SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported)
April 25, 2006
EASYLINK SERVICES CORPORATION
-----------------------------
(Exact name of registrant as specified in its charter)
Delaware 000-26371 13-3787073
(State or other jurisdiction (Commission File Number) (I.R.S. Employer
of incorporation) Identification No.)
33 Knightsbridge Road
Piscataway, NJ 08854
(Address of principal executive offices)
Registrant's telephone number, including area code: (732) 652-3500
N/A
---
Former Name or Former Address, if Changed Since Last Report
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions (see General Instruction A.2. below):
[ ] Written communications pursuant to Rule 425 under the Securities Act (17
CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17
CFR 240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
ITEM 1.01 (Entry into a Material Definitive Agreement)
2006 Executive Incentive Plan
-----------------------------
On April 25, 2006, the Compensation Committee of the Board of Directors adopted
a 2006 Executive Incentive Plan for the Company. The Company's 2006 executive
incentive compensation is based on achieving specified revenue and EBITDA
objectives. Officers and key management employees are eligible to participate
upon the recommendation of the Chief Executive Officer and the approval of the
Compensation Committee of the Board of Directors. Under the plan, a target award
based on percentage of base salary has been established for each participant,
which varies from 10% to 75% of base salary for the participant. The total pool
for all executives at target is approximately $1.4 million for 2006. The
participant may receive a bonus from 0% to 200% of the target award based upon
the actual level of under-achievement and/or over-achievement of the revenue and
EBITDA performance objectives.
Bonus payments under the plan will be paid first using shares of the Company's
Class A common stock available under the Company's 2005 Stock and Incentive Plan
(the "2005 Stock and Incentive Plan"). The bonus pool will be funded with up to
800,000 shares from the 2005 Stock and Incentive Plan. If the value of the
shares as determined in accordance with the plan is not adequate to satisfy the
bonus in full, then cash may be used to make up the remaining portion of the
bonus payment to the extent that EBITDA does not fall below a specified amount
as a result of the payment in cash of the remaining portion. Any remaining
balance will be forfeited. All bonus payments will be paid net of applicable
withholding taxes which will be withheld first from the cash portion of the
bonus and second from the stock portion of the bonus. The value of the shares
issued in payment of the bonus (including the amount of any cash used to pay
withholding taxes in respect of a bonus paid in stock) is not treated as an
expense item in the EBITDA calculation for this purpose.
The Compensation Committee retains full authority to approve final amounts,
which may be higher or lower than plan results. The Compensation Committee may
also approve the use of individual objectives as part of a participant's
performance criteria under the Plan. For 2006, the Compensation Committee has
determined that the absence of a going concern qualification in the report of
the Company's independent auditor on the Company's 2006 annual financial
statements is an individual objective for certain executives and is a
consideration in the determination of their 2006 bonus.
If there occurs a significant beneficial or adverse change in economic
conditions, the indications of growth or recession in the Company's business
segments, the nature of the operations of the Company, or applicable laws,
regulations or accounting practices, or other unanticipated matters which, in
the Company's judgment, have a substantial positive or negative effect on the
performance of the Company, the Compensation Committee may modify or revise the
performance objectives. These significant changes might, for example, result
from acquisitions or dispositions of assets or mergers.
Employees terminating prior to the payout date are not eligible for payment of
an award unless termination is due to retirement or economic reduction in force.
The form of the 2006 Executive Incentive Plan is included in this filing as
Exhibit 10.1 and is incorporated by reference herein. The foregoing summary of
the terms of the 2006 Executive Incentive Plan is not complete and is qualified
in its entirety by reference to Exhibit 10.1 to this filing.
2
ITEM 9.01 (c) Exhibits.
The following exhibits are filed herewith:
EXHIBIT NO. DESCRIPTION
Exhibit 10.1 2006 Executive Incentive Plan
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Dated: April 28, 2006
EASYLINK SERVICES CORPORATION
By: /s/ Thomas Murawski
-----------------------
Thomas Murawski, Chairman, President and Chief Executive Officer
3
INDEX TO EXHIBITS
EXHIBIT NO. DESCRIPTION
Exhibit 10.1 2006 Executive Incentive Plan
4