participant is assigned to as of October 1, 2003 will be used to determine any payments
dependent upon LOB/BSG level of performance (see Standard Weightings Chart). Year-end performance for the LOB/BSG will be used to calculate the incentive amount to be paid for this
component. No prorating will be done for the amount of time spent in another LOB/BSG over the Plan year without prior approval of the appropriate Executive Vice President, along with the Senior Vice
President of Human Resources and Corporate Compensation. 

6

 

        For
the ASI component, leaders who have moved or transferred during the course of the year, and who could therefore have their compensation tied to different reporting groups, will be
reviewed as follows: 

	•
	Determine
where the associate spent the most time during the action planning cycle;

	•
	Assess
where the associate had the greatest opportunity to influence Associate Satisfaction; and

	•
	Before
the end of December, the appropriate HR Executive makes a report recommendation to Corporate Compensation, to be approved by the appropriate Executive
Vice President, along with the Senior Vice President of Human Resources and Corporate Compensation. 

        New Hires:    For associates hired between January 1 and September 30, 2003 into an IC eligible position, the base
salary as of October 1, 2003 will be used to calculate the IC dollar target. The dollar target will be prorated as follows: 

	Hired Between These Dates
 
	 	Prorated Amount
	 
	January 1 - March 31	 	100	%
	April 1 - June 30	 	75	%
	July 1 - September 30	 	50	%
	October 1 - December 31	 	No IC	 

        For
example, if an associate is hired on March 12, the IC dollar target will not be prorated. If an associate is hired on July 4, then the IC dollar target will be prorated
by 50%. 

        IC Target Changes:    For current Alliance associates, if there is a promotion or a grade level change during the Plan year but
before October 1, and this causes a change in IC target, the IC target will be prorated according to the chart below depending on the associate's IC eligible effective
date. Note: changes in IC targets after October 1, 2003 will not be used to calculate IC payout for the 2003 Plan year. 

	IC Eligible Effective Date Between These Dates
 
	 	Prorated Amount For Old/New IC % Target

	January 1 - March 31	 	0% / 100%
	April 1 - June 30	 	25% / 75%
	July 1 - September 30	 	50% / 50%
	October 1 - December 31	 	100% / 0%

        The
base salary as of October 1 will be used to calculate the dollar target, even if there is a corresponding change in base salary at the time of the promotion or IC target
change. For example, a grade level change in April results in an IC target change from 5% to 10% and a base salary change from $35,000 to $40,000. The base salary on October 1 is $40,000, so
that is the salary used in the calculation. The IC dollar target is then calculated using the following formula: 

	 
	 	10/01 Base
	 	IC
	 	Target
	 	Prorate
	 	Subtotal

	Old	 	$	40,000	 	5	%	$	2,000	 	25	%	$	500
	New	 	$	40,000	 	10	%	$	4,000	 	75	%	$	3,000
	TOTAL	 	 	 	 	 	 	 	 	 	 	 	$	3,500

        The
participant's manager should communicate to the participant the new weightings of financial and Individual Expectations (if applicable). 

        Leaves of Absence:    If a participant takes a leave of absence in excess of 30 consecutive days, either paid or unpaid, during
the Plan year, he or she may be eligible for a prorated award at the 

7

 

discretion of the appropriate Executive Vice President, along with the Senior Vice President of Human Resources and Corporate Compensation. 

        Terminations:    If a participant terminates his or her position voluntarily or involuntarily during the Plan year, he or she
will not be eligible for an IC payment because he or she would not be on active status on the date of the award distribution. If a participant retires,
becomes disabled or dies during the Plan year, he or she may be eligible for a prorated award at the discretion of the appropriate Executive Vice President, along with the Senior Vice President of
Human Resources and Corporate Compensation. In the event of death, any incentive award is made to the beneficiary named in the Company-paid life insurance program. 

Other Terms and Conditions  

	•
	All
decisions by the Company will be final in the interpretation and administration of the Plan and shall lie within the Company's sole and absolute
discretion. Decisions shall be final, conclusive and binding on all parties concerned.

	•
	Participant's
rights under the Plan may not be assigned or transferred in any way.

	•
	The
Alliance Data Systems 2003 IC Plan may be amended, modified, suspended or terminated by the Company at any time, without prior consent by or prior notice
to associates. The Compensation Committee at its sole discretion may change objectives at any time without prior consent by or prior notice to associates.

	•
	The
Plan shall be unfunded. The Company shall not be required to establish any special or separate fund or to make other segregation of assets to assure the
payment of the amounts under the Plan. Rights to the payment of amounts under the Plan shall be no greater than the rights of the Company's general creditors.

	•
	Texas
state law governs the validity, construction, interpretation, administration and effect of the Plan and the substantive laws, but not the choice of law
rules of the State of Texas, shall govern rights relating to the Plan.

	•
	Generally,
all applicable employment and tax deductions plus 401(k) contribution deferrals will be withheld from the IC payout.

	•
	No
associate has the right nor is guaranteed the right to participate in the Plan by virtue of being an associate or fulfilling any specific position with
the Company. Selection for participation in the Plan is solely within the discretion of the Compensation Committee. The Company may offer participation in the Plan to additional associates or
terminate the participation of any participant in the Plan at any time during the Plan Year.

	•
	Revenues
and earnings classified as "windfalls" or business losses may or may not be excluded in whole or in part from the calculation of Revenue and EBITDA
at the discretion of the Compensation Committee.

	•
	Notice
to participate in the Plan shall not impair or limit the Company's rights to transfer, promote or demote Plan participants to other jobs or to
terminate their employment, nor shall it create any claim or right to receive any payment under the Plan or any right to be retained in the employ of the Company.

	•
	The
Plan is established for the current fiscal year. There shall be no obligation on the part of the Company to continue the Plan in the same or modified
form for any future years.

	•
	In
the event that a participant has a dispute concerning the administration of this Plan, it shall first be submitted in writing to the Senior Director of
Compensation. In the event that the Senior Director of Compensation does not provide a response satisfactory to the participant 

8

 

within
30 business days, the participant may submit the dispute in writing within five business days thereafter to the Senior Vice President of Human Resources, whose decision regarding the dispute
shall be final and binding on each participant or person claiming under the Plan. 

	•
	The
Plan is effective January 1, 2003, and supersedes and replaces all previous IC Plans. All such previous plans, unless earlier terminated, are
terminated at midnight, December 31, 2002. If not
renewed by the Compensation Committee or their designated representative, this Plan will automatically terminate on December 31, 2003.

	•
	In
the event an eligible associate's performance falls below satisfactory standards during the Plan year, the associate may receive a reduced IC payment, at
the discretion of the Company, regardless of the performance results of the Company, LOB, BSG or the ASI results (if applicable). 

9

   Attachment A  

ASSOCIATE SATISFACTION INDEX (ASI) INFORMATION  

        The Alliance Scorecard views associates as one of three key constituencies (along with clients and stockholders). Research has demonstrated, and Alliance
believes, that satisfied associates provide higher levels of service quality and value creation/delivery, cultivating client retention and loyalty, and in turn providing greater profitability and
growth. The degree to which associates feel valued/satisfied has been shown to be a primary determinant of long-term financial performance. The Associate Satisfaction survey and the
resulting ASI represent an accountability mechanism that puts value on people and "walking the talk" when it comes to Alliance's company values, as well as financials and EBIDTA. 

        The
ASI is intended to drive the Company towards Employer of Choice levels of performance and to reward progress towards these levels and recognize actual scores. Launched in 2001, the
ASI is made up of 18 "core" items, asked and tracked on each annual Associate Survey. 

        The
ASI consists of two main components: a progress calculation and actual scores (current year mean percent favorable score on the 18 items). Scores are evaluated against both progress
made since the previous year (as measured by "potential change") and current year scores. The final payout is determined by equally weighing the two measures (see "Payout Table for Associate
Satisfaction Results"). 

Key elements of the ASI calculation:  

        Progress Calculation—The progress target scores at the Company-wide level and for all
subgroups is set at 16% of potential change. Alliance has set the maximum target score for any group at 75. In the ASI computation, change is based on potential
change, not absolute change. Computing scores based on
potential change recognizes the increased difficulty of making continued progress as scores get higher. Regressions will be calculated in a similar manner. 

        Actual Score—For 2003, the goal at the Company-wide level is to achieve an actual score of 71. Each subgroup's
actual score will be measured relative to the Company-wide goal of 71. 

        Final Payout—Alliance recognizes the importance of both progress and actual score relative to the Company-wide
goals. The final payout is calculated by equally weighing the payout achieved for a group's progress score and its actual score. 

        In
addition, the payout calculation for 2003 is based on the following: 

	•
	Scores
will be rounded to the nearer whole number.

	•
	In
2003, the ASI reports reflect leaders' direct areas of influence and accountability. In consultation with the appropriate LOB/BSG HR executive, an
individual leader's ASI component has been linked to reporting groups, as defined in the 2003 Associate Survey report plan. The goal of these assignments is to reflect both influence and
accountability, and to enhance alignment between the survey process and the ASI design. Prior to the administration of Associate Survey 2003 (by end of July 2003), these assignments will again
be reviewed as part of the report planning process led by the appropriate HR Executive. This final review will provide an opportunity to examine any special cases (e.g., organizational changes) as
needed. In any case of significant organizational change that requires a redefinition of a reporting group, process targets may change and will be re-communicated to leaders prior to
survey administration.

	•
	These
progress targets have not been set by using a flat percentage increase over the average score of the same 18 items from the Associate Survey, but as a
percentage of the "potential for 

A-1

 

change."
We have set a goal for Alliance to increase our associate satisfaction by 16% of potential change each year. Each of the progress targets in this attachment was calculated using this same
growth percentage. As an example, the formula used to determine the 2003 progress target for the Alliance consolidated score of 71 is: 

2002 Base Score* = 65  

 100 - 65 = 35
  (100 - 2002 Base Score* = Potential for Change) 

35 × 16% = 5.60
  (Potential for Change × Alliance Organizational Improvement = Increase Needed) 

65 + 6 = 71
  (2002 Base Score* + Increase Needed = Target Percent Favorable Score for 2003 Survey) 

	*
	Average of 18 items selected to compute Associate Satisfaction Index.

A-2

 
TARGET SCORES (PERCENT FAVORABLE MEAN) FOR 2003 ASSOCIATE SATISFACTION  

	Report Name
	 	2003 Progress Target Score

	Alliance Data Systems Consolidated (Without FMI, NZ)	 	71
	Transaction Services
	 	 

	Transaction Services Consolidated (Without MB, FMI, NZ, Marketing)	 	69
	Network Services Consolidated	 	66
	Network Services (Lenexa & Johnson City)	 	66
	Network Services (Lenexa)	 	74
	Network Services (Johnson City)	 	60
	Network Services (Buffalo Grove)	 	68
	Network Services (excluding Johnson City & Lenexa)	 	71
	Utility Services Consolidated	 	71
	Call Center Operations (Atlanta & Walnut St.)	 	70
	Call Center Operations (Atlanta)	 	64
	Call Center Operations & Human Resources—(Walnut St.)	 	72
	Systems Development Consolidated (includes Seattle)	 	73
	Systems Development (Atlanta)	 	70
	Systems Development (HQ2)	 	75
	Systems Development (Seattle)	 	67
	Frequency Marketing	 	68
	Mail Box Corp	 	65
	Information Technology Solutions
	 	 

	Information Technology Solutions Consolidated	 	71
	Information Technology Solutions (San Antonio)	 	70
	Information Technology Solutions (Reynoldsburg)	 	71
	Information Technology Solutions (excluding San Antonio & Reynoldsburg)	 	71
	Retail Services
	 	 

	Retail Services Consolidated (With Marketing & Voorhees)	 	74
	Marketing Services	 	54
	Bank Operations Consolidated	 	71
	Other Operations Consolidated	 	71
	Retail Information Technology	 	75
	Retail Services (Voorhees)	 	61
	Retail Services (Broad St.)	 	72
	Retail Services (Westerville Call Center)	 	75
	Retail Services (Westminster)	 	74
	Retail Services (Lenexa)	 	75
	Retail Services (Reno)	 	75
	Retail Services (Other)	 	75
	Corporate Support Services, CFO and LCAS
	 	 

	Corporate Support Services, CFO, LCAS	 	75

A-3

 
PAYOUT TABLE FOR ASSOCIATE SATISFACTION RESULTS  

        Payout for the ASI Component is a combination of Actual Score and the Percent of Target Achieved. 

	1.
	Look
up the Actual Score first and determine the payout percentage.

	2.
	Then,
look up Percent of Target Achieved and determine the payout percentage.

	3.
	These
two percentages are averaged to get the final ASI payout percentage. 

Examples:

	2002 Base Score:	 	66	 	 	 	2002 Base Score:	 	73	 	 
	2003 Target:	 	71	 	 	 	2003 Target:	 	75	 	 
	2003 Results and Possible Payment	 	2003 Results and Possible Payment
	Actual Score:	 	69	 	90% payout	 	Actual Score:	 	75	 	140% payout
	Percent of Target Achieved:	 	97	%	70% payout	 	Percent of Target Achieved:	 	100	%	100% payout
	Payment would be the average of the two = 80%	 	Payment would be the average of the two = 120%*

	Actual Score

(% Favorable Mean)
	 	2003 Payout
	 	Percent of Target

Achieved
	 	2003 Payout
	 
	52 or Less	 	0	%	89% or Less	 	0	%
	53	 	10	%	90%	 	10	%
	54	 	15	%	91%	 	15	%
	55	 	20	%	92%	 	20	%
	56	 	25	%	93%	 	30	%
	57	 	30	%	94%	 	40	%
	58	 	35	%	95%	 	50	%
	59	 	40	%	96%	 	60	%
	60	 	45	%	97%	 	70	%
	61	 	50	%	98%	 	80	%
	62	 	55	%	99%	 	90	%
	63	 	60	%	100%	 	100	%
	64	 	65	%	101%	 	105	%
	65	 	70	%	102%	 	110	%
	66	 	75	%	103%	 	115	%
	67	 	80	%	104%	 	120	%
	68	 	85	%	105%	 	125	%
	69	 	90	%	106%	 	130	%
	70	 	95	%	107%	 	135	%
	71	 	100	%	108%	 	140	%
	72	 	110	%	109%	 	145	%
	73	 	120	%	110% or more	 	150	%
	74	 	130	%	 	 	 	 
	75	 	140	%	 	 	 	 
	76 or More	 	150	%	 	 	 	 

	*
	Payout
over 100% for the ASI Component is also contingent upon meeting both the applicable EBITDA and Revenue targets. 

A-4

   Attachment B  

EXAMPLE INDIVIDUAL EXPECTATIONS WORKSHEET  

	Name:	 	 	 	Target IC (%):	 	 
	Position Title:	 	 	 	Grade Level:	 	 
	

 	
 	

 	
 	

 	
 	

 	
 	

 
	 
	 	 
	 	Ratings
	 	(e)

Overall

Perf. Score

%

(c x d)

	(a)

Specific Expectations / Standards of Measure

(Deliverables to be Achieved)
	 	(b)

Accomplishments / Results

(Actual Results Achieved in Performance Period)
	 	(c)

Weighting %
	 	(d)

Actual Perf. %

	1.	 	 	 	 	 	 	 	 
	

2.	
 	

 	
 	

 	
 	

 	
 	

 
	

3.	
 	

 	
 	

 	
 	

 	
 	

 
	

4.	
 	

 	
 	

 	
 	

 	
 	

 
	

5.	
 	

 	
 	

 	
 	

 	
 	

 
	

 	
 	

 	
 	

100%	
 	

 	
 	

 
	

 	
 	
Total Score on Specific Expectations (add column "e") >	
 	

 

	    
 Signed by: Associate	 	    
 Manager

B-1

   Attachment C  

PERFORMANCE/PAYOUT TABLE

FOR REVENUE, EBITDA AND INDIVIDUAL EXPECTATIONS  

	 
	 	% of Objective(s)

Achieved*
	 	%

Payout*
	 	 

	80% is the threshold for performance	 	79% or less	 	0%	 	 
	achievements to result in a payout.-->	 	80%	 	65%	 	 
	 	 	81%	 	67%	 	 
	 	 	82%	 	69%	 	 
	 	 	83%	 	70%	 	 
	 	 	84%	 	72%	 	 
	 	 	85%	 	74%	 	 
	 	 	86%	 	76%	 	 
	 	 	87%	 	77%	 	 
	 	 	88%	 	79%	 	 
	 	 	89%	 	81%	 	 
	 	 	90%	 	83%	 	 
	 	 	91%	 	84%	 	 
	 	 	92%	 	86%	 	 
	 	 	93%	 	88%	 	 
	 	 	94%	 	89%	 	 
	 	 	95%	 	91%	 	 
	 	 	96%	 	93%	 	 
	 	 	97%	 	95%	 	 
	 	 	98%	 	96%	 	 
	 	 	99%	 	98%	 	 
	 	 	100%	 	100%	 	<--100% is the target for performance
	 	 	101%	 	102.5%	 	achievements to receive 100% payout.
	 	 	102%	 	105.0%	 	 
	 	 	103%	 	107.5%	 	 
	 	 	104%	 	110.0%	 	 
	 	 	105%	 	112.5%	 	 
	 	 	106%	 	115.0%	 	 
	 	 	107%	 	117.5%	 	 
	 	 	108%	 	120.0%	 	 
	 	 	109%	 	122.5%	 	 
	 	 	110%	 	125.0%	 	 
	 	 	111%	 	127.5%	 	 
	 	 	112%	 	130.0%	 	 
	 	 	113%	 	132.5%	 	 
	 	 	114%	 	135.0%	 	 
	 	 	115%	 	137.5%	 	 
	 	 	116%	 	140.0%	 	 
	 	 	117%	 	142.5%	 	 
	 	 	118%	 	145.0%	 	 
	 	 	119%	 	147.5%	 	 
	 	 	120% or greater	 	150.0%	 	<--150% is the maximum payout level.

        For business support groups, both Alliance EBITDA and Alliance Revenue targets must be achieved at 100% or greater in order for Individual
Expectations to be paid above 100% of target. For lines of business, both LOB EBITDA and LOB Revenue targets must be achieved at 100% or greater in
order for Individual Expectations to be paid above 100% of target. 

C-1

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Exhibit 10.23QuickLinks
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Exhibit 10.24    
  

 
 

ADS ALLIANCE DATA SYSTEMS, INC.
  
    ASSOCIATE CONFIDENTIALITY AGREEMENT    
  

        WHEREAS ADS Alliance Data Systems, Inc. ("ADSI") and its Affiliates carry on the business of transaction
services, credit services and marketing services for businesses. Specifically for transaction services this includes the authorization, collection and settlement of sales transactions and other data
at point of sale, phone or Internet. Additionally, it includes account and cardholder processing, generating and printing billing statements and processing payments. Transaction services also includes
customer service and collection calls provided by ADSI's inbound and outbound call center. Credit services includes the underwriting on consumer credit card loans, portfolio management and risk
management. Marketing services includes development and management of one to one and coalition loyalty programs, both online and offline. Additionally, marketing services includes customer
relationship management ("CRM") consulting and strategic planning, database building and management, analytics and modeling, campaign management and direct marketing, (collectively,
"ADSI's Business"); and 

        WHEREAS ADSI has hired Associate as an Associate to work in ADSI's Business, and Associate will need to examine and make himself/herself
aware of ADSI's and its Affiliates' business, which involves the use of Confidential Information to carry out his/her duties as assigned by ADSI from time to time; and 

        WHEREAS ADSI possesses certain Confidential Information it intends to disclose to Associate solely for the purpose of enabling the
Associate to perform Associate's duties and functions as an Associate of ADSI and for no other purpose; and 

        WHEREAS in connection with the employment of the Associate by ADSI and in consideration of the grant by ADSI to the Associate on the date
hereof of incentive stock options to purchase shares of Common Stock, $.01 par value, of ADSI's parent company Alliance Data Systems Corporation, on the
terms and subject to the conditions specified in the Incentive Stock Option Agreement being executed by ADSI and the Associate simultaneously with the execution of this Agreement, and in consideration
of immediate training to Associate, including additional disclosure of ADSI Confidential Information under the terms herein, the Associate has agreed, among other things, to preserve Confidential
Information, to refrain from soliciting Associates of ADSI and its Affiliates and to not compete with ADSI or its Affiliates under the conditions specified herein; 

        NOW, THEREFORE, in consideration of the mutual covenants and agreements contained herein, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, ADSI and Associate hereby agree as follows: 

 
 

1. Interpretation.    
  

        In this agreement, the phrase "Confidential Information" means all information, including all documents and other
tangible items which record information, whether on paper or in electronic or other storage form, in computer readable format or otherwise, relating to ADSI, its Affiliates, its customers, ADSI's
Business and/or to the business of any of its Affiliates or customers, including, without limitation, all data of any kind whatsoever; know-how; experience; expertise; business plans; ways
of doing business; business results or prospects; financial books, data and plans; pricing; supplier information and agreements; investor or lender data and information; business processes (whether or
not the subject of a patent), computer software and specifications therefore; leases; and any and all agreements entered into by ADSI or its Affiliates and any information contained therein; database
mining and marketing; customer relationship management programs; any technical, operating, design, economic, client, customer, consultant, consumer or collector related data and information, marketing 

1

 

strategies or initiatives and plans which at the time or times concerned is either capable of protection as a trade secret or is considered by ADSI or its Affiliates or customers to be of a
confidential nature and is supplied to or obtained by Associate whether in the form of specifications, written or electronic data, drawings, or disclosed orally or otherwise.
"Affiliate(s)" means any entity directly or indirectly controlling, controlled by, or under direct or indirect common control with ADSI. 

 
 

2. Associate's Obligations.    
  

        Associate shall, regardless of when the Confidential Information was or is received by Associate: 

(a)
hold in confidence all Confidential Information and not reveal any Confidential Information to any other person without the prior written approval of a senior officer of ADSI; 

(b)
use the Confidential Information only to perform Associate's duties and functions as an Associate of ADSI as directed by ADSI, and not use such Confidential Information for any other purpose; 

(c)
keep all Confidential Information secret and confidential and diligently protect all Confidential Information against loss, and prevent unauthorized use or reproduction thereof; and 

(d)
if requested by ADSI, or immediately upon termination of employment, return to ADSI all Confidential Information, all copies (including backup copies), reproductions, reprints and translations
thereof, whether written, electronic or otherwise, in the possession of, or under the control of, the Associate. 

 
 

3. Exceptions.    
  

        The provisions of Section 2 shall not apply to: 

(a)
Confidential Information which is or becomes generally available to the public other than as a result of a disclosure by Associate or a breach of this Agreement by Associate; or 

(b)
Confidential Information which was available to Associate on a non-confidential basis prior to the date hereof from a person other than ADSI or its Affiliates or customers who was not
otherwise bound by confidentiality obligations to ADSI or its Affiliates or customers and was not otherwise prohibited from disclosing the information to Associate; or 

(c)
Confidential Information which becomes available to Associate on a non-confidential basis from a person other than ADSI or its Affiliates or customers who is not otherwise bound by
confidentiality obligations to ADSI or its affiliates or customers and is not otherwise prohibited from disclosing the information to Associate; or 

(d)
Confidential Information which the Associate is required by law to disclose, in which case, Associate will provide ADSI with notice of such obligation immediately to allow ADSI to seek such
intervention as it may deem appropriate to prevent such disclosure including and not limited to initiating legal or administrative proceedings prior to disclosure. 

 
 

4. ADSI Intellectual Property.    
  

(a)
Associate acknowledges and agrees that ADSI or its Affiliates are the sole owner of the Confidential Information (except Confidential Information owned by customers). 

(b)
Associate acknowledges and agrees that all inventions, formulas, techniques, processes, concepts, systems, programs, customer lists, compilations, and other intellectual property (whether or not
patentable, patented, copyrighted, or subject to or susceptible of formal intellectual property protection under the laws of any jurisdiction and whether or not made during working hours) made or
conceived by Associate solely or jointly with other person(s) during the term of Associate's employment with 

2

 

ADSI that relate to activities or proposed activities of ADSI or its Affiliates or that result from work performed by Associate for ADSI or its Affiliates (collectively "ADSI Intellectual Property")
shall be the property of ADSI. 

(c)
Associate agrees to promptly disclose in writing to ADSI all ADSI Intellectual Property and hereby assigns all right, title, and interest in ADSI Intellectual Property in any and all countries to
ADSI or its nominee. Associate further agrees, when requested, to carry out the intent and purpose of the assignment by: (i) executing oaths, declarations, assignments, powers of attorney and
other papers; (ii) communicating to ADSI all facts known to Associate relating to ADSI Intellectual Property, and the history thereof; and (iii) complying with requests of ADSI for
perfecting title to ADSI Intellectual Property in ADSI, and for securing, maintaining and enforcing protection for ADSI Intellectual Property. 

(d)
Associate shall not be entitled to use ADSI Intellectual Property for Associate's benefit or the benefit of anyone except ADSI without written permission from ADSI and then only subject to the
terms of such permission. Associate acknowledges that nothing herein is intended to give Associate any rights to, ownership interest in, or license with respect to, any of the Confidential
Information, any ADSI Intellectual Property, or any patent, trademark or copyright. Associate waives any moral rights which Associate may have in and to such work. 

 
 

5. Non-Competition.    
  

(a)
Associate acknowledges the confidential and sensitive nature of Confidential Information, and that the use or disclosure of, or even the appearance of the use or disclosure of, the Confidential
Information in certain circumstances may cause irreparable damage to the business and reputation of ADSI or its Affiliates. Accordingly, and in consideration of the options and the immediate training
which ADSI agrees to provide to Associate and ADSI's disclosure of additional Confidential Information as part of that training, including ADSI trade secrets, Associate shall not, within the
Designated Geographical Area (defined below), until the expiration of 24 calendar months after the date on which Associate's employment with ADSI terminates (regardless of the circumstances in which
the employment has ended), engage, directly or indirectly, in any business, enterprise or employment that is competitive with those aspects of ADSI's Business (defined above) in which Associate was
involved or aware (hereinafter the "Non-Competition Covenant"). ADSI and Associate agree that this Non-Competition Covenant is fair and reasonable. 

"Designated
Geographical Area" shall mean and include any area of any state or foreign jurisdiction (i) in which ADSI or its Affiliates has conducted business or is conducting business at the
time Associate ceases to be employed by ADSI, and in which the Associate has worked or has responsibilities, knowledge, or involvement while working for ADSI, or (ii) with respect to which ADSI
or its Affiliates made plans, with Associate's knowledge while he was employed by ADSI, to conduct business at any time within 24 calendar months of the date Associate's employment with ADSI
terminates. 

Although
ADSI and Associate have, in good faith, used their best efforts to make the limitations and scope of the Non-Competition Covenant reasonable, and it is not anticipated or intended
by either party to this Agreement that any court of competent jurisdiction would find the Non-Competition Covenant unreasonable, in the event that a court should conclude that the
Non-Competition Covenant is unreasonable, Associate and ADSI agree that the provisions should be reformed to restrict Associate's competition with ADSI to the maximum extent enforceable to
adequately protect Confidential Information and ADSI's interests, including ADSI trade secrets. 

3

 

 
 

6. Actions Contrary to Interests of ADSI.    
  

During
the term of Associate's employment with ADSI and for a period of one year immediately following the effective date of termination of the Associate's employment with ADSI, regardless of the
circumstances in which the employment has ended, Associate shall not, directly or indirectly, alone or in conjunction with another person in any manner: 

	(a)
	solicit
or encourage any officer or Associate of ADSI or its Affiliates to leave the employment of ADSI or its Affiliates or to otherwise harm their relationship with or commitment to
ADSI or its Affiliates;

	(b)
	hire
any officer or Associate who has left the employment of ADSI or its Affiliates within six months of the termination of such officer's or Associate's employment with ADSI or its
Affiliates;

	(c)
	solicit
or encourage any independent contractors, suppliers or referral sources performing services for ADSI or its Affiliates to cease or modify such performances or to otherwise
harm their relationships with or commitment to ADSI or its Affiliates; or

	(d)
	solicit,
induce or attempt to induce any past, current or prospective customer or supplier of ADSI or its Affiliates to cease doing business in whole or in part with ADSI or its
Affiliates. 

 
 

7. Incentive Stock Options.    
  

Associate
hereby acknowledges that, in consideration for the covenants herein, Associate has been granted pursuant to a separate agreement on the date hereof the option(s) to purchase shares of common
stock of Alliance Data Systems Corporation pursuant to the Amended and Restated Alliance Data Systems Corporation and its Subsidiaries Stock Option and Restricted Stock Plan. 

 
 

8. ADSI Property.    
  

(a)
All memoranda, notes, lists, records, e-mails, computer files and other documents and information (and all copies, versions, and translations thereof) made or compiled by the Associate
or made available to the Associate concerning ADSI's Business or ADSI or its Affiliates shall be the property of ADSI and shall be delivered to ADSI at any time upon request. All such property shall
be delivered to ADSI immediately upon the cessation of the Associate's employment. 

(b)
Associate agrees to return to ADSI all documents, materials, computer hardware and software, PDAs, supplies, calling or credit cards, keys, passes, cell phones, pagers and any other property or
data that is the property of ADSI or its Affiliates or was used in the course of Associate's employment with ADSI at any time upon request by ADSI. The return of such items shall be made at or before
the time of termination of employment or, if that is not possible, as soon thereafter as is possible. 

 
 

9. Injunctive Relief.    
  

Each
party acknowledges that the provisions of this Agreement are only such as are reasonably necessary for the protection of ADSI's and its Affiliates' rights in respect of the Confidential
Information and ADSI Intellectual Property. Associate agrees that damages alone would not be an adequate remedy for the irreparable harm to ADSI, its affiliates and ADSI's Business that would result
from violation of any of the provisions hereof, that ADSI shall be entitled to specific performance and/or similar equitable remedy in respect of by any such violation or any threatened violation of
such provisions (and Associate hereby consents to the granting of such relief to enforce the provisions hereof) and that ADSI may enforce its rights under this Agreement by bringing suit for
injunctive relief or specific performance without payment of bond or security in connection therewith. 

4

 

 
 

10. Conflicting Obligations.    
  

Associate
has listed below all obligations associate has with others pertaining to the subject matter of this Agreement, or which would restrict Associate's acceptance of duty assignments by ADSI. 

 
 

11. General.    
  

	(a)
	Independent Legal Advice. Associate acknowledges that Associate has been advised by ADSI to obtain independent legal advice, and has
had an opportunity to obtain such advice, with respect to the Agreement.

	(b)
	Entire Agreement. This is the entire agreement and supercedes all prior agreements and understandings, whether oral or written, between
the parties with respect to the subject matter hereof. This Agreement may not be amended except by the written agreement of the parties hereto. Associate expressly warrants that no promise or
agreement that is not herein expressed has been made to
Associate in executing this Agreement and that Associate is not relying upon any statement or representation of ADSI or its Affiliates not expressly contained in this Agreement.

	(c)
	No Waiver. Any failure by any party to exercise its rights or remedies hereunder or any delay by such party in the exercise of any of
its rights and remedies hereunder shall not, to the extent permitted by law, operate as a waiver or variation of such or any other right or remedy hereunder.

	(d)
	Severability. Each covenant by Associate contained herein shall be independent and severable from the others, and in the event that any
provision of this Agreement should be invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions contained herein shall not in any way be
affected thereby. Should any provision of this Agreement be held invalid, illegal or unenforceable in any respect, the parties agree to negotiate in good faith a valid, legal and enforceable provision
effectuating the original intent of the parties.

	(e)
	Assignment. Associate may not assign this Agreement or any of Associate's rights or obligations hereunder.

	(f)
	Inurement. This Agreement shall inure to the benefit of and shall be binding upon the parties hereto and their respective successors,
permitted assigns, heirs, and personal representatives.

	(g)
	Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of Texas (without regard to
such state's choice of law rules) and the parties agree to the non-exclusive jurisdiction of the courts of the State of Texas to resolve any dispute which may arise between them concerning
this Agreement and the subject matter hereof, without prejudice to ADSI's right to commence any action against Associate in any other applicable jurisdiction.

	(h)
	Employment at Will. Associate agrees and acknowledges that Associate's employment may be terminated at any time, with or without cause.
Nothing in this Agreement or in any policy statement or manual shall be construed to limit ADSI's right to terminate this employment relationship at any time. 

5

 

        IN WITNESS WHEREOF, ADSI and Associate have executed this agreement as of the date first above written. 

 
 

ADS ALLIANCE DATA SYSTEMS, INC.    
  

	
Authorized Signature	 	 
	

Printed Name	
 	

 
	

Title	
 	

 
	

Date	
 	

 
	

ASSOCIATE	
 	

 
	

Associate's Signature	
 	

 
	

Printed Name	
 	

 
	

Date	
 	

 
	
LIST OF CONFLICTING OBLIGATIONS, IF ANY:
	
 	

 

6

QuickLinks

Exhibit 10.24

ADS ALLIANCE DATA SYSTEMS, INC. ASSOCIATE CONFIDENTIALITY AGREEMENT

1. Interpretation.

2. Associate's Obligations.

3. Exceptions.

4. ADSI Intellectual Property.

5. Non-Competition.

6. Actions Contrary to Interests of ADSI.

7. Incentive Stock Options.

8. ADSI Property.

9. Injunctive Relief.

10. Conflicting Obligations.

11. General.

ADS ALLIANCE DATA SYSTEMS, INC.

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