Exhibit 10.1
MRO SOFTWARE, INC.
YEAR ENDED SEPTEMBER 30, 2003
EXECUTIVE BONUS PLAN
1. PURPOSE
The purpose of the FY 2003 Executive Bonus Plan ("Plan") is to provide
key management employees of MRO Software, Inc. with an incentive to
make significant and extraordinary contributions to the long-term
performance and growth of the Company, to promote the common interest
of the Company, its stockholders and key executives, and to attract and
retain executives of exceptional ability.
2. ADMINISTRATION
2.1 The Plan shall be adopted and administered by the Compensation
Committee of the Board of Directors of the Company (the
"Committee"). The Committee will base all decisions and awards
on quarterly and annual financial statements filed with the
Securities and Exchange Commission.
2.2 The Committee shall have full and complete authority and
discretion to make binding decisions on the administration of
the Plan and shall adopt such rules and regulations and make
all other determinations deemed by it necessary or desirable
for the administration of the Plan.
2.3 The Committee and the Board of Directors of the Company shall
have the authority to amend or terminate the Plan, provided,
however, that if the Plan is amended or terminated, the
Company shall be required to complete payment to each
Participant of the amount which that Participant otherwise
would have received based on the provisions set forth in
paragraph 7.2.
3. DEFINITIONS
3.1 Plan Year means the fiscal year ended September 30, 2003.
3.2 Plan Quarter means each of the three-month periods ended
December 31, 2002, March 31, 2003, June 30, 2003, and
September 30, 2003.
3.3 Participant means any executive of the Company who is
designated in Appendix I.
3.4 Permanent Disability, means a Participant's inability, as a
result of illness, incapacity, disease or calamity to perform
a substantial part of his primary job responsibilities as set
forth in his employment contract or job description for any
concurrent six month period.
3.5 Plan means this FY 2003 Executive Bonus Plan.
3.6 Except as otherwise indicated by the context, any masculine
term used herein also shall include the feminine; the plural
shall include the singular and the singular shall include the
plural.
3.7 Company means MRO Software, Inc. and its subsidiaries included
in its consolidated financial statements.
3.8 Earnings and EPS mean pro-forma earnings per share as
disclosed by the Company, consisting of earnings per share
determined under GAAP, adjusted for the amortization of
goodwill and other intangibles on an after-tax basis in
accordance with past practice of the Company. Earnings may
also be adjusted to reflect such deductions and additions of
extraordinary items and one-time expenses as may be approved
by the Committee for purposes of administering this Plan.
Earnings and EPS are calculated after giving effect to any
bonus that is paid or proposed to be paid under this Plan.
3.9 Revenue means total revenues as disclosed in the consolidated
quarterly financial statements of the Company.
4. ELIGIBILITY AND PARTICIPATION
Executives eligible for bonuses under the Plan shall be those
individuals specified in Appendix I.
5. BONUS MECHANISM
5.1 The amount of on-target bonus that is paid will be determined
as follows:
(a) Each participant is eligible to earn forty (40%)
percent of the on-target bonus based on the
achievement of quarterly goals, fifty (50%) percent
based on the achievement of annual goals and ten
(10%) based on stock ownership guidelines. The
quarterly and annual Revenue and EPS goals are stated
in Appendix II.
(b) The percentage of the on-target bonus described in
Appendix I earned by each Participant on achievement
of the amounts stated in Appendix II in respect of
each Plan Quarter is:
(i) Q1 5% based on Revenue, 5% based on Earnings
(ii) Q2 5% based on Revenue, 5% based on Earnings
(iii) Q3 5% based on Revenue, 5% based on Earnings
(iv) Q4 5% based on Revenue, 5% based on Earnings
40% in total
In the event that the achievement for Revenue in any quarter
is less than the amount stated in Appendix II for that
quarter, but is equal to or greater than 97.5% of such amount,
then a partial bonus shall be paid to each Participant. The
partial bonus shall be equal to the actual amount of Revenue
achieved for the quarter divided by the amount of the Revenue
goal for the quarter as stated in Appendix II times the
on-target bonus the participant would otherwise have earned
for the Revenue component (i.e. 5% of total on-target bonus).
Achievement for Earnings must be at 100% to be eligible for
payout on that component. No incremental bonus is payable to
any participant for achievement above 100% in any quarter.
(c) The percentage of the on-target bonus described in
Appendix I earned by each Participant on achievement
of the amounts stated in Appendix II in respect of
year end performance is:
(i) 20% based on revenue
(ii) 30% based on earnings
(iii) 10% based on stock ownership
60% in total
As stated in Appendix II, there is a minimum, target and
maximum achievement level for payout based on annual
performance, for both the Revenue and the Earnings component,
subject to the following:
(i) No annual bonus payments will be made for
either component if the minimum Earnings
number is not achieved (for fiscal 2003 this
is .30); and
(ii) Actual payment for performance between
minimum, target and maximum achievement will
be prorated accordingly.
(d) Each participant is eligible to earn ten (10%)
percent of the on-target bonus stated in Appendix I
based on stock ownership at the end of the Plan Year,
as follows:
(i) The value of Company stock owned by each
Participant must be equal to or greater than
10% of each Participant's on-target bonus
described in Appendix I.
(ii) The value of Company stock is determined
based on the number of shares owned
multiplied by the price of Company stock at
the close of business on the last day in
September that participants
are allowed to trade under the Company's
Policy on Insider Trading.
In order for this bonus to be paid the annual target as
defined in Appendix II must be achieved.
6. PAYMENT OF BONUSES
Funded bonus will be payable not later than sixty days after the end of
the period in which the bonus was earned provided that the results for
the period have been issued to the public.
7. TERMINATION OF EMPLOYMENT
If a Participant's employment by the Company is terminated, the
participant's entitlement to payment under this Plan shall be as
determined under the terms of the Company's Severance Pay Plan, as
amended to and in effect as of the date of termination.
8. BENEFICIARY DESIGNATIONS
8.1 If a Participant's employment with the Company is terminated
by his death or if he dies after termination of his employment
but prior to the distribution to him of all amounts payable to
him under the Plan, any amounts otherwise payable to him
hereunder shall be distributed to his designated beneficiary
or beneficiaries. For the purposes of this plan a
Participant's beneficiary will be the beneficiary designated
under Company provided life insurance coverage. However, a
Participant may from time to time revoke or change any
beneficiary designation on file with the Company.
If there is no effective beneficiary designation on file with
the Company at the time of a Participant's death, distribution
of amounts otherwise payable to the deceased Participant under
this Plan shall be made to the Participant's estate. If a
beneficiary designated by the Participant to receive his
benefits shall survive the Participant but die before
receiving all distributions hereunder, the balance thereof
shall be paid to such deceased beneficiary's estate, unless
the deceased beneficiary designation provides otherwise.
8.2 The Company shall deduct from the distributions to be made to
a Participant or his designated beneficiary or beneficiaries
under this Plan any federal, state or local withholding or
other taxes or charges which the Company is from time to time
required to deduct under applicable law and all amounts
distributable under this Plan are stated herein before any
such deductions. The Company may rely on a written opinion
from its legal counsel regarding any questions which may arise
in connection with any such deductions.
9. RIGHTS, PRIVILEGES AND DUTIES OF PARTICIPATION
9.1 No participant or other person shall have any interest in any
fund or in any specific asset or assets of the Company and its
Subsidiaries by reason of being a Participant under this Plan
nor any right to receive any distributions under the Plan
except as and to the extent expressly provided in the Plan.
9.2 The Company shall have the right, but shall be under no
obligation, to segregate cash to fund bonuses payable under
the Plan. However, any such segregated amounts shall at all
times remain Company assets, subject to the claims of its
creditors.
9.3 Each Participant shall be entitled to receive a current copy
of the Plan upon his designation as a Participant if a written
request for a copy of the Plan is provided to the Chief
Executive Officer or the Chairman of the Board. Thereafter, as
long as he remains a Participant, he shall be entitled to
receive copies of any amendments to the Plan within sixty (60)
days after their adoption.
9.4 The designation of any employee as a Participant under this
Plan shall not be construed as conferring upon such employee
any right to remain in the
employ of the Company and each such Participant shall remain
an employee at will. The right of the Company to discipline or
discharge an employee shall not be affected in any manner by
reason of such employee's designation as a Participant under
this Plan.
9.5 To the extent permitted by law, the right of any Participant
or any beneficiary to receive any payment hereunder shall not
be subject to alienation, transfer, sale, assignment, pledge,
attachment, garnishment or encumbrance of any kind. Any
attempt to alienate, transfer, sell, assign, pledge or
otherwise encumber any such payment whether presently or
thereafter payable, shall be void. Any payment due hereunder
shall not in any manner be subject to any debts or liabilities
of any Participant or his beneficiary.