Rosetta Stone 2014 Annual Report Download - page 129

•Designated as eligible to participate by the Committee;
•Renders overall satisfactory work performance; and
•Continued active employment with the Company through the date any Award is granted under this LTIP.
The Committee determines, at its sole discretion, whether Awards of cash and/or Performance Stock Awards will be
granted.
The LTIP shall be effective from January 1, 2013 (“Effective Date”) until December 31, 2014 (the “Program Period”).
IV. LTIP Details
Executives designated by the Committee may receive Performance Stock Awards and cash upon the Company’s
achievement of the following specified performance goals during the Program Period: (i) Bookings; (ii) Operating EBITDA;
and (iii) Percentage Digital Sales (each, a “Performance Goal”).
“Bookings” means executed sales contracts by the Company that are either recorded immediately as revenue or as
deferred revenue.
“Operating EBITDA” means GAAP net income or loss plus interest expense, income tax expense, depreciation,
amortization, and stock-based compensation expenses, plus the change in deferred revenues.
“Percentage Digital Sales” means the percentage of all new unit sales of Global Consumer which are downloaded (e.g.,
TOTALe), online (e.g., OSUB, TOSUB, ReFLEX), renewals and paid Apps.
Unless specified otherwise by the Committee in an Award Agreement at the time an Award is granted, the Committee shall
appropriately adjust any evaluation of performance under a Performance Goal to exclude the items listed in Section 9.2 of
the Plan.
An Executive’s individual amount of Performance Stock Awards and cash he or she may be able to receive will be provided
in the Award Agreement. The Executive’s incentive target is determined as a multiple of the Executive’s base salary in
effect as of December 31, 2012. The CEO’s incentive target is 3x base salary, while all other Executives are at 1x base
salary. The incentive target value in each Executive’s Award shall consist of 70% in Performance Stock Awards and 30% in
cash. Each Executive’s target Performance Stock Award is based on valuation as of January 1, 2013. Stock valuation is
based on the monthly average of the closing price of a share of Stock from December 1, 2012 to January 1, 2013. If at any
time a new Executive is added to this Plan, upon approval by the Committee, the Executive’s incentive target for his or her
Award will be determined and valued upon the effective date of participation.
In order for the granting of any Performance Stock Award or any cash payment to be made under this LTIP, the Company
must meet the minimum threshold requirements for each of the three Performance Goals for the 2014 fiscal year,
regardless of the 2013 fiscal year results and/or the total results for each Performance Goal for the Program Period. In
addition, each Performance Goal is mutually exclusive of the other two Performance Goals.