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EXHIBIT 10.5
COMPENSATION AGREEMENT
THIS COMPENSATION AGREEMENT ("Agreement") is made this 17th day of
October, 1997 effective as of January 1, 1997 (the "Effective Date"), by and
between THE PROFIT RECOVERY GROUP INTERNATIONAL I, INC., a Georgia corporation
(the "Company") and XXXXXXX X. XXXXXX, a resident of the State of Georgia (the
"Employee").
W I T N E S S E T H:
WHEREAS, the parties hereto are party to that certain Employment
Agreement, dated September __, 1997 and effective as of the Effective Date (the
"Employment Agreement") whereby the Company employs Employee as President of the
Company's Retail, Wholesale and Government Divisions, and Employee accepts such
employment in accordance with the terms thereof; and
WHEREAS, the Employment Agreement provides that the compensation
payable to Employee shall be as set forth herein (any terms capitalized but not
otherwise defined herein shall have the meanings ascribed to them in the
Employment Agreement).
NOW, THEREFORE, in consideration of the foregoing and of the mutual
promises and covenants contained herein and other good and valuable
consideration the receipt and sufficiency of which are hereby acknowledged, the
parties hereto hereby agree as follows:
1. COMPENSATION. For services rendered by Employee under the Employment
Agreement during the term thereof, Employee shall be entitled to receive the
following compensation (subject to following sections), provided that such
compensation and Performance Goals (as defined below) may be reviewed annually
and modified by the Company in writing prior to the commencement of any Term
Year.
(a) Base Salary. Two Hundred Forty-Five Thousand and No/100
($245,000.00) Dollars) ("Base Salary") shall be payable in accordance with the
Company's customary payroll procedures. For purposes of this Agreement, the term
"Adjusted Base Salary" shall mean and refer to the sum of Employee's Base Salary
and Twenty Thousand and No/100 ($20,000.00) Dollars (such Twenty Thousand and
No/100 ($20,000.00) Dollars, together with interest accrued thereon as
hereinafter provided, is hereinafter referred to as the "Salary Deferred
Compensation Credit"). Employee's Salary Deferred Compensation Credit shall not
be paid to Employee but such amount shall instead be deferred and credited to
Employee's Account (as defined in Section 12(a) of the Employment Agreement) as
deferred compensation in accordance with Section 12 of the Employment Agreement.
In the event of termination of Employee's employment under the Employment
Agreement for any reason during any Term Year, no portion of the Salary Deferred
Compensation Credit shall be credited to Employee's Account in respect of the
month in which such termination occurs or any subsequent period.
(b) Bonus. An annual bonus ("Bonus") in an amount determined
and payable as provided herein for each Term Year during the term of the
Employment Agreement, payable in a lump sum within ninety (90) days following
the end of each Term Year; provided, however, that Employee shall be entitled to
a Bonus only if certain Performance Goal Attainment Measures (as set forth in
Exhibit 1 hereto) are achieved by Employee and the Company. The amount of any
Bonus will depend on which Performance Goal Payout Level (as defined in Exhibit
1 hereto) Employee and the Company have
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attained. The Performance Goal Attainment Measures and related provisions
applicable to Employee hereunder are set forth in the "Incentive Summary"
attached as Exhibit 1 hereto. The maximum potential Bonus shall be established
from time to time by mutual consent of the parties hereto, but, assuming no
decrease in Base Salary, shall not be less than One Hundred Thirty-Two Thousand
Five Hundred and No/100 ($132,500.00) Dollars per Term Year without Employee's
consent.
2. TERMINATION. This Agreement shall terminate effect upon the
termination of the Employment Agreement; provided, however, that all provisions
hereof relating to any actions, including payment, subsequent to termination
shall survive such termination.
3. INCORPORATION BY REFERENCE. The provisions of the Employment
Agreement are hereby incorporated herein by reference.
4. SUCCESSORS AND ASSIGNS. This Agreement may not be assigned by
Employee. In the event that the Employment Agreement is assigned this Agreement
shall be assigned to the assignee thereof.
5. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original and together which shall
constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date first written above.
COMPANY:
THE PROFIT RECOVERY GROUP
INTERNATIONAL I, INC.
By:
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Xxxx X. Xxxx, Chief Executive Officer
EMPLOYEE:
(SEAL)
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Xxxxxxx X. Xxxxxx
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EXHIBIT 1
1997 PRG Executive Incentive
Plan Summary
Annual Payout
Objective
- To motivate and reward outstanding performance, and to
reinforce and support PRG's strategic plans and financial
goals.
- Attract and retain highly talented associates by offering a
competitive total compensation package.
Plan Payouts
- Incentive awards under the plan will be based upon
year-to-date base salary earnings for the period January 1,
1997 - December 31, 1997.
- Incentive plan measurements/goals and levels of payout are
shown on the attached incentive summary. Also attached are
definitions for each of the measurement categories.
- One-fifth of the payout is attributable to meeting each of the
four quarters' goals in each category of measurement, and
one-fifth is attributable to meeting the annual goals for each
category of measurement.
- Incentive payments will be paid within 60 days following the
end of the fiscal year. Participants must be actively employed
in order to receive awards. Exceptions may be made in
terminations due to retirement, disability, or death.
- Participants must have satisfactory performance at the time
payments are made to be eligible. Participants on performance
plans are not eligible to receive payments.
Part-Year Participation
- If an associate becomes eligible for the PRG Executive
Incentive Plan after January 1, 1997, he/she may be eligible
for a prorated payout based on the date of entry into the
Plan.
- Prorated payouts will be based on year-to-date base salary
earnings from the date of entry into the Plan. Entry into the
Plan must be prior to October 1, 1997 for participation in the
Plan during 1997.
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Management of the Plan
- The plan is effective from January 1, 1997 through December
31, 1997.
- Overall responsibility for the plan resides with the Chairman
and Chief Executive Officer, Chief Financial Officer, and
Senior Vice President Human Resources, and payments are
subject to Board of Directors' approval.
- Management reserves the right to amend the plan, with regard
to participation, procedures, awards and any other provisions.
This includes revision of financial targets in the event of
business or organizational change deemed to warrant such
action.
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1997 Incentive Plan Measures - Executive
Definitions of Categories
A) EPS - Earnings per share of PRGX as recorded in quarterly/annual
consolidated financial statements reported in the Company's quarterly
10Q and annual 10K. Measurements will be quarterly based upon
threshold, target, and stretch quarterly goals, however, payouts on EPS
will only be annual.
B) "PRG" Operating Profit - Operating profit for subsidiaries wholly owned
by PRGX as of December 1, 1996. Measurement will be quarterly and will
have threshold, target, and stretch goals for each quarter.
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ATTACHMENT A
1997 INCENTIVE SUMMARY
PAYOUT LEVELS
(expressed as a percentage of base salary)
Threshold 30%
Target 40%
Stretch 50%
GOAL ATTAINMENT MEASURES
Qtrly EPS 25%
Qtrly "PRG" Operating Profit 75%
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