EXHIBIT 10(I)
1998 NEBS EXECUTIVE BONUS PLAN
(EFFECTIVE AS OF JUNE 29, 1997)
This Executive Bonus Plan was adopted by the Board of Directors of New
England Business Service, Inc. (the "Company") on July 25, 1997 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 1998 fiscal year of
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the Company (the "Year") and their respective Target Bonus Percentages
shall be as follows:
A. Officers of the Company.
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Chairman, President & Chief Executive Officer 70%
Vice President, Diversified Operations 50%
Treasurer & Secretary 50%
Vice President, Information Systems 50%
Vice President, Direct Marketing,
Telesales & Service 50%
Vice President, Circulation & International 50%
Vice President, Chief Financial Officer 50%
Vice President, Human Resources 50%
Executive Vice President, NEBS
President, Chiswick Division 50%
Vice President, Manufacturing and
Technical Operations 50%
Vice President, Business Management &
Development 50%
B. CEOs of Subsidiaries
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Managing Director,
NEBS Business Stationery 40%
President and Chief Executive,
NEBS Business Forms, Ltd. 40%
C. Corporate Controller
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Corporate Controller 40%
II. Target Bonus. The Target Bonus payable to a Participant with respect to
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the Year shall be an amount arrived at by multiplying his base annual
salary at the end of the Year by his Target Bonus Percentage.
III. Actual Bonus. The Actual Bonus of each Participant shall be
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calculated based on actual results vs. targeted objectives.
A. Chairman, President & Chief Executive Officer
1. The actual bonus of this Participant shall be the sum of the
following:
(a) Each 1% by which consolidated net sales are more than 95% up
to 105% of the targeted consolidated net sales for the Year
equals 7.0% of his base salary, plus each 1% by which
consolidated net sales are more than 105% of the targeted
consolidated net sales for the Year equals 3.5% of his base
salary; and
(b) Each 1% by which consolidated net income is more than 95% up
to 105% of the targeted consolidated net income for the Year
equals 7.0% of his base salary, plus each 1% by which
consolidated net income is more than 105% of the targeted
consolidated net income for the Year equals 3.5% of his base
salary; and
2. No bonuses shall be paid to this Officer if the Company's
consolidated net income for the Year is less than 90% of the
targeted net income objective.
B. Vice President, Business Management & Development; Vice President,
Chief Financial Officer; Vice President, Human Resources; Vice
President, Information Systems; Vice President, Manufacturing and
Technical Operations; Treasurer & Secretary.
1. The actual bonus of each of these Participants shall be the sum
of the following:
(a) Each 1% by which consolidated net sales are more than 95% up
to 105% of the targeted consolidated net sales for the Year
equals 3.5% of his base salary, plus each 1% by which
consolidated net sales are more than 105% of the targeted
consolidated net sales for the Year equals 1.75% of his base
salary; and
(b) Each 1% by which consolidated net income is more than 95% up
to 105% of the targeted consolidated net income for the Year
equals 3.5% of his base salary, plus each 1% by which
consolidated net income is more than 105% of the targeted
consolidated net income for the Year equals 1.75% of his base
salary; and
(c) 15% of his base salary based on his Quantitative and/or
Qualitative Measurements (MBOs) as determined by the
Chairman, President & Chief Executive Officer.
The Qualitative Measures (MBOs) described in item c above are capped at 100%
attainment of the target.
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 net income objective.
C. Executive Vice President, Chiswick Division; Vice President,
Circulation & International; Vice President, Direct Marketing,
Telesales & Service: Vice President, Diversified Operations.
1. The actual bonus of these Participants shall be the sum of the
following:
(a) Each 1% by which channel net sales are more than 95% up to
105% of the targeted channel net sales for the Year equals
3.5% of his base salary, plus 1% by which channel net sales
are more than 105% of the targeted channel net sales for the
Year equals 1.75% of his base salary; and
(b) Each 1% by which consolidated net income is more than 95% up
to 105% of the targeted consolidated net income for the Year
equals 3.5% of his base salary, plus each 1% by which
consolidated net income is more than 105% of the targeted
consolidated net income for the Year equals 1.75% of his base
salary; and
(c) 15% of his or her base salary based on his Quantitative
and/or Qualitative Measurements (MBOs) as determined by the
Chairman, President & Chief Executive Officer.
The Qualitative Measures (MBOs) described in item c above are capped at 100%
attainment of the target.
2. No bonus shall be paid to any of these Officers if the Company's
consolidated net earnings for the Year is less than 90% of the
targeted net income objective.
D. Subsidiary Business Units: President, Chief Executive; Managing
Director.
1. The actual bonus of both of these Participants shall be the sum
of the following:
(a) Each 1% by which subsidiary net sales are more than 95% up to
105% of the targeted subsidiary net sales for the Year equals
2.8% of his base salary, plus each 1% by which subsidiary net
sales are more than 105% of the targeted subsidiary net sales
for the Year equals 1.4% of his base salary; and
(b) Each 1% by which consolidated net income is more than 95% up
to 105% of the targeted consolidated net sales for the Year
equals 2.8% of his base salary, plus each 1% by which
consolidated net income is more than 105% of the targeted
consolidated net income for the Year equals 1.4% of his base
salary; and
(c) 12% of his base salary based on his Quantitative and/or
Qualitative Measurements (MBOs) as determined by the
Chairman, President & Chief Executive Officer.
The Qualitative Measures (MBOs) described in item c above are capped at 100%
attainment of the target.
2. No bonus shall be paid if the Company's consolidated net income
for the Year is less than 90% of the targeted net income
objective.
E. Corporate Controller.
1. The actual bonus of this Participant shall be the sum of the
following:
(a) Each 1% by which consolidated net sales are more than 95% up
to 105% of the targeted consolidated net sales for the Year
equals 2.8% of his base salary, plus each 1% by which
consolidated net sales are more than 105% of the targeted
consolidated net
sales for the Year equals 1.4% of his base salary; and
(b) Each 1% by which consolidated net income is more than 95% up
to 105% of the targeted consolidated net income for the Year
equals 2.8% of his base salary, plus each 1% by which
consolidated net income is more than 105% of the targeted
consolidated net income for the Year equals 1.4% of his base
salary; and
(c) 12% of his base salary based on his Qualitative and/or
Qualitative Measurements (MBOs) as determined by the
Chairman, President & Chief Executive Officer.
The Qualitative Measures (MBOs) described in item c above are capped at 100%
attainment of the target.
2. No bonus shall be paid if the company's consolidated earnings for
the Year is less than 90% of the targeted net income objective.
IV. Bonus Payouts
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25% of the net payout will be in the form of NEBS Stock with a share price
which is established at the close of trading 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 targeted
consolidated sales, 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 of the Company the effect of
which is not allowed for in the Company's annual budget for the 1998
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 date.
D. Should a Participant die, retire, or become totally disabled during the
Year, he or his estate shall be entitled to receive a bonus pro-rated
in accordance with the percentage of his 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.
E. If a Participant assumes a new position during the Year, the
Organization and Compensation Committee may make an appropriate
adjustment in his target bonus and/or the means of calculating his
actual bonus, effective from and after that event.
F. 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 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 Sales and
Earnings 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.
G. 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.
H. 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 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 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.
I. The Qualitative Measures referred to herein and the application of
certain of the provisions hereof are described in the FY98 MBO
Scorecards prepared by the Compensation Manager.
J. This Plan shall be effective commencing June 29, 1997.
Attachments:
Set of Schedules - FY98 MBO Scorecards (TBD)