% of Base Salary Available as MIP Award at Specified Levels of Achievement of Goals

EX-10.36 6 d59633_ex10-36.htm 2004 MANAGEMENT INCENTIVE PLAN

Exhibit 10.36


Approved by the Compensation Committee 1/27/04
 
Scientific Learning Corporation
2004 Management Incentive Plan
 
Purpose
 

To provide significant cash awards to participants for the achievement and over-achievement of Scientific Learning’s collective financial goals, as well as each participant’s individual goals and overall performance in adding value for shareholders, customers and employees.

 
Participants
 

All members of the Leadership Team, director-level employees and selected manager-level employees. The total number of participants at January 2003 is approximately 23 persons. The regional sales directors (K-12 and private sector) who are included in sales incentive compensation plans are excluded from this Plan.

 
Target Incentive Awards
 

Intended to deliver market average incentive compensation at 100% achievement of goals. Awards increase for overachievement.

 
Title   Target Award
(% of Base Salary Awarded at 100%
Achievement of Goals)		   Max Award
(Max % of Base Salary Awarded
on Overachievement)		  
 
CEO   50%    100%  
VP, Sales K-12   50%    100%  
CFO   40%    80%  
Chief Ed. Officer, Other VPs   30%    60%  
Directors   20%    30%  
Managers   10%    15%  

Goals

All participants in the Plan will have shared Company financial goals and individual goals closely related to the individual’s own area of responsibility.

 
Shared Goals
 

Shared goals for the 2004 Plan are:


Hurdle Level (Minimum
for Payment of Bonus)		   Target Level (100%
Goal Achievement)		   Max. Overachievement
Level		  
 
 
 
 
Operating income $  2.4 million   $  3.4 million   $  5.0 million  
Booked sales $  37 million   $  40 million   $  43 million  
 
Individual Goals

Individual goal performance under the 2004 Plan is based on both the following.
   
• Achievement of agreed-upon individual goals closely related to the individual’s area of responsibility. These goals will be agreed in writing between the participant and his/her manager.
   
• Contribution to adding value for shareholders, customers and employees.
   
Hurdle level for individual goals is 80%. Maximum overachievement level is 200%.

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Approved by the Compensation Committee 1/27/04
 
Weighting of Shared Goals and Individual Performance
       
Goal   % of Target Award
Allocated to Goal		  
 
 
Operating income   30%   
Booked sales   40%  
Individual performance   30%  
 

*For managers and directors, the CEO has discretion to allocate the bonus opportunity differently among the various goals to reflect the priorities and responsibilities of that particular person.
 
Hurdles and Scaling
 
The bonus payout starts for each goal when the specified hurdle level for that goal is achieved. At the hurdle level, 50% of that goal’s portion of the target award is earned. At 100% of the goal, then 100% of that goal’s target award is earned. Between the hurdle level and 100% achievement of the goal, the portion of the award earned is scaled ratably.
 
Overachievement
 
• Officers can double their bonus through overachievement and directors and managers can increase their bonus by 50% through overachievement.

• The overachievement potential is divided among the goals in the same percentage as the bonus for achievement.

• The maximum overachievement award is paid at the maximum overachievement levels specified above.

• Between 100% achievement and the maximum bonus overachievement level, each goal’s portion of the award is scaled ratably.
 
Illustration
 
The attached chart illustrates, for particular positions, the percentage of base salary payable for each goal, at the hurdle, 100% and maximum overachievement levels.
 
Timing
 

Awards will be paid in the first quarter of 2005, following the completion of the 2004 audit. Plan participants must be employed at Scientific Learning in a position that is eligible for an award under this Plan when the awards are paid in order to receive an award. Participants hired during 2004 will be eligible for a pro-rated award (unless otherwise agreed to, in writing, when the participant is hired).

 
Compensation Committee Discretion
 

The Compensation Committee has discretion to pay awards to reflect achievement even if specific goals are not met, and to interpret the terms of the Plan.


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Approved by the Compensation Committee 1/27/04
 
% of Base Salary Available as MIP Award at Specified Levels of Achievement of Goals
 
   
 % of Base Salary Available as Bonus
  
   
 
   
Operating Income
Booked Sales
Individual Goals
Total
  
   
   
   
   
 
    At Hurdle     100%     Max Over     At Hurdle     100%     Max Over     At Hurdle     100%     Max Over     At Hurdle     100%     Max Over  
   
   
   
   
   
   
   
   
   
   
   
   
 
           CEO   7.5 %   15 %   30 %   10 %   20 %   40 %   7.5 %   15 %   30 %   25 %   50 %   100 %
      VP Sales K-12
           CFO   5.25 %   10.5 %   21 %   7 %   14 %   28 %   5.25 %   10.5 %   21 %   17.5 %   35 %   70 %
 Chief Ed Officer,   4.5 %   9 %   18 %   6 %   12 %   24 %   4.5 %   9 %   18 %   15 %   30 %   60 %
           other VPs
        Directors*   3 %   6 %   9 %   4 %   8 %   12 %   3 %   6 %   9 %   10 %   20 %   30 %
        Managers*   1.5 %   3 %   4.5 %   2 %   4 %   6 %   1.5 %   3 %   4.5 %   5 %   10 %   15 %

* Subject to adjustment by the CEO, as described above.

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