Travelzoo 2006 Annual Report Download - page 14

Base Salary. The Committee considered two types of potential base salary increases for the named executive
officers in 2006: (1) “merit increases” based upon each named executive’s individual performance; and/or
(2) “market adjustments” based upon the salary range for similarly situated executives.
In determining merit increases, the Committee considers the specific responsibilities of the executive and the
executive’s overall performance and tenure with the Company. In addition, the Committee also considers the CEO’s
evaluation of each named executive officer in making the decision regarding merit increases.
The Committee determines any market adjustments based on the Committee’s comparison of the executive’s
compensation with statistical information on average compensation for similarly situated executives that is publicly
available through the Wall Street Journal.
During 2006, the Committee increased the salaries of the named executive officers effective July 1, 2006 as
follows:
• Ralph Bartel’s base salary increased from $350,000 to $367,500;
• Wayne Lee’s base salary increased from $140,000 to $170,000 (effective as of June 12, 2006);
• Holger Bartel’s base salary increased from $320,000 to $336,000;
• Christopher Loughlin’s base salary increased from $218,390 to $368,590; and
• Shirley Tafoya’s base salary increased from $330,000 to $346,500.
After these base salary increases, Mr. Ralph Bartel’s, Mr. Holger Bartel’s and Mr. Lee’s base salary remained
below the level of compensation for similarly situated executives. Ms. Tafoya’s base salary was set above the
median level of compensation for similarly situated executives based on the Committee’s evaluation of Ms. Tafoya’s
specific experience and the competition for similarly qualified executives in its market.
Executive Bonus Plan We believe that the Executive Bonus Plan provides the Company with a valuable tool
to assist in focusing executives on accomplishing operational and financial objectives over the Company’s quarterly
periods. The plan is designed to reward the Company’s executives for achieving their quarterly targets as set per the
Company’s Master Budget.
On June 9, 2006, the Committee amended the Executive Bonus Plan and renamed the plan the North America
Executive Bonus Plan, effective July 1, 2006. The amount of the quarterly bonus was increased from $15,000 to
$50,000. The Committee determined that the increase to the bonus available would provide a higher level of
incentive on accomplishing the Company’s operational and financial objectives.
As of July 1, 2006, the Committee determined that of the named executive officers, Mr. Ralph Bartel,
Mr. Holger Bartel, Mr. Wayne Lee and Ms. Shirley Tafoya would be eligible to participate in the North America
Executive Bonus Plan; such named executives are collectively referred to in this section as the “participating
executives.” Effective as of July 1, 2006, the participating executives were eligible to receive a bonus of $50,000 per
quarter upon the attainment of the following goals:
• both of the following quarterly targets are met: (i) the revenue target as set forth in the Company’s North
America Master Budget and there are not more than two customers that account for 10% or more of the
Company’s worldwide consolidated revenues for the quarter and no single customer accounts for more than
15% of the Company’s worldwide revenues for the quarter; and (ii) the operating income target as set forth in
the Company’s North America Master Budget; and
• two of the following three quarterly targets as set forth in the Company’s North America Master Budget are
met: (i) collections; (ii) subscriber targets; or (iii) staffing goals.
The North America Master Budget is set at the beginning of the year by the CEO and provides quarterly targets
for revenues, operating expenses, operating income, net income, subscribers, headcount, days sales outstanding,
and other financial and non-financial performance metrics. The Company reserves the right to amend the North
America Master Budget at any time and for any reason. The quarterly targets were not met for the third and fourth
quarters of 2006 when the plan was in place and no bonuses were paid to the participating executives.
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