Exhibit 10.38
CONFIDENTIAL TREATMENT REQUESTED:
Certain portions of this document have been omitted pursuant to a
request for confidential treatment and, where applicable, have been
marked with an asterisk (“[****]”) to denote where
omissions have been made. The confidential material has been filed
separately with the Securities and Exchange Commission.
L UNA I NNOVATIONS I NCORPORATED
S ENIOR M ANAGEMENT I NCENTIVE C OMPENSATION P LAN
F ISCAL Y EAR 2009
Objective
:
Every member of the Senior
Management team shares in Luna’s vision to bring together the
best ideas and people, to be a leading technology development and
commercialization company, solving important problems that benefit
the world. Through collaboration and hard work, the Senior
Management Team ensures Luna Innovations continues its forward
progress to the next level. Every member plays a significant part
in Luna’s on-going technological advances and financial
success. In recognition of the impact the Senior Management team
has on the achievement of the fiscal year business plan, the Board
of Directors has approved the Senior Management Incentive
Compensation Plan for 2009.
Eligible
Participants :
Chairman & CEO, Chief
Financial Officer, VP Human Resources, President Technology
Development Division, Chief Commercialization Officer, Chief
Technology Officer, VP & General Counsel, President
Products Division, and President nanoWorks Division, and others as
may be added from time to time with prior approval of the CEO or
Compensation Committee, as appropriate. The initial participants
and their respective target percentage award are listed on
Attachment A.
Metrics and
Awards :
The 2009 plan is structured as a
percentage of each participant’s annual salary on 12/31/2009
and is triggered only if the company has positive Adjusted EBITDA
(defined as earnings before interest, taxes, depreciation,
amortization, and stock compensation) in both the third and fourth
quarters of 2009. After the trigger is achieved, a bonus award is
determined for each target if at least 85% of the target (budgeted
net loss, Adjusted EBITDA and budgeted cash usage) is achieved. The
award is calculated based on the participant’s overall target
with component weights as follows: 30% on the achievement of the
2009 net loss target, 30% on the achievement of Adjusted EBITDA
target for Q3 and Q4, 30% on Q4 cash usage, and 10% on the
achievement of the participant’s 2009 performance goals. The
2009 financial performance targets can be found on Attachment B.
For purposes of evaluating performance against each metric receipts
or payments of litigation settlements or awards shall be
excluded.
Payment :
Bonuses awards under this plan will
be paid annually following the completion of the independent audit
of the company’s financial statements. Payment of amounts
earned may be made in cash or in common stock of the Company, as
follows.
If the company’s cash balance
at the end of 2009 exceeds $ [****] , adjusted as of
December 31, 2009 for the pro-forma recognition of amounts
payable under this plan, then the bonuses earned are payable in
cash. Plan participants may elect to receive all or a portion of
their award in common stock in lieu of a cash. If so elected, the
number of restricted shares to be received in lieu of cash will be
the product of (a) a factor determined by the Compensation
Committee of the Company’s Board of Directors (the
“Compensation Committee”) not to exceed 120% multiplied
by (b) the quotient of (i) the amount of cash bonus
foregone by the participant divided by (ii) the closing price
of the Company’s common stock as reported by the NASDAQ
Global Market (or other principal exchange for the Company’s
common stock) on the first trading day of the trading window (as
defined in the Company’s Insider Trading Compliance Policy)
open as of or opening following the date on which the Compensation
Committee approves the final
