EXHIBIT 10.1
SUMMARY OF 2008 ANNUAL BONUS PLAN FOR EXECUTIVE OFFICERS AND CERTAIN KEY MANAGEMENT EMPLOYEES
On February 11, 2008, the Compensation Committee (the “Committee”) of the Board of Directors of Metropolitan Health Networks, Inc. (the “Company”) and the Board of Directors of the Company established the target bonus amounts and the performance criteria applicable to the Company's 2008 bonus plan for executive officers and certain key management employees (the “Bonus Plan”).
The Bonus Plan is a performance-based, cash incentive plan designed to promote the interests of the Company and its shareholders by providing employees with financial rewards upon achievement of specified individual and team business objectives, as well as helping the Company attract and retain key employees.
All of the Company's executive officers, senior vice presidents and vice presidents, including all of the “named executive officers”, are eligible to participate in the Bonus Plan.
For any bonus to be paid to any named executive officer under the Bonus Plan, the Company must first achieve at least 80% of its target year-end consolidated income after allocated overhead and before income taxes (the “Threshold Goal”).
Provided the Threshold Goal is satisfied, bonuses will be payable to named executive officers under the Bonus Plan based on a formula that takes into account the Company's attainment of certain performance goals (the “Performance Goals”) and the achievement by vice presidents and senior vice presidents (the “Non-Executive Participants”) of certain individual objectives (the “MBOs”), each of which objective is assigned a weighted value by the Compensation Committee. Subject to the Company’s satisfaction of the Threshold Goal and the attainment of at least some of the target results, the recipient can receive some level of bonus.
The Company has established Performance Goals with respect to the following measures of operating performances (the "Performance Factors"):
| · | the provider service network segment's income before taxes and allocated overhead for the fiscal year ending December 31, 2008; |
| · | the health maintenance organization segment’s income before taxes and allocated overhead for the fiscal year ending December 31, 2008; and |
| · | aggregate corporate expenses for the year ending December 31, 2008. |
A designated percentage of each executive officer’s bonus is attributable to the average weighted value of the MBOs actually attained by each Non-Executive Participant and the Company's relative success in meeting various established milestones with respect to each Performance Factor.
In the event that the Company achieves the target threshold for each of the Performance Factors and the MBOs satisfied by the Non-Executive Participants, on average, exceed a target level, the named executive officers will be entitled to receive a bonus (the “Target Bonus”) equal to the percentage of their base salary set forth below.
Title | Percentage of Base Salary at Target | |
| Chief Executive Officer | 60% | |
| Chief Financial Officer | 50% | |
| President of Provider Service Network | 50% | |
| General Counsel | 40% |
Actual bonuses payable may be as high as 200% of the Target Bonus or as low as zero depending on the Company's and employees’ level of success with respect to the Performance Factors and the MBOs.
Bonuses pursuant to the Bonus Plan are anticipated to be paid once the Company completes the audit of its financial statements for the fiscal year ending December 31, 2008.