1
Exhibit 10.1
PROJECT SOFTWARE & DEVELOPMENT, INC. & SUBSIDIARIES
YEAR ENDED SEPTEMBER 30, 1997
EXECUTIVE BONUS PLAN
September 1996
2
PROJECT SOFTWARE & DEVELOPMENT, INC. & SUBSIDIARIES
YEAR ENDED SEPTEMBER 30, 1997
EXECUTIVE BONUS PLAN
1. PURPOSE
-------
The purpose of the FY97 Executive Bonus Plan ("Plan") is to provide key
management employees of Project Software & Development, Inc. and its
subsidiaries ("Company"), with an incentive to make significant and
extraordinary contributions to the long-term performance and growth of
the Company, to join the common interest of the Company and key
executives, and to attract and retain executives of exceptional
ability.
2. ADMINISTRATION
--------------
2.1 The Plan shall be 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 By adoption of this Plan the Board has deemed eligible those
individuals named in Appendix I. The Board 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 Compensation Committee and 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, 1997.
3.2 PLAN QUARTER means each of the three-month periods ended
December 31, 1996, March 31, 1997, June 30, 1997, and
September 30, 1997.
3.3 PARTICIPANT means any executive of the Company who is
designated in Appendix I.
3
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 FY97 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 Project Software & Development, Inc. and its
subsidiaries included in the consolidated financial
statements.
3.8 PLAN NET INCOME means net income as disclosed in the
consolidated quarterly financial statements of the Company,
before deductions and additions of:
(i) Taxes calculated by net income.
(ii) Extraordinary items as defined under US generally
accepted accounting principles.
4. ELIGIBILITY AND PARTICIPATION
-----------------------------
Executives eligible for bonuses under the Plan shall be those
individuals specified in Appendix I.
5. CALCULATION OF BONUSES
----------------------
5.1 The on-target bonus will be determined as follows:
(a) Each Participant will be eligible to receive an
on-target earnings bonus if the Company achieves
quarterly and annual Plan Net Income as stated in
Appendix II.
(b) The percentage of the on-target earnings bonus
described in Appendix I earned by each Participant on
achievement of the amounts stated in Appendix II in
respect of cumulative quarterly and year end is:
(i) Q1 8%
(ii) Q2 9%
(iii) Q3 11%
(iv) Q4 12%
(v) Year end 60%
4
(c) As a result, the full on-target bonus stated in
Appendix I for each Participant can only be achieved
if all four quarters and annual Plan Net Income equal
or exceed all of the target amounts stated in
Appendix II.
5.2 An incremental bonus is earned on corporate achievement above
the on-target earnings specified in Appendix II and will be
calculated as follows:
(a) The aggregate incremental bonus amount to be
distributed to all Plan Participants in each Plan
Quarter will be 6% of the difference between Plan Net
Income and the amounts stated in Appendix II for the
quarter.
(b) The aggregate incremental bonus amount to be
distributed to all Plan Participants in respect of
year end will be 9% of the difference between Plan
Net Income and the amount stated in Appendix II for
the year.
(c) The amount of bonus calculated in Section 5.2 (a)
and (b) shall be distributed as follows:
CEO 48%
Paul Birch 24%
William Sawyer 14%
Jack Young 14%
6. PAYMENT OF BONUSES
------------------
Bonus earned under the provisions of 5.1 and 5.2 will be payable 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 EMPLOYEE
-----------------------
7.1 If a Participant's employment is terminated prior to the
conclusion of any Plan Quarter or, following the conclusion of
a Plan Year, but prior to distribution of all installments:
(a) By reason of (i) any deliberate material breach by the
Participant of his employment obligations with the
Company, which, if curable, is not cured within ten (10)
days after the Company shall have notified the Participant
in writing describing to Participant all material facts
concerning such breach,
5
(ii) any deliberate material breach by the
Participant of his employment obligations with the
Company, which is not curable according to notice
from the Company, or (iii) the conviction of a
felony or the commission of a material, fraudulent
act by the Participant against the Company;
(b) Voluntarily by Participant other than for a "Reason
Constituting Good Cause." Reasons Constituting Good
Cause are limited to: (i) a significant change in the
nature and scope of Participant's duties combined
with a change in the Participant's title resulting in
a position of materially lesser authority, or (ii) a
reduction in the Participant's base compensation.
Then, Participant shall cease to have any rights to any
amounts unpaid on the date of termination of employment.
7.2 If a Participant's employment is terminated:
(a) By reason of Death, Permanent Disability; or
(b) By the Company for a reason other than one described
at subparagraph 7.1(a);
If such a termination occurs prior to the conclusion of any
Plan Quarter or Year, the Participant shall receive the amount
which the Participant otherwise would have been entitled to
receive had he remained in the employ of the Company through
the end of the Plan Year, but pro-rated based on the number of
complete months of employment with the Company during such
Plan Year. The amount earned shall be paid according to the
Plan rules.
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.
6
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
Financial Officer. 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.
7
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.
8
APPENDIX I
PROJECT SOFTWARE & DEVELOPMENT, INC.
EXECUTIVE BONUS PLAN
ELIGIBLE PARTICIPANTS
On-target Bonus
as a % of On-target
Base Salary Base Salary Bonus
----------- ----------- -----
CEO (Estimate) $250,000 100% $250,000
Paul Birch 168,000 75% 126,000
William Sawyer 150,000 50% 75,000
Jack Young 140,000 50% 70,000
9
APPENDIX II
PROJECT SOFTWARE & DEVELOPMENT, INC.
EXECUTIVE BONUS PLAN
ON-TARGET CUMULATIVE EARNINGS
Q1 FY1997 Year to Date $ 5,400,000
Q2 FY1997 Year to Date $11,300,000
Q3 FY1997 Year to Date $17,850,000
Q4 FY1997 Year to Date $25,250,000
-----------
FY1997 Total Year to Date $25,250,000
===========
The on-target earnings established for each plan quarter and the year for
any year will not be less than 125% of the actual earnings in the
corresponding period of the prior year.