Exhibit 10.3
[NOTE: Confidential Materials omitted and filed separately with the Securities and Exchange Commission.
Asterisks denote omissions.]
Asterisks denote omissions.]
AMENDED AND RESTATED
WRIGHT EXPRESS CORPORATION
SHORT-TERM INCENTIVE PROGRAM
SHORT-TERM INCENTIVE PROGRAM
ARTICLE 1- PURPOSE OF PROGRAM
Wright Express Corporation has adopted this Short-Term Incentive Program to attract and retain high-performing employees; to provide incentives for eligible employees to achieve specified company, department and/or individual performance goals; and to reward such employees for the achievement of specified goals on an annual basis. The Short-Term Incentive Program is intended to qualify as performance-based compensation under Section 162(m) of the Internal Revenue Code.
ARTICLE 2- DEFINITIONS
Wherever used in this document, the following terms have the meanings set forth below.
2.1 Appendixmeans an Appendix to this Program document containing targets, payment metrics, and other terms of the Program (or modifications thereof) applicable to a specific Plan Year. The Appendices shall be considered part of the Program document.
2.2 Companymeans Wright Express Corporation.
2.3 Eligible Earningsmeans total gross pay for the applicable Plan Year (or the portion thereof during which the Participant is actively employed), including, salary or wages classified by the Company as regular; paid time off (PTO), whether planned or unplanned; holiday; bereavement; jury duty; retroactive pay; overtime pay; shift differential; language differential; and excluding, salary or wages classified by the Company as disability pay, commission/incentive pay, and bonuses.
2.4 Effective Datemeans January 1, 2006.
2.5 MBOmeans management by objectives.
2.6 Participantmeans an eligible employee who participates in the Program for a Plan Year in accordance with Article 3.
2.7 Plan Yearmeans the fiscal year of the Company; as of the Effective Date, the Plan Year is the calendar year.
2.8 Programmeans this Wright Express Corporation Short-Term Incentive Program, as amended from time to time, including the provisions of any Appendix, which are
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incorporated herein.
ARTICLE 3- PARTICIPATION
3.1 Eligible Employees
Each full-time regular or part-time regular employee of the Company who meets the following requirements shall be a Participant for a Plan Year:
(a) The employee is not eligible for any other commission or incentive variable pay plan of the Company.
(b) The employee commences employment on or before November 1 of the applicable year; and
(c) Except as provided in Section 3.2, the employee is actively employed on the bonus payment date for the applicable year.
3.2 Special Rules
(a) A Participant who dies or becomes totally disabled during a Plan Year (as determined under the Company’s Long-Term Disability program) may receive a pro-rated bonus for the applicable year based on his or her Eligible Earnings during the period of the Participant’s active employment. Any bonus payable to a deceased Participant shall be paid to his or her personal representative.
(b) A Participant who is not actively employed on the bonus payment date for a Plan Year due to an approved leave of absence may receive a pro-rated bonus for the applicable year based on his or her Eligible Earnings during the period of the Participant’s active employment.
(c) A Participant who shall be subject of a Performance Improvement Plan at the time payments are made under Section 5.1 of the Program with respect to any Plan Year shall not be eligible to receive a payment under the Program for such Plan Year until he or she has successfully met the requirements of the Performance Improvement Plan.
ARTICLE 4- ANNUAL INCENTIVES
The Corporate and Executive Officer MBOs for each Plan Year shall be approved by the Compensation Committee of the Company’s Board of Directors, or its delegate.
An Individual Effectiveness Factor (“IEF”) shall be assigned to an employee classified as an “associate” based on criteria established by the Company. The IEF for each associate shall be initially established at 1.00. An associate’s IEF for a Plan Year may be adjusted
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down, but not below 0.80, or up, but not above 1.20, in increments of 0.05, by action of his or her supervisor with the approval of his or her division Senior Vice President and the Company’s President and Chief Executive Officer. However, the foregoing adjustments (in the aggregate) must not increase the total amount payable under the Program for the given year.
The performance measures applicable to a Plan Year shall be set out in the Appendix.
ARTICLE 5- PAYMENTS
5.1 Time and Form
Bonuses shall be calculated and paid in a single payment for the applicable year, by no later than March 31 of the following year.
5.2 Position Changes
“Position changes” for a Plan Year include promotions, demotions, and transfers between positions and/or departments.
(a) For a non-Management Participant, the amount of the Participant’s bonus is calculated based on his or her position on December 31 of the applicable year.
(b) For a Participant who is a Manager, Vice President, Senior Vice President, or the President and Chief Executive Officer, the amount of the Participant’s bonus is calculated based on pro-ration for each position change and each target percentage change during the applicable year (excluding target percentage changes resulting from a market adjustment).
(c) For a Participant who is an eligible employee for a portion of the year and an ineligible employee for a portion of the year, the amount of the Participant’s bonus is calculated based on pro-ration for the portion of the year in which he or she was an eligible employee.
5.3 Taxes
All federal, state or local taxes that the Program Administrator determines are required to be withheld from any payments made under the Program shall be withheld.
ARTICLE 6- ADMINISTRATION
6.1 Program Administrator
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The Program shall be administered by the Compensation Committee of the Company’s Board of Directors, which may delegate administrative responsibility in whole or in part to the President and Chief Executive Officer and/or the Senior Vice President, Human Resources (“Administrators”), subject to any requirements for review and approval that may be established by the Compensation Committee. In all areas not specifically reserved for such review and approval, the decisions of the applicable Administrator shall be binding on the Company and each eligible employee under Article 3. Notwithstanding the foregoing, the Compensation Committee may not modify MBOs or other performance criteria during a Plan Year so as to increase the payment to a Section 162(m) Participant (as defined below) or exercise its discretion to increase the amount of incentive pay that would otherwise be due a Section 162(m) Participant upon attainment of a performance goal.
6.2 Claims
Claims regarding payments under the Program shall be directed to a Participant’s direct supervisor and/or the Company’s Compensation Department. Any claim regarding the amount of any bonus payment hereunder shall be made within 30 days of the date of such payment, or shall be forfeited.
ARTICLE 7- AMENDMENT AND TERMINATION
The Company reserves the right to terminate, amend, modify and/or restate this Program, in whole or in part, at will at any time, with or without advance notice.
ARTICLE 8- MISCELLANEOUS
8.1 Payment Adjustments and Special Circumstances
The Compensation Committee shall have the authority to adjust payments under the Program (upward or downward) at its discretion. Subject to the approval of the Compensation Committee, the President and Chief Executive Officer and the Senior Vice President, Human Resources, acting together, shall have the power to adjust payments under the Program (upward or downward) as and to the extent appropriate to achieve the stated goals and purposes of the Program and may approve exceptions to the Program under special circumstances, to avoid undue hardship with respect to a Participant. Notwithstanding the foregoing, neither the Compensation Committee, the President and CEO, the Senior Vice President, Human Resources, nor any other person may increase or accelerate the payment due to any Section 162(m) Participant with respect to any Plan Year. The term “Section 162(m) Participant” shall mean the President and CEO and each of the four highest paid officers of the Company (other than the President and CEO) on the last day of the taxable year, for purposes of the executive compensation disclosure
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rules under the Securities Exchange Act of 1934.
8.2 Information
The Program Administrators shall be responsible for ensuring effective communication of the Program to eligible employees. Copies of the Program shall be available to all Participants. All modifications and changes to the Program shall be appropriately documented and communicated to Participants.
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8.3 No Guarantee of Payment
The Company does not guarantee payment of any bonus amounts hereunder, except to the extent that payment is required by applicable law.
8.4 Limitation of Employees’ Rights
Nothing contained in the Program shall confer upon any person a right to be employed or to continue in the employ of the Employer, or interfere in any way with the right of the Employer to terminate the employment of a Participant at any time, with or without cause.
IN WITNESS WHEREOF, Wright Express Corporation has caused this document to be executed by its duly authorized officer this 31st day of March, 2006.
| WRIGHT EXPRESS CORPORATION | ||||
| By: | /s/ Robert C. Cornett | |||
| Robert C. Cornett | ||||
| Its: Senior Vice President, Human Resources | ||||
| Date:March 31, 2006 | ||||
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APPENDIX I
2006 STIP FACTORS
STIP Weightings
| WEX Corporate MBOs | |||||||||||||||||
| Adj Net Income | PPG Adj Revenue | Exec Shared, VP & Dept MBOs | |||||||||||||||
| CEO/SVPs | 60 | % | 20 | % | 20 | % | |||||||||||
| Vice Presidents | 50 | % | 15 | % | 35 | % | |||||||||||
| Managers | 40 | % | 10 | % | 50 | % | |||||||||||
| Individual Contributors | 40 | % | 10 | % | 50 | % | |||||||||||
PPG: Price Per Gallon
Payout Levels
In 2006, the Company must achieve at least threshold results for Adjusted Net Income in order to pay out any portion of the Short-Term Incentive Program.
| Performance Results | Payout % | ||||||
| Threshold | 50 | % | |||||
| Target | 100 | % | |||||
| Max | 200 | % | |||||
MBOs
Corporate MBOs
Corporate MBOs
| Threshold | |||||||||||
| Performance Goal | Performance | Target Performance | Maximum Performance | ||||||||
Adj Net Income1 | $ [**] | $ [**] | $ [**] | ||||||||
PPG2 Adj Revenue3 | $ [**] | $ [**] | $ [**] | ||||||||
| 1 | For the purposes of this Program, Adjusted Net Income means Adjusted Net Income as reported in the Corporation’s Form 8-K filing reporting the Corporation’s results for the 4th Quarter of 2006 adjusted to exclude the following items (if any): losses from discontinued operations, the cumulative effect of changes in Generally Accepted Accounting Principles, any one-time charge or dilution resulting from any acquisition or divestiture, the effect of changes to our effective federal tax rates, extraordinary items of loss or expense, and any other unusual or nonrecurring items of loss or expense, including restructuring charges. The Compensation Committee may exercise discretion to include all or part of an item of loss or expense. | |
| The Compensation Committee has discretion to increase/decrease payout level on Adjusted Net Income if results increase/decrease by[**]% or more of target ($[**]or more) due to the mismatch on the fuel price derivatives. |
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| 2PPG: Price Per Gallon | ||
| 3PPG Adjusted Revenue is reported 2006 Revenue adjusted for the difference between reported 2006 PPG and Board-approved budgeted 2006 PPG. |
Executive Officer MBOs
CEO and SVPs share the following MBOs:
CEO and SVPs share the following MBOs:
| Weight | Performance Goal | Threshold Performance | Target Performance | Maximum Performance | ||||||||||
| 10% | SOX | By January 31, 2007, the Audit Committee of the Board of Directors gives the Company an average rating of 3.0 on SOX performance against evaluation criteria identified in the SOX project plan. | By January 31, 2007, the Audit Committee of the Board of Directors gives the Company an average rating of 3.5 on SOX performance against evaluation criteria identified in the SOX project plan. | By January 31, 2007, the Audit Committee of the Board of Directors gives the Company an average rating of 4.0 on SOX performance against evaluation criteria identified in the SOX project plan. | ||||||||||
| 10% | Strategic Initiatives | $[**] revenue from sources belowAND [**] of [**] at or above threshold revenue | $[**] revenue from sources belowAND [**] of [**] at or above threshold revenue | $[**] revenue from sources belowAND [**] of [**] at or above target revenue | ||||||||||
| Strategic Initiative | Threshold | Target | ||||||
| [**] | $[**] | $[**] | ||||||
| [**] | $[**] | $[**] | ||||||
| [**] | $[**] | $[**] | ||||||
| [**] | $[**] | $[**] | ||||||
| [**] | $[**] | $[**] | ||||||
SVP Sales Additional Incentive
| 2006 SVP, Sales Special Incentive | |||||||||||||
| PPG Adj Revenue $(,000) | Company Performance Level | Special Incentive Performance Level | SVP, Sales Payout | ||||||||||
| $[**] | [**]% | Miss | $ | 0 | |||||||||
| $[**] | [**]% | Threshold | $ | 50,000 | |||||||||
| $[**] | [**]% | Target | $ | 100,000 | |||||||||
| $[**] | [**]% | Target/Max | $ | 150,000 | |||||||||
| $[**] | [**]% | Max | $ | 200,000 | |||||||||
No payout below Threshold level
Payout for performance between levels above threshold will be incrementalized
If results exceed maximum of special incentive, CEO can recommend higher payout for approval
Payout for performance between levels above threshold will be incrementalized
If results exceed maximum of special incentive, CEO can recommend higher payout for approval
Vice President MBOs
Each Vice President generally has [**] MBOs. While the MBOs are specific to the individual Vice President, Vice Presidents may have one cross-functional MBO shared with another Vice President.
Each Vice President generally has [**] MBOs. While the MBOs are specific to the individual Vice President, Vice Presidents may have one cross-functional MBO shared with another Vice President.
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Department MBOs
Each Manager generally has [**] MBOs shared by all STIP-eligible members of their department.
Each Manager generally has [**] MBOs shared by all STIP-eligible members of their department.
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