Attached files
| file | filename |
|---|---|
| 8-K - 8-K (5.02) - REALNETWORKS INC | a2013mbo8-k.htm |
Exhibit 10.1
RealNetworks, Inc. Executive MBO Plan – Section 16(b) Executive Officers
OBJECTIVE OF THE PLAN
The objective of the RealNetworks’ Executive MBO Plan is to reward participants for their contribution to the company’s success and ensure market competitiveness as we work to attract and retain high caliber talent. RealNetworks has adopted this plan to reward high performance consistent with our core business objectives. The Executive MBO Plan is administered under RealNetworks’ 2005 Stock Incentive Plan, as amended and restated.
EFFECTIVE DATE
The effective date of the 2013 Executive MBO Plan is January 1, 2013 – December 31, 2013. Payout, if earned, will be made by no later than March 15, 2014.
PLAN METRICS
Total attainment for the target period is based on (i) revenue (weighted at 50%), (ii) adjusted EBITDA (weighted at 25%) for either divisional results or corporate results, or both, depending upon whether the executive has divisional responsibility, and (iii) strategic business objectives (together, weighted at 25%; each individual objective is equally weighted). For adjusted EBITDA, separate goals will be established for the first half and the second half of 2013, however, payouts will be determined at the end of the plan year.
Adjusted EBITDA is a non-GAAP measure that we define as operating income (loss) including other income (expense) net, but excluding depreciation and amortization; acquisition-related intangible asset amortization; stock-based compensation; impairment of deferred costs; restructuring and other charges; gain on sale of patents and other technology assets, net of costs; and gain/loss on excess office facilities.
A discretionary modifier of +/- 25% is reserved for Compensation Committee discretion to adjust the calculated payout of an individual executive officer upward or downward by up to 25%. The basis for the modifier being applied is entirely at the discretion of the Compensation Committee when reviewing such things as: shareholder value creation, revenue growth, cash flow generation, use of capital, etc. Notwithstanding the preceding, the Compensation Committee will not have discretion to increase the payment for any Section 162(m) Participant.
MBO PAYOUT MECHANICS
Revenue Metric:
• | In order to encourage revenue growth year over year, performance under 90% of the revenue target goal will not be rewarded. | ||
Attainment | Incentive Payout | |
< 90% | No Payout | |
90% - 100% | 50% - 100% | |
100% - 120%+ | 100% - 200%* | |
* | Payout for revenue results will have a maximum payout of 200%. Payout is capped at 100% if adjusted EBITDA is attained at less than 100% of target. |
Adjusted EBITDA Metric (January 1, 2013 - June 30, 2013):
• | In order to maintain fiscal responsibility, performance under 80% of the EBITDA target will not be rewarded. | ||
Attainment | Incentive Payout | |
< 80% | No Payout | |
80% - 100% | 50% - 100% | |
100% - 120%+* | 100% - 120%* | |
* | Payout for adjusted EBITDA results will be capped at 100% until revenue attainment reaches 100%, and will have a maximum payout of 120% for the first half of 2013. |
Adjusted EBITDA Metric (July 1, 2013 - December 31, 2013):
• | In order to maintain fiscal responsibility, performance under 80% of the adjusted EBITDA target will not be rewarded. | ||
Attainment | Incentive Payout | |
< 80% | No Payout | |
80% - 100% | 50% - 100% | |
100% - 140%+* | 100% - 160%* | |
* | Payout for adjusted EBITDA results will be capped at 100% until revenue attainment reaches 100%, and will have a maximum payout of 160% for the second half of 2013. |
TERMS AND CONDITIONS
• | 2013 Executive MBO Plan calculations and payments are completed and made after the end of the plan year with payout timing approximately 30 - 45 days after the close of the plan year. In all circumstances, any payouts that are earned in the plan year will be paid by March 15 of the following year, at the latest. | ||
• | You must be in an eligible position on the first and last day of the month to participate in the plan for that month. | ||
• | Salary, eligible position changes and/or transfers from one eligible group to another within a month will be based on status at the beginning of the quarter. Changes after the first day of the quarter will be reflected in the next month. | ||
• | In order to receive a payout from the plan you must be on the company’s payroll as of the last day of the plan year and on the company’s payroll as of the date the award is scheduled to be paid, subject to the following. If your employment terminates due to your total and permanent disability or death, you or your estate, still may, in the discretion of the Compensation Committee be eligible to receive any payout that otherwise was earned. | ||
• | Notwithstanding any other provision of the plan, the Compensation Committee may, in its sole discretion, increase (other than for a Section 162(m) Participant), reduce or eliminate a participant’s award at any time before it is paid, whether or not calculated on the basis of pre-established performance goals or formulas. | ||
• | The Compensation Committee has all power and discretion to interpret and administer the plan, including (but not limited to) the power to determine who is eligible for the plan and the size of any payouts. | ||
• | The Compensation Committee may delegate all or any part of its powers under the plan to the company’s chief executive officer or head of human resources, except that such individual may not administer the plan with respect to participants who are executive officers of the company. (For this purpose, an individual will be considered an executive officer of the company if his or her role at the company falls within the definition of “officer” under Rule 16a-1(f) promulgated under the Securities Exchange Act of 1934, as amended.) | ||
• | The Compensation Committee reserves the right to adjust targets/measurements based on acquisition or disposition of businesses/assets. | ||
• | The Section 162(m) Participants are the company’s chief executive officer, chief financial officer, and any president or executive vice president. | ||