Document:

pcti-ex1016_178.htm

EXHIBIT 10.16

 

 

 

 

PCTEL, INC.

 

SALES COMPENSATION PLAN

 

Prepared specifically for:

 

Arnt Arvik

 

Plan Year 2020

 

PCTEL, Inc.

2020 Sales Compensation Plan

EXHIBIT 10.16

	
I.
	
Introduction

 

This PCTEL Sales Compensation Plan (the “Plan”) has been designed by the Company (as hereinafter defined) to:

 

	
 
	
▪
	
Align sales compensation with corporate profitability;

	
 
	
▪
	
Motivate, incent and reward sales behavior in order to achieve PCTEL’s corporate and financial objectives; and

	
 
	
▪
	
Provide a compensation plan that is equitable and consistent across regions and product lines.

 

This Plan supersedes all prior sales compensation plans and any discussions or verbal agreements between Participant and the Company.

 

	
II.
	
Definitions

 

Adjusted EBITDA – Adjusted EBITDA is GAAP operating profit excluding stock compensation expenses, amortization of intangible assets, depreciation, restructuring charges, impairment charges, gain/loss on sale of product lines, and expenses included in GAAP operating profit to the extent their recovery is recorded below operating profit.

 

Base Salary – Base Salary is the amount payable to Participant as non-variable compensation for services rendered to the Company.  It is determined by Company management on an annual basis.  

 

CEO – Chief Executive Officer

 

CFO – Chief Financial Officer

 

Commission – Commission is a portion of the variable compensation payable to Participant and is related to sales to customers.  It is calculated in accordance with Section V below.

 

Commission Payout Factor – Commission Payout Factor has the meaning set forth in Section V(a)(1).

 

Commissionable Revenue – Revenue earned by the Company (determined in accordance with GAAP) from sales of products, services, NRE, maintenance charges, royalties and training charges, excluding freight, loans, interest charges, and other similar charges.  

 

Company – PCTEL, Inc. and its subsidiaries

 

EBITDA Goal – EBITDA Goal has the meaning set forth in Section V(b).

 

EBITDA Payout Factor – EBITDA Payout Factor has the meaning set forth in Section V(b).

 

GAAP – Generally Accepted Accounting Principles in the United States of America

 

Individual Quota – Company management assigns an Individual Quota that represents the total anticipated Commissionable Revenue that management expects the Sales Team to generate for the Plan Year.  Your Individual Quota is set forth on Attachment A.

 

Participant – The sales professional for whom this Plan is prepared and whose name is found on the cover page of this Plan.

 

Plan – Plan has the meaning assigned in Section I.

PCTEL, Inc.

2020 Sales Compensation Plan

EXHIBIT 10.16

 

Plan Administrators – The Plan Administrators are the CEO, CFO and Vice President-Corporate Resources.  

 

Plan Year – The Plan Year is January 1, 2020 through December 31, 2020.

 

Quota Assignment Statement – The Quota Assignment Statement is the statement in the form of Attachment A signed by the Company and Participant defining the amount of the Individual Quota, Target Commission, Target Adjusted EBITDA and target total variable compensation.

 

Sales Team – The Sales Team refers to all sales personnel who report directly or indirectly to Participant.

 

Target Commission – The Target Commission, as identified in Attachment A, is the percentage of Base Salary that Participant is anticipated to earn as Commission if Participant achieves his Individual Quota.

 

	
III.
	
General

 

(a) Plan Administration.  The Plan Administrators will manage the Plan and have full discretion to (i) make adjustments or revisions to the Plan, (ii) construe and interpret the terms of the Plan, (iii) determine eligibility to participate in the Plan, and (iv) determine whether Commission is payable under the Plan; provided, however, that the Plan Administrators will not make changes to (1) the accounts assigned to Participant, (2) the Individual Quota as set forth on the executed version of Attachment A, or (3) the Commission Payout Factor or the EBITDA Payout Factor as they appear in the executed version of this Plan, except to address situations that were unforeseen at the time the Plan was established or as set forth in Section IV(b).  The determination of the Plan Administrators is final and binding.  In the event of any revision or adjustment to the Plan, including Attachment A, an amendment to the Plan will be prepared and signed by the Participant and the Policy Administrators.

 

	

	
(b) Termination of Employment.  The final amount of Commission due to Participant upon termination of employment is the Commission earned, as provided in this Plan, up to and including the termination date.  Subject to applicable law, the final payment of Commission will be made at the times set forth in Section VI.

 

(c) Participation. Participant is not eligible for the short-term incentive program offered by the Company, but is eligible for the long-term incentive program.

 

	
IV.
	
Quota

 

(a) Individual Quota. At the beginning of each fiscal year, the Plan Administrators will specify on a Quota Assignment Statement for each member of the Sales Team, including Participant, the applicable Individual Quota and Target Commission.  The Plan Administrators have assigned Participant, as Chief Sales Officer, an Individual Quota equal to the total target revenue of the Company, as approved by the Board of Directors in the Company’s 2020 financial plan.  

 

(b) Modifications due to Product Discontinuation.  During the Plan Year, Company may discontinue products previously sold by the Sales Team, which may impact Participant’s ability to reach his Individual Quota.  For example, this can occur when a product is discontinued as a result of insufficient sales, lack of component parts, or the sale of the business segment offering the product.  If, based upon sales by the Sales Team of such discontinued product in the current and/or prior fiscal year, the discontinuation of the product could have a material effect on Participant’s ability to meet 

PCTEL, Inc.

2020 Sales Compensation Plan

EXHIBIT 10.16

the Individual Quota, the Plan Administrators will determine in good faith whether Participant’s Individual Quota should be adjusted accordingly.

 

	
 
	
V.
	
Variable Compensation; Commission 

 

Variable Compensation: Participant’s variable compensation for 2020 will be comprised of two components: (i) Commission, and (ii) 2020 Adjusted EBITDA. 

 

(a) Commission Earned:  Commission is calculated based upon the amount of Commissionable Revenue generated by the Sales Team during the 2020 Plan Year.  

 

(1) Commission Calculation - Commissionable Revenue will be calculated on a year-to-date basis from invoices issued to the Sales Team’s customers and will determine the percentage of Individual Quota attained.  The “Commission Payout Factor” is determined by locating the percentage of Individual Quota attained year-to-date in the table below and identifying the corresponding Commission Payout Factor.  If the Individual Quota attained falls between the listed percentages in the Commission Table, the Commission Payout Factor will be extrapolated (e.g., 77% Individual Quota attainment would be a 61.67% Commission Payout Factor).  The Commission earned is calculated as follows: 

 

COMMISSION PAYOUT FACTOR x TARGET COMMISSION x BASE SALARY.

 

Commission Table:

		
	
% Individual Quota Attained
	
Commission

Payout Factor

	
0%
	
0%

	
10%
	
6%

	
20%
	
12%

	
30%
	
18%

	
40%
	
24%

	
50%
	
30%

	
60%
	
36%

	
70%
	
42%

	
75%
	
60%

	
80%
	
64%

	
90%
	
81%

	
100%
	
100%

	
110%
	
121%

	
120%
	
144%

	
130%
	
169%

	
140%
	
196%

	
150%
	
205%

	
160%
	
214%

	
170%
	
223%

	
180%
	
232%

	
190%
	
241%

	
≥ 200%
	
250%

 

PCTEL, Inc.

2020 Sales Compensation Plan

EXHIBIT 10.16

 

(2) Cap on Commission - There is a “cap” or upper limit on the amount of Commission the Company will pay Participant for the 2020 Plan Year.  If Participant were to achieve Commissionable Revenue in excess of 200% of Individual Quota, which equates to a 250% Commission Payout Factor, the excess Commissionable Revenue will not result in additional Commission for Participant.

 

(3) Returns and Credits - In the event that a product for which the Sales Team received credit as Commissionable Revenue is returned (or the Company credited the customer’s account as though the product was returned), the corresponding amount of Commissionable Revenue related to the returned or credited product shall be subtracted from the Commissionable Revenue otherwise credited to the Sales Team.  The amount of Commissionable Revenue will be subtracted in the quarter the product return or product credit is processed.  Further, if one or more assigned accounts are greater than 90 days past the due date established by the applicable payment terms, the corresponding amount of Commissionable Revenue previously credited to the Sales Team shall be subtracted and the next quarterly Commission payment shall be adjusted accordingly.  Such Commissionable Revenue will be added back in the quarter in which the payment is received from the customer and will be included in the next succeeding Commission payment.  No Commission will be payable for any amounts written down or written off in accordance with GAAP.

 

(4) Commission Payments - The amount of Commission payable to Participant will be calculated after the Company’s books are closed for the first fiscal quarter and after each calendar month thereafter.   

 

(b) 2020 Adjusted EBITDA Payment –The Company has assigned an Adjusted EBITDA goal equal to the Company’s target total Adjusted EBITDA, as approved by the Board of Directors in the Company’s 2020 financial plan (“EBITDA Goal”).  

 

(1) Adjusted EBITDA Calculation. The Company’s Finance Department will calculate the year-to-date Adjusted EBITDA in accordance with its established non-GAAP procedures.  The “EBITDA Payout Factor” is determined by locating the percentage of the EBITDA Goal attained in the table below and identifying the corresponding EBITDA Payout Factor.  If the percentage of EBITDA Goal attained falls between the listed percentages in the Adjusted EBITDA Table, the Finance Department will extrapolate to identify the EBITDA Payout Factor (e.g., 77% attainment would be a 61.67% EBITDA Payout Factor).  The Adjusted EBITDA component of Variable Compensation is calculated as follows: 

 

EBITDA PAYOUT FACTOR x TARGET ADJUSTED EBITDA (on Attachment A) 

x BASE SALARY.

PCTEL, Inc.

2020 Sales Compensation Plan

EXHIBIT 10.16

 

Adjusted EBITDA Table:

		
	
% EBITDA Goal Attained
	
EBITDA Payout Factor

	
0%
	
0%

	
10%
	
6%

	
20%
	
12%

	
30%
	
18%

	
40%
	
24%

	
50%
	
30%

	
60%
	
36%

	
70%
	
42%

	
75%
	
60%

	
80%
	
64%

	
90%
	
81%

	
100%
	
100%

	
110%
	
121%

	
120%
	
144%

	
130%
	
169%

	
140%
	
196%

	
150%
	
205%

	
160%
	
214%

	
170%
	
223%

	
180%
	
232%

	
190%
	
241%

	
≥ 200%
	
250%

 

(2) Limits on EBITDA - There is a “cap” or upper limit on the amount of the Adjusted EBITDA payment the Company will pay Participant for the 2020 Plan Year.  If Participant were to achieve Adjusted EBITDA in excess of 200% of the EBITDA Goal, which equates to a 250% EBITDA Payout Factor, the excess Adjusted EBITDA will not result in a higher EBITDA Payout Factor than 250%.  In addition, regardless of actual results, if the percentage of Individual Quota attained is less than 100%, then the percentage of EBITDA Goal attained will also be deemed to be capped at 100%.

 

(3) Adjusted EBITDA Payments - The amount payable to Participant as a result of attaining the EBITDA Goal will be calculated after the Company’s books are closed for each fiscal quarter.

 

	
VI.
	
Payment Timing 

 

All payments of Variable Compensation to Participant will be paid forty-five (45) days after the close of the applicable period.  

PCTEL, Inc.

2020 Sales Compensation Plan

EXHIBIT 10.16

 

ATTACHMENT A

 

PCTEL, INC.

 

QUOTA ASSIGNMENT STATEMENT

 

 

Name:  Arnt Arvik

 

Sales Accounts:  All accounts of the Sales Team

 

Individual Quota assigned: as stated in Section IV(a)

 

Target Commission is:  47% of your Base Salary

 

Target Adjusted EBITDA is: 20% of your Base Salary

 

Target Total Variable Compensation is:  67% of Base Salary 

 

 

 

 

 

 

 

 

 

I acknowledge, as of this 30th day of January 2020, that I have read, understand and agree to the terms and conditions of this specifically prepared PCTEL, INC. Sales Compensation Plan for Plan Year 2020.

 

/s/ ARNT ARVIK

 

Employee/Participant

 

/s/ DAVID A. NEUMANN

 

Chief Executive Officer

 

/s/ RISHI BHARADWAJ

 

Vice President-Corporate Resources & Chief Risk Officer

 

/s/ KEVIN J. MCGOWAN

 

Chief Financial Officer

 

 

 

PCTEL, Inc.

2020 Sales Compensation PlanExhibit
4.1

Description
of the Registrant’s Securities

Our
authorized capital stock consists of 100,000,000 shares of common stock and 5,000,000 shares of undesignated preferred stock.
The following summary describes all material provisions of our capital stock.

Common
Stock

Shares
of our common stock have the following rights, preferences and privileges:

•        Voting
Rights. Each outstanding share of common stock entitles its holder to one vote on all matters submitted to a vote of our stockholders,
including the election of directors. There are no cumulative voting rights. Generally, all matters to be voted on by stockholders
must be approved by a majority of the votes entitled to be cast by all shares of common stock present or represented by proxy.

•        Dividends.
Subject to the rights of the holders of any preferred stock which may be outstanding from time to time, the holders of common
stock are entitled to receive dividends as, when and if dividends are declared by our board of directors out of assets legally
available for the payment of dividends.

•        Liquidation.
In the event of a liquidation, dissolution or winding up of our affairs, whether voluntary or involuntary, after payment of our
liabilities and obligations to creditors and any holders of preferred stock, our remaining assets will be distributed ratably
among the holders of shares of common stock on a per share basis.

•        Rights
and Preferences. Our common stock has no preemptive, redemption, conversion or subscription rights. The rights, powers, preferences
and privileges of holders of our common stock are subject to, and may be adversely affected by, the rights of the holders of shares
of any series of preferred stock that we may designate and issue in the future.

•        Merger.
In the event we merge or consolidate with or into another entity, holders of each share of common stock will be entitled to receive
the same per share consideration.

Our
common stock is listed on The Nasdaq Global Market under the symbol “HWCC.”

Preferred
Stock

Our
amended and restated certificate of incorporation provides that the board of directors has the authority, without action by the
stockholders, to designate and issue up to 5,000,000 shares of preferred stock in one or more classes or series and to fix for
each class or series the powers, rights, preferences and privileges of each series of preferred stock, including dividend rights,
conversion rights, voting rights, terms of redemption, liquidation preferences and the number of shares constituting any class
or series, which may be greater than the rights of the holders of the common stock.

    	 	 	 

     

    

 

Other
Provisions of Our Certificate of Incorporation and By-Laws

No
Stockholder Action by Written Consent. Our certificate of incorporation and by-laws provide that stockholder action can be
taken only at an annual or special meeting of stockholders and cannot be taken by written consent in lieu of a meeting.

No
Ability to Call Special Meetings. Our certificate of incorporation and by-laws provide that, except as otherwise required
by law, special meetings of our stockholders can only be called pursuant to a resolution adopted by a majority of our board of
directors or by our chief executive officer or the chairman of our board of directors. Stockholders are not permitted to call
a special meeting or to require our board to call a special meeting.

Advance
Notice Procedures for Stockholder Proposals. Our by-laws establish an advance notice procedure for stockholder proposals to
be brought before an annual meeting of our stockholders, including proposed nominations of persons for election to our board.
Stockholders at our annual meeting may only consider proposals or nominations specified in the notice of meeting or brought before
the meeting by or at the direction of our board or by a stockholder who was a stockholder of record on the record date for the
meeting and upon giving of notice and provided that the stockholder has given to our secretary timely written notice, in proper
form, of the stockholder’s intention to bring that business before the meeting.

Anti-Takeover
Effects of Delaware Law

We
are subject to provisions of the Delaware General Corporation Law that prohibit a publicly-held Delaware corporation from engaging
in any “business combination” transaction with any “interested stockholder” for a period of three years
after the date on which the person became an “interested stockholder,” unless:

•        prior
to this date, the board of directors approved either the “business combination” or the transaction which resulted in
the “interested stockholder” obtaining this status;

•        upon
consummation of the transaction which resulted in the stockholder becoming an “interested stockholder,” the “interested
stockholder” owned at least 85% of the voting stock of the corporation outstanding at the time the transaction commenced,
excluding for purposes of determining the voting stock outstanding (but not the outstanding voting stock owned by the “interested
stockholder”) those shares owned by (a) persons who are directors and also officers and (b) employee stock plans
in which employee participants do not have the right to determine confidentially whether shares held subject to the plan will
be tendered in a tender or exchange offer; or

•        at
or subsequent to this time the “business combination” is approved by the board of directors and authorized at an annual
or special meeting of stockholders, and not by written consent, by the affirmative vote of at least 662¤3% of the outstanding
voting stock which is not owned by the “interested stockholder.”

A
“business combination” is defined to include mergers, asset sales and other transactions resulting in financial
benefit to a stockholder. In general, an “interested stockholder” is a person who, together with affiliates and
associates, owns 15% or more of a corporation’s voting stock or within the past three years owned 15% or more of a
corporation’s voting stock.

Transfer
Agent and Registrar

The
transfer agent and registrar for our common stock is American Stock Transfer & Trust Company.

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