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Bonus Opportunity! Site Incentive Plan
There are three bonuses that you should be aware of and help your team (and yourself) achieve.
1. Team/Staff Incentive Bonus: Discretionary bonus intended for your support staff (Receptionist, techs, kennel). o Earned by the hospital (collectively as a team) achieving 5% gross revenue growth in a quarter vs. the same quarter prior year. If the 5% growth is achieved, the staff are eligible to receive 7.5% of the difference in growth. o Please see the following document for tiered payout amounts available (based on hospital size). o Teams are eligible to earn this bonus starting in the 1st full quarter with NVA. o Your Divisional Leadership will contact you after the end of each quarter if the bonus is earned with the amount; payout is at the discretion of Hospital Leaders. o A poster will be shipped to you to track earning this bonus with your team if you choose.
*NVA's quarters are as follows: Q1: July-September; Q2: October-December; Q3: January-March; Q4: April-June
2. Site Leadership Profit Share Bonus: Intended for the location's Hospital Manager and Managing DVM together. o Earned by achieving EBITDA growth for a 6-month period (January-June and July-December) vs. the same period prior year. It is based off of EBITDA percent with tiered payout. o Hospital Leaders are eligible after the 1st full fiscal year with NVA o Joint-Venture partners are not eligible to receive this bonus but corresponding leaders (HM) are. o Please review the following document for details.
3. Managing DVM Leadership Fee: For MDVMs only (written into their contract unless they are JV partners) o Earned by achieving 10% gross revenue growth of the business in a quarter vs. the same quarter prior year. o NVA will track and calculate this bonus for each location; NVA will communicate the bonus achieved after the completion of each calendar quarter. o JV partners are not eligible for this bonus
See the following pages for more details!
Site Incentive Plan Calendar Year 2021 (January – December 2021)
TO: NVA General Practice Site Leaders
FROM: Brian Kelly, President and COO, and Sohail Malad, GP Group President
Introduction: As in past years, NVA will offer an incentive bonus for the Calendar Year (CY) 2021 period across our various businesses. While the structure of the previous plan design will carry forward in this plan, we wanted to memorialize the key elements of the plan for this coming year. Please take a few minutes to familiarize yourself with this plan, and don’t hesitate to reach out to your Division Leader, thefinance team, or me with any questions.
Background: NVA believes strongly in providing progressive and compassionate veterinary care, and toachieve this we partner with individual practices that share knowledge to achieve sustainable growth. High-quality veterinary care and strong business performance go hand-in-hand, since neither can exist for a sustained period of time without the other.
The intent of the program is to create a financial reward for Site Leadership and staff that is based upon achievement of goals for the controllable financial aspects that have the greatest impact. To accomplishthis, the program has two distinct parts.
• First, a Team Incentive Bonus will be made available each calendar quarter for staff members based on achieving revenue growth over the prior year. • Second, a Site Leadership Profit-Sharing Bonus will be established for Site Leadership based on achieving growth in EBITDA as compared to the prior two years. The details of these two components of the program are highlighted on the following pages.
Delivering high-quality care requires the efforts of many people and strong teamwork. Please share the quarterly Team Incentive Bonus program with your team and invite them to help you achieve your goals. Good luck and best wishes for a high-quality and prosperous new fiscal year!
Brian Kelly President and Chief Operating Officer Sohail Malad Group President, General Practice
Team Incentive Bonus Calendar Year 2021
Timing: Quarterly
Performance Criteria: Site must achieve growth in revenue of at least 5% compared to the same quarterof the prior year. Seven and one-half percent (7.5%) of the revenue in excess of the 5% growth will be available for pay-out.
Participation: This discretionary award is intended for non-management staff and will be determined bySite Management and the applicable Division Leader.
Computation and Distribution: Calculations for the discretionary bonus will be done by the Support Center team after the end of each quarter, and the files will be saved in the H drive for Site Managers to review and complete for their teams. Payments will then be made to staff who are chosen to receive thisdiscretionary bonus via direct deposit. Starting this calendar year, funds earned must be fully distributed each quarter.
Any unused funds will be forfeited.
Cap: The maximum award will be based on differing tiers of revenue attained by the clinic during the previous fiscal year. Tiers will be as follows:
• For sites $0-2.99 million in revenue = $5,000 cap per quarter ($20,000 annually) • For sites $3.0-4.99 million in revenue = $7,500 cap per quarter ($30,000 annually) • For sites $5.0-7.49 million in revenue = $10,000 cap per quarter ($40,000 annually) • For sites $7.5-9.99 million in revenue = $12,500 cap per quarter ($50,000 annually) • For sites $10.0-14.99 million in revenue = $15,000 cap per quarter ($60,000 annually) • For sites $15.0 million in revenue and above = $17,500 cap per quarter ($70,000 annually)
Other Notes: Each quarter will be an award period of its own. Multiple quarters will not be combined to determine eligibility. Newly acquired sites will be eligible to participate during their first full quarter withNVA. JV sites are eligible for participation in the team incentive bonus program, and JV partners will be responsible for paying their pro-rata share of bonuses.
The Site Leadership Profit-Sharing Bonus is intended to reward Site Leaders for exceptional financial performance throughout the fiscal year.
Bonus Calculation: This bonus is calculated for the January 1st – June 30th and July 1st – December 31st time periods. Earning a bonus in one time period does not guarantee or disqualify the site from earning a bonus in another time period. To earn a bonus, the site must generate excess EBITDA (in dollars) relative to the higher of the two prior years’ EBITDA for the same time period.
Please see the example below for clarity:
Bonus Time Period Comparative Period 1 Comparative Period 2
July through December 2020 July through December 2019 July through December 2018
If qualified, the site’s EBITDA percentage is then used to determine what portion of the EBITDA growth willbe paid to the Site Leaders as a bonus. Please see below:
EBITDA Percentage
23% and Greater 19.0% to 22.99% 15.0% to 18.99% 11.0% to 14.99% 10.99% and below
Bonus as a % of EBITDA Growth
25% of Growth 20% of Growth 15% of Growth 10% of Growth 0
The maximum site award will be $15,000 per bonus period ($30,000 annually). The maximum award for a role will be $7,500 per bonus period ($15,000 annually). For JV sites, the management fee will be excludedfrom the EBITDA calculation.
Site Eligibility: Sites may participate AFTER the first full fiscal year after acquisition by NVA so that comparable financial data is available (for example, if a hospital is acquired in September 2020, they will be eligible for a bonus based on their performance from January - June 2022.) For JV general practice hospitals, participation is predicated on consent of JV Partner(s).
Site Leader Eligibility: For NVA general practice hospitals, Site Leaders are defined as the Hospital Manager (“Site Manager”) and the Managing DVM. For clarity on who is defined as Site Leader(s) for thisprogram please consult with your Division Leader. In the event that more than one individual occupies said role, the bonus will be divided based on the discretion of the Division Leader. Individual must be employed in role for at least 90 days and be employed at time of distribution to be eligible for bonus. Siteleaders benefiting from an earn-out are not eligible to participate in bonus program until earn out periodconcludes. Site Leaders who are JV Partners in their site are also not eligible for this program.
Calculation and Distribution: Calculations will be completed by the Support Center Team after the audited yearend financial statements are complete. Each bonus period will be calculated independent of other bonus periods. Bonus payments will be distributed in the 60 days following completion of each bonusperiod.
Site Leadership Profit-Sharing Bonus Examples:
Example 1:
EBITDA Dollars EBITDA Percentage July- December 2020
$340K 25.0%
July- December 2019
$280K 21.6%
July- December 2018
$250K 19.9%
The 2020 EBITDA was $340K. This number is compared to the $280K that was generated in the same timeperiod in 2019 (since this number is larger than the EBITDA generated in 2018). $340K - $280K = $60K The EBITDA percentage is 25.0%, which corresponds to a bonus pay-out percentage of 25% of the growth. $60K x 25% = $15K (refer to table above)The site award for this bonus period will be $15K.
Example 2:
EBITDA Dollars EBITDA Percentage July- December 2020
$108K 22.7%
July- December 2019
$75K 13.5%
July- December 2018
$80K 14.2%
The 2020 EBITDA was $108K. This number is compared to the $80K that was generated in the same timeperiod in 2018 (since this number is larger than the EBITDA generated in 2019). $108K - $80K = $28K The EBITDA percentage is 22.7%, which corresponds to a bonus pay-out percentage of 20% of the growth. $28K x 20% = $5.6K (refer to table above)The site award for this bonus period will be $5.6K.
Example 3:
EBITDA Dollars EBITDA Percentage July- December 2020
$55K 12.3%
July- December 2019
$40K 10.1%
July- December 2018
$39K 10%
The 2020 EBITDA was $55K. This number is compared to the $40K that was generated in the same timeperiod in 2019 (since this number is larger than the EBITDA generated in 2018). $55K - $40K = $15K The EBITDA percentage is 12.3%, which corresponds to a bonus pay-out percentage of 10% of the growth. $15K x 10% = $1.5K (refer to table above)The site award for this bonus period will be $1.5K.
Calendar Year 2021 Additional Profits Pool
When overall NVA financial performance allows for it, there may be additional funds available for distribution to top-performing sites at the end of the fiscal year. The amount of additional profits that can be shared will be solely dictated by overall company profitability for the year. All such distributions will bemade at the discretion of the Division Leader at fiscal year-end. Division Leaders will direct their payouts to teams (either through the team bonus, site leader profit sharing bonus, or both) that best deliver on agreed-upon goals and objectives, and largely in consideration of driving future site growth.
