EX-10.14 2 0002.txt NU SKIN ENTERPRISES, INC.'S EXECUTIVE BONUS PLAN Nu Skin Enterprises Nu Skin Enterprises, Inc. 3 Exectuvie Annual Incentive Plan July 2000 Purpose Nu Skin Enterprises, Inc. ("Nu Skin") believes that sound compensation programs are essential to the retention, attraction and motivation of personnel . The purpose of the Plan is to focus employees on excellent, sustained performance that leads to long-term growth, profitability and stability. Objectives The objectives of the Annual Incentive Plan include: * Focusing employees on the achievement of Nu Skin Enterprise business and strategic objectives; * Enhancing operational efficiency and teamwork within each Division and across Divisions; * Increasing Divisional revenue and NSE net income; and * Attracting, retaining and motivating employees by emphasizing "pay for performance" compensation programs that offer competitive total compensation (base salary + incentives) opportunities upon achievement of: Company financial and strategic objectives; and Division and Individual objectives. Effective Plan Date, Duration and Performance Cycles * Effective Plan Date The effective Plan date is July 1, 2000. * Plan Duration * From the effective Plan date of July 1, 2000; * Until December 31, 2000; and renegotiated as needed * Performance Cycles The Plan has two performance cycles, a quarterly and an annual performance cycle. Each cycle is based on the specific results of the quarter or year. Employees are eligible to earn up to 12.5% of the Individual's earned incentive award at the end of each quarter and up to 50% of the award upon completion of the fiscal year. Target Incentive Award Opportunities Annual Incentive Plan Participants have target award opportunities designed to reward superior corporate and Division performance and maintain externally competitive total cash compensation commensurate with NSE's performance: * Participants' incentive awards will be based upon the areas of the Company in which they contribute and * Participants are assigned a target incentive award opportunity expressed as a percentage of their base salary: 60% for the Chairman, CEO/President and Founding Senior Vice Presidents subject to review by ECC of named officers, bonus amount above 1 million placed in deferred compensation plan; 60% for Executive Vice President's 50% for Division Presidents and Country Managers 40% for Vice Presidents, Regional Vice Presidents and Division Senior Vice Presidents, Country Division Managers and Country Senior Management. * All employees participate in the plan with both an NSE and Division component and payment is based on the performance of NSE as a whole and all Divisions; and * Target incentive award levels are determined by the Individual's level of job responsibility reflecting that job's ability to impact NSE's financial performance, as well as competitive total compensation practices (base salary = incentives) for comparable jobs within organizations similar in size and scope. The target award amount is not a guaranteed sum: * The actual incentive pay-out may be smaller or larger, depending on overall NSE and Division performance results. PARTICIPANTS Position Participants --------------------- ------------------------------------- Chairman Blake Roney CEO/President Steve Lund Senior Vice Presidents - Founders Brooke Roney, Sandie Tillotson, Keith Halls, Max Pinegar Executive Vice Presidents Corey Lindley, Truman Hunt Division Presidents Joe Chang, Grant Pace, Richard King Corporate Vice Presidents Brad Morris, Gary Garrett, Larry Macfarlane, Rich Hartvigsen, R. Brent Ririe, Claire Averett, Mark Adams, John Fralick Division COOs Robert Conlee, Sid Henderson, Scott Schwerdt Division Vice Presidents Lori Bush, Rob Young, Michael Chang, Luis Cerqueira, Joe Ford, Jack Peterson, Bart Mangum, Brett Nelson Regional Vice Presidents Mike Smith, Mark Wolfert, Andrew Fan Country President/Gen Mgr John Chou, Takashi Bamba, Stewart McArthur, ST Han, Paul Hanson Country Division Manager David Sanar, Others To be named Country Senior Management To be named Performance Objectives The Nu Skin Annual Incentive Plan pay-out formula is based upon the achievement of the following two sets of performance objectives: * Critical Success Factors ("CSF's") The performance objective of Corporate or Country Operating Profit is weighted at 60% The performance objective of Revenue is weighted at 40% * Individual Objectives Personal performance objectives for each participant are established prior to the start of the performance period. Some Individual objectives may stretch for the entire fiscal year. Personal performance objectives should encompass other areas than strictly personal objectives, i.e. LOIs, Department performance etc. Performance levels for Individual objectives are negotiated with each supervisor. Performance Levels * Threshold levels represent the minimum acceptable performance levels required for incentive pay-out in each category. The NSE or Country Operating Profit threshold is 95% The Revenue threshold is 90% The Individual Goal threshold is 80% Note: If any of the CSFs are below the threshold level at the end of the Plan performance cycle, no incentive will be paid. * Target levels represent achievement of 100% of budgeted revenue and operating profit. * Outstanding levels represent performance levels that exceed the target objectives. * Target Guidelines * Corporate Vice Presidents and Country Senior management that also support the Divisions participate in the plan with both a Corporate/Country and Division component based on the performance of the Corporation and all Divisions; and * Division employees must achieve at least 80% of their respective Division budgeted revenue prior to being eligible for any payment from the Corporate/Country portion under the incentive plan, however, in order to receive the Division revenue portion key revenue thresholds (90%) must first be met; and * Even if the Company/Country does not meet its overall financial Goals, the portion of the incentive award relating to the Division Revenue or Individual Goals will be paid where the Division achieves key revenue thresholds (90%), subject to the Company's/Country's overall ability to make such payment. * Incentive Award Pay-Out Guidelines/Eligibility * Eligible participants at Executive Vice President level and above will be chosen by the Chairman and the CEO/President and approved by the Executive Compensation Committee. All other levels of participants will be chosen by the Executive Management Committee. * At achievement of 95% and 90% of the respective CSF, one-half of the cash incentive will be paid out. The pay-out amount is increased linearly up to full payment at 100% achievement of CSFs. * At the Outstanding performance level, target cash incentives will be increased linearly with no cap; * All participants must be on the payroll at the time of the payment; Participants must be actively employed (not on a leave-of-absence) a minimum of three months to participate in the plan. In addition, the award amount will be prorated in full month increments within the plan period based on the number of months actively employed. * Participants will receive their awards, when earned, by separate check; * Award payments shall be subject to any State and/or Federal tax withholdings; and * Payments will be made within forty-five (45) days of each quarter-end and seventy-five (75) days from the fiscal year-end. Position Total Target Corporate NSE Op Division Ind Incentive Revenue Profit Revenue Portion Portion Portion Portion -------------------------------------------------------------------------------- Chairman & the CEO/President 60% 40% 60% 0% 0% Senior Vice Presidents - Founders 60% 40% 60% 0% 0% Executive Vice Presidents 60% 30% 45% 0% 25% Division Presidents 50% 24% 36% 20% 20% Corporate Vice Presidents 40% 20% 30% 25% 25% Division COOs Division Vice Presidents 40% 10% 15% 50% 25% Position Total Target Corporate NSE Op Division Ind Incentive Revenue Profit Revenue Portion Portion Portion Portion -------------------------------------------------------------------------------- Regional Vice Presidents 40% 30% 45% 0% 25% Country President/General Manager 50% 32% 48% 0% 20% Country Division Manager 40% 10% 15% 50% 25% Country Senior Management 40% 32% 48% 0% 20%