Tucows 2015 Annual Report Download - page 138

We provide a base salary to our named executive officers to compensate them for services rendered on a day-
to-day basis during the year and to provide sufficient fixed cash compensation to allow them to focus on their ongoing
responsibilities. The base salaries of all executive officers are reviewed annually and adjusted when necessary to reflect
individual roles and performance as well as market conditions. In January 2015, as a part of the annual review process
and to account for increases in costs of living, with the exception of Mr. Cooperman, who was awarded an additional
eight vacation days in lieu of an increase, the base salaries of our NEOs were increased 3%.
In connection with the Corporate Governance, Nominating and Compensation Committee's annual review
process in January 2016, the base salaries of our NEOs were each increased by 3% for 2016, primarily to account for an
increase in the cost of living.
Annual Cash Incentive Bonuses
We use annual cash incentive bonuses to communicate specific goals that are of primary importance during the
coming year and motivate our senior officers and NEOs to achieve these goals. Each year, we assess if our corporate
financial and strategic objectives are optimally aligned with our management incentive compensation plan to motivate
and reward our senior executives, including our NEOs, to attain specific short-term performance objectives that, in turn,
further our long- term business objectives. These objectives are based upon corporate or service related targets, rather
than individual objectives. In setting target payout levels under our management incentive compensation plan, our
Corporate Governance, Nominating and Compensation Committee considers historical payouts, the total cost to the
company should performance objectives be achieved and our retention needs.
The Corporate Governance, Nominating and Compensation Committee determines the initial level of funding
for the annual incentive bonus pools during the annual budgeting process and approves provisional quarterly payments,
computed on a pro-rata basis, based on quarterly minimum year-to-date targets for our senior officers, including NEOs,
taking into account the Company’s actual performance on a year-to-date basis. To ensure that our annual target remains
the primary consideration, any quarterly payments are subject to a discretionary holdback percentage, which has
historically been set at 25% but may be adjusted each quarter should circumstances warrant it. To mitigate the risk of
overpayment of incentive bonuses based on a quarterly performance, a 25% holdback of quarterly payments is
maintained. The Corporate Governance, Nominating and Compensation Committee retains the right to interpret,
rescind, prescribe, amend or suspend payment under our management incentive compensation plan at any time.
Changes made by the Corporate Governance, Nominating and Compensation Committee will however only be on a
prospective basis so will not impact any quarterly rights our NEO’s and senior officers may have up to the date of the
change.
The performance goals under our management incentive compensation plan consists of two components
namely, an incentive bonus and an overachievement bonus, each with established thresholds and maximum
achievement levels.
For the incentive bonus component, achievement of established targets for each NEO will equate to 100% of
the bonus being paid. Where 75% of an established target is achieved (“floor level”) this will result in 50% of the bonus
being paid. Below the floor level no bonus is payable. In those cases where achievement is between the floor level and
the established target, straight-line interpolation is applied from the established target levels.
To further incent our senior management and NEOs to promote our business and strategic objectives; to the
extent that the Company’s actual performance exceeds the Company’s adjusted EBITDA goals (“overachievement
target”), the Compensation Committee sets aside 30% of the overachievement target in an overachievement pool to
reward our senior management, employees and NEOs. At the discretion of the Corporate Governance, Nominating and
Compensation Committee, approximately 40% of the overachievement pool has been allocated to the NEOs and is
shared equally among them.
Incentive Bonus program
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