Exhibit 10(h)
Acxiom Corporation
Leadership Team Compensation Plan
Fiscal Year 2001
PLAN OBJECTIVE
The objective of the Leadership Team compensation plan is to implement a pay
plan that reflects the leader's responsibility, provide compensation that is
both equitable and competitive, and which will:
Align the leader's interests with shareholder/investor's interest.
Motivate leaders to achieve the highest level of performance.
Retain key leaders by linking leadership team compensation to company
performance.
Attract the best leaders through competitive, growth-oriented plans.
Enable sharing of growth & success between associates, leaders and
shareholders.
ELIGIBILITY OF PARTICPANTS
For purposes of the Leadership Team Compensation Plan, eligible associates will
include Division leaders, Group leaders, Business Unit leaders, Sales leaders,
Business Development leaders, Industry Application Development leaders, Finance
and Accounting leaders, Organizational Development leaders, Legal leaders and
Corporate Office leaders.
COMPONENTS AND PLAN STRUCTURE
The components of the Leadership Team Compensation Plan are as follows:
Base salary (not at risk)
Base salary (at risk)
Long-term incentive (stock options)
Retention/Recruiting Bonus (Special Situations Only)
Exhibit 1 of this document reflects the above components for the 5 levels of the
Leadership Team Compensation Plan. In addition, it reflects the Business
Development / Sales Leadership Plan.
Each level of the plan has the following:
Base salary based on comparable market salary for the equivalent position.
Plan structure reflects percentages for each plan component to total
compensation as well as number of years for which options are granted under
the long-term incentive component of the plan.
Each leader is slotted into one of the five levels based on experience, scope of
responsibility and past performance. The individual to whom the leader reports
is responsible for managing his/her respective slotting. Division leaders must
approve all level 3 slottings. Additionally, Division leaders must approve all
slottings of individuals on the Business Development / Sales Leadership
Compensation Plan. The Company leader must approve all slottings of levels 4 and
5.
-1-
Leaders slotted in the Business Development / Sales Leadership Plan must be a
senior level business development / sales leader responsible for:
developing new business and relationships at senior executive levels of
customers and prospects, or providing leadership to two or more sales
associates for a Group or Division.
providing leadership means assigning quotas and territories, conducting
regular reviews of salesperson's call activity, hiring, terminations,
preparing associate effectiveness plans, performance reviews, coaching,
mentoring and overseeing the overall sales process for the area.
BASE SALARY (NOT AT RISK)
Based on market data, guidelines have been established for base salary ranges
and base salary increases for leaders. The target market for senior leaders is
the 75th percentile. The target market for all other leaders is the 50th
percentile. Leaders who are substantially below market for their role should be
placed on a 3 to 4 year market adjustment plan to bring their base salary in
line with the market.
The percentage increase guidelines are revised / validated annually.
BASE SALARY (AT RISK)
General
Base salary at risk (referred to as at risk throughout the remainder of this
document) is determined based on the level in which the leader is slotted. At
risk is based on the eligible associate's base salary as of May 1. No adjustment
is made to at risk amounts during the plan year unless the leader moves from one
plan level to another or is assigned a different job role that warrants a
change. In the event there is a change in at risk, it will be prorated based on
the date of the change.
Eligible associates must be employed on the date of the actual payment to
receive payment for the quarterly and/or year-end at risk. The at risk for
eligible associates who joined the Leadership Team after the beginning of the
quarter will be pro-rated based on hire date. Additionally, the year-end at risk
amount will be prorated in the same manner.
Division leaders have the right to withhold a leader's quarterly and/or annual
at risk payment if the leader is on a performance improvement plan or has failed
to deliver against his/her objectives.
At Risk Attainment
At risk attainment is determined based on Company Pre-investment EVA attainment.
Pre-investment EVA targets for Q1 and Q2 are shown below. Due to Acxiom's 6
month planning cycle, targets for Q3, Q4 and year-end will be determined later
in the year and communicated at that time.
Pre-investment EVA Targets - FY2001
First Quarter $ 2,404,000
Second Quarter $ 1,733,000
EVA Incentive Principles
Target Incentive
Represents the competitive total compensation opportunity.
-2-
Expected EVA Improvement
Performance standard to achieve the company "target EVA" and to meet the
market expectation of EVA improvement required to support the price of the
Company's stock.
Achievement of Expected EVA Improvement results in Target Incentive (at
risk) Pool.
Sharing of EVA Improvement Above/Below Expected
Associates and shareholders share risks and rewards.
Sharing of incremental EVA (above/below "Expected") is constant.
50% of every $1 of EVA above expected is added to incentive (at
risk )pool
50% of every $1 of EVA below expected is subtracted from incentive (at
risk) pool (EVA improvement can be below zero).
Associates/leaders share in all risks and rewards with no caps or floors.
At Risk Pool Funding
At risk pool is funded from earnings after meeting the Company's target
EPS gate.
All at risk payments are subject to EPS gate except the commission/specific
objective component of the Business Development / Sales Leadership plans. See
page 5 - Commission/specific objective at risk targets.
At risk pool funding is subject to pro rata reduction if full funding above EPS
Gate is not achieved.
EPS targets for Q1, Q2 and end of year are shown below. Due to Acxiom's 6 month
planning cycle, targets for Q3 and Q4 will be determined later in the year and
communicated at that time.
EPS Targets - FY2001
First Quarter $ .20
Second Quarter $ .28
Full Year $1.18
At Risk Pool Distribution
Distribution of the at risk pool to the divisions, shared services organizations
and the corporate office will be determined by the CLT quarterly and at
year-end.
Divisions will be measured based on their own performance. Shared Services and
the Corporate Office will be measured on the Company's total performance.
Guideline criteria for distributions are:
Actual EVA Improvement (60%)
Contribution Improvement of Business Plan Submitted (20%)
Other - Major Wins, DSO Improvement Targets, etc. (20%)
Quarterly At Risk Pool Distribution
CLT will discuss attainment versus guideline criteria.
Compensation Committee will make recommendation for distribution.
CLT will make the final determination of distribution of the funded at risk
pool to each of the Divisions, Shared Services and Corporate Office.
-3-
Annual At Risk Pool Distribution
CLT will discuss attainment versus guideline criteria.
CLT will rate each division's performance against criteria (anonymously).
Compensation Committee will rate each division's performance.
Outside consultant on EVA incentive plans (Scott Olsen) will recommend
distribution.
CLT will make the final determination of distribution of the funded at risk pool
to each of the Divisions, Shared Services and Corporate Office.
Allocation of At Risk to Each Individual
Individual at risk attainment is to be determined by Table 1 shown below.
Individual at risk paid equals adjusted attainment based on the percentage of
distribution (determined above) compared to total at risk opportunity for your
affiliated area of the business (Division, Shared Services or Corporate Office).
Any excess over targeted at risk is retained until year-end and will be included
in the overachievement incentive calculations.
Standard At Risk Targets
The following represents a breakdown of the standard at risk targets that will
be used to determine individual attainment.
Table 1:
- ----------- --------- -------- ------------- ------------ --------------
Corporate Division Group Leaders Revenue Unit Shared
Office Leaders OD/FA Leaders Services
Leaders** Unit Leaders
- ----------- --------- -------- ------------- ------------ --------------
Common 100% 60% 40% 25% 75%
Fate Co. EVA Co. EVA Co. EVA Co. EVA Co. EVA
- ----------- --------- -------- ------------- ------------ --------------
Unit 0% 30% 25% 75%* 25%
Performance Div EVA Div. EVA Bus. Plan
10% A/R 25% (20%Div.
Group EVA EVA)*
10% A/R (45% Group
EVA)*
10% A/R
- ----------- --------- -------- ------------- ------------- --------------
* These are the default percentages unless the corporate office approves a
different documented plan. The Division leader should submit differences to the
corporate office by June 30 and by October 31 for mid-year revisions.
**Organizational Development and Finance/Accounting leaders' at risk targets are
50% Company EVA and 50% Division EVA.
EVA Targets for Divisions, Groups and Units (Except Data Products Division)
The Division, Group and unit EVA is the controllable EVA for a Division and
revenue Group/Unit which includes the direct revenue and expenses for the
unit(s) less appropriate ABM charges including data center consumption,
application software and facilities. Also included will be a charge for the cost
of capital including accounts receivable, data center equipment, workstation/LAN
and facilities. The target for your Group/Unit EVA will be negotiated with your
Division leader.
Exceptions granted during the current fiscal year will affect next year's
EVA targets.
-4-
EVA Targets for Data Products Division - Groups/Units
The definition for EVA for the Data Products Division is the same as for all
other divisions except it is calculated on a product line view. Product line EVA
targets and attainment must be certified by the Corporate Office.
Business Plan Targets for Shared Services - Groups/Units
The business plan target component for Shared Services is to maintain your
expenses at or below your current fiscal year budget.
Commission/Specific Objective At Risk Targets
These targets apply only to Business Development / Sales Leadership Plan.
The commission/specific objective portion of at risk under this plan is based on
revenue and/or EVA percentage of quota attainment for the territories assigned
to the business development/sales leader. It is the responsibility of the
individual's Division and/or Group leader to establish these targets.
The commission/specific objective portion will be funded by the Unit, Group or
Division and is not subject to the EPS gate as is the common fate portion of at
risk. Budgets and EVA targets will not be adjusted for additional commission
expense due to these plans.
All commissions are calculated on a YTD, cumulative basis.
The Division leader may change commission plan provisions and assigned
quotas at any time.
The Division leader may choose not to accept additional business when resources
are not available to process the work. It is the sales leader's responsibility
to make certain that the work will be accepted before customer commitments are
made.
Method Of Payment
It is Acxiom's intention to pay at risk in cash. However, from time to time the
Company Leadership Team (CLT), may elect to pay at risk in stock options if
conditions of the business justify it. In the event this decision is made, the
CLT will make every effort to notify the Leadership Team members within 5
business days of the decision being finalized. If at risk is paid in stock
options in lieu of cash, the Black-Scholes model will be used to calculate the
option value and number of options. A two-year valuation will be used for the
calculation. All of the options will be issued at the market price and will be
100% vested.
Payments will be made quarterly based on attainment of financial objectives up
to the target incentive and are subject to the EPS funding gate calculation, as
follows:
First Quarter - 1/8th of total opportunity
Second Quarter - 1/8th of total opportunity
Third Quarter - 1/8th of total opportunity
Fourth Quarter - 5/8th of total opportunity (1/8 for the 4th Quarter & 1/2
for the Annual Target)
All over achievement incentive calculations will be deferred until year-end.
Over attainment distributions will be either in Stock Options or cash at the
discretion of the Compensation Committee.
All payments will be made within 60 days of the end of the quarter.
All EVA and EPS gate calculations will be done on a year-to-date, cumulative
basis.
-5-
For the first, second, third and fourth quarters, the objectives are equal to
the year-to-date financial targets as of the end of each respective quarter and
are subject to the EPS gate calculation.
Incentive Bank
Cumulative performance and incentive linked.
Over/Under achievement by Division for current year "deposited" into incentive
bank.
Bank balance distributed:
Up to 33% of the resulting bank balance will be distributed.
It is the intent of the plan to distribute 33% of the bank balance under
normal circumstances.
Actual payout % to be determined annually by the Compensation Committee
based on business conditions, financial results and funding considerations.
The Compensation Committee may adjust the payout % based on special
circumstances and may elect to not distribute any of the remaining bank
balance and to carry all of it forward to the next year.
The Compensation Committee may elect to pay all or a portion of the
distribution in stock options.
Remaining bank balance reserved for future payment subject to sustained business
performance of the Division and Acxiom Corporation.
Bank balances are subject to forfeiture to satisfy EPS Gate.
"Negative" bank balance "repaid" before future overachievement incentives are
paid.
In order to receive any distributions from the incentive bank, the associate
must be employed at the time of distribution. Bank balances will be forfeited
upon termination.
Over/Under Achievement
Above/below targeted EVA, 50% of all Incremental EVA will be added to /
subtracted from the Incentive Banks.
Above/Below target funds will be added to/subtracted from the respective
incentive banks based on the performance of the affiliated area of the business
(Division, Shared Services or Corporate Office).
The over/under achievement EVA will be primarily calculated at the Division
level. However, the Compensation Committee has the authority to make adjustments
based on business circumstances. In no cases will the sum of the over attainment
banked be greater than the total company's over attainment.
LONG-TERM INCENTIVE
For purposes of determination of the long-term incentive (LTI), eligible
associates must be employed and be a member of the Leadership Team on the date
the Board of Directors reviews the LTI grants for that year (May Board of
Directors meeting). These options fall under the Acxiom stock option plan and
will be subject to all standard provisions.
The long-term incentive will be in the form of stock options and other
performance vehicles as necessary. The current year vehicle will be stock
options.
-6-
Stock options will be awarded under three categories:
Category A - Fair market value at date of grant
Category B - 25% above fair market value
Category C - 50% above fair market value
Using the Black-Scholes stock options pricing model, the mix of options to be
awarded as an approximate percentage of the total long-term incentive are:
Category A - 50% of total long-term incentive
Category B - 25% of total long-term incentive
Category C - 25% of total long-term incentive
Under the long-term incentive plan, participants will be awarded a grant of
stock options on a cycle corresponding to the level of compensation plan to
which the leader has been assigned. Multi-year grants are awarded for levels 3
through 5.
In the event a leader is assigned a level with multi-year grants, they will be
awarded the number of years of options necessary to put them on the same cycle
as all other leaders on that level.
Stock options awarded will vest over 6 years, 20% after years 2, 3, 4, 5, & 6
respectively, following the date of grant. Stock options may not be exercisable
later than fifteen years after their date of grant.
Stock options may also be granted at the October Board Meeting. The October
options include new Leadership Team members as well as adjustments for those
moving from one level to another.
It is the current intent of the Board of Directors to continue this plan (or a
similar plan) in future years. The Board of Directors reserves the right to
modify or cancel this plan in at any time for any reason at its sole discretion.
RETENTION/RECRUITING BONUS
Retention Bonus
The objective of the retention bonus is to provide a vehicle to retain key
senior leaders who we are at risk of losing.
Each Retention Bonus Plan for a senior leader must by approved by Charles Morgan
and Rodger Kline.
In addition to the standard at risk plan, a retention bonus can be put in place
for a leader with the following plan provisions:
Up to 25% of base salary (determined by Division leader, Rodger Kline and
Charles Morgan)
To be paid at same time as at risk payments
Not subject to Corporate gate
Based on achieving predetermined, documented, individual objectives
Distribution amounts to be determined by Division leader
Recruiting Bonus
With the current demand for talent, it may be necessary to pay a one-time
recruiting bonus to recruit key leaders to Acxiom.
-7-
In addition to the standard at risk plan, a retention bonus can be put in place
for a leader with the following plan provisions: Up to 25% of base salary
(determined by Division leader, Rodger Kline and Charles Morgan) To be paid upon
hiring Not subject to Corporate gate
PLAN MODIFICATIONS
Any modification to this standard plan must be approved in advance by Rodger
Kline.
Exhibit 1
Acxiom Corporation
Compensation Guidelines - FY2001
Leadership Team
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General Leadership Team Plan
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Leader 'Not at Risk' Base Plan Structure
Classification Salary Ranges
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Base At Risk LTI Yrs. Granted
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Level 5 35% 25% 40% 3
Salary ranges
Level 4 determined by 40% 25% 35% 3
market data for
individual area of
Level 3 responsibility. 50% 25% 25% 2
Level 2 60% 20% 20% 1
Level 1 70% 15% 15% 1
- -------------------------------------------------------------------------------
NOTE: At Risk Opportunity for the fiscal year is established based on Base
Salary as of May 1, 2000.
- -------------------------------------------------------------------------------
Business Development / Sales Leadership Team Plan
- -------------------------------------------------------------------------------
Leader 'Not at Risk' Base Plan Structure
Classification Salary Ranges
- -------------------------------------------------------------------------------
Base At Risk LTI Yrs Granted
- -------------------------------------------------------------------------------
Level 3 40% 40% 20% 2
Salary ranges determined
Level 2 by market data for 40% 40% 20% 1
individual area of
responsibility.
Level 1 50% 30% 20% 1
------------------------
Common Fate Commissions
------------------------
75% 25%
50% 50%
25% 75%
- -------------------------------------------------------------------------------
NOTE: At Risk Opportunity for the fiscal year is established based on Base
Salary as of May 1, 2000.
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% Increase Guidelines for Salaries
- -------------------------------------------------------------------------------
- -------------- ------------- ------------ -------------------------------------
Perf. & Within Range In Excess Below Range
Comp. Average of Range
- -------------- ------------- ------------ -------------------------------------
1-4 0% 0% Multi-year market adjustment plans
to be put in place to reach market.
5-8 Up to 6% Up to 2%
9-10 Up to 8% Up to 4%
- -------------- ------------- ------------ -------------------------------------