Travelzoo 2007 Annual Report Download - page 16

Components of Executive Compensation
The Committee has structured an executive compensation program comprised of base salary, cash bonus and
non-equity incentive pay.
Base Salary. The Committee considered two types of potential base salary increases for the named executive
officers in 2007: (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 2007, the Committee increased the salaries of the named executive officers as follows:
• Ralph Bartel’s base salary increased from $367,500 to $382,200 effective July 1, 2007;
• Wayne Lee’s base salary increased from $170,000 to $200,000 effective February 1, 2007, increased from
$200,000 to $208,000 effective July 1, 2007, and increased from $208,000 to $240,000 effective January 1,
2008; and
• Christopher Loughlin’s base salary increased from $400,362 to $416,377 effective July 1, 2007.
Mr. Ralph Bartel’s base salary is below the average base salary of chief executive officers working in New York
City per The Wall Street Journal.
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 operating budget.
On April 6, 2007 the Committee adopted the North America Executive Bonus Plan, as amended and restated
effective as of January 1, 2007 and determined that Ms. Shirley Tafoya, and of the named executive officers,
Mr. Ralph Bartel and Mr. Wayne Lee, would be eligible to participate in the North America Executive Bonus Plan.
Ms Tafoya, Mr. Bartel and Mr. Lee are collectively referred to in this section as the “participating executives.”
Effective as of January 1, 2007, the participating executives were eligible to receive a bonus of $50,000 per
quarter upon the attainment of all of the following goals as set forth in the Company’s Annual Operating Budget:
• 100% of Revenue target;
• 100% of Pro Forma Operating Income target;
• 100% of the U.S. Top 20 Subscribers target;
• 100% of the Canada Top 20 Subscribers target; 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 17% of the Company’s
worldwide consolidated revenues for the quarter.
If one or more of the above targets were not met, the participating executives were eligible to receive a bonus of
$25,000 per quarter upon attainment of all of the following goals as set forth in the Company’s Annual Operating
Budget:
• 98% of Revenue target;
• 90% of Pro Forma Operating Income target;
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