Arcadia Resources, Inc. 2008 Executive Performance Based Compensation Plan
Arcadia Resources, Inc. has established this 2008 Executive Performance Based Compensation Plan to motivate and reward key employees, including executive officers, based on the achievement of specific financial and performance goals. The plan outlines how incentive awards are determined and paid, focusing on aligning employee actions with company strategy and shareholder value. Awards are based on measurable criteria such as company revenue, earnings, and individual or division performance, as set by the plan administrator. Participation is limited to selected executives and officers, and awards are subject to the achievement of predetermined objectives.
ARCADIA RESOURCES, INC.
2008 EXECUTIVE PERFORMANCE BASED COMPENSATION PLAN
- "Annual Base Salary" is the annualized amount of cash compensation paid to a Participant, exclusive of any incentive plan payments, bonuses, commissions, travel stipends, Company-sponsored retirement plan contributions, car allowance and any other type of cash allowances received on a regular basis by Participant in effect at the beginning of the Performance Period. Such Annual Base Salary shall be calculated before (i) deductions for taxes or benefits and (ii) deferrals of compensation pursuant to Company-sponsored plans.
- "Annual Revenue" means the total revenue of the Company and Company Subsidiaries (or a Division) for the applicable Plan Year, determined by the Company's independent certified public accountants in accordance with GAAP.
- "Arcadia FY Budget" means the applicable Plan Year operating budget or operating plan for the Company and Company Subsidiaries, as approved and adopted by the Board of Directors prior to a Determination Date.
- "Award" means, with respect to each Participant, the total performance based compensation award (aggregating all Element Awards) as calculated under the provisions of this Plan for the applicable Performance Period.
- "Board of Directors" or "Board" means the Board of Directors of Arcadia Resources, Inc.
- "Cash Position" means the level of cash and cash equivalents of the Company and Company Subsidiaries as of the end of a Performance Period.
- "Code" means the Internal Revenue Code of 1986, as amended from time to time, as the Code may be interpreted from time to time by the Internal Revenue Service, whether by regulation, notice or otherwise, and including the Treasury Regulations promulgated thereunder
- "Common Stock" means the shares of common stock of the Company, par value $.001 per share.
- "Company" means Arcadia Resources, Inc., a Nevada corporation.
- "Company EBITDA" is defined as the Net Income of the Company and Company Subsidiaries (computed in accordance with GAAP) for the Plan Year, adjusted by adding back: (i) any taxes on income or net worth of the Company and Company Subsidiaries; (ii) interest; (iii) depreciation; and (iv) amortization, each of which have been taken into account in computing Net Income in accordance with GAAP, on a basis consistent with the historical the Company calculations and in and in conformity with the preparation of the applicable Arcadia FY Budget.
- "Compensation Committee" means the Compensation Committee of the Board of Directors.
- "Determination Date" means the latest possible date that will not jeopardize an Award or an Award's qualification as Performance Based Compensation.
- "Division" means a separate reporting segment of the Company, as determined by the Plan Administrator.
- "Earnings Per Share" means as to any Plan Year, the Net Income of the Company and Company Subsidiaries, divided by a weighted average number of shares of Common Stock outstanding and dilutive Common Stock equivalents deemed outstanding, determined by the Company's independent certified public accountants in accordance with GAAP.
- "Element Award" means, with respect to each Participant, the performance based compensation award for a Result Area as calculated under the provisions of this Plan for the applicable Performance Period.
- "Executive Officer" shall mean any officer of the Company subject to Section 16(a) of the Securities Exchange Act of 1934, as amended.
- "GAAP" means generally accepted accounting principles recognized as such from time to time by the American Institute of Certified Public Accountants. Use of the term "GAAP" means that such principles are applied and maintained on a consistent basis throughout the period indicated and consistent with prior financial practices.
- "Law" shall mean any local, county, state, federal, foreign or other law, statute, regulation, ordinance, rule, order, decree, judgment, consent decree, settlement agreement or governmental requirement enacted, promulgated, entered into, agreed or imposed by any governmental entity.
- "Net Income" means as to any Plan Year, the income after taxes of the Company and Company Subsidiaries (or a Division) for the Plan Year determined by the Company's independent certified public accountants in accordance with GAAP.
- "Operating Cash Flow" means the sum of the Net Income of the Company and Company Subsidiaries plus depreciation and amortization less capital expenditures plus changes in working capital, each as determined by the Company's independent certified public accountants in accordance with GAAP.
- "Operating Income" means the Income of the Company and Company Subsidiaries (or a Division) from operations determined by the Company's independent certified public accountants in accordance with GAAP.
- "Participant" means an employee of the Company or a Company Subsidiary who has been selected to participate in the Plan by the Plan Administrator. Employees who are eligible to participate under this Plan shall be the Chief Executive Officer, the Chief Financial Officer, the General Counsel, the Executive Vice Presidents, the Senior Vice Presidents, any other Executive Officer and any other officer selected by the Plan Administrator as eligible to participate. No person shall automatically be entitled to participate in the Plan.
- "Payout Formula" means as to any Performance Period, the formula or payout matrix established by the Plan Administrator pursuant to Section 6 in order to determine the Awards (if any) to be paid to Participants. The formula or matrix may differ from Participant to Participant.
- "Performance Based Compensation" means compensation that is intended to qualify as "performance-based compensation" within the meaning of Section 162(m).
- "Performance Goal" shall mean a Company Goal, a Division Goal and/or an Individual Goal, as applicable, as established by the Plan Administrator in accordance with the terms and conditions of this Plan, in each case based upon objectively determinable performance goals (as determined within the meaning of Section 162(m)). Performance Goals may differ from Participant to Participant and from Award to Award.
- "Performance Period" is the performance based plan measurement period that corresponds to the Company's Plan Year or such longer period than a Plan Year as determined by the Plan Administrator in its sole discretion.
- "Permanent Disability" is defined as a determination of permanent disability under the Company's (or the applicable Company Subsidiary's) long term disability insurance plan; provided, to the extent that no long term disability insurance plan is in effect as of the date of determination of permanent disability, "Permanent Disability" is defined as set forth in the Employee Retirement Income Security Act of 1974 or any successor Law, and regulations and rules issued pursuant to that act or any successor Law.
- "Plan" means this Arcadia Resources, Inc. 2008 Executive Performance Based Compensation Plan, as stated herein and as the same may be amended, modified or supplemented from time to time.
- "Plan Year" means the Company's fiscal year that begins on April 1and ends on March 31.
- "Result Area" means a Company Result Area, a Division Result Area or an Individual Result Area, as applicable.
- "Return on Assets" means the percentage equal to the Operating Income of the Company and Company Subsidiaries (before incentive compensation) divided by average net Company and Company Subsidiary assets, determined by the Company's independent certified public accountants in accordance with GAAP.
- "Return on Equity" means the percentage equal to the Net Income of the Company and Company Subsidiaries (before incentive compensation) divided by average shareholder's equity, determined by the Company's independent certified public accountants in accordance with GAAP.
- "Return on Sales" means the percentage equal to the Operating Income of the Company and Company Subsidiaries (before incentive compensation) divided by the Annual Revenue of the Company and Company Subsidiaries, determined by the Company's independent certified public accountants in accordance with GAAP.
- "Section 162(m)" means Section 162(m) of the Code, or any successor to Section 162(m).
- "Section 409A" means Section 409A of the Code, or any successor to Section 409A.
- "Subsidiary" means any entity in which the Company, directly or indirectly, owns or controls fifty percent (50%) or more of the total combined voting power of all classes of equity of such entity.
- "Target Award" means the target award payable under the Plan to a Participant for the Performance Period, expressed as a percentage of his or her Annual Base Salary or a specific dollar amount, as determined by the Plan Administrator in accordance with Section 5.
- "Total Stockholder Return" means the total return (change in share price plus reinvestment of any dividends) of a share of the Company's Common Stock.
- Annual Company performance goals may be established by the Plan Administrator in its sole discretion ("Company Goals"). A Company Goal may be established in any of the following results areas (the "Company Result Areas"):
- Company EBITDA;
- Company Annual Revenue;
- Company Cash Position;
- Company Earnings Per Share;
- Company Net Income;
- Company Operating Cash Flow;
- Company Operating Income;
- Company Return on Assets;
- Company Return on Equity;
- Company Return on Sales;
- Company Total Stockholder Return; or
- Any such other Company Goal as established by the Plan Administrator from time to time, so long as such Company Goal is objectively determinable within the meaning of Code Section 162(m).
- Annual Division performance goals may be established by the Plan Administrator in its sole discretion ("Division Goals"). A Division Goal may be established in one or more of the following Division results areas (the "Division Result Areas"):
- Division EBITDA;
- Division Annual Revenue;
- Division Net Income;
- Division Operating Income; or
- Any such other Division Goal as established by the Plan Administrator from time to time, so long as such Division Goal is objectively determinable within the meaning of Code Section 162(m).
- Individual performance goals may be established by the Plan Administrator in its sole discretion ("Individual Goals"). An Individual Goal may be established in one or more Individual results areas (the "Individual Result Areas") as established by the Plan Administrator from time to time, so long as such Individual Goal is objectively determinable within the meaning of Code Section 162(m). The definition of and parameters of each Individual Goal and Individual Result Area shall be as established by the Plan Administrator and shall be calculated by the Company's independent auditors and/or Chief Financial Officer from time to time, but shall be consistently defined and calculated at all times and in all circumstances with the provisions of the applicable Arcadia FY Budget.
- The Plan Administrator may assign weighting to each of the Company Result Areas, the Division Result Areas and/or the Individual Result Areas as it determines appropriate, such that the total equals one hundred percent (100%); for example, (i) seventy five percent (75%) Company EBIDTA and twenty five (25%) Company Annual Revenue or (ii) twenty five percent (25%) Company EBITDA, fifty percent (50%) Company Annual Revenue and twenty five percent (25%) Division Revenue.
- All Performance Goals shall be set forth in writing prior to the Determination Date. With respect to any Award the Plan Administrator determines should qualify as Performance Based Compensation, any of the Performance Goals described in this Section 4 shall be established in writing before the first day of the Plan Year to which the Award relates; provided, that to the extent permitted under Section 162(m)(4)(C) of the Code and the Treasury Regulations promulgated thereunder, such Performance Goals may be established in writing not later than ninety (90) days after the commencement of the period of service to which the Performance Goals relate, provided that the outcome is substantially uncertain at the time the Plan Administrator actually establishes the Performance Goals; provided, further, that in no event shall the Performance Goals be established after twenty five percent (25%) of the period of service (as scheduled in good faith at the time the Perfor mance Goal is established) has elapsed.
The definition of and parameters of each Company Goal and Company Result Area shall be as established by the Plan Administrator and shall be calculated by the Company's independent auditors and/or Chief Financial Officer from time to time, but shall be consistently defined and calculated at all times and in all circumstances with the provisions of the applicable Arcadia FY Budget.
The definition of and parameters of each Division Goal and Division Result Area shall be as established by the Plan Administrator and shall be calculated by the Company's independent auditors and/or Chief Financial Officer from time to time, but shall be consistently defined and calculated at all times and in all circumstances with the provisions of the applicable Arcadia FY Budget.
- As soon as reasonably practicable (and not later than thirty (30) days after the Company's certified public accountant delivers to the Company its consolidated reviewed or audited, as applicable, financial statements for the Performance Period for which the Award is to be made), the Plan Administrator shall certify in writing (which may be by approval of the minutes in which the certification was made) the extent to which the Performance Goals applicable to each Participant for the Performance Period were achieved (and the percentage by which actual performance exceeded or fell below the applicable Performance Goals). The Award for each Participant shall be determined by applying the Payout Formula or Formulae to the level of actual performance that has been certified by the Plan Administrator.
- The Plan Administrator may provide for objectively determinable adjustments, as determined in accordance with GAAP, to any of the Performance Goals set for Participants under this Plan, for any items of gain, loss, profit or expense: (i) determined to be extraordinary or unusual in nature or infrequent in occurrence; (ii) related to the disposal of a segment of a business; (iii) related to a change in accounting principles under GAAP; (iv) related to discontinued operations; or (v) attributable to the business operations of any entity acquired by the Company or a Company Subsidiary during the Performance Period.
- Awards shall be paid as soon as reasonably practicable after (and not later than thirty (30) days after) the Plan Administrator's certification for the Performance Period for which the Award is to be made as set forth in Section 8(a) above, unless deferred by a Participant in accordance with any applicable program for deferring incentive compensation under which such Participant has made a valid election to defer all or a part of such Award, in which case the amount deferred by such Participant shall be handled in accordance with the applicable provisions of such deferred compensation program; provided, however, that any additional amount paid pursuant to such program shall be based upon a reasonable interest rate for the period of such deferral. The Plan Administrator may defer payments of Awards, or any portion thereof, to Participants as the Plan Administrator, in its discretion, determines to be necessary or desirable to preserve the deductibility of such amou nts under Section 162(m).
- A Participant must be employed on the last day of the Performance Period for which an award is to be made to be eligible to receive the Award under this Plan.
- Awards will be paid in cash, Common Stock of the Company, or a combination thereof, at the election of the Plan Administrator. In the event that Awards are paid in Common Stock of the Company, the determination of the number of shares of Common Stock which will be awarded in lieu of cash will be made by the Plan Administrator, in its sole discretion, using any generally accepted valuation of the shares of Common Stock at the time of issuance.
- In the event that a Participant has amounts payable as an Award under this Plan and dies prior to payment of such amounts, the amounts payable at the time of Participant's death shall be paid to the Participant's beneficiary or, if no beneficiary was designated by the Participant, to the Participant's estate.
- The Plan Administrator shall be responsible for all matters relative to the effective administration of the Plan. Subject to the requirements for qualifying compensation as Performance Based Compensation, the Plan Administrator may delegate specific administrative tasks to Company employees or others as appropriate for proper administration. The Plan Administrator shall have such powers as may be necessary to discharge its duties hereunder, including, but not by way of limitation, the following powers and duties, but subject to the terms of the Plan:
- discretionary authority to construe and interpret the terms of the Plan, and to determine eligibility, Awards and the amount, manner and time of payment of any Awards hereunder;
- to prescribe forms and procedures for purposes of Plan participation and distribution of Awards; and
- to adopt rules and regulations and to take such actions as it deems necessary or desirable for the proper administration of the Plan (and any rule or decision by the Plan Administrator that is not inconsistent with the provisions of the Plan shall be final, conclusive and binding on all persons, and shall be given the maximum deference permitted by Law).
- The Plan Administrator, in its sole and absolute discretion, may determine whether an Award should qualify as Performance Based Compensation Code and may take such actions which it may deem necessary to ensure that such Awards so qualify.
- The Plan Administrator shall be fully justified in relying or acting in good faith upon any opinion or report made by the independent public accountants of the Company and upon any other opinions, reports or information furnished in connection with the Plan by any accountant, counsel or other specialist (including financial officers of the Company).
- The Plan Administrator's actions in all matters are subject to Board review upon appeal by a Participant.
Approved and Adopted by
the Board of Directors
and Compensation Committee of
of Arcadia Resources, Inc.,
this 1st day of May, 2008
(subject to shareholder approval)
/s/ Michelle M. Molin
Michelle M. Molin, Company Secretary