Exhibit 10.24
NovaMed, Inc. Amended and
Restated Executive Incentive Compensation Plan
ARTICLE 1
Statement of
Purpose
The Plan is intended to increase shareholder
value and the success of the Company by motivating key executives
to perform to the best of their abilities and to achieve the
Company’s objectives. The Plan’s goals are to be
achieved by providing key executives with incentive awards based on
the achievement of goals relating to the performance of the Company
or upon the achievement of objectively determinable individual
performance goals. The Plan is intended to permit the payment of
Awards that may qualify as performance-based compensation under
Code Section 162(m).
ARTICLE 2
Definitions
The terms used in this Plan include the feminine
as well as the masculine gender and the plural as well as the
singular, as the context in which they are used requires. The
following terms, unless the context requires otherwise, are defined
as follows:
2.1
“Affiliate” means any parent, subsidiary or other entity
that is directly or indirectly controlled by, or controls, the
Company.
2.2
“Award”
means, with respect to each
Participant, the award determined by the Committee under
Section 4.3 for the Performance Period, subject to the
Committee’s authority to eliminate or reduce the Award
otherwise payable.
2.3
“Base
Salary” means, as
to any Performance Period, the Participant’s gross salary
paid during the Performance Period. Such Base Salary shall be
determined before both (a) deductions for taxes or benefits,
and (b) deferrals of compensation pursuant to
Company-sponsored benefit plans or deferral
arrangements.
2.4
“Board”
means the NovaMed, Inc. Board
of Directors.
2.5
“Code”
means the Internal Revenue Code of
1986, as amended.
2.6
“Committee” means the Compensation Committee of the Board or
any successor committee with responsibility for compensation, or
any subcommittee, as long as the number of Committee members and
their qualifications shall at all times be sufficient to meet the
applicable requirements for “outside directors” under
Section 162(m) and the regulations thereunder, as in
effect from time to
time, and the independence
requirements of NASDAQ or any other applicable exchange on
which the Company’s common equity is at the time
listed.
2.7
“Company”
means NovaMed, Inc. and any of
its Affiliates that adopt this Plan or that have employees who are
Participants under this Plan.
2.8
“Determination
Date” means the
date that is 90 days after the beginning of the Performance Period
or, if earlier, the date on which no more than 25% of the
Performance Period has elapsed.
2.9
“Disability” means permanent and total disability as defined
in the Company’s long term disability plan or, if no such
plan is then in effect, as defined in Code
Section 22(e)(3).
2.10
“Executive
Officer” means any
Company employee who is an “executive officer” as
defined in Rule 3b-7 promulgated under the Exchange
Act.
2.11
“Exchange
Act” means the
Securities Exchange Act of 1934, as amended.
2.12
“Maximum
Award” means as to
any Participant for any Performance Period,
$1,500,000.
2.13
“NASDAQ”
means the Nasdaq Stock Market,
including the Nasdaq National Market.
2.14
“Participant”
means an Executive Officer or key
management employee as described in Article 3 of this
Plan.
2.15
“Performance
Period” means the
period for which an Award may be made. Unless otherwise specified
by the Committee, the Performance Period shall be a calendar year,
beginning on January 1 of any year.
2.16
“Plan”
means this NovaMed, Inc.
Amended and Restated Executive Incentive Compensation Plan, as it
may be amended from time to time.
2.17
“Retirement” means a Termination of Employment, after
appropriate notice to the Company, (a) on or after the
earliest permissible retirement date under a qualified pension or
retirement plan of the Company or (b) upon such terms and
conditions approved by the Committee, or officers of the Company
designated
2
by the Board or the
Committee.
2.18
“SEC”
means the Securities and Exchange
Commission.
2.19
“Section 162(m)”
means Code
Section 162(m) and regulations promulgated thereunder by
the Secretary of the Treasury.
2.20
“Termination of
Employment” means
(a) the termination of the Participant’s active
employment relationship with the Company, unless otherwise
expressly provided by the Committee, or (b) the occurrence of
a transaction by which the Participant’s employer ceases to
be the Company or an Affiliate.
ARTICLE 3
Participation
An Executive Officer or other key management
employee of the Company designated by the Committee with respect to
a Performance Period shall be a Participant in this Plan and shall
continue to be a Participant until any Award he may receive has
been paid or forfeited under the terms of this Plan. No
person shall be automatically entitled to participate in the
Plan.
ARTICLE 4
Incentive Awards
4.1
Objective Performance
Goals. The Committee shall establish
written, objective performance goals for a Performance Period no
later than the Determination Date. The objective performance
goals shall be stated as specific amounts of, or specific changes
in, one or more of the financial measures described in
Section 4.2. Objective performance goals may
also include operational goals such as: productivity, efficiency,
safety, acquisitions and development, physician recruitment and/or
syndication and other strategic objectives and individual
performance goals. The objective performance goals need not
be the same for different Performance Periods and for any
Performance Period may be stated: (a) as goals for
NovaMed, Inc., for one or more of its Affiliates, divisions,
business or organizational units, facilities, or for any
combination of the foregoing; (b) on an absolute basis or
relative to the performance of other companies or of a specified
index or indices, or be based on any combination of the foregoing;
and (c) separately for one or more of the Participants,
collectively for the entire group of Participants, or in any
combination of the two.
4.2
Financial
Measures. The Committee shall use any one or more of the
following financial measures to establish objective performance
goals under Section 4.1:
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net income, operating earnings,
earnings per share, operating earnings per share, earnings before
interest taxes depreciation and amortization (EBITDA), operating
income, revenues, shareholders’ equity, return on equity,
return on assets, return on invested capital, economic value added,
operating margins, cash flow, total shareholder return, expenses,
debt-to-capital ratio or market share. The Committee may
specify any reasonable definition of the financial measures it
uses. Such definitions may provide for reasonable adjustments
and may include or exclude items, including but not limited to:
realized investment gains and losses; gains and/or losses on the
sale of minority interests; extraordinary, unusual or non-recurring
items; effects of accounting changes, currency fluctuations,
acquisitions, divestitures, or necessary financing activities;
recapitalizations, including stock splits and dividends; expenses
for restructuring or productivity initiatives; stock compensation
expense; gains and/or losses from mark-to-market adjustments for
derivative instruments; and other non-operating items.
4.3
Award.
On or prior to the
Determination Date, the Committee, in its sole discretion, shall
establish a formula, matrix or other objective mechanism for
determining the Award (if any) that may be payable to each
Participant upon achievement of the applicable objective
performance goals. Each formula shall be set forth in writing
and may provide one or more levels of Award ( e.g.,
“Target”, “Threshold”,
“Maximum”, etc.), as determined by the Committee;
provided, however, that in no event shall a Participant’s
Award for any Perform
