Exhibit 10.2
PHOENIX INTERNATIONAL WORLDWIDE
"PLAN FOR INCENTIVES FOR EMPLOYEES"
[PIE]
VERSION 1.3
JULY 8, 1998
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"PLAN FOR INCENTIVES FOR EMPLOYEES"
[PIE]
VERSION 1.3
JULY 8, 1998
Note: This Plan refers to "business units". A business unit is a
semi-autonomous operation, usually a single country operation (e.g. UK
or France), but sometimes a unit within a country (e.g. Cincinnati or
Neptune or the former IRG US).
1. BACKGROUND
The history of employee incentives for the major business units is summarized
below:
1.1 IBRD-ROSTRUM-GLOBAL (IRG)
IRG Employees were awarded bonuses for the fiscal year ending December
31, 1997, totalling in excess of $900,000, despite major losses in
those organizations. When Phoenix International acquired these
operations, it informed IRG employees that its policy was to award
bonuses only if profits were produced. This affected morale in IRG,
mostly in the UK where, in contrast to IRG US which is now profitable,
a significant profit in 1998 was seen by UK employees to be difficult
to achieve. While profitability is and will always be a key to
incentive plans, Phoenix International's Executive Committee believes
that the employees of business units that are in a "recovery mode",
such as the former IRG-UK, should have an incentive to perform other
than salary, and it is thus revising its incentive plans to provide
such encouragement. This is also true of start up operations, where
profitability may not come quickly.
1.2 FRANCE (I.T.E.M.)
In France, assuming the company meets certain criteria, profit sharing
is compulsory by law for a business unit the size of Phoenix
International France (previously I.T.E.M.). However, profits in France
may be reduced by legitimate charges from corporate and European Head
Offices. This could be viewed by employees as an ARTIFICIAL reduction
in profitability in order to avoid profit sharing. Thus, a formal
incentive plan is required in France to reward employees appropriately,
if the amount provided by government-legislated profit sharing is
inconsistent with amounts awarded to other Phoenix International
business units with similar performance.
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1.3 SPAIN, GERMANY (IPR) AND SWITZERLAND (ANAWA)
Bonuses have been paid on a variable basis in previous years to some
employees in some business units.
1.4 CINCINNATI
While Cincinnati has been profitable for some periods, it has yet to be
profitable for a complete fiscal year. Thus, bonuses have generally not
been paid in Cincinnati.
1.5 MONTREAL
In Montreal, employees have benefited from sharing of 20% of profits
every year (except in loss years) since the start of the company in
1989. However, both Phoenix International's Board of Directors and its
executives feel that use of a bonus formula in Montreal based entirely
on local results is counter-productive in a multinational organization
where mutual feeding of business between business units is desired.
Additionally, the 20% of profit formula, while appropriate when Phoenix
was a private company or a primarily Montreal-based public company, is
an unusual formula for a multinational public company.
1.6 EMPLOYEES WITH CONTRACTUAL BONUSES
Some employees have bonuses defined in their employment agreements.
Such employees will not participate in this incentive plan, although
they may revoke their contractual bonus at any time and become
permanently subject to this plan.
2. OBJECTIVES
To pay bonuses to employees based on results in the fiscal year ending August
31, that will provide an incentive to:
2.1 Maximize Corporate Net Profit
2.2 Maximize Local Net Profit
2.3 Meet or exceed the local budget
2.4 Achieve personal objectives that will assist the company in achieving
its goals
3. THE INCENTIVE POOL FOR 1998
This Plan allocates a pool for incentive payments to various business units. An
interim policy is
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necessary for 1998, since it is a transition year:
a) For Montreal, from a profit sharing scheme to a more formal incentive
plan, equitable with business units in other countries, and
b) For other operations, from their previous plans or lack of plans, to a
formal plan based on performance.
The interim incentive plan for 1998 reflects the pool of cash that can be made
available, considering Phoenix International's profit targets. It will provide
some incentive payment to all employees who perform at least adequately,
regardless of whether or not their business unit is profitable in fiscal 1998.
The pool of money available for incentives for fiscal 1998 will be approximately
20% of corporate net profit, and assuming current forecasts are achieved, this
is estimated at approximately Can$2 million. This pool reflects the Phoenix
International "Plan for Incentives for Employees", to be known as the "PIE".
4. THE 1998 INCENTIVE PLAN
Phoenix International's 1998 Incentive Plan is designed to put different degrees
of emphasis on each of the objectives in 2., above.
Phoenix International recognizes that employees have most influence on their own
activities and the results of their own business units. Nevertheless, without a
strong corporate performance, and without collaboration and business sharing
between business units, funds for incentive payments will not exist, and thus
significant emphasis on corporate profits and international collaboration is
necessary in allocating the PIE. The PIE will be allocated as follows:
a) To reflect corporate net profit: 30% of the PIE
b) To reward local net profit achievement: 30% of the PIE
c) To reward local performance vs budget (or in 1998, forecast): 20% of the PIE
d) For individual achievement and international collaboration: 20% of the PIE
Thus, 70% of the incentive payment will be largely associated with local results
(Local Net Profit, Local Performance vs Budget, and Individual Achievement), and
30% with corporate performance.
Some components of the PIE are allocated based partly on the percentage of the
fiscal year that the business unit was part of the Phoenix International group.
This will be called the Time Factor, or "TF". For example, for the former ANAWA,
which will have been part of Phoenix International for 124 days as of August 31,
1998, its TF will be 124/365 = 34% of what its share would have been if it had
been part of Phoenix International for a full year.
Some components of the PIE are allocated based partly on the number of employees
in the
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business unit, relative to the total number of Phoenix International employees
worldwide. This is called the Employee Factor, or "EF". For example, if the
total number of Phoenix International employees is 1,800 and the number of
employees in Montreal is 1,000, then the Montreal EF is 1,000/1,800 = 55.6%.
Details of PIE allocation are as follows:
4.1 CORPORATE NET PROFIT (30%)
The 30% of the PIE allocated to this category is simply multiplied by
the EF to provide the piece allocated to a business unit.
4.2 LOCAL NET PROFIT (30%)
Allocated proportional to actual Local Net Profit divided by Total
Local Net Profit of all profitable business units. Note that if there
is no Local Net Profit (i.e. a loss), then the allocation to the
business unit from this piece of the PIE is zero.
4.3 LOCAL PERFORMANCE VS FORECAST (20%)
This is allocated based on percentage of Net Profit (or Loss) vs
forecast for 1998 (or in future years, vs budget), adjusted for the EF
and for the TF. This category was included in order to reward startup
and recovering business units whose forecast or budget does not predict
profits, and who therefore are unlikely to benefit from 4.2, above.
4.4 INDIVIDUAL ACHIEVEMENT (20%)
The 20% of the PIE allocated to this category is multiplied by the TF
and the EF to arrive at the allocation for a particular business unit.
5. DISTRIBUTION OF POOLS AMONG EMPLOYEES
Distribution of incentive pools among local employees is to be according to a
local written policy that must be approved by the local COO and the Corporate
CEO, and must be in place by July 31, 1998. The senior management of each
business unit will choose a distribution plan that is consistent with the local
corporate culture and objectives. Some portion of this must be based on
achievement of personal objectives or performance. For all employees at Director
level or higher, at least 35% of the achievement of personal objectives must
reflect the extent to which they have contributed to collaboration between their
own business unit and other business units, particularly business units in other
countries. If an employee at Director level or higher has not had or created the
opportunity to indulge in meaningful international collaboration, he/she will
not be eligible for this portion of his/her bonus.
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In France, individual bonuses will be the greater of government-mandated profit
sharing (GMPS) or the bonuses derived from this plan. If the latter is higher
than the GMPS, then the employee shall receive the GMPS plus the difference
between bonus from this plan and the GMPS.
6. 1999 INCENTIVE PLAN
6.1 BONUS POOL
Phoenix International will budget for an incentive pool of 5% of
salaries (approximately $5 million). No incentive of any type, other
than in 6.2, below, will be paid if corporate Net Profit is below 70%
of target. The incentive pool will vary between 2.5 and 7.5% of salary
for corporate profits between 70% and 130% of target, proportionate in
this range. The pool will be capped at 7.5% of salaries.
6.2 RESCUE FUND
A rescue fund will be established to provide incentives to outstanding
performers in the event corporate profit does not reach 70% of target.
This will be distributed at the discretion of Executive committee.
6.3 INCENTIVE ALLOCATION AND DISTRIBUTION
To be identical to that described for 1998, above.
7. ELIGIBILITY AND PAYMENT
Any full time permanent or part time permanent employee who has been employed
for the last three months of the fiscal year is eligible for this plan.
Employees who have worked less than a full fiscal year (but more than 3 months)
and permanent part time personnel will receive a bonus payment proportional to
their days of service that year. Annual bonuses will be paid within 3 months of
the end of the fiscal year. If prior to payment of a bonus an employee gives
notice of resignation, or his/her contract is not renewed, or he or she is
dismissed, the bonus shall be forfeited. If an employee dies, or is permanently
disabled, he/she or his/her estate shall receive within one month of the event a
bonus proportionate to results achieved in the period between the first day of
the fiscal year and the date in the fiscal year when the event occurs.
8. POSSIBLE EMPLOYEE SHARE OWNERSHIP PLAN (ESOP)
Employee share ownership is seen as means of creating greater interest in profit
generation among employees, and motivating and potentially profitable for the
employee-investor. Phoenix International is investigating an ESOP that will
allow any employee to purchase shares at market prices in an amount up to a
defined percentage of annual salary. Phoenix International would make
arrangements that result in an effective discount to market price for these
employee share
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purchases. These arrangements may vary with business unit, due to variations in
tax and securities laws and regulations. A limit on the total benefit provided
by Phoenix International will be imposed. Such share purchases would most likely
be done on a regular basis through payroll deductions.
Phoenix International will investigate the tax implications for employees in
various countries, and the corporate and securities regulations in various
countries. While viewed as desirable by management, there can be no guarantee
that an ESOP will be implemented in any particular country, or at all, pending
the results of these investigations and an evaluation of the cost of
administering the plan.
9. POSSIBLE SHARE PURCHASES AT PUBLIC OFFERINGS
It is proposed that Phoenix International offer interest free loans, repayable
through payroll deductions, for employees to purchase shares at any public
offering that Phoenix International may make. The shares will be held by Phoenix
International as collateral until the loan is fully repaid.
10. APPROVAL OF PLAN
This Plan for Incentives for Employees has been approved in principle by the
Human Resources Committee of the Board of Directors of Phoenix International,
and the company's Corporate Executive Committee. However, the Plan is subject to
the final approval of Phoenix International's Board of Directors.
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