NFP » Topics » Ongoing incentive program

This excerpt taken from the NFP 8-K filed Aug 21, 2009.

Ongoing incentive program

Effective January 1, 2002, NFP established an ongoing incentive plan for principals having completed their contingent consideration period. The ongoing incentive plan pays out an increasing proportion of incremental earnings based on growth in earnings above an incentive target. The plan has a three-year measuring period and rewards growth above the prior period’s average earnings or prior incentive target, whichever is higher. However, once a firm reaches cumulative applicable earnings in a three-year period equal to or in excess of the cumulative amount of its original target compounded at 35% over three years, the new incentive target is fixed. If the principal does not receive a contingent consideration or incentive payment in a prior period, the incentive target remains unchanged. As illustrated by the chart set forth below, the bonus is structured to pay the principal 5% to 40% of NFP’s share of incremental earnings from growth.

 

Three-year

Average

Growth Rate

   % of NFP’s Share
of Growth in
Earnings Paid to
Principal(s)
 

Less than 10%

   0.0

10%–14.99%

   5.0

15%–19.99%

   20.0

20%–24.99%

   25.0

25%–29.99%

   30.0

30%–34.99%

   35.0

35%+

   40.0

 

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Table of Contents

In addition to the incentive award, NFP pays an additional cash incentive equal to 50% of the incentive award elected to be received in NFP stock. This election is made subsequent to the completion of the incentive period. For firms that began their incentive period prior to January 1, 2005, the principals could elect from 0% to 100% to be paid in NFP common stock. For firms beginning their incentive periods on or after January 1, 2005, (with the exception of Highland firms which completed this incentive period in 2008) the principal is required to take a minimum of 30% (maximum of 50%) of the incentive award in NFP common stock. The number of shares of NFP’s common stock that a principal will receive is determined by dividing the dollar amount of the incentive to be paid in NFP stock by the average of the closing price of NFP stock on the twenty trading days up to and including the last day of the incentive period. This election is made subsequent to the completion of the incentive period. For firms which began their incentive period prior to January 1, 2005, no accrual is made for these additional cash incentives until the related election is made. The Company accrues on a current basis for these firms the additional cash incentive (50% of the stock portion of the award) based upon the principal’s election or the minimum percentage required to be received in company stock. For the year ended December 31, 2008, the maximum additional payment for this cash incentive that could be payable for all firms is approximately $0.9 million. Effective December 31, 2008, NFP has elected to pay all incentive awards under this plan in cash.

For the years ended December 31, 2008, 2007 and 2006, the Company recorded ongoing incentive expense of $6.1 million, $16.9 million and $17.0 million, respectively, which is included in management fee expense in the consolidated statements of income.

These excerpts taken from the NFP 10-K filed Feb 13, 2009.

Ongoing incentive program

Effective January 1, 2002, NFP established an ongoing incentive plan for principals having completed their contingent consideration period. The ongoing incentive plan pays out an increasing proportion of incremental earnings based on growth in earnings above an incentive target. The plan has a three-year measuring period and rewards growth above the prior period’s average earnings or prior incentive target, whichever is higher. However, once a firm reaches cumulative applicable earnings in a three-year period equal to or in excess of the cumulative amount of its original target compounded at 35% over three years, the new incentive target is fixed. If the principal does not receive a contingent consideration or incentive payment in a prior period, the incentive target remains unchanged. As illustrated by the chart set forth below, the bonus is structured to pay the principal 5% to 40% of NFP’s share of incremental earnings from growth.

 

Three-year

Average

Growth Rate

   % of NFP’s Share
of Growth in
Earnings Paid to
Principal(s)
 

Less than 10%

   0.0 %

10%–14.99%

   5.0 %

15%–19.99%

   20.0 %

20%–24.99%

   25.0 %

25%–29.99%

   30.0 %

30%–34.99%

   35.0 %

35%+

   40.0 %

 

F-17


Table of Contents

NATIONAL FINANCIAL PARTNERS CORP. AND SUBSIDIARIES

Notes to Consolidated Financial Statements—(Continued)

 

In addition to the incentive award, NFP pays an additional cash incentive equal to 50% of the incentive award elected to be received in NFP stock. This election is made subsequent to the completion of the incentive period. For firms that began their incentive period prior to January 1, 2005, the principals could elect from 0% to 100% to be paid in NFP common stock. For firms beginning their incentive periods on or after January 1, 2005, (with the exception of Highland firms which completed this incentive period in 2008) the principal is required to take a minimum of 30% (maximum of 50%) of the incentive award in NFP common stock. The number of shares of NFP’s common stock that a principal will receive is determined by dividing the dollar amount of the incentive to be paid in NFP stock by the average of the closing price of NFP stock on the twenty trading days up to and including the last day of the incentive period. This election is made subsequent to the completion of the incentive period. For firms which began their incentive period prior to January 1, 2005, no accrual is made for these additional cash incentives until the related election is made. The Company accrues on a current basis for these firms the additional cash incentive (50% of the stock portion of the award) based upon the principal’s election or the minimum percentage required to be received in company stock. For the year ended December 31, 2008, the maximum additional payment for this cash incentive that could be payable for all firms is approximately $0.9 million. Effective December 31, 2008, NFP has elected to pay all incentive awards under this plan in cash.

For the years ended December 31, 2008, 2007 and 2006, the Company recorded ongoing incentive expense of $6.1 million, $16.9 million and $17.0 million, respectively, which is included in management fee expense in the consolidated statements of income.

Ongoing incentive program

Effective January 1, 2002, NFP established an ongoing incentive plan for principals having completed their contingent consideration period. The ongoing incentive plan pays out an increasing proportion of incremental earnings based on growth in earnings above an incentive target. The plan has a three-year measuring period and rewards growth above the prior period’s average earnings or prior incentive target, whichever is higher. However, once a firm reaches cumulative applicable earnings in a three-year period equal to or in excess of the cumulative amount of its original target compounded at 35% over three years, the new incentive target is fixed. If the principal does not receive a contingent consideration or incentive payment in a prior period, the incentive target remains unchanged. As illustrated by the chart set forth below, the bonus is structured to pay the principal 5% to 40% of NFP’s share of incremental earnings from growth.

 

Three-year

Average

Growth Rate

   % of NFP’s Share
of Growth in
Earnings Paid to
Principal(s)
 

Less than 10%

   0.0 %

10%–14.99%

   5.0 %

15%–19.99%

   20.0 %

20%–24.99%

   25.0 %

25%–29.99%

   30.0 %

30%–34.99%

   35.0 %

35%+

   40.0 %

 

F-17


Table of Contents

NATIONAL FINANCIAL PARTNERS CORP. AND SUBSIDIARIES

Notes to Consolidated Financial Statements—(Continued)

 

In addition to the incentive award, NFP pays an additional cash incentive equal to 50% of the incentive award elected to be received in NFP stock. This election is made subsequent to the completion of the incentive period. For firms that began their incentive period prior to January 1, 2005, the principals could elect from 0% to 100% to be paid in NFP common stock. For firms beginning their incentive periods on or after January 1, 2005, (with the exception of Highland firms which completed this incentive period in 2008) the principal is required to take a minimum of 30% (maximum of 50%) of the incentive award in NFP common stock. The number of shares of NFP’s common stock that a principal will receive is determined by dividing the dollar amount of the incentive to be paid in NFP stock by the average of the closing price of NFP stock on the twenty trading days up to and including the last day of the incentive period. This election is made subsequent to the completion of the incentive period. For firms which began their incentive period prior to January 1, 2005, no accrual is made for these additional cash incentives until the related election is made. The Company accrues on a current basis for these firms the additional cash incentive (50% of the stock portion of the award) based upon the principal’s election or the minimum percentage required to be received in company stock. For the year ended December 31, 2008, the maximum additional payment for this cash incentive that could be payable for all firms is approximately $0.9 million. Effective December 31, 2008, NFP has elected to pay all incentive awards under this plan in cash.

For the years ended December 31, 2008, 2007 and 2006, the Company recorded ongoing incentive expense of $6.1 million, $16.9 million and $17.0 million, respectively, which is included in management fee expense in the consolidated statements of income.

Ongoing incentive program

Effective January 1, 2002, NFP established an ongoing incentive plan for principals having completed their contingent consideration period. The ongoing incentive plan pays out an increasing proportion of incremental earnings based on growth in earnings above an incentive target. The plan has a three-year measuring period and rewards growth above the prior period’s average earnings or prior incentive target, whichever is higher. However, once a firm reaches cumulative applicable earnings in a three-year period equal to or in excess of the cumulative amount of its original target compounded at 35% over three years, the new incentive target is fixed. If the principal does not receive a contingent consideration or incentive payment in a prior period, the incentive target remains unchanged. As illustrated by the chart set forth below, the bonus is structured to pay the principal 5% to 40% of NFP’s share of incremental earnings from growth.

 

Three-year

Average

Growth Rate

   % of NFP’s Share
of Growth in
Earnings Paid to
Principal(s)
 

Less than 10%

   0.0 %

10%–14.99%

   5.0 %

15%–19.99%

   20.0 %

20%–24.99%

   25.0 %

25%–29.99%

   30.0 %

30%–34.99%

   35.0 %

35%+

   40.0 %

 

F-17


Table of Contents

NATIONAL FINANCIAL PARTNERS CORP. AND SUBSIDIARIES

Notes to Consolidated Financial Statements—(Continued)

 

In addition to the incentive award, NFP pays an additional cash incentive equal to 50% of the incentive award elected to be received in NFP stock. This election is made subsequent to the completion of the incentive period. For firms that began their incentive period prior to January 1, 2005, the principals could elect from 0% to 100% to be paid in NFP common stock. For firms beginning their incentive periods on or after January 1, 2005, (with the exception of Highland firms which completed this incentive period in 2008) the principal is required to take a minimum of 30% (maximum of 50%) of the incentive award in NFP common stock. The number of shares of NFP’s common stock that a principal will receive is determined by dividing the dollar amount of the incentive to be paid in NFP stock by the average of the closing price of NFP stock on the twenty trading days up to and including the last day of the incentive period. This election is made subsequent to the completion of the incentive period. For firms which began their incentive period prior to January 1, 2005, no accrual is made for these additional cash incentives until the related election is made. The Company accrues on a current basis for these firms the additional cash incentive (50% of the stock portion of the award) based upon the principal’s election or the minimum percentage required to be received in company stock. For the year ended December 31, 2008, the maximum additional payment for this cash incentive that could be payable for all firms is approximately $0.9 million. Effective December 31, 2008, NFP has elected to pay all incentive awards under this plan in cash.

For the years ended December 31, 2008, 2007 and 2006, the Company recorded ongoing incentive expense of $6.1 million, $16.9 million and $17.0 million, respectively, which is included in management fee expense in the consolidated statements of income.

Ongoing incentive program

Effective January 1, 2002, NFP established an ongoing incentive plan for principals having completed their contingent consideration period. The ongoing incentive plan pays out an increasing proportion of incremental earnings based on growth in earnings above an incentive target. The plan has a three-year measuring period and rewards growth above the prior period’s average earnings or prior incentive target, whichever is higher. However, once a firm reaches cumulative applicable earnings in a three-year period equal to or in excess of the cumulative amount of its original target compounded at 35% over three years, the new incentive target is fixed. If the principal does not receive a contingent consideration or incentive payment in a prior period, the incentive target remains unchanged. As illustrated by the chart set forth below, the bonus is structured to pay the principal 5% to 40% of NFP’s share of incremental earnings from growth.

 

Three-year

Average

Growth Rate

   % of NFP’s Share
of Growth in
Earnings Paid to
Principal(s)
 

Less than 10%

   0.0 %

10%–14.99%

   5.0 %

15%–19.99%

   20.0 %

20%–24.99%

   25.0 %

25%–29.99%

   30.0 %

30%–34.99%

   35.0 %

35%+

   40.0 %

 

F-17


Table of Contents

NATIONAL FINANCIAL PARTNERS CORP. AND SUBSIDIARIES

Notes to Consolidated Financial Statements—(Continued)

 

In addition to the incentive award, NFP pays an additional cash incentive equal to 50% of the incentive award elected to be received in NFP stock. This election is made subsequent to the completion of the incentive period. For firms that began their incentive period prior to January 1, 2005, the principals could elect from 0% to 100% to be paid in NFP common stock. For firms beginning their incentive periods on or after January 1, 2005, (with the exception of Highland firms which completed this incentive period in 2008) the principal is required to take a minimum of 30% (maximum of 50%) of the incentive award in NFP common stock. The number of shares of NFP’s common stock that a principal will receive is determined by dividing the dollar amount of the incentive to be paid in NFP stock by the average of the closing price of NFP stock on the twenty trading days up to and including the last day of the incentive period. This election is made subsequent to the completion of the incentive period. For firms which began their incentive period prior to January 1, 2005, no accrual is made for these additional cash incentives until the related election is made. The Company accrues on a current basis for these firms the additional cash incentive (50% of the stock portion of the award) based upon the principal’s election or the minimum percentage required to be received in company stock. For the year ended December 31, 2008, the maximum additional payment for this cash incentive that could be payable for all firms is approximately $0.9 million. Effective December 31, 2008, NFP has elected to pay all incentive awards under this plan in cash.

For the years ended December 31, 2008, 2007 and 2006, the Company recorded ongoing incentive expense of $6.1 million, $16.9 million and $17.0 million, respectively, which is included in management fee expense in the consolidated statements of income.

Ongoing incentive program

STYLE="margin-top:6px;margin-bottom:0px; text-indent:4%">Effective January 1, 2002, NFP established an ongoing incentive plan for principals having completed their contingent consideration period. The
ongoing incentive plan pays out an increasing proportion of incremental earnings based on growth in earnings above an incentive target. The plan has a three-year measuring period and rewards growth above the prior period’s average earnings or
prior incentive target, whichever is higher. However, once a firm reaches cumulative applicable earnings in a three-year period equal to or in excess of the cumulative amount of its original target compounded at 35% over three years, the new
incentive target is fixed. If the principal does not receive a contingent consideration or incentive payment in a prior period, the incentive target remains unchanged. As illustrated by the chart set forth below, the bonus is structured to pay the
principal 5% to 40% of NFP’s share of incremental earnings from growth.

 

















































Three-year

Average

STYLE="margin-top:0px;margin-bottom:1px;border-bottom:1px solid #000000;width:44pt">Growth Rate

  % of NFP’s Share
of Growth in
Earnings Paid to
Principal(s)
 

Less than 10%

  0.0%

10%–14.99%

  5.0%

15%–19.99%

  20.0%

20%–24.99%

  25.0%

25%–29.99%

  30.0%

30%–34.99%

  35.0%

35%+

  40.0%

 


F-17







Table of Contents



NATIONAL FINANCIAL PARTNERS CORP. AND SUBSIDIARIES

STYLE="margin-top:6px;margin-bottom:0px" ALIGN="center">Notes to Consolidated Financial Statements—(Continued)

 


In addition to the incentive award, NFP pays an additional cash incentive equal to 50% of the
incentive award elected to be received in NFP stock. This election is made subsequent to the completion of the incentive period. For firms that began their incentive period prior to January 1, 2005, the principals could elect from 0% to 100% to
be paid in NFP common stock. For firms beginning their incentive periods on or after January 1, 2005, (with the exception of Highland firms which completed this incentive period in 2008) the principal is required to take a minimum of 30%
(maximum of 50%) of the incentive award in NFP common stock. The number of shares of NFP’s common stock that a principal will receive is determined by dividing the dollar amount of the incentive to be paid in NFP stock by the average of the
closing price of NFP stock on the twenty trading days up to and including the last day of the incentive period. This election is made subsequent to the completion of the incentive period. For firms which began their incentive period prior to
January 1, 2005, no accrual is made for these additional cash incentives until the related election is made. The Company accrues on a current basis for these firms the additional cash incentive (50% of the stock portion of the award) based upon
the principal’s election or the minimum percentage required to be received in company stock. For the year ended December 31, 2008, the maximum additional payment for this cash incentive that could be payable for all firms is approximately
$0.9 million. Effective December 31, 2008, NFP has elected to pay all incentive awards under this plan in cash.

For the years ended
December 31, 2008, 2007 and 2006, the Company recorded ongoing incentive expense of $6.1 million, $16.9 million and $17.0 million, respectively, which is included in management fee expense in the consolidated statements of income.


Ongoing incentive program

STYLE="margin-top:6px;margin-bottom:0px; text-indent:4%">Effective January 1, 2002, NFP established an ongoing incentive plan for principals having completed their contingent consideration period. The
ongoing incentive plan pays out an increasing proportion of incremental earnings based on growth in earnings above an incentive target. The plan has a three-year measuring period and rewards growth above the prior period’s average earnings or
prior incentive target, whichever is higher. However, once a firm reaches cumulative applicable earnings in a three-year period equal to or in excess of the cumulative amount of its original target compounded at 35% over three years, the new
incentive target is fixed. If the principal does not receive a contingent consideration or incentive payment in a prior period, the incentive target remains unchanged. As illustrated by the chart set forth below, the bonus is structured to pay the
principal 5% to 40% of NFP’s share of incremental earnings from growth.

 

















































Three-year

Average

STYLE="margin-top:0px;margin-bottom:1px;border-bottom:1px solid #000000;width:44pt">Growth Rate

  % of NFP’s Share
of Growth in
Earnings Paid to
Principal(s)
 

Less than 10%

  0.0%

10%–14.99%

  5.0%

15%–19.99%

  20.0%

20%–24.99%

  25.0%

25%–29.99%

  30.0%

30%–34.99%

  35.0%

35%+

  40.0%

 


F-17







Table of Contents



NATIONAL FINANCIAL PARTNERS CORP. AND SUBSIDIARIES

STYLE="margin-top:6px;margin-bottom:0px" ALIGN="center">Notes to Consolidated Financial Statements—(Continued)

 


In addition to the incentive award, NFP pays an additional cash incentive equal to 50% of the
incentive award elected to be received in NFP stock. This election is made subsequent to the completion of the incentive period. For firms that began their incentive period prior to January 1, 2005, the principals could elect from 0% to 100% to
be paid in NFP common stock. For firms beginning their incentive periods on or after January 1, 2005, (with the exception of Highland firms which completed this incentive period in 2008) the principal is required to take a minimum of 30%
(maximum of 50%) of the incentive award in NFP common stock. The number of shares of NFP’s common stock that a principal will receive is determined by dividing the dollar amount of the incentive to be paid in NFP stock by the average of the
closing price of NFP stock on the twenty trading days up to and including the last day of the incentive period. This election is made subsequent to the completion of the incentive period. For firms which began their incentive period prior to
January 1, 2005, no accrual is made for these additional cash incentives until the related election is made. The Company accrues on a current basis for these firms the additional cash incentive (50% of the stock portion of the award) based upon
the principal’s election or the minimum percentage required to be received in company stock. For the year ended December 31, 2008, the maximum additional payment for this cash incentive that could be payable for all firms is approximately
$0.9 million. Effective December 31, 2008, NFP has elected to pay all incentive awards under this plan in cash.

For the years ended
December 31, 2008, 2007 and 2006, the Company recorded ongoing incentive expense of $6.1 million, $16.9 million and $17.0 million, respectively, which is included in management fee expense in the consolidated statements of income.


Ongoing incentive program

STYLE="margin-top:6px;margin-bottom:0px; text-indent:4%">Effective January 1, 2002, NFP established an ongoing incentive plan for principals having completed their contingent consideration period. The
ongoing incentive plan pays out an increasing proportion of incremental earnings based on growth in earnings above an incentive target. The plan has a three-year measuring period and rewards growth above the prior period’s average earnings or
prior incentive target, whichever is higher. However, once a firm reaches cumulative applicable earnings in a three-year period equal to or in excess of the cumulative amount of its original target compounded at 35% over three years, the new
incentive target is fixed. If the principal does not receive a contingent consideration or incentive payment in a prior period, the incentive target remains unchanged. As illustrated by the chart set forth below, the bonus is structured to pay the
principal 5% to 40% of NFP’s share of incremental earnings from growth.

 

















































Three-year

Average

STYLE="margin-top:0px;margin-bottom:1px;border-bottom:1px solid #000000;width:44pt">Growth Rate

  % of NFP’s Share
of Growth in
Earnings Paid to
Principal(s)
 

Less than 10%

  0.0%

10%–14.99%

  5.0%

15%–19.99%

  20.0%

20%–24.99%

  25.0%

25%–29.99%

  30.0%

30%–34.99%

  35.0%

35%+

  40.0%

 


F-17







Table of Contents



NATIONAL FINANCIAL PARTNERS CORP. AND SUBSIDIARIES

STYLE="margin-top:6px;margin-bottom:0px" ALIGN="center">Notes to Consolidated Financial Statements—(Continued)

 


In addition to the incentive award, NFP pays an additional cash incentive equal to 50% of the
incentive award elected to be received in NFP stock. This election is made subsequent to the completion of the incentive period. For firms that began their incentive period prior to January 1, 2005, the principals could elect from 0% to 100% to
be paid in NFP common stock. For firms beginning their incentive periods on or after January 1, 2005, (with the exception of Highland firms which completed this incentive period in 2008) the principal is required to take a minimum of 30%
(maximum of 50%) of the incentive award in NFP common stock. The number of shares of NFP’s common stock that a principal will receive is determined by dividing the dollar amount of the incentive to be paid in NFP stock by the average of the
closing price of NFP stock on the twenty trading days up to and including the last day of the incentive period. This election is made subsequent to the completion of the incentive period. For firms which began their incentive period prior to
January 1, 2005, no accrual is made for these additional cash incentives until the related election is made. The Company accrues on a current basis for these firms the additional cash incentive (50% of the stock portion of the award) based upon
the principal’s election or the minimum percentage required to be received in company stock. For the year ended December 31, 2008, the maximum additional payment for this cash incentive that could be payable for all firms is approximately
$0.9 million. Effective December 31, 2008, NFP has elected to pay all incentive awards under this plan in cash.

For the years ended
December 31, 2008, 2007 and 2006, the Company recorded ongoing incentive expense of $6.1 million, $16.9 million and $17.0 million, respectively, which is included in management fee expense in the consolidated statements of income.


Ongoing incentive program

STYLE="margin-top:6px;margin-bottom:0px; text-indent:4%">Effective January 1, 2002, NFP established an ongoing incentive plan for principals having completed their contingent consideration period. The
ongoing incentive plan pays out an increasing proportion of incremental earnings based on growth in earnings above an incentive target. The plan has a three-year measuring period and rewards growth above the prior period’s average earnings or
prior incentive target, whichever is higher. However, once a firm reaches cumulative applicable earnings in a three-year period equal to or in excess of the cumulative amount of its original target compounded at 35% over three years, the new
incentive target is fixed. If the principal does not receive a contingent consideration or incentive payment in a prior period, the incentive target remains unchanged. As illustrated by the chart set forth below, the bonus is structured to pay the
principal 5% to 40% of NFP’s share of incremental earnings from growth.

 

















































Three-year

Average

STYLE="margin-top:0px;margin-bottom:1px;border-bottom:1px solid #000000;width:44pt">Growth Rate

  % of NFP’s Share
of Growth in
Earnings Paid to
Principal(s)
 

Less than 10%

  0.0%

10%–14.99%

  5.0%

15%–19.99%

  20.0%

20%–24.99%

  25.0%

25%–29.99%

  30.0%

30%–34.99%

  35.0%

35%+

  40.0%

 


F-17







Table of Contents



NATIONAL FINANCIAL PARTNERS CORP. AND SUBSIDIARIES

STYLE="margin-top:6px;margin-bottom:0px" ALIGN="center">Notes to Consolidated Financial Statements—(Continued)

 


In addition to the incentive award, NFP pays an additional cash incentive equal to 50% of the
incentive award elected to be received in NFP stock. This election is made subsequent to the completion of the incentive period. For firms that began their incentive period prior to January 1, 2005, the principals could elect from 0% to 100% to
be paid in NFP common stock. For firms beginning their incentive periods on or after January 1, 2005, (with the exception of Highland firms which completed this incentive period in 2008) the principal is required to take a minimum of 30%
(maximum of 50%) of the incentive award in NFP common stock. The number of shares of NFP’s common stock that a principal will receive is determined by dividing the dollar amount of the incentive to be paid in NFP stock by the average of the
closing price of NFP stock on the twenty trading days up to and including the last day of the incentive period. This election is made subsequent to the completion of the incentive period. For firms which began their incentive period prior to
January 1, 2005, no accrual is made for these additional cash incentives until the related election is made. The Company accrues on a current basis for these firms the additional cash incentive (50% of the stock portion of the award) based upon
the principal’s election or the minimum percentage required to be received in company stock. For the year ended December 31, 2008, the maximum additional payment for this cash incentive that could be payable for all firms is approximately
$0.9 million. Effective December 31, 2008, NFP has elected to pay all incentive awards under this plan in cash.

For the years ended
December 31, 2008, 2007 and 2006, the Company recorded ongoing incentive expense of $6.1 million, $16.9 million and $17.0 million, respectively, which is included in management fee expense in the consolidated statements of income.


These excerpts taken from the NFP 10-K filed Feb 19, 2008.

Ongoing incentive program

Effective January 1, 2002, NFP established an ongoing incentive plan for principals having completed their contingent consideration period or option incentive plan eligibility. The ongoing incentive plan pays out an increasing proportion of incremental earnings based on growth in earnings above an incentive target. The plan has a three-year measuring period and rewards growth above the prior period’s average earnings or prior incentive target, whichever is higher. However, once a firm reaches cumulative applicable earnings in a three-year period equal to or in excess of the cumulative amount of its original target compounded at 35% over three years, the new incentive target is fixed. If the principal does not receive an option grant, contingent consideration

 

F-17


Table of Contents

NATIONAL FINANCIAL PARTNERS CORP. AND SUBSIDIARIES

Notes to Consolidated Financial Statements—(Continued)

 

or incentive payment in a prior period, the incentive target remains unchanged. As illustrated by the chart set forth below, the bonus is structured to pay the principal 5% to 40% of NFP’s share of incremental earnings from growth.

 

Three-year

Average

Growth Rate

   % of NFP’s Share
of Growth in
Earnings Paid to
Principal(s)
 

Less than 10%

   0.0 %

10%–14.99%

   5.0 %

15%–19.99%

   20.0 %

20%–24.99%

   25.0 %

25%–29.99%

   30.0 %

30%–34.99%

   35.0 %

35%+

   40.0 %

In addition to the incentive award, NFP pays an additional cash incentive equal to 50% of the incentive award elected to be received in NFP stock. This election is made subsequent to the completion of the incentive period. For firms that began their incentive period prior to January 1, 2005, the principals could elect from 0% to 100% to be paid in NFP common stock. For firms beginning their incentive periods on or after January 1, 2005, (with the exception of Highland firms) the principal is required to take a minimum of 30% (maximum of 50%) of the incentive award in NFP common stock. The number of shares of NFP’s common stock that a principal will receive is determined by dividing the dollar amount of the incentive to be paid in NFP stock by the average of the closing price of NFP stock on the twenty trading days up to and including the last day of the incentive period. This election is made subsequent to the completion of the incentive period. For firms which began their incentive period prior to January 1, 2005, no accrual is made for these additional cash incentives until the related election is made. However, for firms beginning their incentive period on or after January 1, 2005 (with the exception Highland firms), the principal is required to take a minimum of 30% (maximum 50%) of the incentive award in common stock. The Company accrues on a current basis for these firms the additional cash incentive (50% of the stock portion of the award) based upon the principal’s election or the minimum percentage required to be received in company stock. For the year ended December 31, 2007, the maximum additional payment for this cash incentive that could be payable for all firms is approximately $5.0 million.

For the years ended December 31, 2007, 2006 and 2005, the Company recorded ongoing incentive expense of $16.9 million, $17.0 million and $13.7 million, respectively, which is included in management fee expense in the consolidated statements of income.

 

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NATIONAL FINANCIAL PARTNERS CORP. AND SUBSIDIARIES

Notes to Consolidated Financial Statements—(Continued)

 

Ongoing incentive program

STYLE="margin-top:6px;margin-bottom:0px; text-indent:4%">Effective January 1, 2002, NFP established an ongoing incentive plan for principals having completed their contingent consideration period or option
incentive plan eligibility. The ongoing incentive plan pays out an increasing proportion of incremental earnings based on growth in earnings above an incentive target. The plan has a three-year measuring period and rewards growth above the prior
period’s average earnings or prior incentive target, whichever is higher. However, once a firm reaches cumulative applicable earnings in a three-year period equal to or in excess of the cumulative amount of its original target compounded at 35%
over three years, the new incentive target is fixed. If the principal does not receive an option grant, contingent consideration

 


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NATIONAL FINANCIAL PARTNERS CORP. AND SUBSIDIARIES

STYLE="margin-top:6px;margin-bottom:0px" ALIGN="center">Notes to Consolidated Financial Statements—(Continued)

 



or incentive payment in a prior period, the incentive target remains unchanged. As illustrated by the chart set forth below, the bonus is structured to pay
the principal 5% to 40% of NFP’s share of incremental earnings from growth.

 

















































Three-year

Average

STYLE="margin-top:0px;margin-bottom:1px;border-bottom:1px solid #000000;width:44pt">Growth Rate

  % of NFP’s Share
of Growth in
Earnings Paid to
Principal(s)
 

Less than 10%

  0.0%

10%–14.99%

  5.0%

15%–19.99%

  20.0%

20%–24.99%

  25.0%

25%–29.99%

  30.0%

30%–34.99%

  35.0%

35%+

  40.0%

In addition to the incentive award, NFP pays an additional cash incentive equal to 50% of the
incentive award elected to be received in NFP stock. This election is made subsequent to the completion of the incentive period. For firms that began their incentive period prior to January 1, 2005, the principals could elect from 0% to 100% to
be paid in NFP common stock. For firms beginning their incentive periods on or after January 1, 2005, (with the exception of Highland firms) the principal is required to take a minimum of 30% (maximum of 50%) of the incentive award in NFP
common stock. The number of shares of NFP’s common stock that a principal will receive is determined by dividing the dollar amount of the incentive to be paid in NFP stock by the average of the closing price of NFP stock on the twenty trading
days up to and including the last day of the incentive period. This election is made subsequent to the completion of the incentive period. For firms which began their incentive period prior to January 1, 2005, no accrual is made for these additional
cash incentives until the related election is made. However, for firms beginning their incentive period on or after January 1, 2005 (with the exception Highland firms), the principal is required to take a minimum of 30% (maximum 50%) of the
incentive award in common stock. The Company accrues on a current basis for these firms the additional cash incentive (50% of the stock portion of the award) based upon the principal’s election or the minimum percentage required to be received
in company stock. For the year ended December 31, 2007, the maximum additional payment for this cash incentive that could be payable for all firms is approximately $5.0 million.

STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%">For the years ended December 31, 2007, 2006 and 2005, the Company recorded ongoing incentive expense of $16.9 million, $17.0 million and $13.7
million, respectively, which is included in management fee expense in the consolidated statements of income.

 


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STYLE="margin-top:6px;margin-bottom:0px" ALIGN="center">Notes to Consolidated Financial Statements—(Continued)

 


This excerpt taken from the NFP 10-K filed Feb 22, 2007.

Ongoing incentive program

Effective January 1, 2002, the Company established an ongoing incentive plan for principals having completed their contingent consideration period or option incentive plan eligibility. The ongoing incentive plan pays out an increasing proportion of incremental earnings based on growth in earnings above an incentive target. The plan has a three-year measuring period and rewards growth above the prior period’s average earnings or prior incentive target, whichever is higher. However, once a firm reaches cumulative applicable earnings in a three-year period equal to or in excess of the cumulative amount of its original target compounded at 35% over three years, the new incentive target is fixed. If the principal does not receive an option grant, contingent consideration or incentive payment in a prior period, the incentive target remains unchanged. As illustrated by the chart set forth below, the bonus is structured to pay the principal 5% to 40% of NFP’s share of incremental earnings from growth.

 

Three-year

Average

Growth Rate

   % of NFP’s Share
of Growth in
Earnings Paid to
Principal(s)
 

Less than 10%

   0.0 %

10%–14.99%

   5.0 %

15%–19.99%

   20.0 %

20%–24.99%

   25.0 %

25%–29.99%

   30.0 %

30%–34.99%

   35.0 %

35%+

   40.0 %

Principals may elect to receive the incentive payment in cash, the Company’s common stock or any combination thereof. For firms that began their incentive period prior to January 1, 2005, the principal could elect from 0% to 100% to be paid in the Company’s common stock. For incentive periods beginning on or after January 1, 2005, the amount of common stock the principals may receive as an incentive payment is subject to a minimum of 30% and a maximum of 50%. The number of shares of common stock that a principal will receive is determined by dividing the dollar amount of the incentive to be paid in stock by the average of the closing price of the Company’s common stock on the twenty trading days up to and including the last day of the incentive period. In addition to the incentive award, the Company pays an additional cash incentive equal to 50% of the incentive award elected to be received in the Company’s stock. This election is made subsequent to the completion of the incentive period. No accrual is made for these additional cash incentives until the related election is made. However, for firms beginning their incentive period on or after January 1, 2005 (with the exception of Highland Capital Holding Corporation or “Highland” firms), the principal is required to take a minimum of 30% (maximum 50%) of the incentive award in common stock. The Company accrues on a current basis for these firms the additional cash incentive (50% of the stock portion of the award) based upon the principal’s election of the minimum percentage required to be received in company stock.

For the years ended December 31, 2006, 2005 and 2004, the Company recorded ongoing incentive expense of $17.0 million, $13.7 million and $6.7 million, respectively, which is included in management fee expense in the consolidated statements of income.

Management fees include an accrual for certain performance-based incentive amounts payable under the Company’s ongoing incentive plan. Incentive amounts are paid in a combination of cash and the Company’s common stock. For the year ended December 31, 2006, the maximum additional payment for this cash incentive that could be payable for all firms is approximately $4.6 million.

 

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NATIONAL FINANCIAL PARTNERS CORP. AND SUBSIDIARIES

Notes to Consolidated Financial Statements—(Continued)

 

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