Bonus for CEO doesn’t add up

Should a CEO get a bonus for helping his company meet its goals if he wasn’t able to meet his own performance goals? Immersion seems to think so.

The compensation committee of Immersion’s board was told last year by a consultant that its “lack of a comprehensive bonus plan was a significant competitive disadvantage.”

So the committee set out to create a cash bonus plan to “incentivize and reward our executive officers for excellent performance” that would depend on the company meeting “yet-to-be-determined targets,” according to the company’s proxy filing last year.

Immersion, the San Jose maker of “touch technology” used to control computing devices, revealed in an SEC filing Tuesday that its chief executive, Victor Viegas, earned “$0” under the executive incentive plan the committee set up, which leads us to believe he didn’t meet his performance goals.

But the company also reported paying Viegas a $75,000 cash bonus “in recognition of (his) role in leading Immersion to achieve its corporate goals in 2007,” in addition to his $300,000 salary.

OK, now $75,000 is not a huge executive bonus by Silicon Valley standards, but it’s more than the median household income in Santa Clara County.

We know the SEC makes a distinction between a bonus, which may be discretionary, and “non-equity incentive compensation” (cash, not stock), which must be based on achievement of specified performance measurements.

But we don’t understand the rationale the company offered for giving Viegas a bonus. It didn’t seem to make sense.

We asked the company for a comment via e-mail, its preferred means of contact by the press, but had not heard back by our deadline Friday.

Focus enhances cash supply: Focus Enhancement got $6.5 million in credit given to it by Heritage Bank last week, thanks to Carl Berg, the notable Silicon Valley real estate mogul who sits on the Focus board. He personally guaranteed the loan.

Focus, which makes tools for digital video systems, has been struggling for years, having reported a net loss for 16 straight quarters. It is set to report results for its 2007 fiscal year on St. Patrick’s Day, and may they be decked out in a profusion of green(backs).

Last month the company’s executives, in a move to conserve cash, agreed to receive 15 percent of their pay in immediately vested restricted stock grants over the next 20 pay periods through Dec. 12. Under the plan, each dollar of pay that the executives forgo converts into stock at a predetermined exchange rate.

For the first five pay periods, the exchange rates are 40 cents, 45 cents, 50 cents, 55 cents and 60 cents. For the rest of the year the rate will be the greater of 60 cents or 80 percent of the trailing 15-day average price before the exchange date.

Berg’s vote of confidence in Focus may have paid off Friday, judging by the 9 cent, or 24 percent, gain in its stock price to 46 cents that day. They lost 47 percent last year. The company has been given until August to raise its stock price above $1 for 10 straight days or risk being delisted from the Nasdaq market.