CPSI 2018 Proxy Statement

26 Salaries ” and “— Sales Commissions ” for a discussion of the various factors that the Compensation Committee considers when evaluating and establishing base salaries and commission arrangements. Annual Performance-Based Cash Bonuses. The Compensation Committee granted performance-based cash bonus awards pursuant to the 2014 Incentive Plan to the non-commissioned NEOs at its meeting on March 6, 2018. Each such individual was granted a target incentive amount (in dollars and as a percentage of base salary), with the actual incentive earned to be calculated based on the percentage increase in the Company’s Adjusted EBITDA in 2018 over the Company’s Adjusted EBIDTA in 2017. The Compensation Committee chose to base the 2018 performance-based cash bonuses on Adjusted EBITDA for the reasons described above under “Elements Used to Achieve Compensation Objectives— Annual Performance-Based Cash Bonuses .” Potential bonus payouts under the 2018 cash bonus awards will range from zero for below threshold performance to 50% of the target award for threshold performance, to 95% of the target award for performance at target, to 150% of the target award for maximum performance. Payouts related to performance between threshold and target and between target and maximum are subject to straight-line interpolation. Failure to meet the minimum performance threshold would result in the participant not receiving any portion of the bonus payout. Long-Term Incentive Awards. Time-Based Restricted Stock. The Compensation Committee granted restricted stock awards to all of the current executive officers of the Company, including our NEOs, at its meeting on March 6, 2018. These awards were granted under the 2014 Incentive Plan and are subject to time-based vesting, with one-third of the shares vesting on each of the first three anniversaries of the date of grant, commencing on March 6, 2019. After determining the target long-term incentive grant value for each NEO, 40% of such amount was allocated to restricted stock. Performance Share Awards. At its meeting on March 6, 2018, the Compensation Committee also granted performance share awards pursuant to the 2014 Incentive Plan to each executive officer of the Company, including our NEOs. As discussed above, the Compensation Committee decided to grant 60% of the dollar amount of the target long-term incentive grant value as performance share awards. In order to transition from a one-year performance period to a three-year performance period, the Committee granted one-half of the performance shares subject to a one-year performance period (the “One-Year PSAs”) and one-half of the performance shares subject to a three-year performance period (the “Three-Year PSAs”): • One-Year PSAs: The target number of One-Year PSAs was determined by dividing the dollar amount of the target long-term incentive compensation to be paid through such awards by an amount equal to the closing price of our common stock on the date of grant. As with the annual performance share awards previously granted by the Compensation Committee, the actual number of performance shares earned will be calculated based on the percentage increase in the Company’s Adjusted EPS in 2018 over the Company’s Adjusted EPS in 2017. The actual performance shares earned by the NEOs, if any, will be issued as shares of restricted stock following the certification by the Compensation Committee of the Company’s achievement of the performance goal set forth above. Such shares of restricted stock are subject to time-based vesting, with one-third of the shares vesting on each of the first three anniversaries of the certification. • Three-Year PSAs: The target number of Three-Year PSAs was determined by dividing the dollar amount of the target long-term incentive compensation to be paid through such awards by an amount equal to the closing price of our common stock on the date of grant. The actual number of performance shares earned will be calculated based on the percentage increase in the Company’s Adjusted EPS in each of three years over the Company’s Adjusted EPS in the respective prior year. The threshold, target and maximum annual growth rates for each of the three years were established at the beginning of the three-year performance period and will be applied to each prior year actual outcome.