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| SCO Group Employee Incentive Bonus Plan Fiscal Year 2005 |
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Tuesday, May 31 2005 @ 12:55 AM EDT
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The exhibits attached to SCO's 10Q for the period ending January 31, 2005, but filed in April of 2005, are now available on the SEC web site. There is a SCO Group Employee Incentive Bonus Plan for Fiscal Year 2005. It's designed, among other things, to improve morale. It's Exhibit 10.1. There is also a table showing the base salaries of executives for fiscal year 2005, Exhibit 10.2 ($265,000 for Darl McBride); an Executive Officer Stock Option Agreement, with a blank Notice of Grant of Stock Option for Executive Officers, Exhibit 10.3, which I'll put up on Groklaw next, because it has an interesting clause 6(a); and the usual certifications. Here's the Bonus Program.
**************************************************
The SCO Group
EMPLOYEE INCENTIVE BONUS PROGRAM
2005 Fiscal Year
1.0 PURPOSE
The Employee Incentive Bonus Program (Bonus Plan) is designed to reward
employees for their contributions to the successful achievement of certain
corporate goals and objectives and to share the success (and risks) of the
business with employees based upon successful achievement of quarterly business
goals.
2.0 ADMINISTRATION
The Bonus Plan is approved annually by the Compensation Committee of
the Company’s Board of Directors and will be administered under the auspices of
the Company’s Management Incentive Committee (MIC), to consist of the CEO, the
CFO and the SVP of Operations. The MIC
will be responsible for setting the performance objectives and administering the
Bonus Plan, provided the Compensation Committee shall set the performance
objectives of the CEO and the CEO shall approve the performance objectives of
the members of the MIC other than the CEO.
The MIC will delegate specific administrative tasks to the Director of
Human Resources as Plan Administrator, who will have day-to-day responsibility
for the administration of the Plan.
3.0 ELIGIBILITY
The Bonus plan will cover all regular employees, except that employees
who are covered by sales commission or any other incentive-eligible program
will not be eligible to participate in the Bonus Plan.
Temporary employees, interns, independent contractors, and authorized
agents are not eligible to participate in the Bonus Plan.
4.0 BONUS
POOL
The Bonus Pool will be comprised of three
components: 1) 40% related to revenue;
2) 40% related to operating performance; and 3) 20% related to personal
objectives.
There will be no Bonus Pool established
unless the revenue and operating performance targets are attained at 100%. Additionally, if the Bonus Pool and
subsequent payment of bonuses causes the UNIX business to have negative cash
flow for a particular quarter, the Bonus Pool will be pro-rated to ensure that
the UNIX business does not generate negative cash flow.
The revenue and operating performance targets for each quarter of
fiscal year 2005 shall be established by the Compensation Committee. The personal objectives shall be established
as set forth in Section 2.0 above.
The amount payable to any employee of the
Company will depend on a percentage of such employee’s annual base salary. The applicable percentages of annual base
salary for all employees shall be established by the Compensation
Committee. To the extent that revenue
and operating performance targets are attained at greater than 100% and up to
150%, accelerators may apply to increase the bonus pool from 101% of the
applicable percentages of annual base salary to 200% of such percentages
depending upon the extent by which the Company exceeds revenue and operating
performance targets.
5.0 GENERAL
PROVISIONS
The Bonus Plan is designed to meet these key objectives:
- Reward achievement of specific
Company Revenue and Operating Loss objectives
- Align employee, Company, and
shareholder interests
- Improve Morale
5.1 Other
Bonus Plans: The Bonus Plan
supersedes all prior bonus plans and shall not be modified unless authorized in
writing by the CEO and the Chair of the Compensation Committee.
5.2 Plan
Objectives: Specific quarterly
financial or performance objectives will be established for each fiscal
quarter, and may include revenue, net income, gross margin, operating expenses,
and other criteria.
5.3 Payment
of Bonus: Bonus payouts will be paid
no later than 45 days following the end of each fiscal quarter for those on a
bi-weekly payroll. Bonus payouts will be
paid no later than the end of the second month following the end of the fiscal
quarter for those on a monthly payroll.
5.4 Benefits: Bonus Plan awards are considered
compensation for purposes of benefit determination and eligibility under the
Company’s 401(k) plan. Bonus Plan awards
are not compensation for purposes of benefit determination or eligibility under
the Company’s life, accidental death and dismemberment, short or long-term
disability insurance, or any other similar benefit plan in accordance with all
plan rules and limitations. Subject to
local employment law, Bonus Plan awards are not considered compensation for
purposes of severance calculation.
5.5 Deductions: All Bonus Plan awards are subject to
statutory deductions and are taxable at the time of payment. There shall be no Bonus Plan Awards under the
Plan deferred to any future years.
5.6 Exchange
Rates: The exchange rates for Bonus
Plan awards will be those rates issued by the Company’s Finance Department at
the end of each accounting period.
5.7 Transfer/Status
Change: Participants must have been
hired and eligible to participate at the beginning of the fiscal quarter. Employees transferring from another
incentive/commission plan during the fiscal quarter shall be compensated based
on the plan they were eligible for at the beginning of the quarter at a
pro-rated basis. Employees whose
promotion bumps them to a higher percentage during the quarter will be
re-levelled at the beginning of the following quarter.
5.8 Leave
of Absence: Bonus Plan Awards are
pro-rated for employees who are on leave of absence more than three consecutive
weeks during any single quarter.
Employees must be actively at work at the beginning of the quarter to be
eligible for that period. Employees who
have been on an approved family or medical leave of absence under FMLA criteria
will be eligible for a pro-rated award, assuming all other criteria have been
met.
5.9 Termination
of Employment: In the event an
employee’s active employment terminates during the fiscal quarter by reason of
retirement, total and permanent disability, or death, the participant will
receive a pro-rated bonus, assuming all other criteria have been met.
Participants who are involuntarily terminated through no fault of their
own will be considered for a pro-rated payment based on MIC approval.
In the event an employee’s active employment terminates for any other
reason, including resignation and discharge for cause during the quarter, all
rights to an award will be forfeited.
5.10 Amendment
and Termination of the Plan: The MIC
and/or the Chair of the Compensation Committee may terminate, suspend, or amend
the Bonus Plan, in whole or in part, from time to time.
5.11 Payment
from General Assets: The payment of
a Bonus Plan award shall be from the general assets of the Company. Employees shall have no greater rights to
payment than other general creditors of the Company.
5.12 Participation: Participation in the Bonus Plan does not
guarantee employment, nor does participation at any time guarantee ongoing
participation.
5.13 Interpretation: The Plan Administrator shall have full power
and authority to interpret and administer the Bonus Plan. Disputes arising under the Bonus Plan
regarding the administration, interpretation or calculation of awards or any
other matter may be submitted in writing to the MIC, who shall render a final
and binding decision.
6.0 CONFIDENTIALITY
Participation in the Bonus Plan and all related discussion and
documentation is considered fully confidential between the Company and the
employee. All employees are expected to
honor this confidentiality and not disclose or discuss Bonus Plan matters with
any persons other than his/her manager or Human Resources. Failure to maintain confidentiality regarding
the Bonus Plan may jeopardize participation and/or award eligibility.
7.0 ETHICS
Any participant who manipulates or attempts to manipulate the Bonus
Plan for personal gain at the expense of customers, other employees, or Company
objectives will be subject to appropriate disciplinary action, up to and
including termination of employment.
8.0 PLAN
IS NOT A CONTRACT
The adoption and maintenance of the Bonus Plan shall not be deemed to
be a contract of employment between the Company and an employee. Nothing herein contained shall be deemed to
give any employee the right to be retained in the employ of the Company or to
interfere with the right of the Company to discharge any employee at any time,
nor shall it interfere with the employee’s right to terminate employment at any
time.
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| Authored by: whoever57 on Tuesday, May 31 2005 @ 01:01 AM EDT |
Please make them clickies -- use:
<a href=http://www.example.com> Link description</a>
Then remember to set the Post Mode as "HTML Formatted"[ Reply to This | # ]
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| Authored by: BigTex on Tuesday, May 31 2005 @ 01:02 AM EDT |
[QUOTE]3.0 ELIGIBILITY
The Bonus plan will cover all regular employees, except that employees who are
covered by sales commission or any other incentive-eligible program will not be
eligible to participate in the Bonus Plan.
Temporary employees, interns, independent contractors, and authorized agents are
not eligible to participate in the Bonus Plan.[/QUOTE]
Who is eligable?[ Reply to This | # ]
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| Authored by: rm6990 on Tuesday, May 31 2005 @ 01:14 AM EDT |
| Corrections here [ Reply to This | # ]
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| Authored by: Anonymous on Tuesday, May 31 2005 @ 01:18 AM EDT |
Emphasis added:
6. Corporate
Transaction.
(a)
As set forth in the Grant Notice, in the event of a Corporate Transaction, if
the Optionee remains in service with the
Company when a Corporate Transaction
occurs, all Option Shares that would have become vested upon continued Service
shall immediately
vest in full and become exercisable notwithstanding any
provision to the contrary of such grant and shall remain exercisable until it
expires or
terminates in accordance with its terms.
(b) Notwithstanding anything herein to
the contrary, to the extent that any payment or benefit provided for herein
is
required to be paid or vested at any earlier date under the terms of any
plan, agreement or arrangement, such plan, agreement or arrangement
shall
control.
(c)
This Agreement shall not in any way affect the right of the Corporation to
adjust, reclassify, reorganize or otherwise
change its capital or business
structure assets.
...
G.
Corporate Transaction (i) shall have the meaning of the term “Change in Control”
as defined in the Change in Control
Agreement dated December 10, 2004 between
the Corporation and the Optionee, as such may be amended from time to time and
(ii) shall include
the declaration by the Corporation’s board of directors of
the payment of a dividend to the common stockholders of the Corporation as a
result
of the Corporation entering into a cash settlement in its litigation with
IBM.[ Reply to This | # ]
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| Authored by: Anonymous on Tuesday, May 31 2005 @ 01:25 AM EDT |
Darn! I was holding out for free SCO Source licences for me and my family...
Now that's an incentive!![ Reply to This | # ]
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| Authored by: Anonymous on Tuesday, May 31 2005 @ 01:34 AM EDT |
The Bonus Pool will be comprised of three components: 1) 40% related to
revenue; 2) 40% related to operating performance; and 3) 20% related to personal
objectives.
There will be no Bonus Pool established unless the revenue
and operating performance targets are attained at 100%. Additionally, if the
Bonus Pool and subsequent payment of bonuses causes the UNIX business to have
negative cash flow for a particular quarter, the Bonus Pool will be pro-rated to
ensure that the UNIX business does not generate negative cash
flow.
The revenue and operating performance targets for each
quarter of fiscal year 2005 shall be established by the Compensation
Committee.
This section reads to me as if:
The Bonus Pool is
not connected with profit in the Unix Businees.
If the Bonus Pool payout
excceeds the profit made by the Unix Business it will not be paid beyond the
point of extingushing that profit.
Therfore the Bonus Pool is related to
business other than Unix.
What else is there apart from their Litigation
Business for this Bonus Pool to be based on?
Brian S. [ Reply to This | # ]
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- 4.0 BONUS POOL - Authored by: Anonymous on Tuesday, May 31 2005 @ 01:37 AM EDT
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| Authored by: Anonymous on Tuesday, May 31 2005 @ 01:50 AM EDT |
Here is a company that is going down the drain, and the CEO is worried about
bonus plans. This tells the whole story. SCO is just raping shareholders.
When are FED's going to shut down these corporate crooks?[ Reply to This | # ]
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| Authored by: Anonymous on Tuesday, May 31 2005 @ 01:53 AM EDT |
20% of remaining funds and any income are to be shared among the staff who can
take out Groklaw.
No one will qualify for the remaining 80%.
DSM[ Reply to This | # ]
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| Authored by: belzecue on Tuesday, May 31 2005 @ 02:02 AM EDT |
Here's my advice to Darl:
* Devote all your time to growing your business instead of wasting it building
elaborate bonus and incentive schemes. In other words, get some loot into the
treasure chest before you worry about dividing it.
* Just accept that people don't want to work for you. You know why. We all
know why. Accept that giving out IOUs to the employees counts for zilch, nada,
zip. Accept that reasons people WANT to work for a company are: the pay is
insanely good, or the work is insanely fun, or the prestige is insanely high.
"The management is insane" is not in that list.
* Just turn the ship around now. Seriously. Eat crow for a year, apologise in
every news outlet, rebuild every bridge that you have single-handedly burned in
your tenure as CEO. You want a challenge to prove your mettle? There it is.
Imagine pulling it off, Darl. Imagine going from public enemy number 1 to
darling of the open source community. Has any CEO done something so herculean?
I don't know. Can it be done? Of course.
Failing the above, just stay on your present course, keep applying your scorched
earth policy to everything you touch, enjoy the money in your retirement, and
know that you will be known forever as the buffoon leader of the Gang Who
Couldn't Shoot Straight.[ Reply to This | # ]
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| Authored by: Newsome on Tuesday, May 31 2005 @ 02:29 AM EDT |
| Darl McBride is getting $265,000 a year to flush SCO's business, and we're
paying for the opportunity to flush SCO's "case".
Is this justice?
:) ---
Frank Sorenson [ Reply to This | # ]
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| Authored by: atul on Tuesday, May 31 2005 @ 02:45 AM EDT |
| Wow, there's just all kinds of fun in that plan. For starters, unless SCO meets
all of its objectives, nobody gets a bonus under the plan, so it's not so much
a "plan" as a hypothesis. And then they come out and say they'll fiddle with
the plan if they need to fudge their Unix numbers in a given quarter.
And
then they go on to say that one of the objectives of the plan is to
"Reward
achievement of specific Company Revenue and Operating Loss
objectives". Hmm.
No mention of profitability there. They ought to at least
play at being
optimistic in that regard, if one of their other objectives is to
"Improve
Morale".
If you're a SCO employee, and you happen to die during the
quarter, the
bonus paid to your estate will be prorated based on how much of
the quarter
you were alive. That's just plain meanspirited, that is. But it
gets better. If
you're subjected to an "involuntary separation" during the
quarter, which is a
distinct possibility, you will only be *considered* for a
prorated bonus. In
other words, you get nothing.
At several points, the
plan goes to great pains to inform lucky
participants, that being part of the
plan is not a guarantee of continued
employment, or of continued participation
in the plan, and in fact it's not a
legally binding contract of any kind
whatsoever. So even if there was a
realistic chance of any bonus ever being
paid under the plan, the company
still intends to regard all provisions of the
plan as nonbinding.
But my favorite bit is where they say "Employees shall
have no greater
rights to payment than other general creditors of the Company".
In other
words, employees get to stand in line with the rabble once the
inevitable BK
filing occurs. If you're lucky, you'll get a couple of cents on
the dollar, but
more likely the BK trustee will laugh at the very idea of
paying performance
bonuses to employees of a bankrupt company, and you'll get
zilch.
I think this is a truly excellent bonus plan. I mean, my morale's
improved
already. On the other hand, I don't work for SCO.
[ Reply to This | # ]
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| Authored by: Anonymous on Tuesday, May 31 2005 @ 05:27 AM EDT |
| In 2003,
apparently Darl's salary was at $1m + $750,000 in bonus. I guess someone
discovered that he wasn't doing such a good job after all ;) [ Reply to This | # ]
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| Authored by: kevin lyda on Tuesday, May 31 2005 @ 06:30 AM EDT |
you know, for one third that salary i could make sco a profitable company. most
people here could.[ Reply to This | # ]
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| Authored by: pooky on Tuesday, May 31 2005 @ 01:59 PM EDT |
This is my favorite part:
7.0 ETHICS
Any participant
who manipulates or attempts to manipulate the Bonus Plan for personal gain at
the expense of customers, other employees, or Company objectives will be
subject to appropriate disciplinary action, up to and including termination of
employment.
No further comment is
necessary.
-pooky
---
Many Bothans died to bring us this
information. [ Reply to This | # ]
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| Authored by: red floyd on Tuesday, May 31 2005 @ 02:29 PM EDT |
PJ mentioned the stock option grant, so I'll discuss it here, even though it's
in the next story.
6(a) appears to be standard. I seem to remember a clause like it in an option
grant I got from a startup.
5(b), on the other hand is *much* more interesting.
---
I am not merely a "consumer" or a "taxpayer". I am a *CITIZEN* of the United
States of America.
[ Reply to This | # ]
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| Authored by: Anonymous on Thursday, June 02 2005 @ 10:00 AM EDT |
thanks - now I have to wipe up my keyboard and screen from the coffed I spit
from laughing so hard.
SCO Bonus Plan - is that an oxymoron.[ Reply to This | # ]
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