Item 5.02 Departure of Directors or Certain Officers; Election of Directors;
Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
(e) On January 4, 2013, the Compensation Committee (the "Committee") of the
Board of Directors of the Company adopted a cash bonus plan (the "Bonus Plan")
pursuant to which participating named executive officers of the Company will be
eligible to earn cash bonus compensation based on the achievement of certain
Company performance objectives in 2013. The terms of the Bonus Plan are not
contained in a formal written document. The material terms of the Bonus Plan are
as follows:
Under the Bonus Plan, the Company's named executive officers shall be entitled
to earn cash bonus compensation based upon the achievement of certain specified
performance goals and objectives relating to the Company. Each named executive
officer of the Company will be eligible to receive a target bonus calculated by
multiplying such named executive officer's annual base salary by a percentage
value assigned to such named executive officer (the "Target Bonus"). The Target
Bonuses of the named executive officers range from 35% to 75% of their
respective annual base salaries.
The determination of the bonus amounts for the Company's named executive
officers will generally be based on achievement of the following Company
performance objectives:
Financial Objectives Weighting
Achievement of a certain sales revenue target 36%
Achievement of a certain EBITDA target 12%
Achievement of a certain operating cash flow target 12%
Total 60%
Non-Financial Objectives Weighting
Achievement of a Ventana product development initiative 12%
Achievement of various Nellix product development initiatives 18%
Achievement of various quality initiatives 5%
Achievement of various compliance initiatives 5%
Total 40%
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For purposes of the financial objectives, the Committee established fiscal year
2013 revenue, EBITDA and operating cash flow targets for the Company as well as
minimum and maximum revenue, EBITDA and operating cash flow amounts within cash
bonuses may be paid. The portion of the cash bonus payable with respect to the
revenue, EBITDA and operating cash flow objectives is calculated by reference to
the Company's actual revenue, EBITDA and operating cash flows in fiscal year
2013 in relation to the established revenue, EBITDA and operating cash flow
targets. If the Company has actual revenue, EBITDA or operating cash flow in an
amount less than the established minimum, then no cash bonus will be paid with
respect to such component. If the Company has actual revenue, EBITDA or
operating cash flow in an amount between the established minimum and the target,
then a cash bonus between 25% and 100% will be paid with respect to such
component (in increments of 25% based on the actual revenue, EBITDA or operating
cash flow). If the Company has actual revenue, EBITDA or operating cash flow in
an amount equal to the established target, then a cash bonus of 100% will be
paid with respect to such component. If the Company has actual revenue, EBITDA
or operating cash flow in excess of the target, then a cash bonus between 100%
and 200 will be paid with respect to such component (in increments of 25% based
on the actual revenue, EBITDA or operating cash flow).
For purposes of the non-financial objectives, the Committee established fiscal
year 2013 product, quality and compliance targets. The portion of the cash bonus
payable with respect to the product components is calculated by reference to the
calendar month during which the Company achieves the applicable milestone, if at
all. If the
Company achieves a milestone later than the target month, then a cash bonus
between 25% and 100% will be paid with respect to such milestone (in increments
of 25% based on the month of achievement). If the Company achieves a milestone
during the target month, then a cash bonus of 100% will be paid with respect to
such milestone. If the Company achieves a milestone earlier than the target
month, then a cash bonus between 100% and 200% will be paid with respect to such
milestone (in increments of 25% based on the month of achievement). The portion
of the cash bonus payable with respect to the quality and compliance components
is calculated by reference to the Company's achievement of certain quality and
compliance targets and the related cash bonus may be in a range between a
minimum of 50% and a maximum of 150% (in increments of 25%).
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