Annual Report — Form 10-K
Filing Table of Contents
Document/Exhibit Description Pages Size
1: 10-K Kindercare Annual Report 75 376K
2: EX-10.CC FY 2005 Management Bonus Plan Letter 3± 13K
3: EX-10.X Amendment No. 3 to Nqdcp 1 8K
4: EX-14.A Code of Business Conduct 17 79K
5: EX-21 Kindercare Subsidiaries 1 7K
7: EX-23 Consent of Deloitte & Touche 1 6K
6: EX-31.A Certification per Sarbanes-Oxley Act (Section 302) 2± 10K
8: EX-31.B Certification per Sarbanes-Oxley Act (Section 302) 2± 10K
9: EX-32.A Certification per Sarbanes-Oxley Act (Section 906) 1 7K
10: EX-32.B Certification per Sarbanes-Oxley Act (Section 906) 1 7K
EX-10.CC — FY 2005 Management Bonus Plan Letter
Officers Management Bonus Plan FY05
[graphics (kids'
pictures) omitted
The KinderCare Learning Centers, Inc. Management Bonus Plan is designed to
encourage and reward excellent performance.
The Bonus Plan is separated into three components:
o 70% is based on the financial performance of the company, as measured by
Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA);
o 20% is based on the financial performance of the company, as measured by
Net Income;
o 10% is based on the achievement of established personal objectives.
Your bonus target is as follows:
35%-70%% of base annual earnings
EBITDA Payout: 70% of your bonus will be based on EBITDA performance. In order
for this portion of the bonus to become payable, the Company must achieve EBITDA
greater than 90% of the targeted EBITDA established in the fiscal year Financial
Plan of the Company. For example, the EBITDA portion of the bonus becomes
payable as soon as EBITDA reaches 90.01%. As EBITDA performance increases past
90%, the percentage of your bonus increases. Two significant changes for this
year are that your bonus will now double at 108% (formerly 110%) and there is no
longer an upper limit on the bonus payout. It's now possible to achieve greater
than a 200% payout.
Net Income Payout: 20% of your bonus will be based on Company Net Income
performance. This is a new component of the bonus program and has been added to
provide an increased emphasis on earnings. In order for this portion of the
bonus to become payable, the Company must achieve Net Income performance greater
than 70% of the targeted Net Income established in the fiscal year Financial
Plan of the Company. For example, the Net Income portion of the bonus becomes
payable as soon as Net Income reaches 70.01%. As Net Income performance
increases past 70%, the percentage of your bonus increases. Similar to the
EBITDA Bonus Component, there is no upper limit on the bonus payout. It's
possible to achieve greater than a 200% payout with the Net Income component of
the bonus.
Personal Objectives: 10% of your bonus is based on how well you accomplish your
own personal objectives established with your supervisor. You and your
supervisor will meet and establish 3-5 measurable personal objectives for the
year. At the end of the fiscal year, you and your supervisor will meet to review
your performance relative to these objectives. You have the ability to double
the portion of your bonus that is based on personal objectives by exceeding the
objectives established at the beginning of the year.
The following is an example of how bonus percentages multiply as Company
performance increases:
[Download Table]
EBITDA Performance Net Income Performance Personal Objectives
--------------------- ---------------------- ----------------------
Performance Bonus % Performance Bonus % Performance Bonus %
----------- ------- ----------- ------- ----------- -------
112.0% 250.00% 136.0% 220%
111.0% 237.50% 133.0% 210%
110.0% 225.00% 130.0% 200% 200.0% 200%
109.0% 212.50% 127.0% 190% 190.0% 190%
108.0% 200.00% 124.0% 180% 180.0% 180%
107.0% 187.50% 121.0% 170% 170.0% 170%
106.0% 175.00% 118.0% 160% 160.0% 160%
105.0% 162.50% 115.0% 150% 150.0% 150%
104.0% 150.00% 112.0% 140% 140.0% 140%
103.0% 137.50% 109.0% 130% 130.0% 130%
102.0% 125.00% 106.0% 120% 120.0% 120%
101.0% 112.50% 103.0% 110% 110.0% 110%
100.0% 100.00% 100.0% 100% 100.0% 100%
99.0% 90.00% 97.0% 90% 90.0% 90%
98.0% 80.00% 94.0% 80% 80.0% 80%
97.0% 70.00% 91.0% 70% 70.0% 70%
96.0% 60.00% 88.0% 60% 60.0% 60%
95.0% 50.00% 85.0% 50% 50.0% 50%
94.0% 40.00% 82.0% 40% 40.0% 40%
93.0% 30.00% 79.0% 30% 30.0% 30%
92.0% 20.00% 76.0% 20% 20.0% 20%
91.0% 10.00% 73.0% 10% 10.0% 10%
90.0% 0.00% 70.0% 0% 0.0% 0%
Examples: In this example, your earnings during the bonus period are $80,000 and
you're at a 17% bonus level. Therefore, your bonus target is 17% of $80,000 or
$13,600. The company achieves 100% of Plan in EBITDA, Net Income and you achieve
100% of your Personal Bonus objectives, your payout would be calculated as
follows:
EBITDA Payout at 100% $ 9,520
Net Income Payout at 100% $ 2,720
Personal Objective Payout at 100% $ 1,360
Total Payout $ 13,600
Let's look at another example. Let's assume the same earnings and bonus
percentage as above, however, this time the Company EBITDA performance comes in
at 105%, Net Income comes in at 115% and you achieve 180% of your Personal Bonus
Objectives. In this example, your payout would be as follows:
EBITDA Payout at 105% $ 15,470 (163% of EBITDA target)
Net Income Payout at 115% $ 4,080 (150% of Net Income Target)
Personal Objective Payout at 180% $ 2,448 (180% of Personal Objectives
Target)
Total Payout $ 21,998 (162% of total bonus target)
These are only examples and are intended to show you the opportunity the new
bonus plan offers you.
The bonus is based on your base annual earnings and does not include bonus or
incentive payments, Short-Term Disability benefits (KinderCare or state
provided), Long Term Disability, Workers' Compensation Payments or any other
form of compensation paid with respect to periods you were not actively working.
Your bonus is NOT based on your annual salary.
To be eligible for the bonus, you must be employed in a bonus eligible position
on the last day of the fiscal year for which the bonus is applicable. If you
transfer from one bonus eligible position to another bonus eligible position,
your bonus will be calculated using the formula set forth above and will
recognize your performance in each position. For your old position, financial
and individual performance will be measured through the end of the accounting
period that includes the effective date of the transfer. Financial and
individual performance measurements for your new position will begin the first
day of the next accounting period.
Please review this information carefully, and if you have any questions, please
talk with your supervisor. You may also call Ruth Cusack at x1572 or Robyn Giger
at x1380.
[graphic omitted
(KinderCare Logo)]
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