Document:

exv10w22

 

Exhibit 10.22

	 	 	 
	CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR CERTAIN PORTIONS OF THIS DOCUMENT

	 	***Confidential treatment has been
requested with respect to the
information contained within the
"[***]” markings. Such marked
portions have been omitted from this
filing and have been filed separately
with the Securities and Exchange
Commission

INTERWOVEN, INC.

2006 EXECUTIVE OFFICER INCENTIVE BONUS PLAN

          Interwoven, Inc. (“Interwoven” or the “Company”), a Delaware corporation, hereby
establishes this 2006 Executive Officer Incentive Bonus Plan (the “Plan”) effective as of January
1, 2006, in order to advance the interests of the Company and its stockholders by providing an
incentive for designated executive officers of the Company to achieve the Company’s total revenue
and non-GAAP operating income (loss) targets for the year ending December 31, 2006 (the “2006
Year”).

	 	1.	 	DEFINITIONS AND CONSTRUCTION.

     1.1     Definitions. Whenever used herein, the following terms shall have their
respective meanings set forth below:

     1.1.1     “Actual Non-GAAP Operating Income” for any Bonus Period means the Company’s
operating income (loss) for such Bonus Period computed in accordance with generally accepted
accounting principles less the impact of amortization of deferred stock compensation and
intangible assets, restructuring and excess facilities charges, in-process research and
development charges and other non-recurring items, net of the related tax impact. Actual
Non-GAAP Operating Income is after accruing for the Quarterly Bonus and Annual Bonus due
Participants under the Plan. Other non-recurring items to be excluded from operating income
(loss) for purposes of computing actual non-GAAP operating income are subject to the review
and approval of the Audit Committee.

     1.1.2     “Plan Operating Income Target” means any one of the Non-GAAP Operating Income
(Loss) Targets set forth in Exhibit A hereto.

     1.1.3     “Actual Revenues” for any Bonus Period means the Company’s total license,
support, service and training revenues for such Bonus Period as reported in the Company’s
Financial Statements.

     1.1.4     “Annual Bonus” means the cash bonus payable pursuant to Section 4.2.

     1.1.5     “Bonus Period” means, with respect to the Annual Bonus, the year ended December
31, 2006 and, with respect to any Quarterly Bonus, the calendar quarter of 2006 with respect
to which such Quarterly Bonus is to be calculated.

 

 

     1.1.6     “Committee” means the Compensation Committee of the Board of Directors of the
Company.

     1.1.7     “Financial Statements” means, with respect to the Annual Bonus, the Company’s
audited consolidated financial statements for the year ending December 31, 2006 as filed by
the Company with the Securities and Exchange Commission on Form 10-K and, with respect to
any Quarterly Bonus, the Company’s unaudited condensed consolidated financial statements for
the calendar quarter with respect to which such Quarterly Bonus is to be calculated, as
filed by the Company with the Securities and Exchange Commission on Form 10-Q in the case of
the calendar quarters ending March 31, 2006, June 30, 2006 and September 30, 2006 and as
filed by the Company with the Securities and Exchange Commission on Form 10-K in the case of
the calendar quarter ending December 31, 2006.

     1.1.8     “MBO” means those quarterly or annual objectives established by the Committee or
the Company’s Chief Executive Officer for the participant.

     1.1.9     “Participant” means an executive officer of the Company who has been designated
by the Committee as a Participant in the Plan.

     1.1.10     “Plan Revenue Target” means the plan revenue targets set forth in Exhibit
B hereto.

     1.1.11     “Quarterly Bonus” means the bonus that is due pursuant to Section 4.1.

     1.1.12     “Target Bonus” means the amounts set forth in Exhibit C hereto. The
Target Bonus may be divided into components. The Company Performance Target Bonus refers to
the amount of the Participant’s Target Bonus allocated to computations defined in Section 4
of this Plan. The MBO Target Bonus refers to the amount of the Participant’s Target Bonus
allocated to the Participants’ MBO Target Bonus as defined in Section 5 of the Plan.

	 	2.	 	ADMINISTRATION.

     The Plan shall be administered by the Committee. All questions of interpretation of the Plan
shall be determined by the Committee in its sole discretion, and such determinations shall be final
and binding upon all persons having an interest in the Plan.

	 	3.	 	ELIGIBILITY.

     A Participant shall be eligible for a Quarterly Bonus only if he or she is actively employed
by the Company throughout the entirety of the corresponding Bonus Period. A Participant shall be
eligible for a pro rated Annual Bonus (based on the full quarters that such Participant was
employed) only if he or she is actively employed by the Company for at least two full quarterly
Bonus Periods during 2006, and such Participant is employed by the Company on December 31, 2006.

2

 

	 	4.	 	COMPANY PERFORMANCE BONUS AND PAYMENT.

          The portion of the Participant’s Target Bonus allocated to the Company Performance Bonus is
designated on Exhibit C to this Plan.

     4.1     Quarterly Bonuses.

     4.1.1     Subject to the provisions of Section 4.4 below, each Participant who meets the
bonus eligibility requirements of Section 3 above shall receive a Quarterly Bonus for each
calendar quarter in 2006 equal to twenty percent (20%) of the Participant’s Company
Performance Target Bonus multiplied by the applicable bonus percentage determined under
Section 4.3 below.

     4.1.2     Each Quarterly Bonus shall be paid on the basis of results shown in the Company’s
press release announcing its financial results for such quarter, in cash, in a single lump
sum, subject to all applicable employment and income tax withholding, within thirty (30)
days after both of the following conditions have occurred: (a) the Company’s external
auditors have completed a review of the Company’s records for the Bonus Period and have
submitted a report thereon to the Audit Committee of the Company’s Board of Directors, and
(b) the Company has issued a press release announcing its financial results for such
quarter.

     4.1.3     In the event that the results set forth in the Financial Statements for a
quarterly Bonus Period are different than those that formed the basis for the calculation of
the Quarterly Bonus for such Bonus Period pursuant to Section 4.1.2 above, the amount of the
Quarterly Bonus for such Bonus Period shall be adjusted using the results set forth in the
Financial Statements for such Bonus Period and (a) each Participant shall be required to
return to the Company within thirty (30) days of receiving notice from the Company of such
adjustment, any amount that has become an over-payment as a result of the adjustment, net of
applicable taxes, and (b) the Company shall pay within thirty (30) days of determining any
such adjustment, any amounts that ought to have been made to each Participant.

     4.1.4     The maximum Quarterly Bonus payment for any such quarterly Bonus Period is
limited to 150% of the quarterly allocation of the Company Performance Target Bonus for each
Participant. To the extent that the Quarterly Bonus earned is greater than 150% (“Excess
Quarterly Bonus”), the amount due in excess of 150% will be deferred pending the
announcement of financial results for the full year. If the Annual Bonus is equal to or
greater than a 100% Annual Bonus pay-out (computed based on actual results without regards
to the 150% cap), the Excess Quarterly Bonus will be added to the Annual Bonus and paid with
the Annual Bonus in accordance with the provisions of Section 4.2. If the Annual Bonus is
computed to be less than a 100% pay-out (computed based on actual results without regards to
the 150% cap), the Excess Quarterly Bonus will be forfeited.

     4.2     Annual Bonus.

3

 

     4.2.1     Each Participant who meets the bonus eligibility requirements of Section 3 above
shall receive an Annual Bonus equal to twenty percent (20%) of the Participant’s Company
Performance Target Bonus multiplied by the applicable bonus percentage determined under
Section 4.3 below. The Annual Bonus will be the sum of the (Q1 Applicable Bonus Percentage
times 25%) plus (Q2 Applicable Bonus Percentage times 25%) plus (Q3 Applicable Bonus
Percentage times 25%) plus (Q4 Applicable Bonus Percentage times 25%).

     4.2.2     Each Annual Bonus shall be paid upon the announcement of the Company’s press
releases for its fourth quarter and annual financial results for the year ending December
31, 2006, in cash, in a single lump sum, subject to all applicable employment and income tax
withholding, within thirty (30) days after both of the following have occurred: (a) the
Company’s external auditors have completed an audit of the Company’s financial results for
the year ending December 31, 2006 and have submitted a report thereon to the Audit Committee
of the Company’s Board of Directors, and (b) the Company has issued a press release
announcing its financial results for such year.

     4.2.3     In the event that the results set forth in the Financial Statements for the
annual Bonus Period are different than those that formed the basis for the calculation of an
Annual Bonus pursuant to 4.2.2 above, the amount of the Annual Bonus shall be adjusted using
the results set forth in the Financial Statements and (a) each Participant shall be required
to return to the Company within thirty (30) days of receiving notice from the Company of
such adjustment, any amount that has become an over-payment as a result of the adjustment,
and (b) the Company shall pay within thirty (30) days of determining any such adjustment,
any amounts that ought to have been made to each Participant.

     4.3     Applicable Bonus Percentage. The applicable bonus percentage shall be calculated
as follows:

50% (Revenue Achievement Percentage) + 50% (Operating Income Achievement Percentage)

     4.3.1     The Revenue Achievement Percentage for any Bonus Period shall be a function of
the extent to which Actual Revenues for the period meet or exceed the Plan Revenue Target
for the period, determined as follows:

	 	 	 
	If Actual Revenues Are:	 	The Applicable Bonus Percentage Is:
	 	 	 
	 
	 	 
	Less than 90% of the Plan Revenue Target

	 	0%
	 
	 	 
	90% of the Plan Revenue Target

	 	60%
	 
	 	 
	90% to 95% of the Plan Revenue Target

	 	60% plus 2% for each 1% by which
Actual Revenues exceed 90% of the
Plan Revenue Target.

4

 

	 	 	 
	 
	 	 
	96% to 100% of the Plan Revenue Target

	 	70% plus 6% for each 1% by which
Actual Revenues exceed 95% of the
Plan Revenue Target.
	 
	 	 
	101% to 105% of the Plan Revenue Target

	 	100% plus 2% for each 1% by which
Actual Revenues exceed 100% of
the Plan Revenue Target.
	 
	 	 
	106% to 110% of the Plan Revenue Target

	 	110% plus 5% for each 1% by which
Actual Revenues exceed 105% of
the Plan Revenue Target.
	 
	 	 
	110% or greater of the Plan Revenue Target

	 	135% plus 7.5% for each 1% by
which Actual Revenues exceed 110%
of the Plan Revenue Target, up to
300%. In no event will the
Revenue Achievement Percentage
exceed 300%.

     4.3.2 The Operating Income Achievement Percentage for any Bonus Period shall be a
function of the extent to which Actual Non-GAAP Operating Income for the period meet or
exceed the Plan Operating Income Target for the period, determined as follows:

	 	 	 
	If Actual Non-GAAP Operating Income is:	 	The Applicable Bonus Percentage Is:
	 	 	 
	 
	 	 
	Greater than $1 million below
the Plan Operating Income
Target.

	 	0%
	 
	 	 
	At $1 million below the Plan
Operating Income Target.

	 	60%
	 
	 	 
	$1 million below to $500,000
below the Plan Operating
Income Target.

	 	60% plus 3% for each full $100,000 increment
by which Actual Non-GAAP Operating Income
exceed $1 million below the Plan Operating
Income Target.
	 
	 	 
	$500,000 below to the Plan
Operating Income Target.

	 	75% plus 5% for each full $100,000 increment
by which Actual Non-GAAP Operating Income
exceed $500,000 below the Plan Operating
Income Target.
	 
	 	 
	At Plan Operating Income
Target plus each full
increment of $100,000 in
excess of Operating Income
Target up to $500,000 above
plan.

	 	100% plus 1% for each $100,000 full increment
by which Actual Non-GAAP Operating Income
exceed 100% the Plan Operating Income Target.
	 
	 	 
	At $500,000 above Plan
Operating Income Target plus
each full increment of
$100,000 in excess of
Operating Income Target up to
$1 million above plan.

	 	105% plus 2% for each $100,000 full increment
by which Actual Non-GAAP Operating Income
exceed $500,000 above the Plan Operating
Income Target.

5

 

	 	 	 
	 
	 	 
	At $1 million or greater above
Plan Operating Income Target
plus each full increment of
$100,000 in excess of
Operating Income Target.

	 	115% plus 4% for each $100,000 full increment
by which Actual Non-GAAP Operating Income
exceed $1 million above the Plan Operating
Income Target, up to 300%. In no event will
the Operating Income Achievement Percentage
exceed 300%.

     4.3.3     Percentages used in the computation of the Revenue Achievement Percentage and the
Operating Income Achievement Percentage shall be rounded to the nearest whole percentage.

     4.4     The Company’s Chief Executive Officer (“CEO”) may review each Participant’s performance
during the applicable Bonus Period and may recommend to the Committee increasing or decreasing the
Participant’s Quarterly Bonus or Annual Bonus. The determination of whether to make any
recommended adjustment shall be in the sole discretion of the Committee.

	 	5.	 	MBO BONUS AND PAYMENT.

     The portion of the Participant’s Target Bonus allocated to the MBO Target Bonus is designated
on Exhibit C to this Plan. MBO’s may be established on a quarterly or annual basis. Either the
Company’s Chief Executive Officer or Chief Financial Officer is responsible for monitoring MBO’s
and reporting completed MBO’s to the Committee. Bonus amounts associated with MBO’s will generally
be paid with any Quarterly Bonus or Annual Bonus due under Section 4.1 and Section 4.2 above. If
no Quarterly or Annual Bonus is due, the bonus amount due under this Section will be paid no later
than 45 days following the end of the quarterly period in which the MBO was successfully completed.

	 	6.	 	AMENDMENT OF PLAN.

     The Plan may be modified or amended at any time by the Committee or the Company’s Board of
Directors; provided, however, that no amendment may increase any Plan Revenue Target, or increase
any Operating Income Target without the consent of the Participants.

	 	7.	 	MISCELLANEOUS.

     7.1     No Assignment. The right of any Participant or any other person to the payment of
any benefits under this Plan shall not be assigned, transferred, pledged or encumbered.

     7.2     Successors. This Plan shall be binding upon and inure to the benefit of the
Company, its successors and assigns and the Participant and his or her heirs, executors,
administrators and legal representatives.

     7.3     No Employment Agreement. Nothing contained herein shall be construed as
conferring upon any Participant the right to continue in the employ of the Company as an employee.

6

 

     7.4     Arbitration. Any dispute or claim relating to or arising out of this Plan shall
be fully and finally resolved by binding arbitration conducted by the American Arbitration
Association in San Mateo County, California.

     7.5     Governing Law. This Plan shall be construed in accordance with and governed by
the laws of the State of California.

     7.6     Entire Agreement. This Agreement constitutes the entire agreement between the
parties regarding the subject matter hereto and supercedes any prior or contemporaneous agreements,
whether oral or written regarding such subject matter.

Adopted by the Compensation Committee, effective as of January 1, 2006.

7

 

Exhibit A

Non-GAAP Operating Income Targets for 2006

	 	 	 	 	 
	 	 	Non-GAAP	 
	 	 	Operating	 
	Period	 	Income Target	 
	 
	 	 	 	 
	Quarter ended March 31, 2006
	 	$	[***]	 
	Quarter ended June 30, 2006
	 	 	[***]	 
	Quarter ended September 30, 2006
	 	 	[***]	 
	Quarter ended December 31, 2006
	 	 	[***]	 
	 
	 	 	 
	Year ended December 31, 2006
	 	$	[***]	 
	 
	 	 	 

 

			
	***	 	Confidential treatment has been requested with respect to the
information contained within the “[***]” markings. Such marked portions have
been omitted from this filing and have been filed separately with the
Securities and Exchange Commission

8

 

Exhibit B

Plan Revenue Targets for 2006

	 	 	 	 	 
	Period	 	Plan Revenue Target	 
	 	 	(in millions)	 
	 
	 	 	 	 
	Quarter ended March 31, 2006
	 	$	[***]	 
	Quarter ended June 30, 2006
	 	 	[***]	 
	Quarter ended September 30, 2006
	 	 	[***]	 
	Quarter ended December 31, 2006
	 	 	[***]	 
	 
	 	 	 
	Year ended December 31, 2006
	 	$	[***]	 
	 
	 	 	 

 

			
	***	 	Confidential treatment has been requested with respect to the
information contained within the “[***]” markings. Such marked portions have
been omitted from this filing and have been filed separately with the
Securities and Exchange Commission

9

 

Exhibit C

Target Bonuses for 2006*

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Company	 	 	 	 
	 	 	 	 	 	 	Performance	 	MBO	 	 
	 	 	Target	 	Target	 	Target	 	Commission
	Participant	 	Bonus	 	Bonus	 	Bonus	 	Plan
	John E.
Calonico, Jr.
	 	$	125,000	 	 	$	100,000	 	 	$	25,000	 	 	$	—	 
	Scipio M. Carnecchia(1)
	 	 	TBD	 	 	$	—	 	 	$	—	 	 	 	TBD	 
	Steven J. Martello(2)
	 	$	200,000	 	 	$	25,000	 	 	$	25,000	 	 	$	150,000	 
	David Nelson-Gal
	 	$	103,000	 	 	$	73,000	 	 	$	30,000	 	 	$	—	 

 

			
	(1)	 	Mr. Carnecchia’s Target Bonus is based on a separate Sales Compensation Plan.
	 
	(2)	 	Of Mr. Martello’s Target, $25,000 is based on Company Performance as defined in Section
4 above, $25,000 is based on MBO as defined in Section 5 above and $150,000 is based on a
separate Sales Compensation Plan.”

*     Excludes information with respect to two officers and one executive officer who was not
among the four most highly compensated executive officers other than Martin W. Brauns who were
serving as executive officers of Interwoven, Inc. at December 31, 2005. The target bonus, company
performance target bonus, MBO target bonus and commission plan for all other officers participating
under the 2006 Executive Officer Incentive Bonus Plan as a group (3 persons) is $315,000, $235,000,
$80,000 and zero, respectively.

10exv10w23

 

Exhibit 10.23

	 	 	 
	CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR CERTAIN PORTIONS OF THIS DOCUMENT

	 	***Confidential treatment has been
requested with respect to the
information contained within the
"[***]” markings. Such marked
portions have been omitted from this
filing and have been filed separately
with the Securities and Exchange
Commission

2006 Compensation Plan

	 	 	 
	To:

	 	Steven J. Martello
	 

	 	Senior Vice President of Client Services
	 
	 	 
	Effective dates:

	 	January 1, 2006 to December 31, 2006

This document outlines your compensation package (“Compensation Plan”) for calendar
year 2006 including the at-risk components determined under the Sales Compensation
Plan below and the 2006 Executive Officer Bonus Plan. Compensation Plan details and
policies can be found in the Interwoven 2006 Sales Compensation Plan and 2006
Executive Officer Bonus Plan documents, which will be provided at your request.

All other terms and conditions of your employment are governed by your offer letter.

In your role, you are responsible for the Interwoven’s worldwide services
organization. Interwoven reserves the right to change your responsibilities from time
to time and modify your Compensation Plan to take into account its business needs.

COMPENSATION PACKAGE

Your Compensation Plan is comprised of a Base Salary and Incentive Pay, which is an
at-risk component of your overall compensation package. The Sales Compensation Plan
and the 2006 Executive Officer Bonus Plan outline the guidelines under which you will
be paid your Incentive Pay component.

Your on-target earnings for 2006 are $450,000.00. Your on-target earnings are
composed of the following:

	 	•	 	Annual Base salary of $250,000.00.
	 
	 	•	 	On target Incentive Pay of $200,000.00.

From your actual earnings, we will subtract payroll deductions, all required
withholdings and other voluntary deductions you authorize Interwoven to make on your
behalf.

BASE SALARY

Your annual Base Salary will be paid to you ratably over the year in accordance with
Interwoven’s standard payroll practices.

 

 

INCENTIVE PAY

Your Incentive Pay will be calculated under the following Incentive Pay plans. These
Incentive Pay plans do not guarantee you a level of income.

Sales Compensation Plan

Of your on-target Incentive Pay, $150,000.00 will be related to commission under
the Sales Compensation Plan. Commissions on revenue from maintenance, consulting
and education services (collectively “Professional Services Revenues”) will be
paid at the rates stated below and will be earned upon recognition of revenue for
those services by Interwoven in accordance with generally accepted accounting
principles and Interwoven’s revenue recognition policy.

The following commission rates will be applied to Professional Services Revenues
for purposes of computing quarterly commissions due for 2006:

	 	 	 	 	 	 
	Quarterly	 	 	Commission	 
	Quota Attainment	 	 	Rates	 
	0% to 95%
	 	 	 	[***]	%
	96% to 97%
	 	 	 	[***]	%
	98% to 99%
	 	 	 	[***]	%
	100%
	 	 	 	[***]	%
	101% to 103%
	 	 	 	[***]	%
	104% to 106%
	 	 	 	[***]	%
	107% to 110%
	 	 	 	[***]	%
	Over 110%
	 	 	 	[***]	%

All quota achievement percentages will be rounded to the next whole number (>=
0.5 will be rounded up and < 0.5 will be rounded down).

Additionally, the commission rates above will be multiplied by the following
adjustment factors based on the Direct Margin Percentage of the combined
Maintenance, Consulting and Education organizations achieved in a quarterly
period:

	 	 	 	 	 	 
	Direct	 	 	Adjustment	 
	Margin Percentage	 	 	Factor	 
	>2% below target
	 	 	 	25	%
	2% below target
	 	 	 	50	%
	1% below target
	 	 	 	75	%
	At target
	 	 	 	100	%
	1% above target
	 	 	 	125	%
	2% above target
	 	 	 	150	%
	3% above target
	 	 	 	175	%
	>3% above target
	 	 	 	200	%

Direct Margin Percentage is defined as recognized Professional Services Revenues
less the direct expenses to acquire and provide the maintenance, consulting and
educational services.

 

 

Your quota for the period January 1, 2006 to December 31, 2006 is $[***] in
Professional Services Revenues.

	 	•	 	$[***] for first quarter of 2006
	 
	 	•	 	$[***] for the second quarter of 2006
	 
	 	•	 	$[***] for the third quarter of 2006
	 
	 	•	 	$[***] for the fourth quarter of 2006

Professional Services Revenues are computed in accordance with generally accepted
accounting principles and Interwoven’s revenue recognition policy. Professional
Services Revenues are subject to reduction for any returns, realization
adjustments or uncollectible accounts.

Your Direct Margin Percentage targets for the period January 1, 2006 to December
31, 2006 are as follows:

	 	•	 	[***]% for first quarter of 2006
	 
	 	•	 	[***]% for the second quarter of 2006
	 
	 	•	 	[***]% for the third quarter of 2006
	 
	 	•	 	[***]% for the fourth quarter of 2006

By way of example, if Professional Services Revenues for the first quarter of 2006
were $[***] (an achievement of 101% of quota) and the direct gross margin was
[***]%, your commission due would be computed as follows:

(($[***] times [***]%) times 125% margin adjustment factor) or $[***].

2006 Executive Officer Bonus Plan

Of your on-target Incentive Pay, $50,000.00 will be related to amounts due under
the 2006 Executive Officer Bonus Plan and calculated in accordance with that plan.
Such amounts may be allocated to Company Performance and MBO objectives.

Please acknowledge you acceptance with this Compensation Plan by signing below. Have a great 2006!

	 	 	 
	Read and accepted:

	 	Signed:
	 
	 	 
	/s/ Steven J. Martello

	 	/s/ John E. Calonico, Jr.
	 

	 	 
	Steven J. Martello

	 	John E. Calonico, Jr.
	Senior Vice President of Worldwide Services

	 	Chief Financial Officer
	Interwoven, Inc.

	 	Interwoven, Inc.

***Confidential treatment has been requested with respect to the
information contained within the “[***]” markings. Such marked portions have
been omitted from this filing and have been filed separately with the
Securities and Exchange Commission

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