Quinton Cardiology Systems, Inc. 2004 Management Incentive Plan and Senior Executive Addendum

Summary

Quinton Cardiology Systems, Inc. established a 2004 Management Incentive Plan for senior management, directors, managers, and key contributors, as well as a special addendum for named senior executives. The plan provides cash bonuses based on the company's consolidated pretax income, with specific eligibility, funding, and payout formulas. Bonuses are only paid if the company meets at least two-thirds of its budgeted pretax income, and payouts are capped as a percentage of salary. Participants must be employed at the time of payment, and all terms are subject to change by the Compensation Committee.

EX-10.5 2 v06098exv10w5.txt EXHIBIT 10.5 EXHIBIT 10.5 Quinton Cardiology Systems, Inc. Management Incentive Plan - 2004 - Eligibility - Sr. Management, Directors, Managers & Selected Key Contributors - Funding - Bonus pool funded through accrual of 8% of consolidated pretax income; 25% of pretax income after budget is met; Compensation Committee may approve additional funding in its discretion - Minimum Profitability - No bonuses unless Quinton achieves at least 2/3 of budgeted pretax income ($4.2 million) - Target Payout - Up to 10% of salary - Stretch Target - Up to 15% of salary (10% target plus 5% additional), based on consolidated pre-tax income/bonus pool availability - Formula for Payout: - Managers - 40% of target (4% of salary) based on personal objectives set by supervisor - Directors - 20% of target (2% of salary) based on personal objectives set by supervisor - Remainder based on bonus pool, divided among participants in proportion to salary (deducting personal objective payouts first) - Total payouts limited to bonus accrual, so if "earned" bonus amounts based on individual objectives exceed total accrual amount, payouts are reduced ratably in proportion to shortfall - Pro-rated for partial year participation. Must be employed at the time of payment to be eligible. - Subject to change at any time in the sole determination of the Compensation Committee of the Board of Directors. - Payout based on audited results, within 30 days of 2004 earnings release. Quinton Cardiology Systems, Inc. Management Incentive Plan - 2004 Addendum for Senior Executives - Eligibility - Named Senior Executives - Funding - Bonus pool funded through accrual of 3% of consolidated pretax income; 25% of pretax income after budget is met; Compensation Committee may approve additional funding in its discretion - No bonuses unless Quinton earns at least 2/3 of budgeted pretax income ($4.2 million) - Payout - Up to 50% of salary, including amounts paid out under the general MIP plan - Formula for Payout: - Payout amounts determined by dividing bonus pool among participants in proportion to salary up to a cap of 50% of salary (including payouts from regular MIP plan first) - Pro-rated for partial year participation. Must be employed at the time of payment to be eligible. - Subject to change at any time in the sole determination of the Compensation Committee of the Board of Directors. - Payout based on audited results, within 30 days of 2004 earnings release. Quinton Cardiology Systems, Inc. Management Incentive Plan - 2004 Senior Executives Participating in MIP Program Allan Criss, VP Acute Care Darryl Lustig, VP Primary Care Senior Executives Participating in Senior Management MIP Program John Hinson, CEO Mike Matysik, CFO Dave Hadley, VP R&D Atul Jhalani, VP Marketing Feroze Motafram, VP Operations