TSYS » Topics » Annual Cash Compensation

This excerpt taken from the TSYS DEF 14A filed Apr 30, 2009.
Annual Cash Compensation
 
Base Salary
 
Annually we review salary ranges and individual salaries for our Named Executive Officers. We establish the base salary for each Named Executive Officer based on consideration of median pay levels of our peer group and internal factors, such as the individual’s performance and experience, and the pay of others on the executive team. For example, in the case of Mr. Lorello, we considered the additional responsibilities that he assumed in 2007 when we set his salary for 2008.
 
We also consider business requirements for certain skills, individual experience and contributions, the roles and responsibilities of the executive and other factors. We believe competitive base salary is necessary to attract and retain an executive management team with the appropriate abilities and experience required to lead us.
 
The base salaries paid to our Named Executive Officers are set forth below in the Summary Compensation Table. For the fiscal year ended December 31, 2008, cash compensation to our Named Executive Officers in the form of base salary was approximately $1.7 million, with our chief executive officer receiving approximately $475,833 of that amount. We believe that the base salary paid to our Named Executive Officers during 2008 achieves our executive compensation objectives, compares appropriately to our peer group and is within our target of providing a base salary at the market median.
 
In 2009, adjustments to our Named Executive Officers’ base salaries were made by the Compensation Committee based on an analysis of current market conditions, our operational budgets set for 2009 and information available to the Compensation Committee Chairman whose profession is executive recruiting, to consider executive salary levels in companies whose businesses intersect with certain facets of ours. Based on these factors, the Compensation Committee approved a 4.5% increase in base salary for each of our Named Executive Officers in 2009.
 
Bonus Opportunity Plan Awards
 
Consistent with our emphasis on pay for performance incentive compensation programs, we have established a Bonus Opportunity Plan pursuant to which certain of our executive officers, including our Named Executive Officers, are eligible to receive Bonus Opportunity Plan awards based upon annual established performance targets, including financial measures and other factors, including individual performance, all at the discretion of the Compensation Committee. The Bonus Opportunity Plan is important to focus our Named Executive Officers’ efforts and reward them for annual operating results that help create value for our stockholders. The Bonus Opportunity Plan for 2008 was designed to create an opportunity for award representing approximately 30% to 65% of a Named Executive Officer’s total potential cash compensation, depending on

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the executive’s role, and included an opportunity for the award to exceed the target amount if certain operational results exceeded the performance metric.
 
In 2008, our Named Executive Officers exceeded all of the target business objectives by unusually wide margins, which resulted in the Named Executive Officers as a group earning total cash bonuses above the amounts anticipated under the Bonus Opportunity Plan when the incentive plan targets for the Bonus Opportunity Plan were set through our annual planning process, which generally begins in October before each fiscal year.
 
For 2008, the financial measures used to determine annual incentive cash payments included total revenue and/or specific revenue targets for the operating unit within the executive’s control; Earnings Before Interest, Taxes, Depreciation and Amortization (including non-cash stock-based compensation), (collectively, ‘‘EBITDA”); cash and cash equivalents balances at year-end; a goal tied to the financial covenant in our bank line of credit; and, in the case of our Chief Financial, Technology and Marketing Officers (the CFO, CTO and CMO), attainment of certain subjective goals related to the executive’s role. The Compensation Committee set individual subjective performance goals for only our CFO, CTO and CMO because their respective responsibilities include matters for which the results are more directly within their respective control and on which we want them to apply focused efforts. While these financial measures and individual goals form a framework for awarding incentive payments, the Compensation Committee retains discretion over the final amount of the payouts under the Bonus Opportunity Plan.
 
For 2008, the individual performance goals included:
 
Chief Financial Officer
 
  •  Maintain SEC compliance with internal control regulations subject to reporting under the Sarbanes-Oxley Act
 
Chief Technology Officer
 
  •  Control research and development expenditures
 
  •  Generate customer satisfaction survey results for software division
 
  •  Achieve “days sales outstanding” metrics for software division
 
Chief Marketing Officer
 
  •  Plan and execute speaking engagements designed to draw attention to our business
 
  •  Produce Company-related articles in technical or trade publications
 
The goals for our company and individual performance goals were established so that target attainment was not assured. The attainment of payment for performance at target or above is expected to require significant effort on the part of our executives.
 
The revenue measure is designed to reflect our objective of developing new products and markets, growing top line revenue, and expanding our market share in existing markets. To ensure we efficiently develop and expand our markets, the EBITDA measure motivates our executives to manage our costs and to take into account the appropriate level of expenses expected with our growth. The cash at year-end measure is designed to ensure that the appropriate level of attention is paid to the need to fund our operations and investments for the next rolling twelve-month period. The subjective goals provide recognition for contributions made to the overall health of the business and are intended to capture how the Named Executive Officer has performed in areas that are not quantified in the major metrics.
 
A business plan which contains annual financial and strategic objectives is developed each year by management, reviewed and recommended by the Named Executive Officers, presented to the board of directors, and ultimately reviewed and approved by our board of directors with such changes it deems


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appropriate. The Bonus Opportunity Plan is presented to the Compensation Committee for review and approval with such modifications it deems appropriate.
 
Bonus Opportunity Plan awards are determined after year-end based on our performance against the approved Bonus Opportunity Plan targets. The Compensation Committee also has the ability to exercise discretion in adjusting awards based on factors it deems relevant which may include its consideration of each Named Executive Officer’s individual performance and for each Named Executive Officer other than the chief executive officer, based on a review of such executive’s performance as communicated to the Compensation Committee by the chief executive officer, internal pay equity among the Named Executive Officers, changing compensation practices within our peer group and other industries against which the Company competes for executive talent, customers and capital, our overall performance during the year, and any unusual or non-recurring business, financial or accounting matters otherwise impacting our performance. The committee may modify the Bonus Opportunity Plan awards prior to their payment.
 
The Compensation Committee sought the advice and counsel of an independent compensation consultant regarding the payment of bonus amounts using the formula that had been established at the beginning of 2008. The Committee also discussed the bonus calculations with other Board members and considered their inputs. After review of the data and considering the advice from the outside compensation consultants, the Committee determined that Named Executive Officers had delivered superior results, had executed in accordance with the plans set forth by the Committee in early 2008, and had earned a total compensation package that rewarded the outstanding performance.
 
This excerpt taken from the TSYS DEF 14A filed Apr 29, 2008.
Annual Cash Compensation
 
Base Salary
 
Annually we review salary ranges and individual salaries for our executive officers. We establish the base salary for each executive officer based on consideration of median pay levels of our peer group and internal factors, such as the individual’s performance and experience, and the pay of others on the executive team. For example, in the case of Mr. Lorello, we considered the additional responsibilities that he assumed in 2007.
 
We also consider business requirements for certain skills, individual experience and contributions, the roles and responsibilities of the executive and other factors. We believe competitive base salary is necessary to attract and retain an executive management team with the appropriate abilities and experience required to lead us.
 
The base salaries paid to our named executive officers are set forth below in the Summary Compensation Table. For the fiscal year ended December 31, 2007, cash compensation to our named executive officers was approximately $1.6 million, with our chief executive officer receiving approximately $452,917 of that amount. We believe that the base salary paid to our executive officers during 2007 achieves our executive compensation objectives, compares appropriately to our peer group and is within our target of providing a base salary at the market median.
 
In 2008, adjustments to our executive officers’ total compensation were made based on an analysis of current market pay levels of peer companies. In addition, we relied on the judgment of the Committee members, using information available to the Committee Chairman whose profession is executive recruiting, to consider executive salary levels in companies whose business intersects with certain facets of ours. In addition to the pay levels of our peer group, factors taken into account in making any changes for 2008 included the contributions made by the executive officer, the performance of the executive officer, the role and responsibilities of the executive officer and the relationship of the executive officer’s base pay to the base salary of our other executives.
 
Bonus Opportunity Plan Awards
 
Consistent with our emphasis on pay for performance incentive compensation programs, we have established a written Bonus Opportunity Plan pursuant to which our executive officers, including our named executive officers, are eligible to receive Bonus Opportunity Plan awards based upon annual established performance targets, including financial measures and other factors, including individual performance. The Bonus Opportunity Plan is important to focus our executive officer’s efforts and reward executive officers for annual operating results that help create value for our shareholders. The Bonus Opportunity Plan award represents approximately 30% to 65% of a named executive officer’s total potential cash compensation, depending on the executive’s role.
 
In 2007, our named executive officers exceeded some but not all of the target business objectives, which result in an earned aggregate of 75% of the potential cash bonuses under the Bonus Opportunity Plan. The incentive plan targets for the Bonus Opportunity Plan are determined through our annual planning process, which generally begins in October before each fiscal year.
 
For 2007, the financial measures used to determine annual incentive cash payments included revenue (total revenue and/or specific revenue targets for the operating unit within the executive’s control), EBITDA, cash on hand at year-end, a goal tied to the tangible net worth covenants in our bank line of credit, and, in the case of


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our Chief Marketing and Chief Technology Officers, attainment of certain operational and subjective goals related to the executive’s role. We set individual goals for only our CMO and CTO because their respective responsibilities include matters for which the results are more directly within their respective control and on which we want them to apply focused efforts. For 2007, the individual goals included:
 
Chief Marketing Officer
 
  •  Plan and execute speaking engagements designed to draw attention to our business
 
  •  Produce Company-related articles in technical or trade publications
 
  •  Generate patent licensing revenue
 
Chief Technology Officer
 
  •  Control research and development expenditures
 
  •  Generate customer satisfaction survey results
 
  •  Achieve “days sales outstanding” metrics
 
The goals for our company and individual measures were established so that target attainment was not assured. The attainment of payment for performance at target or above would have required significant effort on the part of our executives.
 
The revenue measure is designed to reflect our objective of developing new products and markets, growing top line revenue, and expanding our market share in existing markets. To ensure we efficiently develop and expand our markets, the EBITDA measure motivates our executives to manage our costs and to take into account the appropriate level of expenses expected with our growth. The cash on hand measure is designed to ensure that the appropriate level of attention is paid to the need to fund our operations and investments for the next rolling twelve-month period. The tangible net worth goal provides focus on maintaining our balance sheet in a manner that exceeds the requirements of our bank arrangements to avoid liquidity issues on an on-going basis. The operational and subjective goals provide recognition for contributions made to the overall health of the business and are intended to capture how the executive officer has performed in areas that are not quantified in the major metrics.
 
A business plan which contains annual financial and strategic objectives is developed each year by management, reviewed and recommended by the executive officers, presented to the board of directors, and ultimately reviewed and approved by our board of directors with such changes it deems appropriate. The Bonus Opportunity Plan is presented to the Compensation Committee for review and approval with such modifications it deems appropriate.
 
Bonus Opportunity Plan awards are determined at year-end based on our performance against the approved Bonus Opportunity Plan targets. The Compensation Committee also has the ability to exercise discretion in adjusting awards based on its consideration of each executive officer’s individual performance and for each executive officer other than the chief executive officer, based on a review of such executive’s performance as communicated to the Compensation Committee by the chief executive officer, and our overall performance during the year. The committee may modify the Bonus Opportunity Plan awards prior to their payment.


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This excerpt taken from the TSYS DEF 14A filed Apr 30, 2007.
Annual Cash Compensation
 
To attract and retain executives with the ability and the experience necessary to lead us and deliver strong performance to our shareholders, we provide a competitive total compensation package. Base salaries are targeted at the market median (50th percentile) of our peer group, while total compensation (cash plus long-term incentive compensation) is targeted at the 75th percentile of our peer group, considering individual performance and experience, to ensure that each executive is appropriately compensated.
 
Base Salary
 
Annually we review salary ranges and individual salaries for our executive officers. We establish the base salary for each executive officer based on consideration of median pay levels of our peer group and internal factors, such as the individual’s performance and experience, and the pay of others on the executive team.
 
We consider market median pay levels among individuals in comparable positions with transferable skills within the wireless communications technology industry and comparable companies in general industry. When establishing the base salary of any executive officer, we also consider business requirements for certain skills, individual experience and contributions, the roles and responsibilities of the executive and other factors. We believe competitive base salary is necessary to attract and retain an executive management team with the appropriate abilities and experience required to lead us.
 
The base salaries paid to our named executive officers are set forth below in the Summary Compensation Table. For the fiscal year ended December 31, 2006, cash compensation to our named executive officers was approximately $1.5 million, with our chief executive officer receiving approximately $430,000 of that amount. We believe that the base salary paid to our executive officers during 2006 achieves our executive compensation objectives, compares appropriately to our peer group and is within our target of providing a base salary at the market median.
 
In 2007, adjustments to our executive officers’ total compensation were made based on an analysis of current market pay levels of peer companies and in published surveys. In addition to the pay levels of our peer


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group, factors taken into account in making any changes for 2007 included the contributions made by the executive officer, the performance of the executive officer, the role and responsibilities of the executive officer and the relationship of the executive officer’s base pay to the base salary of our other executives.
 
Bonus Opportunity Plan Awards
 
Consistent with our emphasis on pay for performance incentive compensation programs, we have established a written Bonus Opportunity Plan pursuant to which our executive officers, including our named executive officers, are eligible to receive Bonus Opportunity Plan awards based upon our performance against annual established performance targets, including financial measures and other factors, including individual performance. The Bonus Opportunity Plan is important to focus our executive officer’s efforts and reward executive officers for annual operating results that help create value for our shareholders. The Bonus Opportunity Plan award represents approximately 25% to 40% of a named executive officer’s total potential cash compensation, depending on the executive’s role.
 
Incentive award opportunities are targeted to result in Bonus Opportunity Plan payments equal to the market median of our peer group assuming our target business objectives are achieved. If the target level for the performance goals is exceeded, executives have an opportunity to earn cash incentive awards above the median of the market of our peer group. If the target levels for the performance goals are not achieved, executives may earn less or no Bonus Opportunity Plan payments. In 2006, our named executive officers exceeded some but not all of the target business objectives, which result in an earned aggregate of 83% of the potential cash bonuses under the Bonus Opportunity Plan. The incentive plan targets for the Bonus Opportunity Plan are determined through our annual planning process, which generally begins in October before each fiscal year.
 
For 2006, the financial measures used to determine annual incentive cash payments included revenue, EBITDA, cash on hand at year-end, a tangible net worth goal and attainment of certain operational and subjective goals related to the executive’s role.
 
The revenue measure is designed to reflect our objective of developing new products and markets, growing top line revenue, and expanding our market share in existing markets. To ensure we efficiently develop and expand our markets, the EBITDA measure motivates our executives to manage our costs and to take into account the appropriate level of expenses expected with our growth. The cash on hand measure is designed to ensure that the appropriate level of attention is paid to the need to fund our operations and investments for the next rolling twelve-month period. The tangible net worth goal provides focus on maintaining our balance sheet in a manner that exceeds the requirements of our bank arrangements to avoid liquidity issues on an on-going basis. The operational and subjective goals provide recognition for contributions made to the overall health of the business and are intended to capture how the executive officer has performed in areas that are not quantified in the major metrics.
 
A business plan which contains annual financial and strategic objectives is developed each year by management, reviewed and recommended by the executive officers, presented to the board of directors, and ultimately reviewed and approved by our board of directors with such changes it deems appropriate. The Bonus Opportunity Plan is presented to the Compensation Committee for review and approval with such modifications it deems appropriate.
 
Bonus Opportunity Plan awards are determined at year-end based on our performance against the approved Bonus Opportunity Plan targets. The Compensation Committee also exercises discretion adjusting awards based on its consideration of each executive officer’s individual performance and for each executive officer other than the chief executive officer, based on a review of such executive’s performance as communicated to the Compensation Committee by the chief executive officer, and our overall performance during the year. The committee may modify the Bonus Opportunity Plan awards prior to their payment.


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