Exhibit 10.77
TIER TECHNOLOGIES, INC.
INCENTIVE COMPENSATION PLAN
Adopted January 22, 2001
Effective October 1, 2000
1. Purpose. The Tier Technologies, Inc. Incentive Compensation Plan (the
"Plan") is intended to provide incentive compensation opportunities for key
Employees to receive Awards in the form of cash, fully vested stock options to
purchase shares of the Company's common stock, other stock grants, or any
combination of these, based on (i) the performance of the Company and/or one or
more of its Affiliates and (ii) the individual Participant's performance as
quantified in the Performance Objectives and Performance Levels as described
herein.
2. Definitions.
(a) "Affiliate" shall mean any member of an affiliated group of
corporations with the Company under Code Section 1504.
(b) "Award" shall mean the incentive amount earned under the Plan by a
Participant which shall be payable in the form of cash, fully vested stock
options to purchase shares of common stock of the Company, other stock grants,
or any combination of these.
(c) "Base Salary" shall mean the actual base earnings of a Participant
for the Plan Year exclusive of any bonus payments under this Plan or any other
prior or present commitment, including contractual arrangements, any salary
advance, any allowance or reimbursement, and the value of any basic or
supplemental employee benefits or perquisites. Base Salary refers only to
amounts earned while a Participant during the Plan Year.
(d) "Board" shall mean the Board of Directors of the Company.
(e) "Cause" means, with respect to a particular Participant: (i)
fraud, misappropriation, embezzlement or other act of misconduct against the
Company or an Affiliate; (ii) conviction of any felony which has a material
adverse effect on the Company or an Affiliate; (iii) violation of any rules or
regulations of any governmental or regulatory body which has a material adverse
effect on the Company or an Affiliate; (iv) any breach of the Participant's duty
not to engage in any transaction that represents, directly or indirectly, self-
dealing with the Company or any of its Affiliates, which has not been approved
by the Company or an Affiliate; (v) a breach of any material term of the
Participant's employment obligations to the Company or an Affiliate and/or
unsatisfactory job performance where such breach and/or unsatisfactory
performance is not cured within fifteen days of receipt of written notice of
such deficiencies (unless such deficiencies are caused by the Participant's
Permanent Disability); (vi) violation of state or federal law in connection with
the Eligible Employee's performance of his/her job which has a material adverse
effect on the Company or an Affiliate; or (vii) a leave of absence exceeding the
period allowed by contract, policy or applicable law. Notwithstanding the
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foregoing, a Participant's Termination due to death or Permanent Disability
shall not be considered termination for Cause.
(f) "CEO" shall mean the Chief Executive Officer of the Company.
(g) "Code" shall mean the Internal Revenue Code of 1986, as amended.
(h) "Committee" shall mean the Compensation Committee of the Board.
The Committee shall consist solely of outside directors, as defined in Section
162(m) of the Code.
(i) "Company" shall mean Tier Technologies, Inc., a California
corporation.
(j) "Covered Employees" shall mean the CEO and the four (4) highest
compensated officers, as defined in Section 162(m) of the Code, of TIER.
(k) "Employee" shall mean an employee of the Company or an Affiliate.
(l) "Fiscal Year" shall mean the twelve (12) consecutive months
beginning October 1 and ending September 30.
(m) "Maximum Award Percentage" shall mean the maximum percentage of a
Participant's Base Salary (as in effect on the first day of the Plan Year) as
established by the Committee for each Plan Year that a Participant may receive
pursuant to the Plan provided that all Performance Objectives are met at the
Maximum Performance Level (as described herein) for such Plan Year.
(n) "Participant" shall mean an Employee designated by either the CEO
or Committee as eligible to receive an Award under this Plan for any Plan Year
if the applicable Performance Objectives are met at any of the applicable
Performance Levels specified for such Plan Year.
(o) "Performance Levels" shall mean a Participant's achievement of a
Performance Objective at one of the following levels necessary for an Award: (1)
Threshold, (2) Target, or (3) Maximum, the specifics of each shall be
established by the Committee for each Plan Year.
(p) "Performance Objectives" shall mean the pre-established goals
established by the Committee for each Plan Year upon which a Participant's
performance will be assessed for each Plan Year.
(q) "Permanent Disability" shall mean the permanent and total
disability of a person within the meaning of Section 22(e)(3) of the Code.
(r) "Plan" shall mean this Tier Technologies, Inc. Incentive
Compensation Plan, as amended from time to time.
(s) "Plan Year" shall mean the twelve (12) consecutive months
beginning October 1 and ending September 30 over which performance is measured
under this Plan.
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(t) "Pro Forma EPS" or "EPS" shall mean the diluted net income per
share of the Company's common stock as determined on a pro forma basis
consistent with past practice as of Year-end for each Plan Year.
(u) "Retirement" shall mean the Participant's voluntary Termination
(as defined herein) for reasons other than Cause (as defined herein) if such
Participant satisfies both of the following as of the date of Termination: (i)
the Participant has five (5) or more years of service as an Employee and (ii)
the sum of the Participant's age and years of service as an Employee is equal to
or greater than sixty (60) years.
(v) "Revenue" shall mean the consolidated revenues of the Company for
the Plan Year excluding any revenues realized as a result of contracts assumed
by the Company or an Affiliate as a result of acquisitions consummated by the
Company or an Affiliate during the Plan Year.
(w) "Share Price" shall mean average daily closing price of the
Company's common stock on the Nasdaq National Market, or other principal trading
market of such common stock for the Plan Year.
(x) "Termination" shall mean the Participant's ceasing his or her
service with the Company or any of its Affiliates for any reason whatsoever.
(y) "TIER" shall mean the Company and all of its Affiliates.
(z) "Year-end" shall mean the end of the Company's Fiscal Year.
3. Participation and Awards under the Plan.
(a) Participation. Plan participation is extended to selected key
Employees who, in the sole and exclusive opinion of the CEO and/or the
Committee, have the opportunity to significantly impact the annual operating
success of the Company and/or its Affiliates. Participants will be selected to
participate in the Plan at the beginning of or during the Plan Year as set forth
herein. Participants will be notified in writing of their selection to
participate in the Plan each Plan Year. This written notification for all
Participants, except Covered Employees, will be signed by the CEO. The Committee
will determine the Plan participation of all Covered Employees and the written
notification to a Covered Employee will be signed by the Chairman of the
Committee.
(b) Performance Objectives and Levels. The Performance Objectives
shall be determined by the Committee for each Plan Year and with respect to each
Participant. Performance Objectives shall consist of one, all or a combination
of the following: Pro Forma EPS, Revenue, and Share Price; provided, however,
the Performance Objectives for Participants who are not Covered Employees (or
Participants who are Covered Employees but whose remuneration, within the
meaning of Section 162(m) of the Code, for the Fiscal Year, in the determination
of the Committee, is not expected to exceed one million dollars ($1,000,000))
may include additional Performance Objectives in the discretion of the
Committee. The weight to be given and Performance Levels for each of the
applicable Performance Objectives shall be determined by the Committee with
respect to each Participant. The Committee may establish
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different Performance Objectives and/or Levels for the Company, and for one or
more Affiliates and may establish different Performance Objectives and/or Levels
for each Participant or group of Participants.
(c) Participant Awards.
(i) Participant Award Criteria. Each Participant will be
assigned a Maximum Award Percentage by the Committee. The Committee, in its sole
and absolute discretion, may consider recommendations made by the CEO as to
individual Maximum Award Percentages for Participants (other than the CEO). The
Participant's Maximum Award Percentage, when multiplied by the Participant's
Base Salary earned during the Plan Year, represents the maximum Award payable to
such Participant during such Plan Year if all of the applicable Performance
Objectives are met at the Maximum Performance Level for each. For each Plan
Year, each Participant will be notified of the Maximum Award Percentage
applicable to him or her, the applicable Performance Objectives, the weight to
be given each Performance Objective, the Performance Levels upon which each
Performance Objective will be assessed, and each of these items will be included
in the written notification described in subsection 3(a) above.
(ii) Form of Awards. Awards may be paid and/or granted, as
applicable, in any combination of cash or, in lieu of cash, fully vested stock
options to purchase shares of the Company's common stock (pursuant to the
Company's Amended and Restated 1996 Equity Incentive Plan, any subsequently
adopted equity incentive plan, or as otherwise determined by the Committee) with
an exercise price equal to the fair market value of the Company's common stock
on the date of grant of the option (unless a higher exercise price is required
by applicable law), or other stock grants as determined by the Committee. The
Committee, in its sole and absolute discretion, may determine the form of any
Award at any time prior to the payment and/or grant of such Award for any Plan
Year. The value of any stock options granted in lieu of cash (and any other form
of Award that requires application of a valuation model) shall be determined in
accordance with the Black-Scholes valuation model. The Committee may (but need
not) establish different forms of Awards for each Participant or group of
Participants. The written notification described in subsection 3(a) above may
(but need not) include the form of any Award that the Participant may earn upon
achievement of the Applicable Performance Objective(s) for such Plan Year (to
the extent that the form of such Award for such Plan Year has been determined by
the Committee as of the date of such written notification).
(d) Special Rules for Covered Employees. Notwithstanding any
provision of the Plan to the contrary, the Committee shall establish Maximum
Award Percentages, Performance Objectives, the weight to be given each
Performance Objective and the Performance Levels applicable to each Performance
Objective, and any other term necessary under the Plan to determine the Awards
for Covered Employees not later than ninety (90) days after the beginning of
each Fiscal Year, provided that at the time such Performance Objectives are
established, the satisfaction of such Performance Objectives is not
substantially certain to be satisfied. Notwithstanding the foregoing, the ninety
(90) day requirement set forth in the preceding sentence shall not apply in the
case of a Covered Employee whose remuneration, within the meaning of Section
162(m) of the Code, for the Fiscal Year, in the determination of the Committee,
is not expected to exceed one million dollars ($1,000,000).
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(e) Maximum Award Per Plan Year. Notwithstanding any provision of the
Plan to the contrary, the maximum Award payable under the Plan for any Plan Year
to any Participant shall not exceed one million dollars ($1,000,000).
4. Other Plan Provisions.
(a) Performance Assessment. Assessment of actual performance and
payout of Awards with respect to Revenue and Pro Forma EPS will be subject to
completion of the Year-end independent audit and certification by the Committee
that a Participant has met the applicable Performance Objectives and other
material terms of the Plan, and specifying the Performance Level at which such
Performance Objectives have been met. The certification by the Committee with
respect to these Performance Objectives will occur no later than December 15 of
each year. Assessment of actual performance and payout of any Award with respect
to Share Price will be subject to certification by the Committee that a
Participant has met the applicable Performance Objective and any other material
terms of the Plan, and specifying the Performance Level at which such
Performance Objective has been met. The certification by the Committee with
respect to this Performance Objective shall occur no later than five (5)
business days after the end of the Plan Year.
(b) Award Payment. The Award earned, if any, shall be paid and/or
granted, as applicable, in the form of Award as determined by the Committee and
shall be paid and/or granted to the Participant (or the Participant's heirs in
the case of death) within ten (10) business days following the certification by
the Committee. Payroll and other taxes will be withheld and/or reported as
required by law.
(c) Stockholder Approval. Notwithstanding the foregoing, for any Plan
Year in which the Company desires a deduction pursuant to Section 162(m) of the
Code with respect to any portion of any Award earned by any Covered Employee
under the Plan during such Plan Year, no Award will be paid to any Covered
Employee under the Plan during such Plan Year until the shareholders of the
Company have approved the material terms of the Plan in accordance with Section
162(m) of the Code and the requirements set forth in subsection 3(d) have been
fulfilled. In addition, the material terms of the Plan must again be approved by
the shareholders of the Company no later than the first shareholders' meeting in
the fifth year following the year in which the shareholders previously approved
the material terms of the Plan.
(d) Employment. In order to receive an Award under the Plan, a
Participant must be employed by the Company or an Affiliate on the last day of
the Plan Year, except as otherwise provided herein. Selection for participation
in the Plan does not convey any employment rights on behalf of any Participant.
Terms and conditions of Participants' employment agreements with the Company or
its Affiliates addressing issues other than payment of bonus or incentive
compensation, if any, supersede the terms and conditions of the Plan.
(e) Termination.
(i) Death, Permanent Disability, or Retirement. If Termination
of a Participant occurs prior to the end of the Plan Year by reason of the
Participant's death, Permanent Disability or Retirement (excluding the
Retirement of a Covered Employee), the
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Participant (or the Participant's heirs in the case of death) will be eligible
to receive a pro-rata Award based on the time employed as a Participant up to
the date of such Termination if the Performance Objectives and Performance
Levels are achieved for the entire Plan Year. Participants who earn an Award on
this basis will receive payment on the same schedule as other Participants. The
formula used to pro-rate the Awards shall be to adjust the applicable Award by a
fraction, the numerator of which is the number of days (or whole months) for the
which the Participant was employed as a Participant during the Plan Year and the
denominator of which is 365 (or 12).
(ii) Other than Death, Permanent Disability, or Retirement. If
Termination of a Participant occurs prior to the end of the Plan Year for any
reason other than the Participant's death, Permanent Disability or Retirement
(whether voluntarily or involuntarily), the Participant will forfeit the
opportunity to earn an Award under the Plan, except as otherwise provided for by
the Committee; provided, however, that if Termination of a Covered Employee
occurs prior to the end of the Plan Year, such Covered Employee shall not
receive an Award at the discretion of the Committee or otherwise, except as
provided in the preceding paragraph.
(f) Other Pro-Rata Awards. Individuals who have been hired and
selected during Plan Year for Plan participation and who have served a minimum
of nine (9) months as a Participant will be eligible to receive a pro-rata Award
based on the time employed as a Participant and the Performance Objectives and
Performance Levels achieved by such Participant for the entire Plan Year,
provided that the Participant is employed by the Company or an Affiliate on the
last day of the Plan Year and, in the case of a Covered Employee, is selected
for Plan participation on his or her date of hire. The Committee will establish
the Maximum Award Percentage for individuals selected for Plan participation
during the Plan Year as soon as practicable after the individuals are selected,
but not later than fifteen (15) days after the selection date. The formula used
to pro-rate the applicable Award by a fraction, the numerator of which is the
number of days (or whole months) for which the individual was a Participant
during the Plan Year and the denominator of which is 365 (or 12).
(g) Plan Administration.
(i) Committee Discretion. Responsibility for decisions and/or
recommendations regarding Plan administration are divided between the CEO and
the Committee. Notwithstanding the foregoing, the Committee retains final
authority regarding all aspects of Plan administration, the resolution of any
disputes, and application of the Plan in any respect to a Covered Employee
including, but not limited to, the determination as to whether a Participant's
Termination was for Cause. The Committee may, without notice, amend, suspend or
terminate the Plan.
(ii) Discretionary Participation and Awards. No Employee has a
claim or right to be a Participant in the Plan, to continue as a Participant, or
to be granted an Award under the Plan. The Company and its Affiliates are not
obligated to give uniform treatment (e.g., Maximum Award Percentages) to
Employees or Participants under the Plan.
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(h) No Employment Rights. Participation in the Plan does not give an
Employee the right to be retained in the employment of the Company or its
Affiliates, nor does it imply or confer any other employment rights. Nothing
contained in the Plan will be construed to create a contract of employment with
any Participant. The Company and its Affiliates reserve the right to elect any
person to its offices and remove Employees in any manner and upon any basis
permitted by law.
(i) No Ownership Rights. Nothing contained in the Plan will be deemed
to require the Company or its Affiliates to deposit, invest or set aside amounts
for the payment of any Awards. Participation in the Plan does not give a
Participant any ownership, security, or other rights in any assets of the
Company or any of its Affiliates.
(j) Withholding Tax. The Company or an Affiliate will deduct from all
Awards paid under the Plan any taxes required by law to be withheld.
(k) Effective Date. The Plan is effective as of October 1, 2000, and
will remain in effect until suspended or terminated by the Committee.
(l) Validity. In the event any provision of the Plan is held invalid,
void, or unenforceable, the same will not affect, in any respect whatsoever, the
validity of any other provision of the Plan.
(m) Applicable Law. The Plan will be governed by and construed in
accordance with the laws of the State of California.
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