This excerpt taken from the YBTVA 8-K filed Aug 10, 2007.
4.2 Annual Bonus.
(a) The Company shall pay to Executive an annual cash bonus (Annual Bonus) in accordance with the terms hereof and the terms of the Companys annual incentive plan for executive officers, as amended from time to time (the Annual Incentive Plan) for each Year which begins during the Employment Period.
(b) If Executive achieves his target performance goals (the Target Annual Goals), as determined by the Committee on an annual basis after consulting with Executive, such Annual Bonus shall be not less than 70% of Executives Base Salary (the Target Annual Bonus). If Executive achieves his maximum performance goals (Maximum Annual Goals), as determined by the Committee on an annual basis after consulting with Executive, such Annual Bonus shall be not less than 150% of Executives Base Salary (the Maximum Annual Bonus).
(c) Notwithstanding any provision in Section 4.2(b) to the contrary, the amount of the Annual Bonus payable to Executive shall be subject to the terms and conditions set forth in the Annual Incentive Plan, which provides that the Committee shall have full and complete discretion to determine whether to authorize the payment of an Annual Bonus and, if so, the amount of the Annual Bonus payable to Executive for a Year.
(d) In the event that the Committee determines that an Annual Bonus is payable to Executive for a year, the Company shall pay the entire Annual Bonus that is payable with respect to a Year in a lump-sum cash payment within 90 days after the end of the Year.
This excerpt taken from the YBTVA DEF 14A filed Mar 31, 2006.
Annual Bonus. At the consultants recommendation the Committee in 2003 established the Annual Incentive Plan for executive officers. The Annual Incentive Plan provides for the potential for significant incentive bonuses based on the Companys cash flow levels. The television broadcasting industry generally recognizes operating cash flow or OCF (operating income before income taxes and interest expenses, plus depreciation and amortization and non-cash compensation, less payments for program license liabilities) as a means of valuing companies. Accordingly, the Committee believes it to be in the best interests of stockholders that the Companys bonus plan incentivize the executive officers to achieve the highest possible OCF. The Annual Incentive Plan used by the Committee with respect to bonuses for 2005 was approved by the Companys stockholders at the Companys 2004 Annual Meeting. At the Companys 2004 Annual Meeting, the Companys stockholders approved the 2004 Equity Incentive Plan, which contains the terms of the Annual Incentive Plan. In accordance with this Annual Incentive Plan, a bonus pool equal to 9.5% of the Companys OCF was established for 2005. The allocation of the bonus pool among the executive officers was determined at the discretion of the Committee based on each officers individual target bonus for the year, and the allocation of the bonus pool among other eligible employees was determined by the Chief Executive Officer. The target bonus for each executive officer is based on a percentage of such executives base salary, as determined by the Committee.
Under the Annual Incentive Plan, the Committee has the discretion to pay each executive officer all or part of his target bonus from the bonus pool, based upon the Committees evaluation of the degree of achievement of certain short-term and longer-term financial and non-financial business objectives and criteria. For 2005, in order to provide a meaningful incentive to the executives, the Committee established the following objectives: (i) attainment of specified short-term net revenue and operating cash flow objectives for each of the Companys stations, (ii) maintain or increase market share of the Companys stations individually and as a group, (iii) maintain or increase ratings of primary news programming and (iv) maintain the Companys stations share of market revenues. In addition, the Committee determined that certain long-term quantitative and subjective measures be evaluated, including the performance of the Companys publicly-traded common stock and bonds compared to industry averages, the Companys ratings and market position within each market in which it owns a television station, and success at attracting and retaining key staff members. These objectives and criteria for reviewing potential executive officer bonus awards for 2005 were established by the Committee prior to March 31, 2005.
In evaluating managements performance in 2005, the Committee discussed and evaluated the extent to which management and the Company had achieved the objectives and performance criteria established at the beginning of 2005, and the aggressive response of management to the difficult market forces faced by the Company and the television industry generally during 2005. The Committee considered that the actual levels of net revenue and OCF achieved for 2005 were approximately 87% and 45%, respectively, of the amounts targeted. The Committee noted that 2005 was a very difficult year for the Company, and that many of the factors that contributed to the revenue and OCF shortfalls were beyond managements control. The Committee noted that general weakness in many of the markets served by the Companys stations resulted in revenue target shortfalls at all but two of the stations. In analyzing the causes of the shortfall in the OCF targeted amount, the Committee noted that operating expenses for 2005 were slightly below the budgeted amounts, reflecting the cost containment measures instituted by management at the beginning of 2005. Accordingly, the entire shortfall in the OCF targeted amount was attributable to the decline in net revenues.
The Committee considered the considerable success of the Third Leg program created by management in 2004. The Committee noted that, under this program, management continued to aggressively seek out new business opportunities with both new and existing clients. During 2005, the Third Leg program was very successful and added significant revenue in local markets that otherwise afforded few opportunities for growth. Largely as a result of the Third Leg programs, local revenue at the Companys network-affiliated stations increased 10.3% over 2004s local revenue totals. The Committee also noted that, in the eight affiliate markets where the Companys stations share market revenue information, seven of the stations outperformed their total markets local revenue growth-rate for the full year 2005, while the eighth station matched its markets growth-rate in local sales revenue. The Committee also considered that the market ratings, ratings of primary news products and overall market revenue share improved during 2005 at a majority of the Companys stations.
Finally, in evaluating management performance and determining the amount of bonus payments, the Committee also considered that the Annual Incentive Plan (i) serves as a device to encourage the continued retention of the executives, whose services to the Company are an important asset of the Company, (ii) rewards the executives for exemplary performance during a period of challenging business and economic conditions and (iii) accordingly incentivizes the executives to continue to perform at a high level. The Committee determined that, based on the performance of management and the Company in 2005, it was appropriate and reasonable, and in the best interests of the Company and its stockholders, that Vincent Young, Deborah McDermott and James Morgan should each receive a bonus payment for 2005 in an amount equal to 56% of the previously established bonus target level for each such executive. Accordingly, the Committee approved the payment of cash bonuses to such executive officers in respect of 2005 as indicated in the Summary Compensation Table.