Document:

Ex-10.30

 

EXHIBIT
10.30

NATIONAL MEDICAL HEALTH CARD

CORPORATE INCENTIVE PLAN

SUMMARY PLAN DESCRIPTION

FY 2007

Table of Contents

	 	 	 	 	 
	Introduction
	 	 	2	 
	 
	 	 	 	 
	Section 1: Award Levels
	 	 	2	 
	 
	 	 	 	 
	Section 2: Calculation of Award
	 	 	2	 
	 
	 	 	 	 
	1. Individual Performance Element
	 	 	3	 
	2. Net Income Element
	 	 	3	 
	3. Gross Profit
	 	 	4	 
	 
	 	 	 	 
	Section 3: Definitions
	 	 	5	 
	 
	 	 	 	 
	Section 4: Eligibility
	 	 	5	 
	 
	 	 	 	 
	Section 5: Award Payments
	 	 	6	 
	 
	 	 	 	 
	Section 6: General Provisions
	 	 	6	 

- 1 -

 

FY 2007 CORPORATE INCENTIVE PLAN

Introduction

At National Medical Health Card (“the Company”), we believe associates can make a difference
in overall corporate performance and in the achievement of our strategic initiatives. The Corporate
Incentive Plan (the “CIP” or the “Plan”) is designed to reward Associates for performance that
significantly contributes to our growth and financial success.

All management associates at NMHC play a critical role in assisting the Company in achieving the
financial goals expected by our shareholders. Our investors provide us with the necessary capital
to operate the Company anticipating a sufficient return on the dollars invested. If we achieve our
goals and meet shareholders expectations, we should share in the financial success. Likewise, if we
fail to meet our objectives, we should share in the same financial shortfall as our investors. We
have designed the Plan so that good management efforts resulting in financial success is aligned in
the best interest of our shareholders.

The 2007 Plan is designed to reward three important elements of performance: (1) Individual
Performance (2) Net Income and (3) Gross Profit.

The following is a summary of the Plan.

Section 1: Award Levels

Target bonus award levels, expressed as a percent of eligible compensation for professional
levels of Manager and above are based on considerations of affordability, internal equity and
market positioning with peer companies. Target award levels are subject to review annually to
assure conformance of NMHC’s compensation strategy and market conditions.

No award will be paid if threshold requirements for that element are not met. Awards will never
exceed maximum. No bonus award, for any element, will be paid in the event the Company does not
report positive Net Income.

Your Target Corporate Incentive Bonus for FY 2007 is described in your Total Compensation
Statement, provided under separate cover.

Section 2: Calculation of Award

The Plan has been linked to correspond directly to our business goals for Fiscal Year 2007.
Award results for each element will be calculated and added together to represent your 2007 Bonus
Award as illustrated in Table 1.

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FY 2007 CORPORATE INCENTIVE PLAN

Table 1

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Measures	 	Weight	 	Threshold	 	Target	 	Maximum
	Individual Performance
	 	 	30	%	 	 	0	%	 	 	100	%	 	 	120	%
	Net Income
	 	 	50	%	 	$	9,957	 	 	$	12,447	 	 	$	14,936	 
	Gross Profit
	 	 	20	%	 	$	77,712	 	 	$	97,141	 	 	$	116,569	 

1. Individual Performance Element

Individual Performance, based on meeting your personal goals and objectives, is a hallmark of
our corporate culture. We base 30% of your overall bonus on your individual performance results, as
determined by your managers. Awards for individual performance are granted from a fixed budget for
each business unit and will range generally from 80% to 100% of target, within an overall range of
zero to 120% of target. As long as the company is profitable, the Individual Performance bonus will
be paid, regardless of Company financial performance measures for the fiscal year. This feature of
the plan is designed to recognize individual contributions and to provide a bonus opportunity, even
if the Company fails to meet its financial objectives.

Awards for this element are based on a “zero-sum” model, and can be subject to forced distribution
requirements.

2. Net Income Element

A portion of your total target bonus will be based on the Company’s financial performance, as
measured by Net Income (excluding the expensing of stock options and related taxes). Senior
management has established threshold, target and maximum levels for Net Income. Table 2 illustrates
the relationship of financial results to the Net Income financial performance element; award levels
will be interpolated for performance between threshold, target and maximum levels.

Awards under this element will range from 50% of target for business results equal to 80% of the FY
2007 business plan to 150%. No award will be paid for this element for business results less than
80% of the Plan.

Table 2

	 	 	 	 	 	 	 	 	 
	 	 	Net Income (% of Plan)	 	Net Income Element Award
	Threshold
	 	 	80	%	 	 	50	%
	Target
	 	 	100	%	 	 	100	%
	Maximum
	 	 	120	%	 	 	150	%
	Example
	 	 	110	%	 	 	125	%

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FY 2007 CORPORATE INCENTIVE PLAN

3. Gross Profit Element

Twenty percent of your bonus will be based on the Company’s Gross Profit. Senior management has
established threshold, target and maximum levels for Gross Profit. Table 3 illustrates the
relationship of financial results to the Gross Profit financial performance element; award levels
will be interpolated for performance between threshold, target and maximum levels.

Awards under this element will range from 50% of target for business results equal to 80% of the FY
2007 business plan to 150%. No award will be paid for this element for business results less than
80% of the Plan.

Table 3

	 	 	 	 	 	 	 	 	 
	 	 	Gross Profit (% of Plan)	 	Gross Profit Element Award
	Threshold
	 	 	80	%	 	 	50	%
	Target
	 	 	100	%	 	 	100	%
	Maximum
	 	 	120	%	 	 	150	%
	Example
	 	 	90	%	 	 	75	%

Example of Total Bonus Opportunity

Assumptions:

	 	à	 	Eligible Earnings $75,000
	 
	 	à 	 	 Total Target Incentive = 10%
	 
	 	à	 	 Individual Performance = 100%
	 
	 	à	 	 Net Income = $12,290
	 
	 	à	 	 Gross Profit = $116,569

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	Element	 	 
	 	 	Target %	 	Target $	 	Award	 	Award $
	Individual
Performance
	 	 	30	%	 	$	2,250	 	 	 	100	%	 	$	2,250	 
	Net Income
	 	 	50	%	 	$	3,750	 	 	 	93.7	%	 	$	3,513.75	 
	Gross Profit
	 	 	20	%	 	$	1,500	 	 	 	150	%	 	$	2,250	 
	Total
	 	 	100	%	 	$	7,500	 	 	 	107	%	 	$	8,013.75	 

- 4 -

 

FY 2007 CORPORATE INCENTIVE PLAN

Section 3: Definitions

The following terms have been defined for the purpose of clarification:

	 	à	 	Actively Employed: Period of time an Associate is employed. Does not
include Associates who are on medical leave or workers compensation.
	 
	 	à	 	Bonus Award: The sum of awards earned under the elements of the Plan:
Individual Performance, Net Income and Gross Profit.
	 
	 	à	 	Bonus Target: The percent of Eligible Compensation representing the Bonus
Award for performance equal to Plan (i.e. Individual Performance plus Net Income plus
Gross Profit equal to Plan).
	 
	 	à	 	Determination Date: The date on which your target and business unit is
fixed for calculation of the Bonus Award. The Determination Date is June
1st of the Plan Year. Your bonus will be based on your target bonus
percent, as in effect on June 1st, 2007.
	 
	 	à	 	Net Income: As reported in NMHC’s SEC filings, Gross Sales minus taxes,
interest, depreciation, and other expenses excluding special, non-recurring charges.
For purposes of the Plan, Net Income results are reviewed and approved by the
compensation committee of the Board of Directors.
	 
	 	à	 	Eligible Compensation: The following types of earnings, paid during the
Plan Year, are included as eligible compensation: base pay, non-exempt overtime,
holiday, vacation, FTO, and shift differential, as applicable. All other forms of pay
are not considered eligible compensation
	 
	 	à	 	Participant: An Associate who has met the eligibility criteria outlined in
accordance with Section 4.
	 
	 	à	 	Plan: The 2007 Corporate Incentive Plan as outlined in this Summary Plan
Description.
	 
	 	à	 	Plan Year: The fiscal year beginning July 1, 2006 and ending June 30, 2007.

Section 4: Eligibility

All employees in professional levels of Manager and above are eligible to participate
in the Plan, except:

	 	à	 	Associates who participate in any sales-based or other specific
incentive compensation plan, or
	 
	 	à	 	 Non-exempt Member Relation Associates who participate in the Member
Relation Incentive Plan, or
	 
	 	à	 	 Consultants, Contract and Temporary Associates

The bonus Award for any Associate who begins employment with the Company after the
beginning of the Plan Year shall be pro-rated based on the amount of eligible earnings
earned during the Plan Year. An Associate who begins employment on or after April 2, 2007
is not eligible to participate in the Plan for that Plan Year.

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FY 2007 CORPORATE INCENTIVE PLAN

An Associate who terminates or is terminated for any reason during the Plan Year is not
eligible to receive an award.

Part-Time Associates are eligible for participation based on their Target Bonus at the
Determination Date and the amount of eligible compensation earned during the Plan Year.

Associates who are on medical leave of absence such as disability, or workers compensation
are eligible for a bonus award. Bonus calculations will be based on eligible compensation
earned while Associate is Actively Employed.

To be eligible to receive any award under the Plan, the Associate must be considered in
good standing as that term is defined by the Company in its sole discretion.

Section 5: Award Payments

Awards will be paid, generally, during the first quarter following the Plan Year,
subject to the availability of all required performance results.

All bonus awards payable under the Plan are subject to all required withholding income tax
and such other taxes as may be required.

Associates must be employed at the time of payment.

Fidelity 401(k) Plan deductions will be withheld at the same percentage as elected for
normal paychecks, and will be eligible for NMHC’s Company Match, up to the 401(k) Plan
limits.

Section 6: General Provisions

The company reserves the right to amend the Plan from time to time and to terminate
this Plan at any time solely in its discretion.

Nothing contained herein shall be construed to confer on the Participant any right to
continue as an Associate of the Company or to derogate from any right of the Company to
request the resignation or discharge the Participant, or to lay off or require a leave of
absence of the Participant, with or without pay, at any time, with or without cause or
notice.

These guidelines should not be construed as a contract between NMHC and any Associate. No
Manager or other representative of the Company (other than the Chief Executive Officer) has
the authority to make any representations, promises or commitments to any associate
regarding incentive amounts different from or contrary to the formula set forth in this
Summary Plan Description. Further, no such representations made by the Chief Executive
Officer shall be binding on the

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FY 2007 CORPORATE INCENTIVE PLAN

Company or enforceable, unless they are in writing, and
signed by the respective Associate and the Chief Executive Officer.

The Chief Executive Officer shall have full authority to interpret the Plan, to establish
and amend rules and regulations relating to it and to make all other determinations
necessary or advisable for the administration of the Plan.

- 7 -Ex-10.31

 

EXHIBIT
10.31

[NMHC letterhead]

[Date]

[Executive’s name

& address]

Dear [Executive]:

We are pleased to offer you the executive Severance Package described below in the event that
National Medical Health Card Systems, Inc. or any of its successors or assigns (“the Company”)
decides to terminate your employment for any reason other than cause or if, you terminate your
employment for Good Reason. For the purposes of this Agreement, cause shall be defined as theft,
embezzlement or conviction of a felony or a misdemeanor (“Cause”). For the purposes of this
Agreement, “Good Reason” shall be defined as

	 	(a)	 	Action by the Company that results in the material diminution
of your position, authority, duties or responsibilities absent your written
consent;
	 
	 	(b)	 	Reductions in your base salary, bonus target, and material
reductions in retirement benefits, and/or welfare benefits.
	 
	 	(c)	 	Changes in your eligibility or reduction in your level of
participation in the Company’s Long Term Incentive plan that has a targeted
value equal to ___% of your annual base salary.

By signing below, you and the Company agree that if the Company decides to terminate your
employment other than for Cause or if you terminate your employment for Good Reason, then you shall
be entitled to receive the following payment and benefits (“Severance Package”):

i) severance payments equal to your then current annualized salary, payable
pursuant to the Company’s payroll practices;

ii) benefits generally payable to terminated employees under 401(k) plans, qualified
benefits plans, and other employee benefit plans and as may be mandated by state or federal
benefits continuation laws; and

iii) continuation of health insurance under the Company’s group plans for the lesser of one
(1) year or until you become employed by another employer offering group health coverage.

 

 

You are required to notify the Company when you become employed by another employer. You agree to
arbitrate through the expedited commercial procedures of the American Arbitration Association in
Manhattan regarding any dispute arising under this Agreement. This Agreement shall be governed by
New York Law.

     As a condition of receiving the executive Severance Package, you will be required to sign a
separation agreement and general release in a form acceptable to the Company. Please indicate your
acceptance of this executive severance Agreement by signing below.

	 	 	 	 	 	 	 
	 

	 	 	 	Very truly yours,
	 	 
	 
	 	 	 	 	 	 
	AGREED TO:

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