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FY2001 NEBS EXECUTIVE BONUS PLAN
(EFFECTIVE AS OF JUNE 26, 2000)
This Executive Bonus Plan (the "Plan") was adopted by the Board of
Directors of New England Business Service, Inc. (the "Company") on July 28, 2000
upon the recommendation of its Organization and Compensation Committee for the
purpose of providing incentive compensation for the senior executives and
managers of the Company and its subsidiaries. This Plan shall be governed by
the following definitions and calculations.
I. Participants. The participants in the Plan for the 2001 fiscal year of
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the Company (the "Year") and their respective target bonus percentages
shall be as follows:
A. Officers of the Company.
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Chairman, President & Chief Executive Officer 70%
Senior Vice President and President, Diversified Operations 60%
Senior Vice President and President, NEBS Direct Marketing 60%
Senior Vice President and President, Chiswick Trading 60%
Senior Vice President and President, RapidForms 60%
Senior Vice President and President, Premium Wear 60%
Senior Vice President, Information Systems 60%
Senior Vice President, Chief Financial Officer 60%
Senior Vice President, Human Resources 60%
Senior Vice President, Manufacturing and Technical Operations 60%
Senior Vice President, Business Management and Development 60%
Senior Vice President, Corporate Channel Marketing 60%
Vice President and President, McBee 60%
Vice President, Investor Relations 50%
Vice President, Controller 50%
Vice President, General Counsel and Secretary 50%
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B. CEOs of Subsidiaries.
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Managing Director, NEBS Business Stationery 40%
President and Chief Executive, NEBS Business Forms, Ltd. 40%
II. Target Bonus. The target bonus payable to a participant with respect
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to the Year shall be an amount arrived at by multiplying his base
salary at the end of the Year by his target bonus percentage.
III. Actual Bonus. The actual bonus of each participant shall be calculated
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based on actual results vs. targeted objectives. No bonus shall be paid
if the Company's consolidated net income for the Year is less than 90%
of the targeted net income objective.
A. Chairman, President & Chief Executive Officer.
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The actual bonus of this participant shall be the sum of the
following:
(a) Each 1% by which consolidated net sales are more than 95% up
to 105% of the targeted consolidated net sales for the Year
equals 5.6% of his base salary, plus each 1% by which
consolidated net sales are more than 105% of the targeted
consolidated net sales for the Year equals 2.8% of his base
salary; and
(b) Each 1% by which consolidated net income is more than 95% up
to 105% of the targeted consolidated net income for the Year
equals 5.6% of his base salary, plus each 1% which
consolidated net income is more than 105% of the targeted
consolidated net income for the Year equals 2.8% of his base
salary; and
(c) Up to 14% of his base salary based on his attainment of
certain personal objectives established by the Organization
and Compensation Committee, as determined by the latter.
B. Senior Vice President, Chief Financial Officer; Senior Vice
President, Human Resources; Senior Vice President, Information
Systems; Senior Vice President, Manufacturing and Technical
Operations; Senior Vice President, Corporate Channel Marketing.
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The actual bonus of these participants shall be the sum of the
following:
(a) Each 1% by which consolidated net sales are more than 95% up
to 105% of the targeted consolidated net sales for the Year
equals 4.8% of his base salary, plus each 1% by which
consolidated net sales are more than 105% of the targeted
consolidated net sales for the Year equals 2.4% of his base
salary; and
(b) Each 1% by which consolidated net income is more than 95% up
to 105% of the targeted consolidated net income for the Year
equals 4.8% of his base salary, plus each 1% by which
consolidated net income is more than 105% of the targeted
consolidated net income for the Year equals 2.4% of his base
salary; and
(c) Up to 12% of his base salary based on the degree of his
attainment of certain personal objectives established by the
Chairman, President & Chief Executive Officer, as determined
by the latter.
C. Senior Vice President, Business Management and Development.
The actual bonus of this Participant shall be the sum of the
following:
(a) Each 1% by which NEBS Canada net sales are more than 95% up
to 105% of the targeted channel net sales for the Year
equals 1.8% of his base salary, plus each 1% by which
channel net sales are more than 105% of the targeted channel
net sales for the Year equals 0.9% of his base salary; and
(b) Each 1% by which consolidated net income is more than 95% up
to 105% of the targeted consolidated net income for the Year
equals 3% of his base salary, plus each 1% by which
consolidated net income is more than 105% of the targeted
consolidated net income for the Year equals 1.5% of his base
salary; and
(c) Each 1% by which NEBS Canada profit from operations is more
than 95% up to 105% of the targeted channel profit from
operation for the Year equals 1.8% of his base salary.
Payment for the attainment of channel profit from operations
will be capped at 200% of target payment (105%) achievement;
and
(d) Each 1% by which NEBS Europe net sales are more than 95% up
to 105% of the targeted channel net sales for the Year
equals 1.2% of his base salary, plus each 1% by which
channel net sales are more
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than 105% of the targeted channel net sales for the Year
equals 0.6% of his base salary; and
(e) Each 1% by which NEBS Europe profit from operations is more
than 95% up to 105% of the targeted channel profit form
operation for the Year equals 1.8% of his base salary.
Payment for the attainment of channel profit from operations
will be capped at 200% of target payment (105%) achievement;
and
(f) Up to 12% of his base salary based on his attainment of
certain personal objectives established by the Chairman,
President & Chief Executive Officer, as determined by the
latter.
D. Senior Vice President and President, Diversified Operations;
Senior Vice President and President, Chiswick Trading; Vice
President and President, McBee.
The actual bonus of this participant shall be the sum of the
following:
(a) Each 1% by which consolidated net income is more than 95% up
to 105% of the targeted consolidated net income for the Year
equals 3% of his base salary, plus each 1% by which
consolidated net income is more than 105% of the targeted
consolidated net income for the year equals 1.5% of his base
salary; and
(b) Each 1% by which channel net sales are more than 95% up to
105% of the targeted channel net sales for the Year equals
3% of his base salary, plus each 1% by which channel net
sales are more than 105% of the targeted channel net sales
for the Year equals 1.5% of his base salary; and
(d) Each 1% by which channel profit from operations is more than
95% up to 105% of the targeted channel profit from
operations for the Year equals 3.6% of his base salary.
Payment for the attainment of channel profit from operations
will be capped at 200% of target payment (105%); and
(e) Up to 12% of his base salary based on the degree of his
attainment of certain personal objectives established by the
Chairman, President & Chief Executive Officer, as determined
by the latter.
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E. Senior Vice President and President, NEBS Direct Marketing
The actual bonus of this participant shall be the sum of the
following:
(a) Each 1% by which consolidated net income is more than 95%
up to 105% of the targeted consolidated net income for the
Year equals 3% of his base salary, plus each 1% by which
consolidated net income is more than 105% of the targeted
consolidated net income for the Year equals 1.5% of his base
salary; and
(b) Each 1% by which channel net sales are more than 95% up to
105% of the targeted channel net sales for the Year equals
3.6% of his base salary, plus each 1% by which channel net
sales are more than 105% of the targeted channel net sales
for the Year equals 1.8% of his base salary; and
(c) Each 1% by which channel profit form operations is more than
95% up to 105% of the targeted channel profit from
operations for the Year equals 3% of his base salary.
Payment for the attainment of channel profit from operations
will be capped at 200% of target payment (105%) achievement;
and
(d) Up to 12% of his base salary based on the degree of his
attainment of certain personal objectives established by the
Chairman, President and Chief Executive Officer, as
determined by the latter.
F. Vice President and President, RapidForms.
The actual bonus of this participant shall be the sum of the
following:
(a) Each 1% by which consolidated net income is more than 95% up
to 105% of the targeted consolidated net income for the Year
equals 3% of his base salary, plus each 1% by which
consolidated net income is more than 105% of the targeted
consolidated net income for the Year equals 1.5% of his base
salary; and
(b) Each 1% by which combined RapidForms and McBee Systems
profit from operations is more than 95% up to 105% of the
targeted profit from operations for the Year equals 3% of
his base salary. Payment for the attainment of profit from
operations will be capped at 200% of target payment (105%)
achievement; and
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(c) Each 1% by which combined RapidForms and McBee Systems net
sales are more than 95% up to 105% of the targeted net sales
for the Year equals 3.6% of this base salary, plus each 1%
by which combined RapidForms and McBee Systems net sales is
more than 105% of the targeted net sales for the Year equals
1.8% of his base salary; and
(d) Up to 12.0% of his base salary based on the degree of
attainment of certain personal objectives established by the
Chairman, President & Chief Executive Officer, as determined
by the latter.
G. Senior Vice President and President PremiumWear.
The actual bonus of this participant shall be the sum of the
following:
(a) Each 1% by which consolidated net income is more than 95% up
to 105% of the targeted consolidated net income for the Year
equals 3.6% of his base salary, plus each 1% by which
consolidated net income is more than 105% of the targeted
consolidated net income for the Year equals 1.8% of his base
salary; and
(b) At target, 21% of his base salary will be earned for the
achievement of PremiumWear net sales with payment commencing
when a specified threshold level of achievement is attained,
at which point a payout equivalent to a specified minimum
percentage of the participant's annual base salary, times
the weighting will be earned. Above the threshold level of
achievement, the percentage of payout will increase on a
linear basis until a specified midpoint level of achievement
is attained, at which point a payout equivalent to a
specified midpoint percentage of the participant's annual
base salary, times the weighting, will be earned. Above the
midpoint level of achievement, the percentage of payout will
increase on a linear basis until a specified target level of
achievement is attained, at which point a payout equivalent
to a specified target percentage of the participant's annual
base salary, times the weighting, will be earned. Above the
specified target level of achievement, the percentage of
payout will increase on a linear basis until a specified
maximum level of achievement is attained, at which point a
payout equivalent to a specified maximum level of
achievement is attained, at which point a payout equivalent
to a specified maximum percentage of the participant's
annual base salary, times the weighting, will be earned.
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(c) At target, 21% of his base salary will be earned for the
achievement of PremiumWear operating income with payment
commencing when a specified threshold level of achievement
is attained, at which point a payout equivalent to a
specified minimum percentage of the participant's annual
base salary, times the weighting will be earned. Above the
threshold level of achievement, the percentage of payout
will increase on a linear basis until a specified midpoint
level of achievement is attained, at which point a payout
equivalent to a specified midpoint percentage of the
participant's annual base salary, times the weighting, will
be earned. Above the midpoint level of achievement, the
percentage of payout will increase on a linear basis until a
specified target level of achievement is attained, at which
point a payout equivalent to a specified target percentage
of the participant's annual base salary, times the
weighting, will be earned. Above the specified target level
of achievement, the percentage of payout will increase on a
linear basis until a specified maximum level of achievement
is attained, at which point a payout equivalent to a
specified maximum percentage of the participant's annual
base salary, times the weighting, will be earned.
H. Vice President, Investor Relations; Vice President, Controller;
Vice President, General Counsel and Secretary.
The actual bonus of these participants shall be the sum of the
following:
(a) Each 1% by which consolidated net sales are more than 95% up
to 105% of the targeted consolidated net sales for the Year
equals 4% of his base salary, plus each 1% by which
consolidated net sales are more than 105% of the targeted
consolidated net sales for the Year equals 2.0% of his base
salary; and
(b) Each 1% by which consolidated net income is more than 95% up
to 105% of the targeted consolidated net income for the Year
equals 4% of his base salary, plus each 1% by which
consolidated net income is more than 105% of the targeted
consolidated net income for the Year equals 2.0% of his base
salary; and
(c) Up to 10% of his base salary based on the degree of his
attainment of certain personal objectives established by the
Chairman, President & Chief Executive Officer, as determined
by the latter.
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I. Chief Executive Officers of Subsidiaries.
The actual bonus of these participants shall be the sum of the
following:
(a) Each 1% by which consolidated net income is more than 95% up
to 105% of the targeted consolidated net income for the Year
equals 2% of his base salary, plus each 1% by which
consolidated net income is more than 105% of the targeted
consolidated net income for the Year equals 1.0% of his base
salary; and
(b) Each 1% by which subsidiary net sales are more than 95% up
to 105% of the targeted subsidiary net sales for the Year
equals 3.2 % of his base salary, plus each 1% by which
subsidiary net sales are more than 105% of the targeted
subsidiary net sales for the Year equals 1.6% of his base
salary; and
(c) Each 1% by which subsidiary profit from operations is more
than 95% up to 105% of the targeted subsidiary profit from
operations for the Year equals 1.2% of his base salary.
Payment for the attainment of channel profit from operations
will be capped at 200% of target payment (105% achievement);
and
(d) Up to 8% of his base salary based on the degree of his
attainment of certain personal objectives established by the
Chairman, President & Chief Executive Officer, as determined
by the latter.
IV. Bonus Payments
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A. For participants with 60% or 70% bonus targets: 75% of the gross
payment will be in the form of cash; 25% of the gross payment
will be in the form of NEBS Stock with a share price which is
established at the close of trading on the New York Stock
Exchange on the third business day following the issuance of the
press release disclosing the Company's financial results for the
fourth fiscal quarter of the Year. Cash payment will be made
within 60 days after the close of the Year. Stock awarded under
the plan will be in the form of Restricted Stock with terms and
conditions detailed in the form of a Restricted Stock Agreement
attached hereto.
B. For participants with 40% or 50% bonus targets: 75% of the net
payment will be in the form of cash; 25% of the net payment will
be in the form of NEBS Stock with a share price which is
established at the close of trading on the New York Stock
Exchange on the third business day following the issuance of the
press release disclosing the Company's financial results for the
fourth fiscal quarter of the Year. All bonus payments will be
made within 60 days after the close of the Year.
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C. At their option and with the authorization of the Chief
Executive Officer, participants, other than the Chief Executive
Officer and the four next most highly compensated executive
officers, may receive their bonus entirely in cash if the
payment earned is less than 25% of annualized base salary.
V. Certain Definitions and Other Provisions.
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A. All references to "net" sales shall refer to consolidated net
sales of the Company or net sales of a distribution channel or a
business unit, as the case may be, as reported or used in
calculating the Company's audited consolidated earnings.
B. For purposes of calculating the actual bonuses, consolidated net
income for the Year shall mean such consolidated income, after
taxes and after provision for executive bonuses under this plan,
determined in accordance with all of the accounting policies
employed in the preparation of the Company's audited financial
statements for the Year.
C. Actual or targeted consolidated net income; actual or targeted
consolidated sales; actual or targeted profit from operations of
any business unit or distribution channel; or actual or targeted
net sales of any business unit or distribution channel may, at
the discretion of the Organization and Compensation Committee,
be adjusted to eliminate the effect of (a) either the
acquisition or the divestiture by the Company of any subsidiary
or division during the Year, and/or (b) the imposition during
the Year by Massachusetts or any other state or states of sales
taxes on services, materials or supplies purchased by the
Company or any subsidiary of the Company the effect of which is
not allowed for in the Company's annual budget for the 2001
fiscal year or (c) any abatement of taxes or material increase
or decrease in Federal or State corporate tax rates. It is the
intention of the Organization and Compensation Committee that
any such discretionary adjustment shall be made by it, and shall
be announced to the affected participants, promptly after the
occurrence of the motivating event, but failure to act promptly
shall not deprive the Committee of its power to make such an
adjustment at a later date.
D. Should a participant die, retire, or become totally disabled
during the Year, he or his estate shall be entitled to receive a
bonus prorated in accordance with the percentage of his annual
salary earned from the beginning of the Year up to the date of
death, retirement or disability. Should a participant's
employment by the Company or a subsidiary business unit be
terminated for any other reason, payment of any bonus hereunder
for the Year in which such termination occurs is at the sole
discretion of the Organization and Compensation Committee.
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E. If a participant assumes a new position during the Year, the
Organization and Compensation Committee may make an appropriate
adjustment in his target bonus and/or the means of calculating
his actual bonus, effective from and after that event.
F. If a Change of Control event (as defined in Section 11 of the
Company's 1997 Key Employee and Eligible Director Stock Option
and Stock Appreciation Rights Plan) occurs, the Company will
within sixty (60) days following such event pay each participant
a prorated bonus through the date thereof as hereinafter
provided, whereupon this Plan will terminate. The portion of the
bonus based on factors other than personal objectives shall be
calculated based on a comparison of (i) actual results of the
Company through the end of the calendar quarter next preceding
the Change in Control event to (ii) the targeted quarterly
performance criteria set forth on the schedules attached hereto.
The portion of the bonus based on personal objectives will be
calculated through the end of the calendar quarter next
preceding the Change of Control event to the extent equitable
and reasonably practicable in the judgment of the Organization
and Compensation Committee. Qualitative measurements for which
such calculation is not equitable or reasonably practicable will
be disregarded and the percentage of the bonus otherwise
allocated thereto under the terms hereof will be reallocated in
even percentages to the sales and earnings components of the
bonus calculation. After determining the full year bonus based
on the extent to which the aforesaid quarterly targets have been
achieved, the amount of the full year bonus will be prorated by
multiplying the same by a fraction the numerator of which is the
number of days between the beginning of the fiscal year and the
date of the Change of Control event and the denominator of which
would be 365. The determination of the amount of any bonus
payable under this paragraph to the Chairman, President & Chief
Executive Officer shall be made by the Organization and
Compensation Committee and for all other participants the
determination of the amount of any bonus payable shall be made
by the Chairman, President & Chief Executive Officer and in each
instance the determination shall be final and binding on the
Company and all participants.
G. In the event of any material, unusual and non-recurring charge
to income, purchase or sale of any material business unit by the
Company, or other material event affecting the ability of the
participants to achieve the performance targets established
under this Plan, the Organization and Compensation Committee
shall review such performance targets and make such adjustments
with respect thereto as it deems reasonable and equitable in
light of the purposes of this Plan. Any and all adjustments made
by the Organization and Compensation Committee under this
paragraph shall be final and binding on the Company and all
participants.
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H. The Organization and Compensation Committee may in its
discretion terminate the Plan as of the end of any fiscal
quarter. If the Plan is so terminated, the Company shall pay out
bonuses to the participants in such amounts as are appropriate
and equitable in light of the Company's and participants'
performance through the end of such quarter and the targets
established hereunder. The determination of the amount of any
bonuses payable under this paragraph shall be made by the
Organization and Compensation Committee in line with the
objectives set for each participant, and its determination shall
be final and binding on the Company and all participants.
I. The personal objectives referred to herein and the application
of certain provisions hereof are described in the FY01 Scorecard
prepared by the Senior Vice President, Human Resources.
J. This Plan shall be effective commencing June 26, 2000.
