MARVEL ENTERTAINMENT,
INC.
2005 Cash Incentive Compensation
Plan
As Amended and Restated on
December 31, 2008
This 2005 Cash Incentive Compensation Plan (the
“Plan”) of Marvel Entertainment, Inc. (the
“Company”) authorizes the grant of annual incentive and
long-term incentive awards to executive officers and sets forth
certain terms and conditions of such Awards. The purpose of the
Plan is to help the Company attract and retain executive officers
of outstanding ability and to motivate such persons to exert their
greatest efforts on behalf of the Company and its subsidiaries by
providing incentives directly linked to the measures of the
financial success and performance of the Company and its
businesses. The Plan is intended to permit the Committee to qualify
certain Awards as “performance-based” compensation
under Code Section 162(m).
In addition to the terms defined in
Section 1 and elsewhere in the Plan, the following are defined
terms under this Plan:
(a) “Annual Incentive Award”
means an Award earned based on performance in a Performance Period
of one fiscal year or a portion thereof.
(b) “Award” means the amount of
a Participant’s Award Opportunity in respect of a Performance
Period determined by the Committee to have been earned, and the
Participant’s rights to current or future payments in
settlement thereof.
(c) “Award Opportunity” means
the Participant’s opportunity to earn specified amounts based
on performance during a Performance Period. An Award Opportunity
constitutes a conditional right to receive settlement of an
Award.
(d) “Cause” means
“cause” as defined in an employment agreement between
the Company and the Participant in effect at the time of
Termination of Employment. If, however, there is no such employment
agreement or no definition of “cause” therein, Cause
means an individual’s (i) intentional failure to perform
reasonably assigned duties, (ii) dishonesty or willful
misconduct in the performance of duties, (iii) involvement in
a transaction in connection with the performance of duties to the
Company or any of its Subsidiaries thereof which transaction is
adverse to the interests of the Company or any of its Subsidiaries
and which is engaged in for personal profit, (iv) knowing or
grossly negligent misconduct which results in the Company being
required to prepare an accounting restatement due to the material
noncompliance of the Company with any financial reporting
requirement under the securities laws, (v) willful violation
of any law, rule or regulation in connection with the performance
of duties (other than traffic violations or similar offenses), or
(vi) the commission of an act of fraud or intentional
misappropriation or conversion of assets or opportunities of the
Company or any Subsidiary; provided, however, that the Committee
may vary the definition of “Cause” in any agreement or
document relating to an Award.
(e) “Code” means the Internal
Revenue Code of 1986, as amended from time to time. References to
any provision of the Code include and successor provisions thereto
and regulations thereunder.
(f) “Committee” means the
Compensation Committee of the Board of Directors, or such other
Board committee as the Board may designate to administer the
Plan.
(g) “Covered Employee” means a
person designated by the Committee as likely, with respect to a
given fiscal year of the Company, to be the Chief Executive Officer
or one of the four other most highly compensated executive officers
serving on the last day of such fiscal year. This designation
generally is required at the time an Award Opportunity is
authorized. The Committee may designate more than five persons as
Covered Employees with respect to a given year.
(h) “Participant” means an
employee participating in this Plan.
(i) “Performance Goal” means
the Company or individual performance objective or accomplishment
required as a condition to the earning of an Award
Opportunity.
(j) “Performance Period” means
the period, specified by the Committee, over which an Award
Opportunity may be earned.
(k) “Retirement” means
Termination of Employment deemed a retirement by the
Committee.
(l) “Termination of Employment”
means the termination of a Participant’s employment by the
Company or a subsidiary immediately after which the Participant is
not employed by the Company or any subsidiary; provided, however,
that in the case of an Award that constitutes a deferral of
compensation under Code Section 409A, if the timing of payment
relates to the termination of employment, then termination of
employment means a “separation from service” as defined
in Treasury Regulation § 1.409A-1(h).
(a) Administration by the Committee
. The Plan will be administered by the Committee, provided that the
Committee may condition any of its actions on approval or
ratification by the Board of Directors or the independent directors
of the Board. The Committee shall have full and final authority to
take all actions hereunder, subject to and consistent with the
provisions of the Plan. This authority includes authority to
correct any defect or supply any omission or reconcile any
inconsistency in the Plan and to construe and interpret the Plan
and any plan rules and regulations, authorization of an Award
Opportunity, Award, Award agreement, or other document hereunder;
and to make all other decisions and determinations as may be
required under the terms of the Plan or as the Committee may deem
necessary or advisable for the administration of the
Plan.
(b) Manner of Exercise of Authority
. Any action by the Committee or the Board with respect to the Plan
shall be final, conclusive, and binding on all persons, including
the Company, subsidiaries or affiliates, Participants, any person
claiming any rights under the Plan from or through any Participant,
and stockholders. The express grant of any specific power to the
Committee, and the taking of any action by the Committee, shall not
be construed as limiting any power or authority of the Committee. A
memorandum signed by all members of the Committee shall constitute
the act of the Committee without the necessity, in such event, to
hold a meeting. At any time that a member of the Committee is not
an “outside director” as defined under Code
Section 162(m), any action of the Committee relating to an
Award intended by the Committee to qualify as
“performance-based compensation” within the meaning of
Section 162(m) may be taken by a subcommittee, designated by the
Committee or the Board, composed solely of two or more
“outside directors.” Such action shall be the action of
the Committee for purposes of the Plan. The foregoing
notwithstanding, no action of the Committee shall be void or deemed
beyond the authority of the Committee solely because, at the time
such action was taken, one or more members of the Committee failed
to qualify as an “outside director.” The Committee may
delegate to specified officers or employees of the Company
authority to perform administrative functions under the Plan, to
the extent permitted by law.
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(c) Limitation of Liability . Each
member of the Committee and the Board of Directors, and any person
to whom authority or duties are delegated hereunder, shall be
entitled to, in good faith, rely or act upon any report or other
information furnished to him or her by any officer or other
employee of the Company or any subsidiary or affiliate, the
Company’s independent certified public accountants, or any
executive compensation consultant, legal counsel, or other
professional retained by the Company to assist in the
administration of the Plan. No member of the Board or Committee,
nor any person to whom authority or duties are delegated hereunder,
shall be personally liable for any action, determination, or
interpretation taken or made in good faith with respect to the
Plan, and any such person shall, to the extent permitted by law, be
fully indemnified and protected by the Company with respect to any
such action, determination, or interpretation.
Employees of the Company or any subsidiary who
are or may become executive officers of the Company may be selected
by the Committee to participate in this Plan.
5.
Per-Person Award Limitation
Award Opportunities granted to any one eligible
employee shall be limited such that the amount potentially earnable
of performance in any one calendar year shall not exceed the
Participant’s Annual Limit. For this purpose, the Annual
Limit shall equal $10 million plus the amount of the
Participant’s unused Annual Limit as of the close of the
previous fiscal year. For this purpose, (i) “earning”
means satisfying performance conditions so that an Award
Opportunity becomes payable, without regard to whether it is to be
paid currently or on a deferred basis or continues to be subject to
any service requirement or other non-performance condition, and
(ii) a Participant’s Annual Limit is used to the extent
an amount may be potentially earned or paid under an Award,
regardless of whether such amount is in fact earned or
paid.
6.
Designation and Earning of Award Opportunities
(a) Designation of Award Opportunities
and Performance Goals . The Committee shall select employees to
participate in the Plan for a Performance Period and designate, for
each such Participant, the Award Opportunity such Participant may
earn for such Performance Period, the nature of the Performance
Goal the achievement of which will result in the earning of the
Award Opportunity, and the levels of earning of the Award
Opportunity corresponding to the levels of achievement of the
performance goal. The following terms will apply to Award
Opportunities:
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(i) Specification of Amount Potentially
Earnable . Unless otherwise determined by the Committee, the
Award Opportunity earnable by each Participant shall range from 0%
to a specified maximum percentage of a specified target Award
Opportunity. The Committee shall specify a table, grid, formula, or
other information that sets forth the amount of a
Participant’s Award Opportunity that will be earned
corresponding to the level of achievement of a specified
Performance Goal.
(ii) Denomination of Award Opportunity;
Payment of Award . Award Opportunities will be denominated in
cash and Awards will be payable in cash, except that the Committee
may denominate an Award Opportunity in shares of Common Stock
and/or to settle an Award Opportunity in shares of Common Stock if
and to the extent that shares of Common Stock are authorized for
use in incentive awards and available under the Company’s
1998 Stock Incentive Plan, 2005 Stock Incentive Plan or any other
equity compensation plan of the Company.
(b) Limitations on Award Opportunities
and Awards for Covered Employees. If the Committee determines
that an Award Opportunity to be granted to an eligible person who
is designated a Covered Employee by the Committee should qualify as
“performance-based compensation” for purposes of Code
Section 162(m), the following provisions will
apply:
(i) Performance Goal . The
Performance Goal for such Award Opportunities shall consist of one
or more business criteria and a targeted level or levels of
performance with respect to each of such criteria, as specified by
the Committee consistent with this Section 6(b). The
performance goal shall be objective and shall otherwise meet the
requirements of Code Section 162(m) and regulations thereunder
(including Treasury Regulation 1.162-27 and successor
regulations thereto), including the requirement that the level or
levels of performance targeted by the Committee result in the
achievement of performance goals being “substantially
uncertain.” The Committee may determine that the Award
Opportunity will be earned, or tentatively earned, based upon
achievement of any one measure of performance or that two or more
measures of performance must be achieved. The Committee may
establish a “gate-keeper” Performance Goal that
conforms to this Section 6(b) while specifying or considering other
types of performance (which need not meet the requirements of this
Section 6(b)) as a basis for reducing the amount of the Award
deemed earned upon achievement of the gate-keeper Performance Goal.
Performance Goals may differ for Award Opportunities granted to any
one Participant or to different Participants.
(ii) Business Criteria . One or
more of the following business criteria for the Company, on a
consolidated basis, and/or for specified subsidiaries or
affiliates, divisions or other business units of the Company shall
be used by the Committee in establishing the Performance Goal for
such Award Opportunities: (1) net sales, revenues or
royalties; (2) gross profit or pre-tax profit;
(3) operating income, earnings before or after taxes, earnings
before or after interest, depreciation, amortization, or
extraordinary or special items; (4) net income or net income
per common share (basic or fully diluted); (5) return
measures, including, but not limited to, return on assets (gross or
net), return on investment, return on capital, or return on equity;
(6) cash flow, free cash flow, cash flow return on investment
(discounted or otherwise), net cash provided by operations, or cash
flow in excess of cost of capital; (7) economic value created
or economic profit; (8) operating margin or profit margin;
(9) stockholder value creation measures, including but not
limited to stock price or total stockholder return; (10) royalties
or revenues from specific assets, projects, fees or payments
received or lines of business; (11) targets
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relating to
expense or operating expense, working capital targets, or operating
efficiency; and (12) strategic business criteria, consisting
of one or more objectives based on meeting specified goals relating
to market penetration, new projects, new products, new ventures,
geographic business expansion, cost targets, customer satisfaction,
employee satisfaction, human resources management, supervision of
litigation and information technology, and acquisitions or
divestitures of subsidiaries, affiliates or joint ventures. The
targeted level or levels of performance with respect to such
business criteria may be established at such levels and in such
terms as the Committee may determine, in its discretion, including
in absolute terms, as a goal relative to performance in prior
periods, or as a goal compared to the performance of one or more
comparable companies or an index covering multiple
companies.
(iii) Performance Period and Timing for
Establishing Performance Goals . The Committee will
specify the Performance Period over which achievement of the
Performance Goal in respect of such Award Opportunities shall be
measured. A Performance Goal shall be established by the date which
is the earlier of (A) 90 days after the beginning of the
applicable Performance Period or (B) the time 25% of such
Performance Period has elapsed.
(iv) Annual Incentive Awards Granted to
Covered Employees . The Committee may grant an Annual
Incentive Award, intended to qualify as “performance-based
compensation” for purposes of Code Section 162(m), to an
eligible person who is designated a Covered Employee for a given
fiscal year.
(v) Performance Award Pool . The
Committee may establish a performance Award pool, which shall be an
unfunded pool, for purposes of measuring performance of the Company
in connection with Award Opportunities. The amount of such
performance Award pool shall be based upon the achievement of a
Performance Goal or Goals based on one or more of the business
criteria set forth in Section 6(b)(ii) during the given
Performance Period, as specified by the Committee. The Committee
may specify the amount of the performance Award pool as a
percentage of any of such business criteria, a percentage thereof
in excess of a threshold amount, or as another amount which need
not bear a strictly mathematical relationship to such business
criteria. The Committee may specify Award Opportunities for
individual Participants, in accordance with Section 6(a) and other
provisions of this Section 6(b), as a percentage or other portion
or amount of the performance Award pool.
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