Document:

Exhibit 10.12

 

USA COMPRESSION PARTNERS, LP

 

ANNUAL CASH INCENTIVE PLAN

 

Set forth below is a description of the Annual Cash Incentive Plan (the “Plan”) of USA Compression Partners, LP (the “Partnership”) and its, and its general partner’s, subsidiaries (collectively, “USAC”).  The Plan includes management personnel (at or above director level) plus other selected key personnel of USAC. For each Plan participant who also maintains an employment agreement with USAC, their potential Plan bonus will be governed both by the Plan and their respective employment agreement.  The compensation committee (the “Committee”) of the Board of Directors (the “Board”) of USA Compression GP, LLC, the general partner of the Partnership (the “General Partner”), will act as the administrator of the Plan under the supervision of the full Board, and will have the discretion to amend, modify or terminate the Plan at any time upon approval by the Board.

 

The Board will set a target bonus amount (the “Target Bonus”) for each eligible individual (as indentified by the Chief Executive Officer of the General Partner) prior to or during the first quarter of the calendar year.  The Target Bonus will be subject to the satisfaction of both a Partnership performance goal and an individual performance goal.  Fifty percent (50%) of the Target Bonus will be subject to the Partnership’s achievement of its budgeted adjusted distributable cash flow level (“Adjusted DCF”) for the year, as determined by the Board.  Payouts with respect to the portion of the bonus subject to Adjusted DCF (the “Adjusted DCF Bonus”) will not occur unless the Partnership has satisfied the threshold set for Adjusted DCF.  The threshold, target and maximum requirements for the Adjusted DCF target for each year, as well as the portion of the Adjusted DCF Bonus that would become payable if performance was satisfied for the year, are set forth below:

 

	
Levels of Adjusted
   DCF Bonus
    	
 
    	
Adjusted DCF as a
   Percentage of Budgeted
   Adjusted DCF for
    the 2014 Year
    	
 
    	
Percentage of
   Adjusted DCF
   Bonus that would
   be Paid
    	
 
    
	
Threshold
    	
 
    	
80
    	
%
    	
50
    	
%
    
	
Target   
    	
 
    	
100
    	
%
    	
100
    	
%
    
	
Maximum
    	
 
    	
110
    	
%
    	
200
    	
%
    

 

If Adjusted DCF performance falls in between threshold and target, or between target and maximum, the amounts payable will be adjusted ratably using straight line interpolation.  If Adjusted DCF is satisfied above maximum levels, the potential payment of the Adjusted DCF Bonus will be capped at the maximum level of 200%.

 

The remaining fifty percent (50%) of the Target Bonus will be subject to individual objectives specific to each eligible individual’s role at USAC (the “Individual Bonus”).  The individual objectives will be agreed upon in advance between the employee and his/her immediate supervisor (or, with respect to the Chief Executive Officer, between the Board and the Chief Executive Officer) that address the key priorities for that individual’s position.  They may include key operating objectives as well as personal development criteria.  The Individual Bonus will be subject to a maximum payout of 100% of the targeted Individual Bonus amount, although the Board will have discretion to pay out smaller amounts ranging from 0% to 100%, at their sole discretion, after analyzing the individual’s personal performance for the year.

 

In the aggregate, the maximum amount payable with respect to a Target Bonus under the Plan will be 150%, as the Adjusted DCF Bonus will be capped at 200% of target and the Individual Bonus will be capped at 100% of target.  Target Bonuses, if any, shall be paid within one week following delivery by the Partnership’s independent auditor of the audit of the Partnership’s financial statements for the year in which the Target Bonus relates, but in no case later than March 15 of the year following the year in which the Target Bonus relates.exhibit10_1

2014 CEO Compensation Plan

2014 CEO Compensation Plan

The Board of Directors has approved the following 2014 compensation plan for Jeff Housenbold, President and CEO.
Plan Summary
	
				
	Element
	Threshold
	Target
	Maximum

	Base Salary
	n/a
	$650,000 (+16%)
	n/a

	Cash Bonus Target
	75%
	100%
	200%

	Total Cash Target
	$1,137,500
	$1,300,000
	$1,950,000

	Time-Based RSU (45% of total)*
	$3,507,084
	$3,507,084
	$3,507,084

	Performance-Based RSU (55% of total)*
	$1,607,414
	$4,286,436
	$9,376,579

	Total RSU*
	$5,114,498
	$7,793,520
	$12,883,663

	Total RSU shares*
	110,250
	168,000
	277,725

	Total Compensation
	$6,251,998
	$9,093,520
	$14,833,663

*Grant date face value; shares determined by dividing face value by $46.39, which is the average closing price of SFLY over the 30 trading days from December 31, 2013 to February 12, 2014
Plan Components
		
	•
	Base salary of $650,000, effective March 1, 2014

		
	•
	Cash bonus target of 100% of base salary, earned quarterly in accordance with the 2014 Quarterly Bonus Plan (CEO & eStaff);  maximum bonus is 200% of target

		
	•
	75,600 Time-vested Restricted Stock Units (RSU) with a target grant value of $3,507,084

		
	◦
	Shares to grant will be determined by dividing the target value by the average closing price of SFLY over the 30 trading days preceding the grant approval date

		
	◦
	Vesting will occur over 4 years, 25% each on the 1st, 2nd, 3rd and 4th anniversary of the grant date

		
	•
	92,400 Performance-based Restricted Stock Units (PBRSU) with a target grant value of $4,286,436, modified for absolute company performance by Trigger and Funding Goals, and relative company performance in a Relative Shareholder Return Modifier Goal, as follows:

		
	o
	Trigger Goal:  EBITDA 2 year cumulative growth, from FY2013 to FY2015, must be achieved at the “target” level set for this plan; achievement below target results in no earned PBRSU

		
	o
	Funding Goal:  Revenue 2 year cumulative growth, from FY2013 to FY2015, will earn PBRSU as follows:

	
			
	Funding Table
	Percent of Goal Attained
	Percent of PBRSU Earned

	Threshold
	80%
	50%

	Target
	100%
	100%

	Maximum
	150%
	175%

		
	▪
	Achievement between Threshold and Target, or Target and Maximum will be interpolated on a straight-line basis

		
	o
	Relative Shareholder Return Modifier Goal:  Comparison SFLY 2-year cumulative share value growth compared to Russell 2000 Index (RUT) share value growth over the same period*, will modify the PBRSU Funding as follows:

Nothing in this program summary alters the “at will” employment relationship with the Company, as described in the employee handbook.  Neither the program nor the transactions authorized under the program constitute an express or implied promise of continued employment for any period.  Nothing in the program shall interfere with or limit in any way the right of the employee or the Company to terminate employment at any time, with or without cause or notice.

2014 CEO Compensation Plan

		
	§
	Minimum:  If SFLY is 25 percentage points or lower than RUT = 75% of Funded Goal result

		
	§
	Target:  If SFLY is Equal to RUT = 100% of Funded Goal result

		
	§
	Maximum:  If SFLY is 25 percentage points or higher than RUT = 125% of Funded Goal result

		
	§
	Achievement between Minimum and Target, or Target and Maximum will be interpolated on a straight-line basis; every whole percentage point of SFLY 2-year cumulative share value growth that is above or below the RUT Index, will add or subtract, respectively, 1% from the 100% of Funded Goal result

		
	§
	Example:    SFLY 2 year cumulative share value growth = 30%

RUT 2 year cumulative share value growth = 20%
SFLY result is +10 percentage points higher than RUT 
Modifier is 110%, applied to the Funded Goal Result
		
	o
	Vesting of earned PBRSU will occur over 3 years; 50% on the 2nd anniversary of the grant based on achievement of performance goals and 50% on the 3rd anniversary of the grant assuming continued service until that date

		
	o
	In order to ensure sufficient pool shares in the 2006 Equity Incentive Plan to accommodate the full range of PBRSU shares earned under this plan, the PBRSU grant will be made at the Maximum grant date face value shown in the Plan Summary above, with achievement of the PBRSU goals determining the portion of the grant that vests 

		
	o
	PBRSU Calculation to determine number of shares to vest:

		
	§
	Target Shares x Trigger Goal Result x Funding Goal Result x Modifier Goal Result

		
	§
	Example assuming Trigger achieved (100%), Funding @ 150%, Modifier @ 110%:

		
	•
	92,400 x 100% Trigger x 150% Funding x 110% Modifier = 152,460 to vest

		
	•
	The RSU and PBRSU grants will be governed by Shutterfly’s 2006 Equity Incentive Plan.

*as measured by the average closing price in the first 30 trading days of 2016 divided by the average closing price in the first 30 trading days of 2014; this measurement does not consider the payment of dividends by SFLY or in the Russell 2000 Index

Page 2 of 3

Nothing in this program summary alters the “at will” employment relationship with the Company, as described in the employee handbook.  Neither the program nor the transactions authorized under the program constitute an express or implied promise of continued employment for any period.  Nothing in the program shall interfere with or limit in any way the right of the employee or the Company to terminate employment at any time, with or without cause or notice.

2014 CEO Compensation Plan

Appendix:  Baseline for Relative Shareholder Return

Page 3 of 3

Nothing in this program summary alters the “at will” employment relationship with the Company, as described in the employee handbook.  Neither the program nor the transactions authorized under the program constitute an express or implied promise of continued employment for any period.  Nothing in the program shall interfere with or limit in any way the right of the employee or the Company to terminate employment at any time, with or without cause or notice.

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