2009General Counsel Incentive Bonus Plan

November 24, 2008

David Zuckerman,

The letter is to document your variable compensation plan for Chordiant’s 2009 fiscal year which begins October 1st, 2008 and ends September 30th, 2009.  Your variable compensation element, which has a target equal to 50% of your annual base salary, will be calculated and paid (if applicable) quarterly based on the following criteria.

The General Counsel Bonus Plan applies to the Vice President and General Counsel and is comprised of two components—the quantitative portion and the qualitative portion.

The quantitative portion under this plan will be calculated and paid (if applicable) quarterly based on the criteria stipulated in the Chordiant Fiscal Year 2009 Executive Incentive Bonus Plan.

The qualitative portion of the bonus, as described below, may be paid regardless of the performance of the Company against the quantitative measures.  Evaluation of and payment for performance under the qualitative portion of the bonus shall be the exclusive decision of the Board of Directors. Payment of the qualitative portion of the bonus is limited to no greater than 100% when overall performance under the quantitative measures is less than 100% on a combined measure basis.  When the quantitative measure is greater than 100% for the year, the qualitative portion of the bonus may also exceed 100% proportionately.

Based on the criteria and payment calculation formulas established in the Chordiant Fiscal Year 2009 Executive Incentive Bonus Plan (attachment A)

 

 

Corporate Governance - - By Board direction, the General Counsel reports to the Board in his role as Chief Compliance Officer.  Each quarter the General Counsel shall submit a report to the Audit or Compensation Committee on his activities in this role for evaluation by the Committee(s).  At year end, based upon a performance evaluation, the Compensation Committee shall recommend a scoring of full, partial or no payout to the Board for its final determination.  Should the quantitative metrics justify a bonus payment above 100%, the payment under this opportunity shall be increased proportionately.

 

The final decision to pay a bonus will remain the decision of the Board of Directors or the Compensation Committee if so delegated by the Board.  The Board may in its own discretion, determine to pay or not pay a bonus based upon the factors listed above or other Company performance criteria it deems appropriate.  The factors listed above are guidelines to assist the Board, or the Committee, as the case may be, in its judgment but the final decision to pay or not pay is in the discretion the Board.  In its discretion, the Committee may recommend, and the Board has the authority to approve, a payment of up to 50% of an executive’s bonus opportunity to an individual(s) without regard to the performance criteria set forth in this plan.

Bonuses are generally calculated within thirty (30) days after the end of any given quarter and are generally paid within forty-five (45) days after the end of a given quarter, and generally not later than 60 days following the end of such quarter.  Bonuses are then paid in the next regularly-scheduled paycheck.  Payment for achievement of greater than 100% of plan goal generally will be made not later than 60 days following the close of the Company’s fiscal year.  These payment dates are contingent upon the Company filing its periodic Forms 10-Q and 10-K.

 

No bonus is earned until it is paid under this plan.  Therefore, in the event the employment of an executive eligible under this plan  is terminated (either by the Company or by the eligible executive, whether voluntarily or involuntarily) before a bonus is paid, then the executive will not be deemed to have earned that bonus, and will not be entitled to any portion of that bonus.

 

Questions regarding the Plan should be directed to the Chief Executive Officer or the Vice President of Human Resources.  Acceptance of payment(s) under the Plan constitutes full and complete acceptance of its terms and conditions.  Any eligible employee wishing to not participate in the Plan must notify the Vice President, Human Resources in writing of their desire and intent.

 

Nothing in this Plan is intended to alter the at-will nature of employment with the Company, that is, the executive’s right or the Company’s right to terminate the executive’s employment at will, at any time with or without cause or advance notice.  In addition, acceptance of this Plan shall not be construed to imply a guarantee of employment for any specified period of time.

 

This Plan contains the entire agreement between the Company and its executives on this subject, and supersedes all prior bonus compensation plans or programs of the Company and all other previous oral or written statements regarding any such bonus compensation programs or plans.

 

The contents of this Plan are Company confidential.  This Plan shall be governed by and construed under the laws of the State of California.

 

*   *   *

 

I have read and understand the provisions of this 2009 Executive Bonus Plan and hereby accept its terms.

 

 

/s/ David Zuckerman		11/24/2008
David Zuckerman		Date
Vice President, General Counsel
/s/ Steven R. Springsteel		11/24/2008
Steven R. Springsteel		Date
Chief Executive Officer

 

This Executive Incentive Bonus Plan (the “Plan”) will cover all Executive Officers and Vice Presidents of the Company (except for the Vice President of Services, the Vice President of Sales, the General Counsel, and those paid on sales commission plans).  Bonuses under this Plan will be calculated and paid (if applicable) based on the Company’s financial results as filed on Forms 10-Q and 10-K (and the associated non-GAAP reconciliations historically included in press releases and filed on a Form 8-K) for the Company’s 2009 fiscal year versus the Company’s FY2009 Financial Plan on one quantitative measure: Revenue (as defined below).

A participant’s total bonus payments under the Plan shall not exceed 300% of his or her 2009 fiscal year target bonus.  Payments for any given quarter will be limited to a maximum of 100% of the participant’s target bonus for that quarter, plus any cumulative “catch up” payment for prior quarters.

The quarterly bonus calculations will be computed using year-to-date figures. Cumulative “catch up” payments will be made for any prior quarter shortfall against the goals.

Except for the [**], for quarterly payments to be made under the Plan, the Company must be profitable on a non-GAAP Operating Profit basis. For the [**], for payments to be made under the Plan, the Company’s [**] cannot exceed the forecasted [**] in the FY2009 Financial Plan.

At the end of the fiscal year, the Company will evaluate its 2009 fiscal year revenue attainment against its 2009 fiscal year revenue goal. Payments for performance in excess of 100% of its annual revenue goal will be calculated and paid as provided in this Plan.

Quantitative Component (in $US):

·	GAAP Revenue

Maximum payout to a participant – 300%

Payments

·	Quarterly.

·	Limited to 100% maximum payment for a current quarter, plus any cumulative “catch-up” to bring any prior quarter to 100%.

·	Overachievement above 100% paid at end of fiscal year.

·	To qualify for payment, Company must be profitable on a non-GAAP Operating Profit basis in [**], and achieve better than forecasted [**].

                                                      Quarter     Year-to-Date

Q1                                                      [**]         [**]

Q2                                                      [**]         [**]

Q3                                                      [**]         [**]

Q4                                                      [**]         [**]

FY2009                    [**]

                                                      Performance*     Payout*

Thresholds                                            80%         60%

                                                    100%         80%

                                                    120%         100%

                                                    160%         300%

*Performance and payout interpolate between levels

                                                      Quarter         Year-to-Date

Q1                                                      [**]             [**]

Q2                                                      [**]             [**]

“Revenue” is defined as revenue as recognized under GAAP on the Company’s quarterly consolidated statement of operations in $US.

Each quarter, a participant is eligible to receive a bonus equal to twenty-five percent (25%) of his or her annual bonus target (plus “catch up” payments described elsewhere in this Plan).  Bonus payments are subject to the following:

· If the Company does not achieve at least 80% of its year-to-date Revenue goal, then no bonus will be paid for that quarter.

 

· If the Company achieves at least 80% of its year-to-date Revenue goal (and satisfies the non-GAAP Operating Profit/Loss criteria) participant will be paid 60% of his or her target bonus for the quarter.  For each 1.00% of the Revenue goal achieved above 80% (up to 100%), participant will be paid an additional 1% of his or her target bonus for the quarter.

 

·  If the Company achieves at least 100% of its year-to-date Revenue goal (and satisfies the non-GAAP Operating Profit/Loss criteria) participant will be paid 80% of his or her target bonus for the quarter.  For each 1.00% of the Revenue goal achieved above 100% (up to 120%), participant will be paid an additional 1% of his or her target bonus for the quarter.

 

· If the Company achieves at least 120% of its year-to-date Revenue goal (and satisfies the non-GAAP Operating Profit/Loss criteria) participant will be paid 100% of his or her target bonus for the quarter.  For each 1.00% of the Revenue goal achieved above 120% (up to 160%), participant will be paid an additional 5% of his or her target bonus for the quarter, up to the maximum payout of 300% of a participant’s target bonus for the quarter.

 

Non-GAAP Operating Profit is defined as Non-GAAP Operating Profit as reported on the Company’s quarterly Non-GAAP consolidated statement of operations in $US. Non-GAAP reconciliations historically have been included in press releases and filed on a Form 8-K at the end of each fiscal quarter.  Historically, these Non-GAAP results exclude expenses associated with the amortization of purchased intangible assets, stock-based compensation expense, reductions in workforce and other non-recurring charges. In fiscal year 2009, the Non-GAAP adjustments will include the non-cash tax expense associated with acquired NOL carry forwards.

Participants joining the Company after the beginning of the Company’s 2009 fiscal year will only be entitled to a pro-rata portion of the quarterly bonus in the quarter they commence employment with the Company, a pro-rata portion of any bonus amount that exceeds 100%, and will not be eligible for any “catch-up” payments for quarters in which they were not employed by the Company.

The final decision to pay a bonus will remain the decision of the Board of Directors or the Compensation Committee if so delegated by the Board.  The Board may in its own discretion determine to pay or not pay a bonus based upon the factors listed above or other Company performance criteria it deems appropriate.  The factors listed above are guidelines to assist the Board, or the Committee, as the case may be, in its judgment but the final decision to pay or not pay is in the discretion the Board or the Compensation Committee if so delegated by the Board.  In its discretion, the Board, or the Compensation Committee if so delegated by the Board, has the authority to approve a payment of up to 50% of a participant’s annual target bonus without regard to the performance criteria set forth in this Plan.

Bonuses are generally calculated within thirty (30) days after the end of any given quarter and are generally paid within forty-five (45) days after the end of a given quarter, and generally not later than sixty (60) days following the end of such quarter.  Bonuses are then paid in the next regularly-scheduled paycheck.  Payment for achievement of greater than 100% of the Revenue goal generally will be made not later than sixty (60) days following the close of the Company’s fiscal year.  These payment dates are contingent upon the Company filing its periodic Forms 10-Q and 10-K with the SEC.

 

Notwithstanding anything to the contrary herein, no bonus is earned until it is paid under this Plan.  Therefore, in the event the employment of a participant under this Plan is terminated (either by the Company or by the participant, whether voluntarily or involuntarily) before a bonus is paid, then the participant will not be deemed to have earned that bonus, and will not be entitled to any portion of that bonus.

 

Questions regarding the Plan should be directed to the Chief Executive Officer or the Vice President of Human Resources.  Acceptance of payment(s) under the Plan constitutes full and complete acceptance of its terms and conditions.  Any eligible participant who wishes not to participate in this Plan must notify the Vice President, Human Resources in writing of their desire and intent.

 

Nothing in this Plan is intended to alter the at-will nature of employment with the Company, that is, the participant’s right or the Company’s right to terminate the participant’s employment at will, at any time with or without cause or advance notice.  In addition, acceptance of this Plan shall not be construed to imply a guarantee of employment.

 

This Plan contains the entire agreement between the Company and the participant on this subject, and supersedes all prior bonus compensation plans or programs between the Company and participant, and all previous oral or written statements regarding any such bonus compensation programs or plans.

 

This Plan shall be governed by and construed under the laws of the State of California.

 

*   *   *