Executive Incentive Plan – Macrovision Corp.
MACROVISION CORPORATION
EXECUTIVE INCENTIVE PLAN (EIP)
For 1996
February 1, 1996
COMPANY CONFIDENTIAL
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CONFIDENTIAL
[** Confidential Treatment has been requested for certain portions of this
document]
EXECUTIVE INCENTIVE PLAN (EIP)
FOR MACROVISION CORPORATE EXECUTIVES
February 1, 1996
INTRODUCTION
The Macrovision Corporation Executive Incentive Plan ('EIP') has been
established to provide incentive and reward for those key executives who, by
virtue of their position, have a significant impact on the financial performance
of the Company. It has been created with the belief that those executives who
are directly responsible for managing a major profit & loss or cost center and
who materially contribute to growth in earnings and shareholder value should be
eligible to participate in a plan which provides for annual cash incentive
awards based upon annual performance.
For each plan year, eligible participants will be involved in the determination
of annual goals and objectives that will be used as a measurement of
performance. At the end of the fiscal year, the President will review the
accomplishments of all participants and make appropriate recommendations to the
Compensation Committee based upon the Company's overall performance and the
individual executive's attainment of his/her goals. The Compensation Committee
will have the full authority to establish whether those recommended incentive
awards will be approved and the full latitude to establish the final incentive
award value, which may be zero in all cases.
The purpose of this policy is to establish incentive award guidelines. In
determining the final incentive award, Company performance, individual
accomplishment of goals and other considerations will be taken into account on
an individual basis.
OVERVIEW
The fundamental philosophy behind the EIP is to reward participants relative
to their individual contribution/performance toward the overall Macrovision
team effort in achieving annual corporate performance goals - as defined in
the annual Business Plan with respect to EBIT (earnings before interest and
taxes), or Corporate Operating Income.
The President reviews and approves individual EIP departmental goals at the
beginning of the Plan Year. These goals are weighted according to a
pre-determined formula based on 50% financial, and 50% for specific
strategic/tactical objectives. The President will assure that each
executive's individual strategic/tactical objectives will represent a
'stretch' to accomplish.
It should be noted that the Company has a variety of other Incentive Award
programs that are designed to motivate ALL employees throughout the year.
These other programs include Employee Profit Sharing, Performance Incentive
Plan (PIP), Special Recognition Awards, Inventions Reward Plan and
Time-To-Market Award.
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CONFIDENTIAL
RECOGNITION OF EXTRAORDINARY INDIVIDUAL PERFORMANCE
In the normal administration of the EIP, it is possible that the corporate EBIT
target will be achieved and that certain executives may exceed their financial
and strategic/tactical goals, while others may fall short.
In order to justly reward those executives that have exceeded their goals, the
EIP provides for individual payouts, or Individual Performance Ratings, in
excess of 100% of the Unmodified Corporate Performance Incentive Award.
1996 PARTICIPANTS
INDIVIDUAL POSITION
---------- --------
Mark Belinsky VP ACP Theatrical and ACP/PPV
Patrice Capitant Direction Engineering
Brian Dunn VP Cineguard
Greg Ellis Director, Pay TV Components/Licensing
Whit Jackson VP Transmissions Systems
Carl Jorgensen VP Operations
Alistair Knox UK/Europe, M.D.
William Krepick President
Masao Kumei Japan, KK, M.D.
Rich Matuszak VP ACP Special Interest
Robert Netter, Jr. VP/CFO
John Ryan Chairman
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CONFIDENTIAL
DEFINITIONS OF TERMS
A. CORPORATE PERFORMANCE RATING
The ratio in % of Actual EBIT to EBIT Plan.
For 1996, the Business Plan EBIT is [**]. EBIT (Earnings Before
Interest and Taxes) is also known as Operating Income.
B. UNMODIFIED INCENTIVE AWARD
The percentage of participant's gross annual salary for a given Corporate
Performance Rating, which is independent of the participant's Individual
Performance Rating.
C. STATEMENT OF GOALS
A written sent of objectives (see attached form), unique to each
participant that establishes quantifiable objectives and measurements of
performance. The goals are all tied directly to the Corporate Business
Plan and specified objectives.
D. INDIVIDUAL PERFORMANCE RATING
Each participant has a Statement of Goals (pps. 10, 11) which establishes
his or her objectives for the Plan Year. They include a combination of
Financial, Strategic and Tactical goals. Each set of goals carries a
weighting factor which allows for quantification of the Individual
Performance Rating by the President. It is the responsibility of the
participant to insure that appropriate documentation is maintained to
support the measurement and accomplishment of each particular goal.
Additional or substitute accomplishments may be recognized in the
measurement of factual Individual Performance Ratings.
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CONFIDENTIAL
[** Confidential Treatment has been requested for certain portions of this
document]
DETERMINATION OF AWARDS
(See next page for 1996 rating chart)
1. CALCULATE THE CORPORATE PERFORMANCE RATING
Actual Operating Income (EBIT - earnings before interest and taxes)
divided by Plan Operating Income, in %.
Actual Operating Income is the final year-end Operating Income including
reserves for EIP Awards.
NOTE: Corporate Performance Rating must equal [**] of the Plan before
there is any payout.
2. CALCULATE THE UNMODIFIED INCENTIVE AWARD
Example: Assume Corporate Performance Rating of [**]
The Unmodified Incentive Award would be [**]
3. ESTABLISH THE INDIVIDUAL PERFORMANCE RATING
From the Statement of Goals, the participant and President will determine
the final Individual Performance Rating, based upon the attainment of the
specified, Financial and Strategic/Tactical Goals.
The Individual Performance Rating can be 0 to 200%, with 100% indicating
the satisfactory completion of all goals. The Individual Performance
Rating can exceed 100% in cases of exceptional performance.
Example: Assume individual achieved 90% of financial goals, and 80% of
strategic/tactical goals.
The Individual Performance Rating would be [0.9x50%] + [0.8x50%]
= 85%
4. DETERMINATION OF FINAL INDIVIDUAL INCENTIVE AWARD
Multiply the Unmodified Incentive Award by the Individual Performance
Rating and the Gross Annual Year-end Salary to determine the Final
Individual Incentive Award.
Example: 85% x [**] = [**] EIP payout (as percentage of actual salary)
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CONFIDENTIAL
[** Confidential Treatment has been requested for certain portions of this
document]
PERFORMANCE RATING CHART TO DETERMINE
UNMODIFIED INCENTIVE AWARD
CORPORATE
EBIT PERFORMANCE UNMODIFIED
(ACTUAL) RATING (%) INCENTIVE AWARD %
-------- ---------- -----------------
$ [**] [**] [**]
100 20 1996 PLAN
[**] [**]
NOTE: Interpolations apply for performance in between ratings listed
above.
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CONFIDENTIAL
[** Confidential Treatment has been requested for certain portions of this
document]
IMPLEMENTATION PROCEDURE
ADMINISTRATION
The Plan will be administered by the Compensation Committee which will have
the right to interpret the Plan, confirm award decisions, and establish
guidelines for determining individual awards and rules for the operation of
the Plan.
This Plan sets forth management's intent and it is the exclusive domain of
the Compensation Committee to interpret the Plan. All Compensation Committee
decisions regarding the Plan and award determinations are final.
The President's and Chairman's incentive awards will be determined solely by
the compensation committee, taking into account the overall Company
performance relative to the established Business Plan, individual
accomplishments and any special considerations.
ELIGIBILITY
The Chairman, President, executives who report directly to the President,
and key business line executives who have profit & loss responsibility are
eligible to participate in the Plan. Final approval of eligible executives
is made by the Board Chairman upon recommendation by the President prior to
the beginning of the Plan's fiscal year. EIP participants are NOT eligible
to participate in the Employee Profit Sharing Plan, Special Recognition
Awards program, or Employee Performance Incentive Plan. Participation in the
Plan does not imply employment for any specified period of time, nor does it
constitute a contract of employment, nor does it guarantee any amount of
award.
PRORATE AWARDS
Participants with less than 4 months service in an Executive Manager
position are ineligible for an Incentive Award. Awards to participants in
Executive Management Incentive positions for more than 4 months, but less
than 1 year, will be pro-rated to the nearest month.
DURATION
The Compensation Committee shall review this Plan annually and make any
amendments or revisions thereto which it deems appropriate or desirable under
the circumstances, and the Plan shall remain in effect until amended or
terminated by the Compensation Committee.
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CONFIDENTIAL
PAYMENT
Incentive Award payments will be made no later than March 31st of the
following year, allowing the Company adequate time to formally analyze its
financial results according to the regulations and procedures of a public
company.
Awards will be calculated using the participant's actual, earned gross annual
salary of the Plan Year. To receive an award if one is granted, the
participant must remain an employee of the Company through the payment date.
Failure to do so will result in forfeiture of the award.
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CONFIDENTIAL
MACROVISION CORPORATION
EXECUTIVE INCENTIVE PLAN
Form For Statement of Goals
For Each Participant
1996 Fiscal Year
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CONFIDENTIAL
EXECUTIVE INCENTIVE PLAN
STATEMENT OF GOALS
FOR YEAR 1996
Name: __________________________ Supervisor:__________________________
Title: __________________________ Signed:______________________________
Signed:__________________________ Date:________________________________
Date: __________________________
The following is a statement of financial, strategic and tactical objectives
for 1996 that will serve as a basis for overall performance evaluation and
determination of year-end executive incentive awards. Goals will be
quantified as to amount, date and measurement basis and will be weighted as
follows: financial 50%; strategic/tactical 50%.
CORPORATE GOAL: Achieve Earnings Before Interest and Taxes of [**]
A. FINANCIAL (50%)
1. _________________________________________________________________
Actual:____________________________________
2. _________________________________________________________________
Actual:____________________________________
B. STRATEGIC/TACTICAL (50%)
1. _________________________________________________________________
Result:____________________________________
2. _________________________________________________________________
Result:____________________________________
3. _________________________________________________________________
Result:____________________________________
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CONFIDENTIAL
[** Confidential Treatment has been requested for certain portions of this
document]
4. _________________________________________________________________
Result:____________________________________
5. _________________________________________________________________
Result:____________________________________
6. _________________________________________________________________
Result:____________________________________
7. _________________________________________________________________
Result:____________________________________
8. _________________________________________________________________
Result:____________________________________
Additional/substitute goals accomplished during year:
____________________________________________________________________________
____________________________________________________________________________
____________________________________________________________________________
____________________________________________________________________________
____________________________________________________________________________
____________________________________________________________________________
____________________________________________________________________________
____________________________________________________________________________
____________________________________________________________________________
____________________________________________________________________________
____________________________________________________________________________
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CONFIDENTIAL
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