2006 Incentive Compensation Plan for Kevin McLaughlin
This agreement outlines the 2006 incentive compensation plan for Kevin McLaughlin, in addition to his base salary of $200,000. The plan, offered by VeriChip Corporation, provides up to $250,000 in target incentive compensation plus a special $100,000 bonus for achieving specific revenue goals. Incentives are based on quarterly and annual performance, including meeting revenue targets and specific business objectives. Payments are subject to certain conditions, such as achieving minimum revenue thresholds and are paid within set timeframes after each period ends.
Exhibit 10.29
Memorandum
| To: | Kevin McLaughlin | April 20, 2006 | ||
| From: | Scott Silverman | |||
| Re: | Senior Management Incentive Compensation Plan | |||
In addition to your base salary of US$200,000, we are pleased to offer you the following incentive compensation for the fiscal year ended December 31, 2006.
Your target incentive compensation is US$250,000 (plus a special Implanted Revenue incentive of an additional US$100,000 as listed below) and is based upon the achievement of specific objectives. These targets and the related incentive compensation are divided into three components – quarterly, annual and Implanted Revenue. The quarterly incentive compensation (up to US$125,000) rewards the achievement of budgeted revenues. The annual incentive compensation (up to US$125,000) rewards the achievement of specific objectives; and provides an incentive for exceeding budgeted revenues. The Implanted Revenue incentive bonus (US$100,000) rewards you for the achievement specifically of Implanted Division revenue.
Quarterly Incentive Compensation
Your quarterly incentive compensation is calculated based upon the achievement of year-to-date revenue from all of VeriChip Corporation relative to the December 9, 2005 budget. Your quarterly incentive compensation will be calculated at the end of each fiscal quarter; is earned in the quarter to which it relates; and shall be paid, subject to available cash or stock, within 45 calendar days of the end of each quarter.
The following is the formula for your quarterly incentive compensation calculation:
(Year-to-Date Revenue to the end of the Fiscal Quarter) / (Annual Revenue Budget of $34,852,000) * (Target Incentive Compensation) * (% of Target Incentive Compensation) = Actual Quarterly Incentive Compensation
Specifically for the first quarter of 2006 your actual quarterly incentive compensation is:
US$6,441,000 / US$34,852,000 * US$250,000 * 50% = US$23,101
If year-to-date revenue to the end of any fiscal quarter does not exceed 95% of the year-to-date annual revenue budget no additional incentive compensation shall be paid. Payments of quarterly incentive compensation in the 2nd, 3rd and 4th quarters will be
reduced by the actual amount paid in previous quarters. The maximum amount that you can earn during 2006 from this quarterly incentive compensation is US$125,000
Annual Incentive Compensation
Your annual incentive compensation shall be calculated at the end of each fiscal year; is earned in the year to which it relates; and shall be paid within 60 calendar days of the end of the year.
a) Achievement of Specific Objectives
This portion of the annual incentive compensation pays a specific amount for the achievement of each specific objective. Partial payments will be considered in extraordinary circumstances.
| Specific Objectives of Annual Incentive | % of Target Incentive Compensation | Specific Compensation Amount | ||||
| Achievement of budgeted Canadian revenue of US$28,360,000 | 10 | % | US$ | 25,000 | ||
| Achievement of legacy operations (the former companies – eXI and Instantel) budgeted EBITDA of US$4,182,000 | 10 | % | US$ | 25,000 | ||
| Completion of VeriChip Initial Public Offering with proceeds in excess of US$25M (Gross) | 10 | % | US$ | 25,000 | ||
| 40 Hospitals with VeriMed Operational Protocol | 10 | % | US$ | 25,000 | ||
| 200 Hospitals signed by 12/31/2006 | 5 | % | US$ | 12,500 | ||
| VeriMed Database operational and co-located in 2006 | 5 | % | US$ | 12,500 | ||
| Sub-Total of Annual Incentive Compensation | 50 | % | US$ | 125,000 | ||
| Implantable Revenue in excess of US$4,000,000 | US$ | 50,000 | ||||
| Implantable Revenue in excess of US$6,000,000 | US$ | 50,000 | ||||
| Total | US$ | 225,000 | ||||
b) Exceeding Budgeted Revenues
This portion of the annual incentive compensation is calculated based upon exceeding annual revenue from legacy operations (the former companies – eXI and Instantel) relative to the December 9, 2005 budget
The following is the formula for this portion of your annual incentive compensation:
[(Actual Annual Revenue) / (Annual Revenue Budget of US$28,360,000) – 1] * (Target Incentive Compensation) * (multiplier of 2) = Actual Annual Incentive Compensation
Assuming that revenues are exceeded by 10% the following would be the calculation for this portion of your Actual Annual Incentive Compensation:
[US$31,196,000 / US$28,360,000 – 1] * C$250,000 * 2 = US$50,000
If Actual Annual Revenue does not exceed the Annual Revenue Budget no incentive compensation shall be paid. There is no maximum for this portion of the annual incentive compensation.
I look forward to working with you to achieve these performance targets.
