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Exhibit 10.18
BIRMAN MANAGED CARE, INC.
EXECUTIVE BONUS PLAN DOCUMENT
1. Purpose:
The Birman Managed Care, Inc. Executive Bonus Plan (the "Plan") is for
executive employees to earn incentive compensation based on his or her
individual performance and/or the financial performance of BIRMAN MANAGED CARE,
INC. and its subsidiaries (collectively referred to herein as the "Company").
The effective date of this Plan Document is March 1, 1996.
2. Certain Definitions:
(a) "BOARD" means the Board of Directors of the Company.
(b) "BONUS EARNED" means the amount of incentive compensation that is
payable to a Participant under the Plan with respect to any Bonus Year.
(c) "BONUS YEAR" means that fiscal year with respect to which the
amount of a Bonus is determined.
(d) "COMMITTEE" means the Compensation Committee of the Board of
Directors.
(e) "EXECUTIVE" shall have the meaning ascribed in Section 4.
(f) "EXECUTIVE OFFICER" means any "Officer" as defined in Rule 16a-1(f)
of the Securities Exchange Act of 1934 of the Parent Company and such other
person as may be designated by the Committee to be an Executive Officer or by
the Board of Directors of the Parent Company.
(g) "NET REVENUE" means gross revenue of the company and subsidiaries
net of any reserve or allowance for doubtful accounts. Net revenue for operating
health plans which are consolidated is defined as total gross premium less
reserves for doubtful accounts and direct medical expenses.
(h) "PARTICIPANT" has the meaning ascribed in Section 4.
(i) "PLAN" means this Executive Bonus Plan, as the same may be amended
from time to time.
(j) "MAXIMUM BONUS AMOUNT" is the Participant's annual salary
multiplied against the "Target Bonus Percentage".
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(k) "PARENT COMPANY" means Birman Managed Care, Inc.
(l) "TARGET BONUS PERCENTAGE" means the percentage applicable to the
Participant's annual base salary as further defined under section 5.
(m) "OPERATING PROFIT" means an amount equal to net revenue less the
following expense categories: cost of revenue, general and administrative,
research and development and accrued executive bonuses all calculated consistent
with the Company's accounting policies in accordance with generally accepted
accounting principals.
(n) "OPERATING PROFIT PERCENTAGE" means a percentage amount equal to
Operating Profit divided by Net Revenue.
3. Administration:
This Plan shall be administered by the Committee. The Committee shall
hold meetings at such times and places as it may determine. Acts approved by a
majority of the members of the Committee shall be the valid acts of the
Committee. The interpretation and construction by the Committee of any provision
of the Plan shall be final, binding and conclusive.
4. Eligibility:
Each person who on June 30th of the Bonus Year is employed by the
Company and who is or has been designated "Executive" by the Board of Directors
and who does not have an alternative incentive program shall be a participant
("Participant") in the Plan and shall be eligible to participate in the Plan for
all or any portion of the Bonus Year as to which such person participated. Any
person who is initially hired by the Company during a Bonus Year and who is
designated as a Participant shall participate in that portion of the Bonus Year
equal to the number of months such person was employed by the Company divided by
twelve (12). For this purpose, a person shall be treated as employed as of the
first day of the calendar month in which they were hired if they were hired on
or before the 15th day of the month. All other persons shall be treated as
employed as of the first day of the calendar month following his or her date of
hire. Any person whose employment with the Company terminated during the Bonus
Year for any reason other than death, disability or retirement, shall
participate in the Plan only with respect to that portion of the Bonus year
equal to the number of months such person was employed by the Company divided by
twelve (12). Notwithstanding anything to the contrary contained in the Plan, for
the purpose of determining any Participant's entitlement to any Bonus under any
section of the Plan, the Committee may designate the status of such Participant
as either an Executive or as an Executive Officer solely for the purpose of
applying any specific provision of the Plan without regard to such Participant's
status as either an Executive Officer or as an Executive for purpose of applying
any other provisions of the Plan.
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5. Calculation of Maximum Bonus Amount:
The Maximum Bonus Amount is based on several components. First the Maximum Bonus
Amount is determined based on the Participant's annual base salary multiplied by
the Target Bonus Percentage from the following table.
Net Revenue Target Bonus Percentage
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Less than 10 Million 50%
10 Million to 50 Million 100%
Over 50 Million 200%
After the Maximum Bonus Amount has been determined, then the Bonus Earned will
be calculated.
6. Calculation of Bonus Earned:
To determine how much of the Maximum Bonus Amount has been earned, the following
three parameters will be reviewed: Company profitability, Net Revenue Growth,
and individual performance. No more than 100% of the Maximum Bonus Amount can be
earned in any one fiscal year. The criteria of each portion is described below:
PORTION A - COMPANY PROFITABILITY: Portion A is based upon the year end
consolidated financial performance of the Company. The Maximum Bonus Amount will
be multiplied by the applicable Bonus Percentage Earned as set forth below to
determine the amount that will be paid under this portion of the Plan.
Operating Profit Percentage Bonus Percentage Earned
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Less than 5% 0.0%
5% thru 10% 10.0%
11% thru 15% 20.0%
16% thru 20% 30.0%
21% thru 25% 40.0%
26% thru 29% 50.0%
30% or greater 60.0%
PORTION B - REVENUE GROWTH: Portion B is based on the achievement of revenue
growth goals established by the Company at the beginning of each fiscal year and
approved by the Committee. The amount of Bonus Earned will be determined based
on the percentage of Net Revenue growth achieved as a percentage of the goal
established by the Company at the beginning of the year. The Company's annual
audited financial statements will be used to determine achievement of the
revenue growth goals established at the beginning of the year. The Maximum Bonus
Amount will be multiplied by the
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applicable Percentage of Bonus Earned as set forth below to determine the amount
that will be paid under this portion of the Plan.
Revenue Growth Goals Achieved Bonus Earned Percentage
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Less than 50% of Growth Goal 0.0%
50% to 74% of Growth Goal 20.0%
75% to 94% of Growth Goal 30.0%
95% to 99% of Growth Goal 40.0%
100% to 110% of Growth Goal 50.0%
Over 110% of Growth Goal 60.0%
PORTION C - INDIVIDUAL PERFORMANCE: Portion C is based on the Participant's
individual performance, achievement of goals and contribution to the Company
during the Bonus Year. The Participant can earn up to 10% of the Maximum Bonus
Amount under this portion of the Plan.
MAXIMUM BONUS AMOUNT TO BE PAID:
Even though it is possible for the sum of portions A, B and C to exceed 100%,
the maximum that will be awarded in any bonus year is the Maximum Bonus Amount
as defined in section 5.
7. Payment of Bonus Amount Earned:
Bonuses will normally be paid three months after the fiscal year end.
Alternative payment arrangements can be approved by the Committee.
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