Amended Annual Incentive Plan (Fiscal Year 2012)

Amended Executive Annual Incentive Bonus Plan

FY12

For

“NAME”

I.

Purpose

The purpose of Aspen Technology’s (“Company”) Amended Executive Annual Incentive Plan (the “Plan”) is to motivate and reward performance that results in the achievement of key Company objectives. The Plan was adopted by the Compensation Committee of the Company’s Board of Directors in July 2011 and amended by the Compensation Committee of the Company’s Board of Directors in October 2011.

II.	Effective Date of Plan

The Plan will operate on a fiscal year basis (“Plan Year”), and is effective from July 1, 2011 through June 30, 2012.

III.	Eligibility

Eligibility is afforded to those employees:

A.

whose positions are determined by Aspen Technology to have significant impact on the operating results of the Company; and

B.

who have been employed by the Company for six months or more (pro-rated target awards for employment greater than six months and less than twelve months).

In FY12, the eligible positions include CEO, EVP-Field Operations, EVP & CFO, EVP, Products, SVP Marketing, SVP HR, SVP Strategy and SVP & General Counsel.

Eligibility for the Plan does not guarantee payment of an award. Payment is dependent upon performance. Further, eligibility does not guarantee continuation of employment. If employment ends prior to the end of the performance period any payment eligibility is subject to the Executive Retention Agreement then in force. Should an Executive voluntarily resign after the completion of the performance period, he is eligible to receive the earned bonus in accordance with the Plan.

IV.	Target Award

The Plan is based on the “Target Award” concept, which bases the award on the Company’s overall performance. In order to achieve the Target Award amount, the Company must achieve 100% of its pre-established objectives by the end of the Plan Year. The actual award paid to the participant, if any, for a given Plan Year will be based on the Company’s overall performance, as adjusted for the overall level of bonus pool funding.

The Target Award for each position is the incentive award as defined when 100% of all Plan objectives are met and the Company attains the necessary level of performance to fund the bonus pool at 100%.

V.	Components of Award

“Company Metric Performance” for Plan purposes is based on the accomplishment of one or more predetermined annual Company financial objectives, which will be selected each year based on their critical importance to the Company’s success. Company Metric Performance for fiscal year 2012 will be measured based on the achievement of the FY12 Growth in Total License Contract Value “TLCV” and Cash Flow from Operations.

The following summarizes the weighting for the various incentive components for FY12.

 

FY12 Plan Components		Overall Bonus Weighting		On Target Metric
Growth in TLCV		50%		$ TBD
Cash Flow from Operations		50%		$ TBD

 

The achievement level will then correspond to a bonus plan funding/weighting percentage by individual metric according to the following table:

 

Actual Performance Achieved by Metric		Funding Level of Metric Based on Performance
< 70% of Target			0	%
70% of Target			50	%
80% of Target			70	%
90% of Target			90	%
100% of Target			100	%

This Plan is capped at 100% funding.

The funding is based on a minimum achievement of 70% of the on target metric. At 70% achievement, the plan funds at 50% target and will increase at a 2:1 ratio until 90% achievement. Achievement between 90% and 100% will fund at a 1:1 ratio. Each metric is measured and funded independently.

VI.	Plan Funding Allocation and Achievement

For fiscal year 2012, Plan funding will be based on the attainment of specified levels of Growth in Total License Contract Value and Cash Flow from Operations. Funding is contingent upon and proportional to the Company’s attainment of required levels (minimum 70% performance). In FY12, there is the potential for a mid-year payment as well as a final year-end payment. The mid-year payment is based on mid-year performance against the mid-year targets and will not exceed 25% of the annual bonus target. The year-end payment is based on total annual performance against the annual performance targets less any payment received at mid-year.

The allocation of target bonus by metric/measurement for each measurement period is as follows:

 

Measurement		% of Annual Bonus
Growth in TLCV			50	%
Cash Flow			50	%

Should the mid-year bonus earned be less than the target of 25% of bonus potential, the unrealized difference (up to the 25% mid-year potential) can be made up at year-end based on annual achievement against annual goals.

VII.	Bonus Calculation

A.

Bonus calculation takes into account three components:

·

Growth in TLCV and corresponding funding percentage (Section V);

·

Cash Flow from Operations and corresponding funding percentage (Section V); and

·

Target Bonus ($) level (as defined in Appendix A).

B.

The bonus will be measured on a first half performance at mid-year and on an annual performance level at year end.

 

Annual Bonus Target

X

Metric Weighting 50%

X

Maximum Payout 25%

X

Mid –Year Funding Achievement %

=

H1 Growth in TLCV Bonus Payout

Annual Bonus Target

X

Metric Weighting 50%

X

Maximum Payout 25%

X

Mid -Year Funding Achievement %

=

H1 Cash Flow Bonus Payout

H1 Growth in TLCV Bonus Payout

+

H1 Cash Flow Bonus Payout

=

Total H1 Bonus Payout

 

Annual Bonus Target

X

Metric Weighting 50%

-

H1 Earned

X

Funding Achievement %

=

YE Growth in TLCV Earned Bonus

Annual Bonus Target

X

Metric Weighting 50%

-

H1 Earned

X

Funding Achievement %

=

YE Cash Flow Earned Bonus

Growth in TLCV Earned

+

YE Cash Flow Earned

= Total YE Bonus Payout

The following illustrations demonstrate sample calculations for determining potential bonus payments using an annual bonus potential of $100,000.

	Target Bonus $		Achievement				Funding %			Bonus Earned
Growth in TLCV	$100,000 x 50% x 25% = $12,500			90	%			90	%	$12,500 * 90% = $11,250
Cash Flow	$100,000 x 50% x 25% = $12,500			80	%			70	%	$12,500 * 70% = $8,750
Bonus Earned										$11,250 + $8,750 = $20,000

	Target Bonus $		YE Target Bonus Less H1 Earned				Percent Achieved				Funding %			Bonus Earned
Growth in TLCV	$100,000 x 50% = $50,000		$	38,750				85	%			80	%	$38,750 * 80% = $31,000
Cash Flow	$100,000 x 50% = $50,000		$	41,250				100	%			100	%	$41,250 * 100% = $41,250
Annual Bonus Earned														$31,000 + $41,250 = $72,250

 
 

Total Annual Bonus Earned		Bonus Payment
First Half (H1) Bonus Earned		$	20,000
End of Year (YE) Bonus Earned		$	72,250
Total Bonus Earned for the Plan Year		$	92,250
Percent of Annual Bonus Target		92.25		%

Note: All Actual Plan awards will be adjusted up/down based on Company bonus pool funding levels.

VIII.

Discretionary Awards

In addition to awards based on the performance metrics established herein and notwithstanding any limitations including caps set forth elsewhere herein, the Compensation Committee of the Board of Directors may make discretionary awards to eligible employees in such amounts as the Committee determines are appropriate and in the best interests of the Company.

IX.	Administration

Administration of this Plan will be the responsibility of the CEO or the Compensation Committee of the Board of Directors. Any interpretation of the terms, conditions, goals, or payments from this Plan required because of a dispute will be made solely by the CEO or the Compensation Committee of the Board of Directors after a full review of the facts, input from the affected parties, and with appreciation of the overall intent of the Plan and previous practices.

If any term or condition of this Plan is found to be in non-conformance with a given state or federal law (USA) or local legislation (International locations), that term or condition will be non-enforceable but will not negate other terms and conditions of the Plan. However, Aspen Technology, Inc., will review and modify the overall Plan to conform to such law.

Eligibility and participation in this Plan in no way implies or reflects any guarantee or contract of employment, except as may be stipulated by applicable local law. Aspen Technology, Inc. reserves the right to amend, modify, or terminate this Plan and the procedures set forth herein at any time. Any change to the terms of the Plan will be made in writing by SVP of Human Resources to all Participants in as far in advance as possible of the effective date of such change, and will be subject to acceptance by the Participant.

Employee’s Name:	Manager’s Name:	Organization:	Date Prepared:
FY12 Compensation	Base Salary:$	Bonus Target: $	OTE: $

Employee Signature:

Date:

CEO Signature:

Date:

 

 

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