1997 NEBS EXECUTIVE BONUS PLAN
(Effective as of June 30, 1996)
This Executive Bonus Plan was adopted by the Board of Directors of New
England Business Service, Inc. (the "Company") on July 26, 1996 upon the
recommendation of its Organization and Compensation Committee for the purpose of
providing incentive compensation for the senior executives and managers of the
Company and its subsidiaries. This Plan shall be governed by the following
definitions and calculations.
I. Participants. The Participants in the Plan for the 1997 fiscal year
of the Company (the "Year") and their respective Target Bonus Percentages shall
be as follows:
A. Officers of the Company.
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Robert J. Murray,
Chairman, President & Chief Executive Officer 70%
George P. Allman
Vice President, Retail Sales & Operations 50%
Timothy D. Althof,
Treasurer 50%
Edward M. Bolesky,
Vice President, Direct Marketing,
Telesales & Service 50%
Robert S. Brown,
Vice President, Circulation & International 50%
Russell V. Corsini, Jr.,
Vice President, Chief Financial Officer 50%
Michael F. Dowd,
Vice President, Strategic Planning 50%
& Legal Officer
John F. Fairbanks,
Vice President, Corporate Controller 50%
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Thomas W. Freeze,
Vice President, Finance and Administration -
Retail 50%
Linda A. Jacobs,
Vice President, Business Management -
Image Products 50%
Kenneth R. Kaisen,
Vice President, Information Systems &
Technology Based Marketing 50%
Steven G. Schlerf,
Vice President, Manufacturing and
Technical Operations 50%
Robert D. Warren,
Vice President, Business Management -
Business Solutions 50%
Peter J. Zarrilla,
Vice President, Human Resources 50%
B. CEOs of Subsidiaries.
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Robert T. Richardson,
President and Chief Executive,
NEBS Business Forms, Ltd. 40%
Steven H. Dedo
General Manager,
NEBS Business Stationery 40%
No Participant shall be eligible to participate in the NEBS Profit Sharing Plan
for any year in which he or she is entitled to participate in this Plan.
II. Target Bonus. The Target Bonus payable to a Participant with respect
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to the Year shall be an amount arrived at by multiplying his or her base salary
as approved and effective for the Year by his or her Target Bonus Percentage.
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III. Actual Bonuses. The Actual Bonus of each Participant shall be calculated
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based on the following:
. Targeted consolidated net sales for the Year in a dollar amount equal
to the budgeted consolidated net sales for the Year.
. Targeted consolidated net income for the Year in a dollar amount equal
to the budgeted consolidated net income for the Year.
The total Actual Bonus payable to each Participant shall be capped at 100%
of his or her base salary.
A. Chairman, President & Chief Executive Officer
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1. The actual bonus of this Participant shall be the sum of the
following:
(a) For each 1% by which consolidated net sales are more
than 95%, but not more than 105% of the targeted
consolidated net sales for the Year, 3.5% of his base
salary, plus for each 1% by which consolidated net sales
are more than 105% of the targeted consolidated net
sales for the Year, 1.75% of his base salary; and
(b) For each 1% by which consolidated net income is more
than 95%, but not more than 105% of the targeted
consolidated net income for the Year, 3.5% of his base
salary, plus for each 1% by which consolidated net
income is more than 105% of the targeted consolidated
net income for the Year, 1.75% of his base salary; and
(c) 17.5% of his base salary if consolidated net sales are
100% or more of the targeted consolidated net sales for
the Year; and
(d) 17.5% of his base salary if consolidated net income is
100% or more of the targeted consolidated net income for
the Year.
The amount of bonus payable pursuant to items c and d above is
capped at 17.5% of this Participant's base salary and no bonus
will be paid pursuant to items c or d above if less than 100%
of target is attained.
2. No bonus shall be paid to this Officer if the Company's
consolidated net income for the Year is less than 90% of the
targeted consolidated net income for the Year.
B. Vice President, Business Management - Business Solutions; Vice
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President, Business Management - Image Products; Vice President,
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Chief Financial Officer; Vice President, Circulation &
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International; Vice President, Corporate Controller; Vice President,
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Direct Marketing, Telesales & Service; Vice President, Finance and
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Administration - Retail; Vice President, Human Resources; Vice
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President, Information Systems & Technology Based Marketing; Vice
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President, Manufacturing and Technical Operations; Vice President,
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Retail Sales & Operations; Vice President, Strategic Planning &
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Legal Officer; Treasurer.
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1. The actual bonus of each of these Participants shall be the
sum of the following:
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(a) For each 1% by which consolidated net sales are more
than 95%, but not more than 105% of the targeted
consolidated net sales for the Year, 2.5% of his or her
base salary, plus for each 1% by which consolidated net
sales are more than 105% of the targeted consolidated
net sales for the Year, 1.25% of his or her base salary;
and
(b) For each 1% by which consolidated net income is more
than 95%, but not more than 105% of the targeted
consolidated net income for the Year, 2.5% of his or her
base salary, plus for each 1% by which consolidated net
income is more than 105% of the targeted consolidated
net income for the Year, 1.25% of his or her base
salary; and
(c) 25% of his or her base salary based on his or her
Qualitative Measurements (MBOs) as determined by the
Chairman, President & Chief Executive Officer.
The amount of bonus payable pursuant to item c above is capped
at 25% of a Participant's base salary and no bonus will be
paid pursuant to item c above for any specific Qualitative
Measurement (MBO) if less than 100% of that specific
Qualitative Measurement (MBO) target is attained.
2. No bonus shall be paid to any of these Officers if the
Company's consolidated net income for the Year is less than
90% of the targeted consolidated net income for the Year.
C. Subsidiary Business Units: President, Chief Executive; General
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Manager.
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1. The actual bonus of both of these Participants shall be the
sum of the following:
(a) For each 1% by which consolidated net sales are more
than 95%, but not more than 105% of the targeted
consolidated net sales for the Year, 2% of his base
salary, plus for each 1% by which consolidated net sales
are more than 105% of the targeted consolidated net
sales for the Year, 1% of his base salary; and
(b) For each 1% by which consolidated net income is more
than 95%, but not more than 105% of the targeted
consolidated net income for the Year, 2% of his base
salary, plus for each 1% by which consolidated net
income is more than 105% of the targeted consolidated
net income for the Year, 1% of his base salary; and
(c) 10% of his base salary if subsidiary net sales are 100%
or more of targeted subsidiary net sales for the Year;
and
(d) 10% of base salary if subsidiary profit from operations
is 100% or more of targeted subsidiary profit from
operations for the Year.
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The amount of bonus payable pursuant to items c and d
above is capped at 10% of a Participant's base salary
and no bonus payout will be paid pursuant to items c or
d above if less than 100% of target is attained.
2. No bonus shall be paid to any of these Officers if the
Company's consolidated net income for the Year is less
than 90% of the targeted consolidated net income for the
Year.
IV. Bonus Payouts.
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75% of the payout will be in the form of cash; 25% of the payout
will be in the form of NEBS Common Stock with a share price equal to the closing
share price of NEBS Common Stock on the New York Stock Exchange on the third
business day following the issuance of the press release disclosing the
Company's financial results for the fourth quarter of the Year. All bonus
payments will be made within 60 days after the close of the Year.
V. Certain Definitions and Other Provisions.
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A. All references to "net" sales shall refer to consolidated net
sales of the Company or net sales of a subsidiary business unit or business
unit, as the case may be, as reported or used in calculating the Company's
audited consolidated earnings.
B. For purposes of calculating the actual bonuses, consolidated
net income for the Year shall mean such consolidated income, after taxes and
after provision for executive bonuses under this Plan, determined in accordance
with all of the accounting policies employed in the preparation of the Company's
audited financial statements for the Year.
C. Actual or targeted consolidated net income, actual or targeted
consolidated sales, the actual or targeted profit from operations of any
subsidiary business unit or business unit or the actual or targeted net sales of
any subsidiary business unit or business unit may, at the discretion of the
Organization and Compensation Committee, be adjusted to eliminate the effect of
(a) either the acquisition or the divestiture by the Company of any subsidiary
or division during the Year, and/or (b) the imposition during the Year by
Massachusetts or any other state or states of sales taxes on services, materials
or supplies purchased by the Company or any subsidiary
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of the Company the effect of which is not allowed for in the Company's annual
budget for the 1997 fiscal year or (c) any abatement of taxes or material
increase or decrease in Federal or State corporate tax rates. It is the
intention of the Organization and Compensation Committee that any such
discretionary adjustment shall be made by it, and shall be announced to the
affected Participants, promptly after the occurrence of the motivating event,
but failure to act promptly shall not deprive the Committee of its power to make
such an adjustment at a later time.
D. "Profit from Operations" for any subsidiary business unit or
business unit of the Company shall be determined consistently with the process
whereby its targeted profit from operations for the Year was determined and
shall not reflect any charge for executive bonuses payable under this Plan.
E. Should a Participant die, retire, or become totally disabled
during the Year, he or she or his or her estate shall be entitled to receive a
bonus pro-rated in accordance with the percentage of his or her annual salary
earned from the beginning of the Year up to the date of death, retirement or
disability. Should a Participant's employment by the Company or a subsidiary
business unit be terminated for any other reason, payment of any bonus hereunder
for the year in which such termination occurs is at the sole discretion of the
Organization and Compensation Committee.
F. If a Participant assumes a new position during the Year, the
Organization and Compensation Committee may make an appropriate adjustment in
his or her target bonus and/or the means of calculating his or her actual bonus.
G. If a Change of Control event (as defined in Section 11 of the
Company's 1994 Key Employee and Eligible Director Stock Option and Stock
Appreciation Rights Plan) occurs, the Company will within sixty (60) days
following such event pay to each Participant a pro-rated bonus through the date
thereof as hereinafter provided, whereupon this Plan will terminate. The portion
of the bonus based on factors other than Qualitative Measurements shall be
calculated based on a comparison of (i) actual results of the Company through
the end of the calendar quarter next preceding the Change in Control event to
(ii) the targeted quarterly
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performance criteria set forth on the schedules attached hereto. The portion of
the bonus based on Qualitative Measurements will be calculated through the end
of the calendar quarter next preceding the Change of Control event to the extent
equitable and reasonably practicable in the judgment of the Organization and
Compensation Committee. Qualitative Measurements for which such calculation is
not equitable or reasonably practicable will be disregarded and the percentage
of the bonus otherwise allocated thereto under the terms hereof will be
reallocated in even percentages to the consolidated net sales and consolidated
net income components of the bonus calculation. After determining the full year
bonus based on the extent to which the aforesaid quarterly targets have been
achieved, the amount of the full year bonus will be pro-rated by multiplying the
same by a fraction the numerator of which is the number of days between the
beginning of the fiscal year and the date of the Change of Control event and the
denominator of which would be 365. The determination of the amount of any bonus
payable under this paragraph shall be made by the Organization and Compensation
Committee and its determination shall be final and binding on the Company and
all Participants.
H. In the event of any material, unusual and non-recurring charge
to income, purchase or sale of any material business unit by the Company, or
other material event affecting the ability of the Participants to achieve the
performance targets established under this Plan, the Organization and
Compensation Committee shall review such performance targets and make such
adjustments with respect thereto as it deems reasonable and equitable in light
of the purposes of this Plan. Any and all adjustments made by the Organization
and Compensation Committee under this paragraph shall be final and binding on
the Company and all Participants.
I. The Organization and Compensation Committee may in its
discretion terminate the Plan as of the end of any fiscal quarter. If the Plan
is so terminated, the Company shall pay out bonuses to the Participants in such
amounts as are appropriate and equitable in light of the Company's and the
Participants' performance through the end of such quarter and the targets
established hereunder. The determination of the amount of any bonuses payable
under this paragraph shall be made by the Organization and
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Compensation Committee in line with the objectives set for each Participant, and
its determination shall be final and binding on the Company and all
Participants.
J. The Qualitative Measurements referred to herein and the
application of certain of the provisions hereof are described in the FY97 MBO
Scorecards prepared by the Vice President, Corporate Controller and dated as of
[TBD].
K. This Plan shall be effective commencing June 30, 1996.
Attachment:
Set of Schedules - FY97 MBO Scorecards [TBD]
July 29, 1996
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