Document:

exv10w9

 

Exhibit 10.9

Description of Salary and Bonus Arrangements for Certain Executive Officers

     Following is a description of the salary and bonus arrangements for each of the named
executive officers of webMethods, Inc. as of August 9, 2006:

	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Target
	 	 	 	 	 	 	Bonus Amount as a
	 	 	 	 	 	 	Percentage of
	Name and Title	 	Base Salary	 	Annual Base Salary
	David
Mitchell

President and Chief Executive Officer
	 	$	450,000	 	 	 	100	%(1)
	Richard
Chiarello

Executive Vice President and Chief Operating Officer
	 	$	385,000	 	 	 	 	(2)
	Mark
Wabschall

Executive Vice President, Chief Financial Officer and Treasurer
	 	$	275,000	 	 	 	50	%(1)
	Douglas
McNitt

Executive Vice President, General Counsel and Secretary
	 	$	275,000	 	 	 	50	%(1)
	Kristin
Weller Muhlner

Executive Vice President, Product Development
	 	$	262,500	 	 	 	50	%(1)

 

			
	(1)	 	On July 6, 2006, the Compensation Committee of our Board of Directors approved the
webMethods’ Executive Incentive Plan (the “EIP”), pursuant to which fiscal year 2007 annual
bonus compensation for each of our executive officers, other than Mr. Chiarello, will be
determined. Under the EIP, two-thirds of the annual target bonus for each participant is
based on our achievement of established revenue and earnings per share goals and one-third of
the annual target bonus is based on the achievement of established individual performance
objectives. The individual performance objectives for the Chief Executive Officer are
determined by our Board of Directors, and the individual performance objectives for the other
executive officers are determined by the Chief Executive Officer in consultation with the
Compensation Committee. If we exceed our financial objectives, the actual annual bonus amount
may exceed the target bonus amount, subject to the decision of the Compensation Committee.
	 
	(2)	 	Under a separate arrangement approved by the Compensation Committee on June 15, 2006, fiscal
year 2007 bonus compensation for Mr. Chiarello is determined quarterly, based in part on a
percentage of our license revenue, total revenue and earnings per share and based in part on
our achievement of established license revenue, total revenue and earnings per share goals.
The target quarterly bonus amount for Mr. Chiarello in fiscal year 2007, assuming our
attainment of 100% of performance objectives, is $87,500. The actual quarterly bonus amount
may exceed the target quarterly bonus amount if we exceed one or more of the performance
objectives.exv10w1

 

Exhibit 10.1

2006 Leadership Performance Incentive Plan

For Employees in Tiers 1 and 2

Purpose of the Plan

The purpose of the Leadership Performance Incentive Plan (the “Plan”) is to reward the
contributions of eligible employees of Advanced Energy Industries, Inc. and its subsidiaries (the
“Company”) for the successful accomplishment of specific Company objectives.

Annual performance objectives have been established for 2006 based on the Company’s three-year
Company objectives. The key metrics translate the business strategy into defined targets against
which actual results are measured. At the end of the plan year, the Board and executive leadership
evaluate Company performance in relation to the performance objectives in order to determine the
size of the Company bonus pool. A more detailed description of how the pool, if any, is determined
is provided under “Company Bonus Pool Funding.”

Plan Term

The Plan is in effect from January 1, 2006 to December 31, 2006.

Eligibility

All regular, full-time and part-time employees of the Company in tiers 1 and 2 who are not
covered by any other bonus plan (excluding the sales incentive plan) are eligible to participate in
the Plan. To be eligible for payment, eligible employees must sign and return a copy of the Plan
thereby accepting the terms of the Plan.

Notwithstanding anything in this Plan to the contrary, an individual shall not be eligible to
participate in the Plan if such individual (a) performs services for the Company and is classified
or paid as an independent contractor by the Company or (b) performs services for the Company
pursuant to an agreement between the Company and any other person or entity including an employee
leasing organization.

To be eligible for the bonus payment, an employee must be employed in the eligible role as of
October 1, 2006, must have a satisfactory year-end performance rating (meets expectations or
better), and must be employed and continue to be employed and provide the services required of
their position through the bonus payment date. Bonuses, if any, for participants who become
eligible after the beginning of the Plan term (promoted, hired, rehired or converted from a
non-employee status) will be eligible for prorated bonus payments.

A condition precedent to earning any bonus or prorated portion thereof is continuous active
employment through the date such bonus is paid. As such, participants must be actively employed by
the Company on the date bonuses are paid in order to earn a bonus. An employee whose employment is
terminated, either voluntarily or involuntarily, prior to the scheduled payout will not earn or be
eligible to receive any payment.

Company Bonus Pool Funding

The size of the bonus pool will vary based on actual financial performance of the Company. No
bonus pool will accrue if revenues and post-bonus operating income do not exceed a specified
threshold set by the Board. The bonus pool is funded as a percentage of Operating Income. If
required revenue and post-bonus operating income levels are met, the bonus pool will be
equivalent to 10% of pre-bonus operating income. The bonus pool, if any, funds both the Leadership
Performance Incentive Plan and the Employee Performance Incentive Plan.

 

 

Individual Award Calculation

Individual performance objectives are established during the annual Performance Management
process and are linked to the Company level objectives. Company level objectives may be modified
throughout the year in the sole discretion of the Board of Directors as necessary. At the end of
the Plan year, the manager evaluates the employee’s performance in relation to his or her
objectives in order to determine the size of the bonus award, if any. The performance rating
determines the individual modifier described below.

Target bonus awards are calculated as a percentage of the participant’s year-end annualized base
salary. The 2006 target percentages based on Annual Operating Plan (“AOP”) performance levels vary
by tier level, and are as follows:

	 	 	 	 	 
	 	 	2006 Annual
	Tier Level	 	Target at AOP
	1 — CEO
	 	 	39	%
	1 — EVP
	 	 	28	%
	2
	 	 	17	%

A participant’s actual bonus award may vary above or below the targeted level based on the
supervisor’s evaluation of his or her performance in relation to their predetermined objectives.
Each participant may receive from 0% up to 150% of his or her target bonus amount. A modifier of
150% is considered exceptional and is most unlikely to be earned regularly by any individual.
However, the total of all bonus awards given within each business unit must total no more than 100%
of the total bonus pool dollars allocated to that business unit.

	 	 	 	 	 
	Performance	 	Individual
	   Rating	 	Modifier
	     5

	 	 	1.50	 
	     4

	 	 	1.25	 
	     3

	 	 	1.00	 
	     2

	 	 	0	 
	     1

	 	 	0	 

Sample Calculation at 95% Funding:

Bonus Amount = (Annualized Salary x 2006 Target % x Individual Modifier) x 95%

Example: Tier 2 employee; earning a $150,000 annualized salary; receiving a “3” performance
rating; bonus pool funding at 95%

	 	 	 	 	 	 	 
	 

	 	$	150,000	 	 	Annualized Salary
	 

	 	 	x .17	 	 	2006 Target at AOP
	 

	 	 	x 1.00	 	 	Individual Performance Modifier
	 

	 	 	 	 	 	 
	 

	 	$	25,500	 	 	 
	 

	 	 	x .95	 	 	95% Bonus Pool Funding
	 

	 	 	 	 	 	 
	 

	 	$	24,225	 	 	Sample Payout Amount

2006 Additional Incentive

Accomplishment of the Company’s growth objective is dependent on the ability to both gain
share in our “Core Markets” of Semiconductors, Flat Panel Display, Data Storage, Architectural
Glass/Industrial Coatings and on penetrating emerging and new markets using the company’s core
technology and products.

If the terms of one or both of the objectives detailed below are achieved an additional bonus pool
or pools will be funded.

 

 

Objective 1: Strategic share gain at a key customer as defined by the Board

If either of the following conditions are met, a bonus pool will be funded:

	 	•	 	Revenue growth with the identified key customer from 2005 to 2006 is twice that of the
forecasted growth for the total company (greater than 25% increase) OR
	 
	 	•	 	Achievement of at least one critical design win currently pending with the customer on
or before December 31, 2006. Design win is defined as initial shipment for revenue to an
end-user.

Objective 2: Revenue from New and Emerging Markets

If the following condition is met, a bonus pool will be funded:

	 	•	 	Revenue in excess of $10M generated in new and emerging markets.

If either or both of the objectives are achieved, the resulting bonus pool will be allocated as a
percentage of year end base salary as follows:

	 	 	 	 	 	 	 	 	 
	 	 	Estimated Target if	 	Estimated Target if
	 	 	One Objective	 	Both Objectives
	Tier Level	 	Achieved	 	Achieved
	1 — CEO
	 	 	35	%	 	 	70	%
	1 — EVP
	 	 	25	%	 	 	50	%
	2
	 	 	15	%	 	 	30	%

Additions and changes to the tier 1 and 2 population will result in adjusted target percentages as
the total payments cannot exceed the total funded bonus pool.

Method and Timing of Payment

Bonus payments, if any, are paid as soon as practicable after the fiscal year-end review and
authorization of the payments by the AE Board of Directors or a committee thereof. The payment
will be taxed at the flat IRS rate plus applicable state rates for bonus payments. For all
benefits purposes such as Short-term Disability, Long-term Disability or Life Insurance, earnings
and/or income is defined by the plan documents governing those plans. Incentive awards are
considered eligible earnings for 401(k) contributions if the employee has previously elected a
bonus deferral percentage.

General

The Company reserves the right to define Company performance and individual performance and to
review, revise, amend, or terminate the Plan at any time without notice at its sole discretion.
Only the Board has the ability to modify the Plan, and all modification to the Plan must be in
writing and approved by the Board. This Plan document supersedes any previous document you may
have received.

This Plan does not constitute a guarantee of work, job status or employment for any period of time.
Your employment at Advanced Energy Industries, Inc. is at will and either you or the company may
terminate the relationship at any time. This document is not intended to create a contract of
employment, express or implied.

Any questions regarding this Plan should be directed to the Human Resources department or the
Senior Vice President, Human Resources.

 

 

Acknowledgement

I understand and accept the terms of the Advanced Energy Industries, Inc. 2006 Leadership
Performance Incentive Plan.

	 	 	 	 	 
	Participant:

	 	 	 	Issued by:
	 
	 	 	 	 
	 

	 	 	 	 
	Employee Signature

	 	 	 	Manager Signature
	 
	 	 	 	 
	 

	 	 	 	 
	Employee Printed Name

	 	 	 	Manager Printed Name
	 
	 	 	 	 
	 

	 	 	 	 
	Date

	 	 	 	Date

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