RINGCENTRAL, INC. BONUS PLAN
Exhibit 10.10
RINGCENTRAL, INC.
BONUS PLAN
1. Purposes of the Plan. This Bonus Plan (the Plan) is intended to increase shareholder value and the success of the Company by motivating Employees to (a) perform to the best of their abilities, and (b) achieve the Companys objectives.
2. Definitions.
(a) Affiliate means any corporation or other entity (including, but not limited to, partnerships and joint ventures) controlled by the Company.
(b) Actual Award means as to any Performance Period, the actual award (if any) payable to a Participant for the Performance Period, subject to the Committees authority under Section 3(d) to modify the award.
(c) Board means the Board of Directors of the Company.
(d) Bonus Pool means the pool of funds available for distribution to Participants. Subject to the terms of the Plan, the Committee establishes the Bonus Pool for each Performance Period.
(e) Code means the Internal Revenue Code of 1986, as amended. Reference to a specific section of the Code or regulation thereunder will include such section or regulation, any valid regulation promulgated thereunder, and any comparable provision of any future legislation or regulation amending, supplementing or superseding such section or regulation.
(f) Committee means the committee appointed by the Board (pursuant to Section 5) to administer the Plan. Unless and until the Board otherwise determines, the Boards Compensation Committee will administer the Plan.
(g) Company means RingCentral, Inc., or any successor thereto.
(h) Disability means a permanent and total disability determined in accordance with uniform and nondiscriminatory standards adopted by the Committee from time to time.
(i) Employee means any executive or key employee of the Company or of an Affiliate, whether such individual is so employed at the time the Plan is adopted or becomes so employed subsequent to the adoption of the Plan.
(j) Participant means as to any Performance Period, an Employee who has been selected by the Committee for participation in the Plan for that Performance Period.
(k) Performance Period means the period of time for the measurement of the performance criteria that must be met to receive an Actual Award, as determined by the Committee in its sole discretion. A Performance Period may be divided into one or more shorter periods if, for example, but not by way of limitation, the Committee desires to measure some performance criteria over 12 months and other criteria over 3 months.
(l) Plan means this Bonus Plan, as set forth in this instrument and as hereafter amended from time to time.
(m) Target Award means the target award, at 100% performance achievement, payable under the Plan to a Participant for the Performance Period, as determined by the Committee in accordance with Section 3(b).
(n) Termination of Service means a cessation of the employee-employer relationship between an Employee and the Company or an Affiliate for any reason, including, but not by way of limitation, a termination by resignation, discharge, death, Disability, retirement, or the disaffiliation of an Affiliate, but excluding any such termination where there is a simultaneous reemployment by the Company or an Affiliate.
3. Selection of Participants and Determination of Awards.
(a) Selection of Participants. The Committee, in its sole discretion, will select the Employees who will be Participants for any Performance Period. Participation in the Plan is in the sole discretion of the Committee, on a Performance Period by Performance Period basis. Accordingly, an Employee who is a Participant for a given Performance Period in no way is guaranteed or assured of being selected for participation in any subsequent Performance Period or Periods.
(b) Determination of Target Awards. The Committee, in its sole discretion, will establish a Target Award for each Participant, which generally will be a percentage of a Participants average annual base salary for the Performance Period.
(c) Bonus Pool. Each Performance Period, the Committee, in its sole discretion, will establish a Bonus Pool. Actual Awards will be paid from the Bonus Pool.
(d) Discretion to Modify Awards. Notwithstanding any contrary provision of the Plan, the Committee may, in its sole discretion and at any time, (i) increase, reduce or eliminate a Participants Actual Award, and/or (ii) increase, reduce or eliminate the amount allocated to the Bonus Pool. The Committee may determine the amount of any reduction on the basis of such factors as it deems relevant, and will not be required to establish any allocation or weighting with respect to the factors it considers.
(e) Discretion to Determine Criteria. Notwithstanding any contrary provision of the Plan, the Committee will, in its sole discretion, determine the performance goals applicable to any Target Award which requirement may include, without limitation, (i) cash flow, (ii) cash position, (ii) earnings (which may include earnings before interest and taxes, earnings before taxes and net earnings), (iii) earnings per share, (iv) net income, (v) net profit, (vi) net sales, (vii) operating cash flow, (xxiv) operating expenses, (xxv) operating income, (xxvi) operating margin, (xxvii) overhead or other expense reduction, (xxviii) product defect measures, (xxix) product release timelines, (xxx) productivity, (xxxi) profit, (xxxii) return on assets, (xxxiii) return on capital, (xxxiv)
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return on equity, (xxxv) return on investment, (xxxvi) return on sales, (xxxvii) revenue, (xxxviii) revenue growth, (xxxix) sales results, (xl) sales growth, (xli) stock price, (xlii) time to market, (xliii) total stockholder return, (xliv) working capital, and individual objectives such as peer reviews or other subjective or objective criteria. As determined by the Committee, the performance goals may be based on GAAP or Non-GAAP results and any actual results may be adjusted by the Committee for one-time items or unbudgeted or unexpected items when determining whether the performance goals have been met. The goals may be on the basis of any factors the Committee determines relevant, and may be on an individual, divisional, business unit or Company-wide basis. The performance goals may differ from Participant to Participant and from award to award. The Committee may, in its discretion, determine to set forth the applicable performance goals in writing from time-to-time, which writing shall be attached hereto as Appendix A. Failure to meet the goals will result in a failure to earn the Target Award, except as provided in Section 3(d).
4. Payment of Awards.
(a) Right to Receive Payment. Each Actual Award will be paid solely from the general assets of the Company. Nothing in this Plan will be construed to create a trust or to establish or evidence any Participants claim of any right other than as an unsecured general creditor with respect to any payment to which he or she may be entitled.
(b) Timing of Payment. Payment of each Actual Award shall be made as soon as practicable as determined by the Committee after the end of the Performance Period during which the Actual Award was earned, but in no event later than the fifteenth day of the third month of the Fiscal Year following the date the Participants Actual Award is no longer subject to a substantial risk of forfeiture. Unless otherwise determined by the Committee, a Participant must be employed by the Company or any Affiliate on the last day of the Performance Period to receive a payment under the Plan.
It is the intent that this Plan comply with the requirements of Code Section 409A so that none of the payments to be provided hereunder will be subject to the additional tax imposed under Code Section 409A, and any ambiguities herein will be interpreted to so comply.
(c) Form of Payment. Each Actual Award will be paid in cash (or its equivalent) in a single lump sum.
(d) Payment in the Event of Death or Disability. If a Participant dies or becomes Disabled prior to the payment of an Actual Award earned by him or her prior to death or Disability for a prior Performance Period, the Actual Award will be paid to his or her estate or to the Participant, as the case may be, subject to the Committees discretion to reduce or eliminate any Actual Award otherwise payable.
5. Plan Administration.
(a) Committee is the Administrator. The Plan will be administered by the Committee or, if no Committee has been appointed, the Plan shall be administered by the Board. The Committee will consist of not less than two (2) members of the Board. The members of the Committee will be appointed from time to time by, and serve at the pleasure of, the Board.
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(b) Committee Authority. It will be the duty of the Committee to administer the Plan in accordance with the Plans provisions. The Committee will have all powers and discretion necessary or appropriate to administer the Plan and to control its operation, including, but not limited to, the power to (i) determine which Employees will be granted awards, (ii) prescribe the terms and conditions of awards, (iii) interpret the Plan and the awards, (iv) adopt such procedures and subplans as are necessary or appropriate to permit participation in the Plan by Employees who are foreign nationals or employed outside of the United States, (v) adopt rules for the administration, interpretation and application of the Plan as are consistent therewith, and (vi) interpret, amend or revoke any such rules.
(c) Decisions Binding. All determinations and decisions made by the Committee, the Board, and any delegate of the Committee pursuant to the provisions of the Plan will be final, conclusive, and binding on all persons, and will be given the maximum deference permitted by law.
(d) Delegation by Committee. The Committee, in its sole discretion and on such terms and conditions as it may provide, may delegate all or part of its authority and powers under the Plan to one or more directors and/or officers of the Company.
(e) Indemnification. Each person who is or will have been a member of the Committee will be indemnified and held harmless by the Company against and from (i) any loss, cost, liability, or expense that may be imposed upon or reasonably incurred by him or her in connection with or resulting from any claim, action, suit, or proceeding to which he or she may be a party or in which he or she may be involved by reason of any action taken or failure to act under the Plan or any award, and (ii) from any and all amounts paid by him or her in settlement thereof, with the Companys approval, or paid by him or her in satisfaction of any judgment in any such claim, action, suit, or proceeding against him or her, provided he or she will give the Company an opportunity, at its own expense, to handle and defend the same before he or she undertakes to handle and defend it on his or her own behalf. The foregoing right of indemnification will not be exclusive of any other rights of indemnification to which such persons may be entitled under the Companys Articles of Incorporation or Bylaws, by contract, as a matter of law, or otherwise, or under any power that the Company may have to indemnify them or hold them harmless.
6. General Provisions.
(a) Tax Withholding. The Company will withhold all applicable taxes from any Actual Award, including any federal, state and local taxes (including, but not limited to, the Participants FICA and SDI obligations).
(b) No Effect on Employment or Service. Nothing in the Plan will interfere with or limit in any way the right of the Company to terminate any Participants employment or service at any time, with or without cause. For purposes of the Plan, transfer of employment of a Participant between the Company and any one of its Affiliates (or between Affiliates) will not be deemed a Termination of Service. Employment with the Company and its Affiliates is on an at-will basis only.
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The Company expressly reserves the right, which may be exercised at any time and without regard to when during a Performance Period such exercise occurs, to terminate any individuals employment with or without cause, and to treat him or her without regard to the effect that such treatment might have upon him or her as a Participant.
(c) Participation. No Employee will have the right to be selected to receive an award under this Plan, or, having been so selected, to be selected to receive a future award.
(d) Successors. All obligations of the Company under the Plan, with respect to awards granted hereunder, will be binding on any successor to the Company, whether the existence of such successor is the result of a direct or indirect purchase, merger, consolidation, or otherwise, of all or substantially all of the business or assets of the Company.
(e) Beneficiary Designations. If permitted by the Committee, a Participant under the Plan may name a beneficiary or beneficiaries to whom any vested but unpaid award will be paid in the event of the Participants death. Each such designation will revoke all prior designations by the Participant and will be effective only if given in a form and manner acceptable to the Committee. In the absence of any such designation, any vested benefits remaining unpaid at the Participants death will be paid to the Participants estate.
(f) Nontransferability of Awards. No award granted under the Plan may be sold, transferred, pledged, assigned, or otherwise alienated or hypothecated, other than by will, by the laws of descent and distribution, or to the limited extent provided in Section 6(e). All rights with respect to an award granted to a Participant will be available during his or her lifetime only to the Participant.
7. Amendment, Termination, and Duration.
(a) Amendment, Suspension, or Termination. The Board, in its sole discretion, may amend or terminate the Plan, or any part thereof, at any time and for any reason. The amendment, suspension or termination of the Plan will not, without the consent of the Participant, alter or impair any rights or obligations under any Actual Award theretofore earned by such Participant. No award may be granted during any period of suspension or after termination of the Plan.
(b) Duration of Plan. The Plan will commence on the date specified herein, and subject to Section 7(a) (regarding the Boards right to amend or terminate the Plan), will remain in effect thereafter.
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8. Legal Construction.
(a) Gender and Number. Except where otherwise indicated by the context, any masculine term used herein also will include the feminine; the plural will include the singular and the singular will include the plural.
(b) Severability. In the event any provision of the Plan will be held illegal or invalid for any reason, the illegality or invalidity will not affect the remaining parts of the Plan, and the Plan will be construed and enforced as if the illegal or invalid provision had not been included.
(c) Requirements of Law. The granting of awards under the Plan will be subject to all applicable laws, rules and regulations, and to such approvals by any governmental agencies or national securities exchanges as may be required.
(d) Governing Law. The Plan and all awards will be construed in accordance with and governed by the laws of the State of California, but without regard to its conflict of law provisions.
(e) Bonus Plan. The Plan is intended to be a bonus program as defined under U.S. Department of Labor regulation 2510.3-2(c) and will be construed and administered in accordance with such intention.
(f) Captions. Captions are provided herein for convenience only, and will not serve as a basis for interpretation or construction of the Plan.
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APPENDIX A
2012 Performance Goals
(As amended on September 18, 2012)
1. | H1 2012 Performance Period and Performance Goals. For the first half of calendar year 2012, there are two quarterly Performance Periods, ending on March 31 and June 30 (each, an H1 2012 Performance Period). For each H1 2012 Performance Period, there are two equally weighted (50% each) performance goals (each, an H1 2012 Performance Goal): H1 Revenue and H1 Free Cash Flow (each as defined below). The chart below illustrates the H1 Revenue and H1 Free Cash Flow targets for each of the H1 2012 Performance Periods. |
H1 2012 Performance Period | H1 Revenue Target (in millions) | H1 Free Cash Flow Target (in millions) | ||
Q1 | $24.8 | ($4.3) | ||
Q2 | $27.8 | ($8.3) | ||
TOTAL | $52.6 | ($12.6) |
H1 Revenue means as to any H1 2012 Performance Period, the Companys or a business units net revenues generated from third parties.
H1 Free Cash Flow means as to any H1 2012 Performance Period, the Companys cash flow from operations less the capital expenditures, as presented on the quarterly cash flow statement. The free cash flow target for H1 2012 assumes that the Company will have negative free cash flow in each quarter.
2. | Funding of H1 2012 Bonus Pool. Subject to the terms of Plan, including but not limited to Section 3(d) of the Plan, following the end of an H1 2012 Performance Period, the Committee will determine the extent to which each of the H1 2012 Performance Goals are achieved in accordance with the following guidelines. |
a. | If the Company achieves less than 90% of the H1 Revenue H1 2012 Performance Goal OR achieves more than 111.1% (negative) of the H1 Free Cash Flow H1 2012 Performance Goal during an H1 2012 Performance Period, the H1 2012 Bonus Pool will not fund. |
b. | If the Company achieves 90% or more of the H1 Revenue H1 2012 Performance Goal AND achieves 111.1% (negative) or less of the H1 Free Cash Flow H1 2012 Performance Goal, the H1 2012 Bonus Pool will fund as follows with respect to each H1 2012 Performance Goal during such H1 2012 Performance Period based on the percentage achievement. The chart below illustrates the funding multiple that will apply to each H1 Performance Goal. |
H1 Performance Goal Achievement Revenue (Positive) | H1 Performance Goal Achievement Free Cash Flow (Negative) | H1 Bonus Pool Funding Multiple* | ||
90% | 111.1% | .90x | ||
92% | 108.7% | .92x | ||
94% | 106.4% | .94x | ||
96% | 104.2% | .96x | ||
98% | 102.0% | .98x | ||
100% | 100.0% | 1.00x | ||
102% | 98.0% | 1.02x | ||
104% | 96.2% | 1.04x | ||
106% | 94.3% | 1.06x | ||
108% | 92.6% | 1.08x | ||
110% | 90.9% | 1.10x | ||
112% | 89.3% | 1.12x | ||
114% | 87.7% | 1.14x | ||
116% | 86.2% | 1.16x | ||
118% | 84.7% | 1.18x | ||
120% and above | 83.3% and below | 1.20x |
* | x equals target bonus amount at 100% of performance goal achievement |
Illustration
For example, if the Company achieves its H1 Revenue at 93% of target and H1 Free Cash Flow at 111.1%, the H1 2012 Bonus Pool will fund as to 91.5%, determined as follows:
| 46.5% on achievement of the revenue goal (50% weighted target * .93x) |
| 111.1% on achievement of the free cash flow goal (50% weighted target * .90x) |
3. | H2 2012 Performance Period and Performance Goals. For the second half of calendar year 2012, there are two quarterly Performance Periods, ending on September 30 and December 31 (each, an H2 2012 Performance Period). For each H2 2012 Performance Period, there are two |
2012 Bonus Plan Appendix A - August Amendment | -2- |
equally weighted (50% each) performance goals (each, an H2 2012 Performance Goal): H2 Revenue and H2 Operating Income (each as defined below). The chart below illustrates the H2 Revenue and H2 Operating Income targets for each of the H2 2012 Performance Periods. |
H2 2012 Performance Period | H2 Revenue Target (in millions) | H2 Operating Income Target (in millions) | ||
Q3 | $28.8 | ($6.048) | ||
Q4 | $31.1 | ($6.309) | ||
TOTAL | $59.9 | ($12.357) |
H2 Revenue means as to any H2 2012 Performance Period, the Companys or a business units net revenues generated from third parties.
H2 Operating Income means as to any H2 2012 Performance Period, the Companys non-GAAP income from operations (revenues less cost of revenues and operating expenses, excluding the impact of stock-based compensation expense, amortization of acquisition related intangibles, and income tax effects of the excluded items), as adjusted for certain acquisitions, as presented on the quarterly income statement. The operating income target for H2 2012 assumes that the Company will have negative operating income in each quarter.
4. | Funding of H2 2012 Bonus Pool. Subject to the terms of Plan, including but not limited to Section 3(d) of the Plan, following the end of an H2 2012 Performance Period, the Committee will determine the extent to which each of the H2 2012 Performance Goals are achieved in accordance with the following guidelines. |
c. | If the Company achieves less than 90% of the H2 Revenue H2 2012 Performance Goal OR achieves more than125% (negative) of the H2 Operating Income H2 2012 Performance Goal during an H2 2012 Performance Period, the H2 2012 Bonus Pool will not fund. |
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d. | If the Company achieves 90% or more of the H2 Revenue H2 2012 Performance Goal AND achieves 125% (negative) or less of the H2 Operating Income Performance Goal), the H2 2012 Bonus Pool will fund as follows with respect to each H2 2012 Performance Goal during such H2 2012 Performance Period based on the percentage achievement. The chart below illustrates the funding multiple that will apply to each Performance Goal. |
H2 Performance Goal Achievement Revenue (Positive) | H2 Performance Goal Achievement Operating Income (Negative) | H2 2012 Bonus Pool Funding Multiple* | ||
N/A | 125.0% | .80x | ||
N/A | 117.6% | .85x | ||
90% | 111.1% | .90x | ||
92% | 108.7% | .92x | ||
94% | 106.4% | .94x | ||
96% | 104.2% | .96x | ||
98% | 102.0% | .98x | ||
100% | 100.0% | 1.00x | ||
102% | 98.0% | 1.02x | ||
104% | 96.2% | 1.04x | ||
106% | 94.3% | 1.06x | ||
108% | 92.6% | 1.08x | ||
110% | 90.9% | 1.10x | ||
112% | 89.3% | 1.12x | ||
114% | 87.7% | 1.14x | ||
116% | 86.2% | 1.16x | ||
118% | 84.7% | 1.18x | ||
120% and above | 83.3% and below | 1.20x |
* | x equals target bonus amount at 100% of performance goal achievement |
Illustration
For example, if the Company achieves its H2 Revenue at 93% of target and H2 Operating Income at 111.1%, the H2 2012 Bonus Pool will fund as to 91.5%, determined as follows:
| 46.5% on achievement of the revenue goal (50% weighted target * .93x) |
| 111.1% on achievement of the operating income goal (50% weighted target * .90x) |
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