2020 Management Incentive Plan
The purpose of the Endurance International Group Holdings, Inc. (together with its subsidiaries, the “Company”) Management Incentive Plan (“MIP”) is to share the success of the Company with our leaders and top performers. The MIP provides a cash bonus opportunity to eligible employees and this document describes how it works.
Eligibility and Other Terms
Your eligibility is determined by your role and level within the Company; generally, full-time employees at the Director level (or equivalent) and above are eligible. Eligible employees are notified in writing. Any employee eligible to participate in any other discretionary non-equity incentive plan, including a sales commission plan, is ineligible unless otherwise notified by the Company in writing.
Payments under the MIP are determined based in part on your “eligible earnings” and your “target bonus percentage”. For purposes of the MIP:
Your “eligible earnings” consist of regular earnings paid to you within each quarter that you participate in the 2020 MIP, and exclude payments for overtime, bonuses, the value of any equity awards, and other special or incentive payments such as commissions.
Your “target bonus percentage” is your annual bonus target expressed as a percentage of your eligible earnings. Target bonus percentages vary by individual, function and organization level and are communicated in writing. Please contact your manager or Human Resources if you have questions about your target bonus percentage.
Payment and Payment Timing. To receive payment under the MIP, you must be actively working for the Company and in good standing at the time payment is made. Payments are made via payroll in the first quarter of 2021. All payments and bonus pool funding are at the discretion of the Company’s Board of Directors (the “Board”).
Are you a new hire? If you were hired on or before October 1, 2020, then your participation effective date is your hire date. If you were hired after October 1, 2020, then your participation effective date will be January 1, 2021 and you will not be eligible for a bonus under the 2020 MIP, unless you are otherwise notified by the Company in writing.
Are you a current employee? If you’re a current employee newly added to the program during the annual merit review cycle, your participation effective date is April 1st. The same is true for current participants with a merit increase to base salary or target bonus percentage during the annual merit review cycle, unless you are otherwise notified by the Company in writing. Changes and additions made outside of the annual merit review cycle are effective at the start of the next quarter following the change or addition to the MIP. For example, if you are promoted or added to the MIP in September, the effective date would be October 1st.
Any payments under the MIP will be calculated on a pro-rated basis, based on the timing of the adjustment to your base salary or target bonus percentage during the year. Please see “Bonus Calculation Example” below for an illustration of this calculation.
Bonus Pool Funding
Bonus pool funding is dependent on the Company’s achievement of the GAAP Revenue and Adjusted EBITDA performance metric targets recommended by management and approved by the Board or a committee of the Board. GAAP Revenue and Adjusted EBITDA are as reported and defined in the Company’s public filings with the U.S. Securities and Exchange Commission.
Each performance metric is weighted 50%. The Company’s percentage achievement of the target for each of the GAAP Revenue and Adjusted EBITDA metrics will be evaluated separately, weighted, and then added together, and the bonus pool will be funded at the resulting combined percentage. The Company must achieve at least 98.2% of
the GAAP Revenue target and 93.2% of the Adjusted EBITDA target before such metric will contribute to the bonus pool funding. The MIP can pay out if the minimum threshold of one metric is hit but not the other. Achievement of 100% of the target for each metric will equate to 100% funding of the bonus pool. If the Company exceeds one or both metric targets, the bonus pool may be funded at a level up to 125%, depending upon the level of overachievement.
Linear interpolation is used to determine bonus pool funding between the stated percentages. This means that if the Company achieves percentages of one or both targets that fall between the percentages shown in the “Target Achievement %” columns in the table below, then a formula will be used to determine the corresponding bonus pool funding level, which will fall between the percentages shown in the “Bonus Pool Funding” column.
Example: 99.6% of the GAAP Revenue target would result in 97.8% bonus pool funding and 100.5% of the Adjusted EBITDA target would result in 100.7% bonus pool funding. After weighting, the combined bonus pool funding percentage would be 99.3%.
TARGET ACHIEVEMENT %
Achievement of the performance metrics is based on 2020 performance results as determined by the Company’s Finance group and approved by the Board or a committee of the Board. The Board or a committee of the Board may make adjustments to the achievement of performance metrics and/or bonus pool funding levels under the MIP to address the impact of any mergers, acquisitions or other unexpected activities, developments, trends or events. In addition, achievement of the performance metrics may include or exclude the impact of any of the following events that occur during the performance year: any reorganization or restructuring transactions; extraordinary nonrecurring items; and significant acquisitions or divestitures.
Bonus Calculation Example
Your target bonus is the product of eligible earnings * target bonus percentage * bonus pool funding percentage. Your target bonus may also be adjusted based on individual performance to obtain the final bonus payment.
Below is an example target bonus calculation for an employee whose base salary is $100,000 at the beginning of 2020 and who receives a base salary increase of 3% and a target bonus percentage increase from 10% to 15% effective April 1 as part of the annual merit review cycle. This example assumes 99.3% bonus pool funding.
Target Bonus Percentage
Earnings at old rate
January 1 – March 31
Earnings at new rate
April 1 – December 31
Bonus Pool Funding%:
Bonus Pool Funding%:
Bonus Pool Funding Percentage:
2020 Target Bonus: