EXHIBIT 10.13
1999 NEBS EXECUTIVE BONUS PLAN
(EFFECTIVE AS OF JUNE 29, 1998)
This Executive Bonus Plan was adopted by the Board of Directors of New
England Business Service, Inc. (the "Company") on July 24, 1998 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 1999 fiscal year
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of 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 60%
Vice President, Information Systems 60%
Vice President, Direct Marketing, 60%
Telesales & Service
Vice President, Chief Financial Officer 60%
Vice President, Human Resources 60%
Vice President, General Manager 60%
Chiswick Division
Vice President, General Manager 60%
RapidForms Division
Vice President, Manufacturing and 60%
Technical Operations
Vice President, Business Management & 60%
Business Solutions
Vice President, Investor Relations 50%
Vice President, Controller 50%
B. CEOs of Subsidiaries
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Managing Director,
NEBS Business Stationery 40%
President and Chief Executive,
NEBS Business Forms, Ltd. 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 salary
at the end of the Year by his target bonus percentage.
III. Actual Bonus. The Actual Bonus of each Participant shall be calculated
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based on actual results vs. targeted objectives.
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) Each 1% by which consolidated net sales are more than 95% up
to 105% of the targeted consolidated net sales for the Year
equals 5.6% 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 2.8% 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 5.6% 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 2.8% of his base
salary; and
(c) 14% of his base salary based on his qualitative measurements
(MBOs) as determined by the Board of Directors on the
recommendation of the Organization and Compensation Committee.
The qualitative measures described in item c above are capped
at 14% of base salary or 100% attainment of the target.
2. No bonuses shall be paid 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.
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 4.8% 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 2.4% 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 4.8% 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 2.4% 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 objectives 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
earnings for the Year is less than 90% of the targeted net
income objective.
C. Vice President, Chiswick Division; Vice President, Diversified
Operations.
1. The actual bonus of this Participant 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 4.8%
of his base salary, plus each 1% by which channel net sales are
more than 105% of the targeted channel net sales for the Year
equals 2.4% 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 3.0% 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 1.5% of his base
salary; and
(c) Each 1% by which channel profit from operations is more than
95% up to 105% of the targeted channel profit from operations
for the Year equals 1.8% of his salary. Payment for the
attainment of channel profit from operations will be capped at
200% of target payment (105% achievement); and
(d) 12% of his or her base salary based on his quantitative
and/or qualitative measurements (MBOs) as determined by the
Chairman, President & Chief Executive Officer.
Objectives described in item (d) above are capped at 100%
attainment of the target.
2. No bonus shall be paid if the Company's consolidated net
earnings for the Year is less than 90% of the targeted net income
objective.
D. Vice President, Direct Marketing, Telesales & Service; President;
RapidForms.
1. The actual bonus of both 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 3.0%
of his base salary, plus each 1.0% by which channel net sales
are more than 105% of the targeted channel net sales for the
Year equals 1.5% of his base salary; and
(b) Each 1% by which combined channel net sales is more than 95%
up to 105% of the targeted combined channel net sales for the
Year equals 1.8% of his base salary, plus each 1% by which
combined channel net sales are more than 105% of the targeted
combined channel sales for the Year equals 0.9% of his base
salary; and
(c) Each 1% by which consolidated net income is more than 95% up
to 105% of the targeted consolidated net income for the Year
equals 3.0% 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 1.5% of his base
salary; and
(d) Each 1% by which channel profit from operations is more than
95% up to 105% of the targeted channel profit from operations
for the Year equals 1.8% of his base salary. Payment for the
attainment of channel profit from operations will be capped at
200% of target payment (105% achievement); and
(e) 12% of his base salary based on his quantitative and/or
qualitative measurements (MBOs) as determined by Chairman,
President & Chief Executive Officer.
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. Vice President, Investor Relations; Vice President, Controller.
1. The actual bonus 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 4% 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 2% 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 4% 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 2% of his base salary; and
(c) 10% of his base salary based on his quantitative and/or
qualitative measurements (MBOs) as determined by the Chairman,
President & Chief Executive Officer.
Objectives 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
earnings for the Year is less than 90% of the targeted net
income objective.
F. Subsidiary Business Units: President, Chief Executive; Managing
Director.
1. The actual bonus 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
3.2% 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 1.6% 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 2.0% 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 1.0% of his base
salary; and
(c) Each 1% by which subsidiary profit from operations is more
than 95% up to 105% of the targeted subsidiary profit from
operations for the Year equals 1.2% of his base salary. Payment
for the attainment of channel profit from operations will be
capped at 200% of target payment (105% achievement); and
(d) 8% of his base salary based on his quantitative and/or
qualitative measurements (MBOs) as determined by the Chairman,
President & Chief Executive Officer.
Objectives described in item d 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.
IV. Bonus Payments
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A. For Participants with 60% or 70% bonus targets: 75% of the gross
payment will be in the form of cash; 25% of the gross payment 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.
Cash payments will be made within 60 days after the close of the
Year. Stock awarded under the plan will be in the form of
Restricted Stock with terms and conditions detailed in the
Participant commitment letter.
B. For Participants with 40% or 50% bonus targets: 75% of the net
payment will be in the form of cash; 25% of the net payment 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 distribution channel or a 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; actual or targeted profit from operations of
any business unit or distribution channel; or actual or targeted
net sales of any business unit or distribution channel 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 1999 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 motivation
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 FY99 MBO
Scorecards prepared by the Compensation Manager.
J. This Plan shall be effective commencing June 29, 1998.
Attachments:
Set of Schedules - FY99 MBO Scorecards (TBD)