Incentive Compensation Plan - SkyMall Inc.
SKYMALL, INC.
INCENTIVE COMPENSATION PLAN
Plan: This plan shall be known as the SkyMall, Inc. Incentive
Compensation Plan (the "Plan").
Objective: To incentivize management to meet SkyMall's earnings goals and
other objectives.
Eligibility: SkyMall's executive and management employees are eligible to
receive bonuses and stock options under the Plan. Each year the
Board will designate categories of executive and management
employees who are eligible to participate in the Plan.
Earnings
Target: Each year the Board establishes an earnings target (the
"Targeted EBITDA") which is based on the Company's Earnings
Before Interest, Taxes, Depreciation and Amortization ("EBITDA")
contained in the Company's annual budget approved by the Board of
Directors. The Board also determines a bonus percentage (the
"Bonus Percentage") for eligible employees.
Bonus
Payments: Bonuses, if any, will be paid under this Plan as soon as
practicable following the determination of the Company's annual
financial results and sign-off of such results by the Company's
independent public accountants. Bonuses for employees who have
been employed less than one year will be pro-rated. No employee
will be eligible to receive any bonus or stock options under this
Plan unless the employee is employed by the Company on the date
the bonuses are paid and the stock options are granted.
Stock
Options: Immediately following the determination of the cash bonus (the
"Cash Bonus") amounts payable to employees under the Plan for the
immediately preceding fiscal year (the "Determination Date"),
eligible employees will also be granted options to purchase that
number of shares of common stock of the Company determined by
dividing the employee's Cash Bonus for the year by the closing
bid price of the Company's common stock on the first business day
of the immediately preceding fiscal year. Calculations resulting
in a fraction of a share shall be rounded up to the next whole
share. Such options shall vest over a three-year period at a rate
of 1/3 per year and shall be priced at the closing bid price on
the Determination Date.
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Incentive Compensation Plan
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Board
Approval: Payment of Cash Bonuses and the grant of stock options shall be
subject to board approval.
Bonus
Calculations: Cash Bonuses under the Plan shall be calculated on an annual
basis as follows:
* Step 1 - Employee's base salary will be multiplied by the Bonus Percentage
("Bonus Dollars").
* Step 2 - The ratio of the Company's actual EBITDA for the applicable year
to the Targeted EBITDA will be determined (the "EBITDA Ratio").
* Step 3- The Bonus Dollars will be multiplied by the EBITDA Ratio to
determine the employee's Cash Bonus Potential (the "Cash Bonus Potential"),
subject to certain limitations including a floor on the EBITDA Ratio of 80%
and a ceiling on the EBITDA Ratio of 120%.
* Step 4 - The employee will be reviewed by the employee's supervisor as soon
as possible following the end of the Company's fiscal year. The review
shall assess the employee's contribution to the goals of the management
team as well as the employee's progress during the year toward specific
goals. The review process will include a self-evaluation by the employee.
* Step 5 - The employee will be paid 50% of the Cash Bonus Potential based
solely on the performance of the Company. The employee will also be paid
50% of the Cash Bonus Potential subject to a satisfactory evaluation from
the employee's supervisor. If the employee is not performing in a
satisfactory fashion as determined by the employee's supervisor, such
supervisor shall have the discretion to award any amount of the employee's
Cash Bonus Potential not to exceed 50%.
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