Exhibit 10.32
EARTHLINK, INC.
2009 SHORT-TERM INCENTIVE BONUS
PLAN
1.
STATEMENT OF PURPOSE
1.1
Statement of
Purpose . The purpose of the
EarthLink, Inc. 2009 Short-Term Incentive Bonus Plan (the
“Plan”) is to encourage the creation of shareholder
value by establishing a direct link between Adjusted EBITDA (as
defined below) and, in certain cases, Revenue (as defined below)
achieved and the incentive compensation of Participants in the
Plan.
Participants contribute to the
success of EarthLink, Inc. (the “Company”) through
the application of their skills and experience in fulfilling the
responsibilities associated with their positions. The Company
desires to benefit from the contributions of the Participants and
to provide an incentive bonus plan that encourages the sustained
creation of shareholder value.
2.
DEFINITIONS
2.1
Definitions
.
Capitalized terms used in the Plan shall have the following
meanings:
“ Adjusted EBITDA
” means EBITDA excluding stock-based compensation expense
under SFAS No. 123(R), facility exit and restructuring costs,
net losses of equity affiliates, gain (loss) on investments, net,
impairment of goodwill and intangible assets.
“ Bonus Award ”
means the Participant’s Performance Bonus or such lesser
amount as the Committee in its sole discretion may determine as of
a result of the failure by the individual Participant to achieve
desired individual performance levels for the Bonus
Period.
“ Bonus Period(s)
” means (i) for Management Participants, the 2009
calendar year and (ii) for all other Participants, the period
beginning January 1, 2009 and ending June 30, 2009 and
the period beginning July 1, 2009 and ending December 31,
2009, in respect of which the Corporate Performance Objectives are
measured and the Participants’ Bonus Awards, if any, are to
be determined.
“ Cause ” has the
same definition as under any employment or service agreement
between the Employer and the Participant or, if no such employment
or service agreement exists or if such employment or service
agreement does not contain any such definition, Cause means
(i) the Participant’s willful and repeated failure to
comply with the lawful directives of the Board of Directors of any
Employer or any supervisory personnel of the Participant;
(ii) any criminal act or act of dishonesty or willful
misconduct by the Participant that has a material adverse effect on
the property, operations, business or reputation of any Employer;
(iii) the material breach by the Participant of the terms of
any confidentiality, non-competition, non-solicitation or other
such agreement that the Participant has with any Employer or
(iv) acts by the Participant of willful malfeasance or gross
negligence in a matter of material importance to any
Employer.
“ Change in Control
” means the occurrence of any of the following
events:
(a)
the accumulation in any number of
related or unrelated transactions by any person of beneficial
ownership (as such term is used in Rule 13d-3 promulgated
under the Securities Exchange Act of 1934, as amended) of more than
fifty percent (50%) of the combined voting power of the
Company’s voting stock; provided that, for purposes of this
subsection (a), a Change in Control will not be deemed to have
occurred if the accumulation of more than fifty percent (50%) of
the voting power of the Company’s voting stock results from
any acquisition of voting stock (i) directly from the Company
that is approved by the Incumbent Board, (ii) by the Company,
(ii) by any employee benefit plan (or related trust) sponsored
or maintained by the Company or any Employer, or (iv) by any
person pursuant to a merger, consolidation, or reorganization (a
“Business Combination”) that would not cause a Change
in Control under clauses (i) and (ii) of subsection
(b) below; or
(b)
consummation of a Business
Combination, unless, immediately following that Business
Combination, (i) all or substantially all of the persons who
are the beneficial owners of voting stock of the Company
immediately prior to that Business Combination beneficially own,
directly or indirectly, at least fifty percent (50%) of the then
outstanding shares of common stock and at least fifty percent (50%)
of the combined voting power of the then outstanding voting stock
entitled to vote generally in the election of directors of the
entity resulting from that Business Combination (including, without
limitation, an entity that as a result of that transaction owns the
Company or all or substantially all of the Company’s assets
either directly or through one or more subsidiaries), in
substantially the same proportions relative to each other as their
ownership, immediately prior to that Business Combination, of the
voting stock of the Company, and (ii) at least sixty percent
(60%) of the members of the Board of Directors of the entity
resulting from that Business Combination holding at least sixty
percent (60%) of the voting power of such Board of Directors were
members of the Incumbent Board at the time of the execution of the
initial agreement or of the action of the Board of Directors
providing for that Business Combination and, as a result of or in
connection with such Business Combination, no person has the right
to dilute either such percentages by appointing additional members
to the Board of Directors or otherwise without election or action
by the shareholders; or
(c)
a sale or other disposition of all
or substantially all the assets of the Company, except pursuant to
a Business Combination that would not cause a Change in Control
under clauses (i) and (ii) of subsection (b) above,
or
(d)
approval by the shareholders of the
Company of a complete liquidation or dissolution of the Company,
except pursuant to a Business Combination that would not cause a
Change in Control under clauses (i) and (ii) of
subsection (b) above; or
(e)
the acquisition by any person,
directly or indirectly, of the power to direct or cause the
direction of the management and policies of the Company
(i) through the ownership of securities which provide the
holder with such power, excluding voting rights attendant with such
securities, or (ii) by contract; provided the Change in
Control will not be deemed to have occurred if such power was
acquired (x) directly from the Company in a transaction
approved by the Incumbent Board, (y) by any employee benefit
plan (or related trust) sponsored or maintained by the Company or
any Employer or (z) by any person pursuant to a Business
Combination that would not cause a Change in Control under clauses
(i) and (ii) of subsection (b) above.
2
“ Code ” means
the Internal Revenue Code of 1986, as amended.
“ Committee ”
means the Leadership and Compensation Committee of the Board of
Directors of the Company which will administer the Plan.
“ Compensation ”
means the Participant’s actual wages earned during the Bonus
Period, excluding incentive payments, salary continuation, bonuses,
income from equity awards, stock options, restricted stock,
restricted stock units, deferred compensation, commissions, and any
other forms of compensation over and above the Participant’s
actual wages earned during the Bonus Period.
“ Common Stock ”
means the common stock, $.01 par value per share, of the
Company.
“ Corporate Performance
Objectives ” means Adjusted EBITDA and, in certain cases,
Revenues in such amounts as the Committee shall determine in its
sole discretion for each Bonus Period that must be achieved for the
Participant’s Performance Bonus Multiplier for the Bonus
Period to be greater than zero (0). The Committee shall adjust the
Corporate Performance Objectives as the Committee in its sole
discretion may determine is appropriate in the event of
unanticipated circumstances, unbudgeted acquisitions or
divestitures, or other unexpected changes to fairly and equitably
determine the Bonus Awards and to prevent any inappropriate
enlargement or dilution of the Bonus Awards. In that respect,
the Corporate Performance Objectives may be adjusted to reflect the
impairment of any tangible or intangible assets, litigation or
claim judgments or settlements, changes in tax law, accounting
principles or other such laws or provisions affecting reported
results, business combinations, reorganizations and/or
restructuring programs, reductions in force and early retirement
incentives and any other extraordinary, unusual, infrequent or
non-reoccurring items separately identified in the financial
statements and/or notes thereto in accordance with generally
accepted accounting principles. To the extent any such
adjustments affect any Bonus Award, the intent is that the
adjustments shall be in a form that allows the Bonus Award to
continue to meet the requirements of Section 162(m) of
the Code for deductibility.
“ Disability ”
means where the Participant is “disabled” or has
incurred a “disability” in accordance with the policies
of the Employer that employs the Employee in effect at the
applicable time.
“ Distribution ”
means the payment of cash under the Plan.
“ Distribution Date
” means the date on which the Distribution occurs.
“ EBITDA ” means
income (loss) from continuing operations before interest income
(expense) and other, net, income, taxes, depreciation and
amortization.
“ Effective Date
” means January 1, 2009.
“ Employee ”
means a full-time common law employee of an Employer. A
full-time common law employee of an Employer only includes an
individual who renders personal services to the Employer and who,
in accordance with the established payroll, accounting and
personnel policies of the Employer, is characterized by the
Employer as a full-time, common law employee.
3
An Employee does not include any
person whom the Employer has identified on its payroll, personnel
or tax records as an independent contractor or a person who has
acknowledged in writing to the Employer that such person is an
independent contractor, whether or not a court, the Internal
Revenue Service or any other authority ultimately determines such
classification to be correct or incorrect as a matter of
law.
“ Employer ”
means EarthLink, Inc. (also referred to as the
“Company”) and any other entity that is part of a
controlled group of corporations or is under common control with
the Company within the meaning of Sections 1563(a), 414(b) or
414(c) of the Code, except that, in making any such
determination, fifty percent (50%) shall be substituted for eighty
percent (80%) each place therein.
“ Incumbent Board
” means a Board of Directors of the Company at least a
majority of whom consist of individuals who either are
(a) members of the Company’s Board of Directors as of
the Effective Date of the adoption of this Plan or (b) members
who become members of the Company’s Board of Directors
subsequent to the date of the adoption of this Plan whose election,
or nomination for election by the Company’s shareholders, was
approved by a vote of at least sixty percent (60%) of the directors
then comprising the Incumbent Board (either by specific vote or by
approval of a proxy statement of the Company in which that person
is named as a nominee for director, without objection to that
nomination), but excluding, for that purpose, any individual whose
initial assumption of office occurs as a result of an actual or
threatened election contest (within the meaning of
Rule 14a-11 of the Securities Exchange act of 1934, as
amended) with respect to the election or removal of directors or
other action or threatened solicitation of proxies or consents by
or on behalf of a person other than the Board of Directors of
the Company.
“ Management ”
means the executive officers of EarthLink, Inc., individually
or as a group, whose positions are in the Red Zone of the Career
Band System.
“ Maximum Bonus Award
” means the maximum bonus award, denoted as a dollar amount,
that can be earned and paid to the Participant for the Bonus Period
as established by the Committee.
“ Participant ”
means an Employee of an Employer who is selected to participate in
the Plan.
“ Performance Bonus
” means the dollar amount which results from multiplying the
Participant’s Compensation for the Bonus Period by the
product of the Participant’s Target Bonus Percent and the
Participant’s Performance Bonus Multiplier.
“ Performance Bonus
Multiplier ” means either (i) zero (0) or
(ii) the percentage from fifty percent (50%) to two hundred
percent (200%) that applies to determine the Participant’s
Performance Bonus for the Bonus Period. The Committee shall
establish the Performance Bonus Multipliers that relate to the
levels of Corporation Performance Objectives that must be achieved
during the Bonus Period to calculate the Participant’s
Performance Bonus.
“ Plan ” means
this EarthLink, Inc. 2009 Short-Term Incentive Bonus Plan, in
its current form and as it may be hereafter amended.
4
“ Revenues ”
means revenues as reported on the Company’s financial
statements filed with the Securities and Exchange
Commission.
“ Target Aggregate
Bonus ” means the Bonus Award that would be earned if the
Participant’s Performance Bonus Multiplier were one hundred
percent (100%).
“ Target Bonus Percent
” means the percent of the Participant’s Compensation
that will be earned as a Performance Bonus where the Corporate
Performance Objectives that are achieved for the Bonus Period
result in a Performance Bonus Multiplier of one hundred percent
(100%). The Target Bonus Percent for each Participant’s
position shall be established by the Committee.
3.
ADMINISTRATION OF THE
PLAN
3.1
Administration
of the Plan . The Committee shall
be the sole administrator of the Plan and shall have full authority
to formulate adjustments and make interpretations under the Plan as
it deems appropriate. The Committee shall also be empowered to make
any and all of the determinations not herein specifically
authorized which m
