Travelzoo 2013 Annual Report Download - page 17

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15
The Committee did not engage an outside consulting firm to provide advice on executive compensation.
Components of Executive Compensation
The Committee has structured an executive compensation program comprised of base salary, cash bonus and non-
equity incentive pay. In addition, the Committee approved the grant of options to the Company's Chief Executive Officer for
75,000 shares of common stock as further described under "Approval of Stock Options (Proposal 2)".
Base Salary
The Committee considered two types of potential base salary increases for the named executive officers in 2013: (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.
The Committee did not make any changes to the salaries of Mr. Christopher Loughlin, Mr. Glen Ceremony and
Ms. Shirley Tafoya in 2013. Mr. Richard Singer and Mr. Mark K. Webb base salaries were increased as shown in on the
Summary Compensation Table based upon their individual performance and salary ranges for similarly situated executives in
2013.
Incentive Bonus Pay
In 2013, 2012 and 2011, Mr. Christopher Loughlin, Mr. Glen Ceremony, Ms. Shirley Tafoya, Mr. Richard Singer and
Mr. Mark Webb also received incentive bonuses pursuant to the terms of their employment agreements and the discretion of the
Board of Directors.
Pursuant to the terms of Mr. Loughlin's employment agreement dated November 18, 2009, effective July 1, 2010 and
as amended January 1, 2013 and August 1, 2013, Mr. Loughlin was eligible to receive a quarterly Performance Bonus for each
quarter during 2013.
The quarterly Performance Bonus is calculated based upon worldwide revenue, operating income and audience
targets. The revenue bonus is calculated based upon a sliding scale that ranges from 95% through 105% achievement of the
target resulting in a potential bonus that ranges from $16,000 to $32,000. The quarterly revenue bonus at 100% of target is
$26,667 and the maximum revenue bonus is $32,000. The revenue bonus requires that there are no more than two significant
customers and that no significant customer is 17% or more than worldwide revenue. The operating income bonus is calculated
based upon a sliding scale that ranges from 90% through 105% achievement of the target resulting in a potential bonus that
ranges from $16,000 to $32,000. The quarterly operating income bonus at 100% of target is $26,666 and the maximum
operating income bonus is $32,000. The audience bonus is calculated based upon achievement of certain audience targets
resulting in a potential bonus of up to $26,667. The total maximum Performance Bonus per quarter for the revenue, operating
income and audience components combined is $90,667.
Mr. Loughlin earned a quarterly bonus for revenue and operating income in the first and second quarters of 2013 and
earned a quarterly bonus for the audience for each quarter of 2013. Mr. Loughlin received Performance Bonuses totaling
$184,364 during 2013. For 2013, Mr. Loughlin received 51% of the maximum Performance Bonus. The Company believes that
targets set for worldwide revenue, operating income and audience align with the Company's desire to continue to grow the
business. Since the individual targets are intended to be challenging, and since the separate targets related to different aspects of
the Company's performance, it is expected it will be difficult for all the targets to be achieved for any given year.
Mr. Loughlin is also eligible to receive a Discretionary Bonus to be determined by the Board of Directors at its sole
and absolute discretion. In exercising such discretion, the Board of Directors takes into consideration Mr. Loughlin's individual
performance. In evaluating Mr. Loughlin's individual performance during 2013, the Board of Directors considered factors such
as the quality of Mr. Loughlin's strategic management to ensure the long-term success of the Company, the development of the
Company's leadership talent, the quality of the content of the Company's publications, and the development of the Travelzoo
brand. Mr. Loughlin received Discretionary Bonuses totaling $60,000 in 2013.