NENG » Topics » 2008 Executive Bonus Program

This excerpt taken from the NENG DEF 14A filed Jan 28, 2009.

2008 Executive Bonus Program

        The Bonus Program was divided into two earning periods:

            1.     The first six months of the fiscal year; and

            2.     The second six months of the fiscal year.

        The total eligible annual bonus amount of our executive officers was allocated to each earning period as follows: 50% as to the first six months, and 50% as to the second six months. Bonuses earned are paid semiannually, and in order to be eligible for a bonus payment, the executive officer is required to be employed, as a full time employee, by us for the full duration of the period on which the bonus calculation is based.

        Under the 2008 Executive Bonus Program, Company performance goals for both of the earning periods were based on revenue and adjusted operating profit (loss) of the Company (each, a "Corporate Metric"). Adjusted operating profit (loss) was determined using our GAAP operating profit (loss) adjusted to remove the effects of stock-based compensation expense, amortization of intangible assets, and any other non-recurring expenses as determined by our Chief Executive Officer and Chief Financial Officer, and approved by our Compensation Committee. Our Chief Executive Officer and Chief Financial Officer provided recommended targets for each Corporate Metric for both of the earning periods to our Compensation Committee. These recommendations were reviewed, modified if necessary, and approved by our Compensation Committee. Once set, the established targets generally are not changed, but any such change would require Compensation Committee approval. The approved Corporate Metrics for Fiscal 2008 were $112 million in revenue and $2.5 million in adjusted operating profit as to the first six months and $123 million in revenue and $4.7 million in adjusted operating profit as to the second six months.

        Bonuses were paid based on a graduated scale of achievement of the Corporate Metrics, whereby 100% achievement of both Corporate Metrics resulted in a payout of 100%. Achievement of the Corporate Metrics between 70% and 150% of each of the targets resulted in bonus payouts ranging from 60% to 150%. Bonus payments were determined by multiplying the executive officer's targeted bonus for the respective earning period by the corresponding percentage for the targets achieved.

        In Fiscal 2008, 100% of each executive officer's annual bonus was based on the Corporate Metrics. For the first six months of Fiscal 2008, comparison of actual results to the established Corporate Metrics resulted in bonus payouts of 100% of our executive officers' targeted incentive bonuses. For the second six months of Fiscal 2008, comparison of actual results to the established Corporate Metrics resulted in no payouts of our executive officers' targeted incentive bonuses. The table below reflects,

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for each named executive officer, the target and actual incentive bonuses earned for the first six months and second six months of Fiscal 2008.

 
  First Six Months   Second Six Months  
 
  Target
Incentive
Bonus
  Actual
Incentive
Bonus
  Target
Incentive
Bonus
  Actual
Incentive
Bonus
 

Gregory A. Shortell, Chief Executive Officer and President

  $ 90,625   $ 90,625   $ 93,750   $  

Douglas G. Bryant, Chief Financial Officer, Treasurer and Secretary

    62,500     62,500     62,500      

Charles N. Cone, III, Senior Vice President of Sales & Marketing

    25,000     25,000     50,000      

Richard P. Graber, Senior Vice President of Engineering and Operations

    52,500     52,500     52,500      

Kevin J. Murphy Jr., former Chief Technology Officer

    20,000     20,000     20,000      

Hugh W. Kelly, former Senior Vice President of Worldwide Marketing(1)

    35,000     35,000          

Ronald W. Pugh, former Senior Vice President of Worldwide Sales(2)

    7,812     7,812          

(1)
Mr. Kelly's employment with the Company ended August 8, 2008 and therefore he was not eligible for a bonus for the second six months of Fiscal 2008.

(2)
Mr. Pugh's employment with the Company ended August 30, 2008 and therefore he was not eligible for a bonus for the second six months of Fiscal 2008.
This excerpt taken from the NENG 8-K filed Mar 19, 2008.

2008 Executive Bonus Program

 

On March 13, 2008, the Compensation Committee of the Board of Directors of the Company approved the targeted corporate metric for the second half of Fiscal Year 2008, under the Company’s 2008 Executive Bonus Program, which was previously approved by the Compensation Committee.  The 2008 Executive Bonus Program provides the Company’s executive officers the opportunity to earn semi-annual incentive bonuses based on the Company’s performance, determined by the achievement of an approved corporate metric.  The approved corporate metric for the second half of fiscal year 2008 is based on the Company’s revenue and operating results adjusted to exclude expenses related to stock compensation, amortization of intangible assets, and certain items at the discretion of the Compensation Committee.  The corporate metric for the second half of Fiscal Year 2008 determines 50% of the annual incentive bonus that can be earned by the executive officers, and payouts can range between 0% and 150% of the targeted payment based upon a pre-defined scale.

 

This excerpt taken from the NENG DEF 14A filed Jan 29, 2008.

2007 Executive Bonus Program

        The Bonus Program was divided into three earning periods:

      1.
      First six months of the fiscal year

      2.
      Second six months of the fiscal year and

      3.
      Full fiscal year.

        The total eligible annual bonus amount of our executive officers was allocated to each earning period as follows: 35% as to the first six months, 40% as to the second six months, and 25% as to the full fiscal year. Bonuses earned are paid semiannually, and in order to be eligible for a bonus payment, the executive officer is required to be employed, as a full time employee, by us for the full duration of the period for which the bonus calculation is based on.

        Under the 2007 Executive Bonus Program, Company performance goals for each of the three earning periods were based on adjusted operating profit (loss) of the Company (the "Corporate Metric"). The Corporate Metric was determined using our GAAP operating profit (loss) adjusted to remove the effects of stock-based compensation expense, and any other non-recurring expenses as determined by our Chief Executive Officer and Chief Financial Officer, and approved by our Compensation Committee. Our Chief Executive Officer and Chief Financial Officer provided recommended Corporate Metric targets for each of the measurement periods to our Compensation Committee. These recommendations were reviewed, modified, if necessary, and approved by our Compensation Committee. Once set the established targets generally are not changed, but any such change would require Compensation Committee approval. The approved Corporate Metrics for Fiscal 2007 were ($750,000) as to the first six months, $630,000 as to the second six months, and $405,000 as to the full fiscal year.

        Bonuses were paid based on a graduated scale of Corporate Metric achievement, whereby 100% achievement resulted in a payout of 100%. Corporate Metric achievement between 0% to 90% of the target resulted in a bonus payout ranging from 0% to 89%, and achievement between 110% to 170% resulted in a bonus payout ranging from 103% to 120%. Bonus payments were determined by multiplying the executive officer's pro-rata bonus for the respective earning period by the corresponding percentage for the target achieved.

        In Fiscal 2007, 100% of each executive officer's annual bonus was based on the Corporate Metric. For each of the three earning periods for Fiscal 2007 we exceeded the established Corporate Metrics resulting in bonus payouts of 120% of our executive officers' targeted incentive bonus. The table below

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reflects for each named executive officer the target and actual incentive earned for the first six months, second six months, and full Fiscal 2007.

 
  First Six Months
  Second Six Months
  Full Fiscal 2007
 
  Target Incentive Bonus
  Actual Incentive Bonus
  Target Incentive Bonus
  Actual Incentive Bonus
  Target Incentive Bonus
  Actual Incentive Bonus
Gregory A. Shortell, Chief Executive Officer and President   $ 61,250   $ 73,500   $ 70,000   $ 84,000   $ 43,750   $ 52,500
Douglas G. Bryant, Chief Financial Officer, Treasurer and Secretary   $ 43,750   $ 52,500   $ 50,000   $ 60,000   $ 31,250   $ 37,500
Richard P. Graber, Vice President of Operations   $ 36,750   $ 44,100   $ 42,000   $ 50,400   $ 26,250   $ 31,500
Hugh W. Kelly, VP Worldwide Marketing   $ 22,750   $ 28,350   $ 27,000   $ 32,400   $ 16,875   $ 20,250
Kevin J. Murphy Jr., Chief Technology Officer   $ 12,250   $ 14,700   $ 14,000   $ 16,800   $ 8,750   $ 10,500
This excerpt taken from the NENG 8-K filed Dec 20, 2007.

(c)                2008 Executive Bonus Program

 

On December 13, 2007 the Compensation Committee of the Board of Directors of the Company approved a 2008 Executive Bonus Program whereby the President and Vice Presidents have the opportunity to earn semi-annual performance bonuses, based on the achievement of certain Company metrics. Under the 2008 Executive Bonus Program, the Compensation Committee of the Board of Directors, selects, reviews and/or approves individual targeted annual incentive bonuses for each executive.  For fiscal year 2008 these incentive bonus targets range from 20% to 50% of the individual’s base salary.

 

2



 

Specifically, the Compensation Committee has approved the following semi-annual measurements and payments:

 

·                  50% of annual incentive based on the first half of the fiscal year 2008 target Corporate Metric;

 

·                  50% of annual incentive based on the second half of the fiscal year 2008 target Corporate Metric; and

 

For the first half of fiscal year 2008, the Compensation Committee approved the targeted Corporate Metric based on the Company’s revenue and operating results adjusted to exclude expenses related to stock compensation, amortization of intangible assets, and certain one time items, if any occur.  Payouts can range between 0% and 150% of the targeted payment based upon a pre-defined scale.  The Corporate Metric for the second half of fiscal year 2008 has not yet been approved by the Compensation Committee.

 

This excerpt taken from the NENG 8-K filed Nov 22, 2006.

(c)           2007 Executive Bonus Program

On November 16, 2006 the Compensation Committee of the Board of Directors of the Company approved an Executive Bonus Program whereby the President and Vice Presidents have the opportunity to earn semi-annual performance bonuses, based on the achievement of certain Company metrics. Under the Executive Bonus Program, the Compensation Committee of the Board of Directors, selects, reviews and/or approves individual targeted annual incentive bonuses for each executive.  For fiscal year 2007 these incentive bonus targets range from 20% to 50% of the individual’s base salary.

2




 

Specifically, the Compensation Committee has approved the following semi-annual measurements and payments:

·                  35% of annual incentive based on the first half of the fiscal year 2007 target Corporate Metric;

·                  40% of annual incentive based on the second half of the fiscal year 2007 target Corporate Metric; and

·                  25% of annual incentive based on the full fiscal year 2007 target Corporate Metric.

For the first half of fiscal year 2007, the Compensation Committee approved the targeted Corporate Metric based on the Company’s operating results adjusted to exclude expenses related to stock compensation and certain one time items, if any occur.  Payouts can range between 0% and 120% of the targeted payment based upon a pre-defined scale.  Corporate Metrics for the second half of fiscal year 2007 and for the full fiscal year have not yet been approved by the Compensation Committee.


This excerpt taken from the NENG 10-Q filed Feb 9, 2006.

2006 Executive Bonus Program

 

Each executive officer of Network Engines, Inc. (the “Company”) has the opportunity to earn quarterly performance bonuses, based on his or her performance and the achievement of specific goals. Under the Executive Bonus Program, the Compensation Committee of the Board of Directors selects, reviews and/or approves individual objectives for each executive that directly contribute to overall Company performance objectives.  The Compensation Committee and Chief Executive Officer assign a specific dollar value to each objective and evaluates each executive’s performance against those selected goals, generally on a quarterly basis. The Company will pay to each of the executive officers, on a quarterly basis, a percentage of their annual base salaries if the executive achieves selected targets for the quarter.

 

The Compensation Committee has approved the following guidelines for the Executive Bonus Program:

 

                  The Chief Executive Officer of the Company (“CEO”), with approval from the Compensation Committee, will designate an executive as a participant in the Executive Bonus Program.

 

                  Participants must be full time employees for the entire period, either a quarter or the entire fiscal year, depending on the bonus component.

 

                  The CEO and/or the Compensation Committee reserve the right to modify the fiscal 2006 program to reflect substantial changes in business conditions.

 

                  Quarterly bonus payments will be paid at the rates defined in individual plans based on the actual performance compared to targeted performance for specified parameters. Quarterly bonus payments are only payable to certain maximum amounts for each specified parameter.  Where appropriate, quarterly performance for metrics such as revenue, contribution margin and operating income will be measured on the better of performance for the specific quarter or the cumulative year-to-date performance at the end of that quarter.

 

                  The Compensation Committee and CEO will approve any Management Based Objective (“MBO”) bonus opportunities and the CEO will determine if a participant has achieved/partially achieved such qualitative bonuses.

 

                  Bonus components related to Company financial performance will be based on appropriate documents and reports filed with the SEC and/or as included in internal financial reports provided to the Board of Directors by the CFO. The CEO/CFO, with Compensation Committee approval, may modify such targets, for example to eliminate non cash/non-recurring charges/credits.

 

                  Sales, contribution margin and other financial metrics for purposes of the Executive Bonus Program are defined in advance by the CFO and CEO. The CFO and/or CEO, with approval of the Compensation Committee, will determine the definition of operating metrics for purposes of executive bonuses.

 



 

This Executive Bonus Program and payments made to eligible participants are subject to approval and/or modification by the Compensation Committee.

 


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