Exhibit 10.2(a)

 

SHORT-TERM INCENTIVE PLAN

 

Effective January 1, 2005

 

As Amended Effective January 1, 2012

 

ARTICLE I

 

Statement of Purpose

 

1.1                                 The purpose of the Plan is to provide a
system of incentive compensation which will promote the maximization of
shareholder value.  In order to align eligible salaried employees’ incentives
with shareholder interests, incentive compensation will reward the creation of
value.  The Plan will tie incentive compensation to Economic Value Added
(“EVA®”) and, thereby, reward employees for creating value.  Effective for the
fiscal year commencing January 1, 2005, this Plan replaced the Management
Incentive Compensation Plan (Economic Value Added (EVA®) Bonus Plan), created
effective July 4, 1993, as amended (the “Prior Plan”).  This Plan was amended
effective January 1, 2007 and again effective January 1, 2008.

 

1.2                                 EVA is the performance measure of value
creation.  EVA reflects the benefits and costs of capital employment.  Employees
create value when they employ capital in an endeavor that generates a return
that exceeds the cost of the capital employed.  Employees destroy value when
they employ capital in an endeavor that generates a return that is less than the
cost of capital employed.  By subtracting a capital charge from the operating
profits generated by a business group, EVA measures the total value created by
employees.

 

EVA = (Net Operating Profit After Tax - Capital Charge)

 

1.3                                 Each Plan Participant is assigned a target
annual incentive award (bonus) opportunity (expressed as a percentage of base
salary) for a year.  A Participant’s target award opportunity, in any one year,
is the result of multiplying the Participant’s Target Bonus Percentage by the
Participant’s Base Pay.  A Participant’s incentive award earned in any one year
is the result of multiplying the Actual Bonus Percentage by the Participant’s
Base Pay.  Incentive awards earned can range from 0% to 200% of the target award
opportunity.  Earned awards will be fully paid out after the end of the year.

 

1.4                                 With respect to any corporate officer as of
the February Committee meeting in a given calendar year (“Covered Officer”), the
Plan is intended to qualify for the “performance-based compensation” exception
from the deductibility limitation under Internal Revenue Code Section 162(m) and
shall be so interpreted and administered.

 

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ARTICLE II

 

Definition of EVA and the Components of EVA

 

Unless the context provides a different meaning, the following terms shall have
the following meanings.

 

2.1                                 “Participating Group” means a business
division or group of business divisions which are uniquely identified for the
purpose of calculating EVA and EVA-based bonus awards.  Some Participants’
awards may be a mixture of more than one Participating Group.  For the purpose
of this Plan, the Participating Groups are determined by the Committee and may
be revised by the Committee from time-to-time as they deem appropriate, provided
that the Participating Groups for any particular year shall be established no
later than the February Committee meeting.

 

2.2                                 “Capital” means the net investment employed
in the operations of each Participating Group.  The components of Capital are as
follows:

 

 

 

Gross Accounts Receivable (including trade A/R from another Manitowoc unit — See
Notes 2 and 3)

Plus:

 

Gross FIFO Inventory (See Note 3)

Plus:

 

Other Current Assets

Less:

 

Non-Interest Bearing Current Liabilities (NIBCL’s - See Note 1)

Plus:

 

Net PP&E

Plus:

 

Other Operating Assets

Plus:

 

Capitalized Research & Development

Plus:

 

Goodwill acquired after July 3, 1993

Plus:

 

Accumulated Amortization on Goodwill acquired after July 3, 1993

Plus (Less):

 

Special Items

 

Equals:

 

Capital

 

 

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Notes:

 

(1)                                  NIBCL’s include trade A/P to another
Manitowoc unit (see Note 2), and include liabilities associated with receivable
factoring programs as well as capital lease obligations.

 

(2)                                  Intercompany trade payables and receivables
will be excluded from EVA capital if outstanding longer than the approved
payment date per intercompany payment terms.

 

(3)                                  Accounts receivable reserve balances
recorded at acquisition date will be treated as reductions to EVA capital and
changes excluded from NOPAT up to the balance in the acquisition reserve for a
12-month period subsequent to the acquisition date.  Inventory reserve balances
recorded at acquisition date will be treated the same as accounts receivable
above except for spare parts inventory

 

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which will be excluded from Capital and NOPAT over a three-year period at a rate
of 1/3 less each year.

 

2.3                                 Each component of Capital will be measured
by computing an average balance based on the ending monthly balance for the
twelve months of the Fiscal Year.

 

2.4                                 “Cost of Capital” or “C*” means the weighted
average of the after tax cost of debt and equity for the year in question.  The
Cost of Capital will be reviewed annually and revised if it has changed
significantly.  The Cost of Capital is determined pursuant to Exhibit A and the
following:

 

(a)                                  Cost of Equity = Risk Free Rate + (Beta x
Market Risk Premium)

 

(b)                                 Debt Cost of Capital = Debt Yield x (1 - Tax
Rate)

 

(c)                                  The weighted average of the Cost of Equity
and the Debt Cost of Capital is determined by reference to a fixed debt to
capital ratio of 40%.  The Risk Free Rate is the average daily closing yield
rate on 30 year U.S. Government Bonds for the month of December immediately
preceding the Plan year, the Beta is one, and the Market Risk Premium is 5%. 
The Debt Yield is the projected weighted average yield on the Company’s long
term obligations for the 12 month period ending December 31 of the Plan year,
and the Tax Rate is determined as set forth in subparagraph 2.4(e).

 

The debt to capital ratio, Beta, and Market Risk Premium assumptions will be
reviewed and updated if necessary at least every three years.

 

(d)                                 Short-term debt is to be treated as
long-term debt for purposes of computing the Cost of Capital.

 

(e)                                  For purposes of determining the Cost of
Capital, the “Tax Rate” for any particular year shall be equal to the audited
tax rate of the Company for the previous calendar year.

 

2.5                                 “Capital Charge” means the deemed
opportunity cost of employing Capital in the business of each Participating
Group.  The Capital Charge is computed as follows:

 

Capital Charge = Capital x Cost of Capital (C*)

 

2.6                                 “Net Operating Profit” or “NOP” and “Net
Operating Profit After Tax” or “NOPAT”

 

“NOP” means the before tax cash earnings attributable to the capital employed in
the Participating Group for the year in question, and “NOPAT” means the after
tax cash earnings attributable to the capital employed in the Participating
Group for the year in question.  The components of NOP and NOPAT are as follows:

 

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Operating Earnings

Plus:

 

Increase (Decrease) in Capitalized R & D (See Note 1)

Plus:

 

Increase (Decrease) in Bad Debt Reserve

Plus:

 

Increase (Decrease) in Inventory Reserves

Plus:

 

Amortization of Goodwill (resulting from annual US GAAP impairment analyses)

Less:

 

Other Expense (Excluding interest on debt and including interest on factored
receivables)

Plus:

 

Other Income (Excluding investment income)

Equals:

 

Net Operating Profit (NOP)

Less:

 

Taxes (See Note 2)

Equals:

 

Net Operating Profit After Tax (NOPAT)

 

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(1)                                  R & D is Capitalized, and amortized over a
five-year period and is defined in the U.S. Federal R&D Tax Credit Regulation.

 

(2)                                  For purposes of calculating NOPAT, Taxes
will be the actual annual effective tax rate for the Company as a whole for the
particular year.

 

2.7                                 “Economic Value Added” or “EVA” means for
Participants in the salary grade of the Company of 210 and above, the NOPAT that
remains after subtracting the Capital Charge, expressed as follows:

 

 

 

NOPAT

Less:

 

Capital Charge

Equals:

 

EVA (which may be positive or negative)

 

“Economic Value Added” or “EVA” means for Participants in the salary grade of
the Company of 209 and below, the NOP that remains after subtracting the Capital
Charge, expressed as follows:

 

 

 

NOP

Less:

 

Capital Charge

Equals:

 

EVA (which may be positive or negative)

 

ARTICLE III

 

Definition and Computation of Target Bonus Award

 

3.1                                 “Actual EVA” means the EVA as calculated for
each Participating Group for the year in question.

 

3.2                                 “Target EVA” for the year in question means
the level of EVA that is expected in order for the Participating Group to
receive the Target Bonus Award.  Target EVA for the year in question is
determined as follows:

 

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“Target EVA” = Last Year’s Actual EVA+ Expected Improvement in EVA

 

3.3                                 “Expected Improvement in EVA” means the
constant EVA improvement that is added to shift the target up each year.  It is
determined by the expected growth in EVA per year.  The Expected Improvement
factors are determined by the Committee and will be evaluated and recalibrated
by the Committee, as appropriate, no less than every three years.  Expected
Improvement may be different for each Participating Group.

 

3.4                                 “Base Pay” for any particular year, means
(a) for all Participants other than Covered Officers, the base pay actually
received for the calendar year; and (b) for Covered Officers, the base pay
actually received prior to the February Committee meeting and the rate of base
pay in effect immediately after the February Committee meeting in the given
calendar year, such that salary increases for a Covered Officer after the
February Committee meeting are not considered for such year.  Notwithstanding
the foregoing, for a Covered Officer whose employment terminates prior to
December 31 of a calendar year, Base Pay is reduced to a pro-rata amount based
on the period of time actually employed during the year.

 

3.5                                 “Target Bonus Award” for the year means the
“Target Bonus Percentage” multiplied by a Participant’s Base Pay.

 

3.6                                 “Target Bonus Percentage” for a Participant
who is Covered Officer is the percentage assigned to the Covered Officer for a
particular year by the Committee no later than the February Committee meeting
for that year.  “Target Bonus Percentage” for a Participant other than a Covered
Officer is the percentage assigned to the Participant for a particular year by
the Administrator no later than the February Committee meeting for that year. 
In any case, the Target Bonus Percentage for any Participant may not be greater
than 150% of salary and the maximum potential annual award for any participant
may not exceed $3 million.

 

3.7                                 “Actual Bonus Award” for the year in
question means the bonus earned by a Participant and is computed as the Actual
Bonus Percentage multiplied by a Participant’s Base Pay for the year in
question.

 

3.8                                 “Actual Bonus Percentage” is determined by
multiplying the Target Bonus Percentage by the Bonus Performance Value.

 

3.9                                 “Bonus Performance Value” is an amount
determined as follows:

 

(a)                                  Base Formula.  “Bonus Performance Value”
means the Actual EVA minus the Target EVA, divided by the Leverage Factor, plus
1.0 [((Actual EVA — Target EVA)/Leverage Factor) + 1.0]; subject, however, to
the following subparagraph (b).

 

(b)                                 Floor/Ceiling.  If the calculation of the
Bonus Performance Value is less than zero (0), the Bonus Performance Value shall
be deemed to be zero (0) , and if the calculation of the Bonus Performance Value
exceeds 2.0, the Bonus Performance Value shall be deemed to be 2.0.

 

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3.10                           “Leverage Factor” is the negative (positive)
deviation from Target EVA necessary before a zero (two times Target) bonus is
earned.  The Leverage Factors are determined by the Committee and will be
evaluated and recalibrated, as appropriate, no less than every three years.  The
Leverage Factor may be different for each Participating Group.

 

3.11                           “Adjustment Guidelines” are guidelines the
Compensation Committee of the Board of Directors (Committee) will consider in
determining the potential treatment of any material, non-recurring or unusual
items (see Exhibit B).

 

3.12                           A Participant’s classification is determined by
the Board of Direcotors upon recommendation by the Committee for officers of The
Manitowoc Company, Inc., and by the Senior VP of HR & Administration for all new
participants below the level of corporate officer.

 

ARTICLE IV

 

Payment of Actual Bonus Awards

 

4.1                                 Beginning with the fiscal 2008 Plan year,
Actual Bonus Awards earned will be fully paid out after the end of the year at
such time as the Committee but not later than March 15 of the calendar year
following the performance period, unless (a) deferred pursuant to Section 4.2 or
(b) otherwise permitted pursuant to the exemption provisions of Section 409A of
the Internal Revenue Code.

 

4.2                                 Notwithstanding the provisions of
Section 4.1, the Committee may permit or require a Participant to defer receipt
of the payment of an Actual Bonus Award to the extent provided under any
deferred compensation plan of the Company.  Notwithstanding the foregoing, any
deferral made in accordance with this Section 4.2 shall satisfy the rquirements
of Section 409A of the Internal Revenue Code.

 

ARTICLE V

 

Plan Participation, Transfers and Terminations

 

5.1                                 Participants.  Except as otherwise provided
(primarily in Section 8.1) the Administrator will determine who shall
participate in the Plan (“Participant(s)”).  Employees designated for Plan
participation shall be salaried employees of The Manitowoc Company, Inc. or its
affiliates (the “Company”).  In order for a Participant to receive or be
credited with their Actual Bonus Award for a Plan year, the Participant must
have (i) remained employed by the Company through the last day of such Plan
year, (ii) terminated employment with the Company for any reason during the Plan
year at or after the earlier of attainment of age sixty, or the first of the
month following the date on which the participant’s attained age plus years of
service with the Company equal 80, (iii) suffered a “disability” as defined in
the Company’s long term disability benefits program during the Plan year, or
(iv) died during the Plan year.  In all other cases of termination of employment
prior to the last day of the Plan year, a Participant shall not be entitled to
any Actual Bonus Award for such Plan year.

 

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5.2                                 No Guarantee.  Participation in the Plan
provides no guarantee that a payment under the Plan will be made.  Selection as
a Participant is no guarantee that payments under the Plan will be made or that
selection as a Participant will be made in any subsequent calendar year.

 

ARTICLE VI

 

General Provisions

 

6.1                                 Withholding of Taxes.  The Company shall
have the right to withhold the amount of taxes, which in the determination of
the Company, are required to be withheld under law with respect to any amount
due or paid under the Plan.

 

6.2                                 Expenses.  All expenses and costs in
connection with the adoption and administration of the Plan shall be borne by
the Company.

 

6.3                                 No Prior Right or Offer.  Except and until
expressly granted pursuant to the Plan, nothing in the Plan shall be deemed to
give any employee any contractual or other right to participate in the benefits
of the Plan.

 

6.4                                 Claims for Benefits.  In the event a
Participant (a “claimant”) desires to make a claim with respect to any of the
benefits provided hereunder, the claimant shall submit evidence satisfactory to
the Committee of facts establishing their entitlement to a payment under the
Plan.  Any claim with respect to any of the benefits provided under the Plan
shall be made in writing within ninety (90) days of the event which the claimant
asserts entitles the claimant to benefits. Failure by the claimant to submit a
claim within such ninety (90) day period shall bar the claimant from any claim
for benefits under the Plan.

 

6.5                                 Denial and Appeal of Claims.  In the event
that a claim which is made by a claimant is wholly or partially denied, the
claimant will receive from the Committee a written explanation of the reason for
denial and the claimant or the claimant’s duly authorized representative may
appeal the denial of the claim to the Committee at any time within ninety (90)
days after the receipt by the claimant of written notice from the Committee of
the denial of the claim.  In connection therewith, the claimant or the
claimant’s duly authorized representative may request a review of the denied
claim; may review pertinent documents; and may submit issues and comments in
writing.  Upon receipt of an appeal, the Committee shall make a decision with
respect to the appeal and, not later than sixty (60) days after receipt of a
request for review, shall furnish the claimant with a decision on review in
writing, including the specific reasons for the decision written in a manner
calculated to be understood by the claimant, as well as specific reference to
the pertinent provisions of the Plan upon which the decision is based.  In
reaching its decision, the Committee shall have complete discretionary authority
to determine all questions arising in the interpretation and administration of
the Plan, and to construe the terms of the Plan, including any doubtful or
disputed terms and the eligibility of a Participant for benefits.

 

6.6                                 Action Taken in Good Faith;
Indemnification.  The Committee may employ attorneys, consultants, accountants
or other persons and the Company’s directors and officers shall

 

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be entitled to rely upon the advice, opinions or valuations of any such
persons.  All actions taken and all interpretations and determinations made by
the Committee in good faith shall be final and binding upon all employees who
have received awards, the Company and all other interested parties.  No member
of the Committee, nor any officer, director, employee or representative of the
Company, or any of its affiliates acting on behalf of or in conjunction with the
Committee, shall be personally liable for any action, determination, or
interpretation, whether of commission or omission, taken or made with respect to
the Plan, except in circumstances involving actual bad faith or willful
misconduct.  In addition to such other rights of indemnification as they may
have as members of the Board, as members of the Committee or as officers or
employees of the Company, all members of the Committee and any officer, employee
or representative of the Company or any of its subsidiaries acting on their
behalf shall be fully indemnified and protected by the Company with respect to
any such action, determination or interpretation against the reasonable
expenses, including attorneys’ fees actually and necessarily incurred, in
connection with the defense of any civil or criminal action, suit or proceeding,
or in connection with any appeal therein, to which they or any of them may be a
party by reason of any action taken or failure to act under or in connection
with the Plan or an award granted thereunder, and against all amounts paid by
them in settlement thereof (provided such settlement is approved by independent
legal counsel selected by Company ) or paid by them in satisfaction of a
judgment in any action, suit or proceeding, except in relation to matters as to
which it shall be adjudged in such action, suit or proceeding that such person
claiming indemnification shall in writing offer the Company the opportunity, at
its own expense, to handle and defend the same.  Expenses (including attorneys’
fees) incurred in defending a civil or criminal action, suit or proceeding shall
be paid by the Company in advance of the final disposition of such action, suit
or proceeding if such person claiming indemnification is entitled to be
indemnified as provided in this Section.

 

6.7                                 Rights Personal to Participant.  Any rights
provided to a Participant under the Plan shall be personal to such Participant,
shall not be transferable (except by will or pursuant to the laws of descent or
distribution), and shall be exercisable, during the Participant’s lifetime, only
by such Participant.

 

6.8                                Non-Allocation of Award.  In the event of a
suspension of the Plan in any Plan year for a period of more than 90 days, the
current Bonus for the subject Plan year shall be deemed forfeited and no portion
thereof shall be allocated to Participants.  Any such forfeiture shall not
affect the calculation of EVA in any subsequent year.

 

ARTICLE VII

 

Limitations

 

7.1                                 No Continued Employment.  Nothing contained
herein shall provide any Participant or employee with any right to continued
employment or in any way abridge the rights of the Company to determine the
terms and conditions of employment and whether to terminate employment of any
employee.

 

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7.2                                 No Vested Rights.  Except as otherwise
provided herein, no Participant or employee or other person shall have any claim
of right (legal, equitable, or otherwise) to any award, allocation, or
distribution and no officer or employee of the Company or any other person shall
have any authority to make representations or agreements to the contrary.  No
interest conferred herein to a Participant shall be assignable or subject to
claim by a Participant’s creditors.  The right of the Participant to receive a
distribution hereunder shall be an unsecured claim against the general assets of
the Company and the Participant shall have no rights in or against any specific
assets of the Company as the result of participation hereunder.

 

7.3                                 Not Part of Other Benefits.  The benefits
provided in this Plan shall not be deemed a part of any other benefit provided
by the Company to its employees.  The Company assumes no obligation to Plan
Participants except as specified herein.  This is a complete statement, along
with the Schedules and Appendices attached hereto, of the terms and conditions
of the Plan.

 

7.4                                 Other Plans.  Nothing contained herein shall
limit the Company or the Committee’s power to grant bonuses to employees of the
Company, whether or not Participants in this Plan.

 

7.5                                 Limitations.  Neither the establishment of
the Plan or the grant of an award hereunder shall be deemed to constitute an
express or implied contract of employment for any period of time or in any way
abridge the rights of the Company to determine the terms and conditions of
employment or to terminate the employment of any employee with or without cause
at any time.

 

7.6                                 Unfunded Plan.  This Plan is unfunded and is
maintained by the Company in part to provide incentive compensation to a select
group of employees and highly compensated employees.  Nothing herein shall
create or be construed to create a trust of any kind, or a fiduciary
relationship between the Company and any Participant.

 

ARTICLE VIII

 

Authority

 

8.1                                 Plan Administration.  “Committee” means the
Compensation Committee of the Board of Directors of the Company, or if there is
none, The Board of Directors.  “Administrator” means the Company’s Senior Vice
President-Human Resources & Administration or, if that position is vacant, the
Committee.  Except as otherwise expressly provided herein, full power and
authority to interpret and administer this Plan shall be vested in the
Committee.  The Committee may authorize the Administrator to determine who shall
participate in the Plan, except for the participation of officers. 
Participation of officers shall require Committee approval.  The Committee may
from time to time make such decisions and adopt such rules and regulations for
implementing the Plan as it deems appropriate for any Participant under the
Plan.  Any decision taken by the Committee arising out of or in connection with
the construction, administration, interpretation and

 

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effect of the Plan shall be final, conclusive and binding upon all Participants
and any person claiming under or through them.

 

8.2                                 Board of Directors Authority.  The Board
shall be ultimately responsible for administration of the Plan.  References made
herein to the “Committee” assume that the Board of Directors has created a
Compensation Committee to administer the Plan.  In the event a Compensation
Committee is not so designated, the Board shall administer the Plan.  The Board
or its Compensation Committee, as appropriate, shall work with the Company’s CEO
and SVP-HR & Administration in all aspects of the administration of the Plan.

 

8.3                                 162(m) Limitations.  After the
February Committee meeting for any applicable year, the calculation methodology
for the maximum possible benefit entitlement shall be fixed for all Covered
Officers.  On or before such February meeting, the Committee may make
appropriate determinations for such purpose, but if no such determinations are
made, such maximum possible benefit entitlement shall be calculated based on the
provisions then in effect, without later application of discretion, with the
exception that the discretion inherent in Exhibit B shall be assumed to have
been exercised for each of the guidelines (with the result that the items listed
in Exhibit B will be excluded from the EVA calculation).  Notwithstanding the
foregoing, for purposes of determining the benefits of Participants who are
not Covered Officers and in situations in which the effect is to reduce the
actual benefits to a Covered Officer, the Committee shall retain the discretion
inherent in 2.4, 3.3, 3.5, 3.10, 3.11, Exhibit B and elsewhere to alter the
calculation methodology later than the February Committee meeting, up to and
including the time of the final determination of the benefit entitlements.

 

ARTICLE IX

 

Notice

 

9.1                                 Any notice to be given pursuant to the
provisions of the Plan shall be in writing and directed to the appropriate
recipient thereof at their business address or office location.

 

ARTICLE X

 

Effective Date

 

10.1                           This Plan shall be effective as of January 1,
2005 and it shall remain in effect, subject to amendment from time to time,
until terminated or suspended by the Committee.

 

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ARTICLE XI

 

Amendments

 

11.1                           This Plan may be amended, suspended or terminated
at any time at the sole discretion of the Board upon the recommendation of the
Committee.  Notice of any such amendment, suspension or termination shall be
given promptly to each Participant.

 

ARTICLE XII

 

Applicable Law

 

12.1                           This Plan shall be construed in accordance with
the provisions of the laws of the State of Wisconsin.

 

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Exhibit A

 

Calculation of the Cost of Capital

 

“Cost of Capital” or “C*” means the weighted average of the after tax cost of
debt and equity for the year in question.  It is calculated as follows:

 

Inputs Variables:

 

Risk Free Rate = Average Daily closing yield on U.S. Government 30 Yr. Bonds
(for the month of December preceding the Plan year).

 

Market Risk Premium = 5.0% (Fixed)

 

Beta = One (Fixed)

 

Debt/Capital Ratio = 40% (Fixed)

 

b = Cost of Debt Capital (Projected & Weighted Average Yield on the Company’s
Long Term Debt Obligations).

 

Marginal Tax Rate =  the Tax Rate as defined in Section 2.4(e)

 

Calculations:

 

y

 

= Cost of Equity Capital

 

 

= Risk Free Rate + (Beta x Market Risk Premium)

 

Weighted Average Cost of Capital = [Cost of Equity Capital x (1 - Debt/Capital
Ratio)] + [Cost of Debt x (Debt/Capital Ratio) x (1 - Marginal Tax Rate)]

 

C* = [y x (1 - Debt/Capital)] + [b x (Debt/Capital) x (1 - Marginal Tax Rate)]

 

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Exhibit B

 

Adjustment Guidelines for Material and Unexpected Non-Recurring Items

 

·                                          Potential material and unexpected
“non-recurring items” which the Committee may consider excluding from the “raw”
EVA calculation (i.e., impact net operating profit after-tax or the cost of
capital), in order to ensure employees are assessed on the performance of
continuing operations, include:

 

·                                          Change in Accounting Principle or
Practices (e.g., treatment of goodwill, FAS 123-revised 2004, etc.).  Typically,
the company may exclude the impact from both operating results and performance
goals.

 

·                                          Major acquisition (i.e., acquiring a
business with total assets greater than 15% of the company’s/operating unit’s
prior year-end total assets).  In the event of a major acquisition, the company
may exclude the performance of the acquired unit from both results and goals for
an agreed upon period of time.

 

·                                          Major disposition (e.g., disposition
as defined by FAS 144).  In the event a disposition is classified as
discontinued under FAS 144, the company may exclude the performance of the
disposed unit from both results and goals.

 

·                                          Restructuring (i.e., reorganization
of a specific business or operating unit).  In the event of a restructuring, the
company may exclude the cost of restructuring from NOPAT but must also exclude
any benefits up to the amount of restructuring costs during the subsequent
12-month period.  The restructuring liability should also be excluded from the
calculation of capital for the same subsequent 12-month period.

 

·                                          Recapitalization (i.e., significant
altering of the company’s current capital structure).  In the event of a
recapitalization, the company may exclude the impact from both results and
goals.

 

·                                          Other unusual or one-time
gains/losses considered on a case-by-case basis relative to their impact on the
company’s/operating unit’s financial results.

 

·                                          Expenses related to significant ERP
system implementations may be capitalized and amortized over the same period as
the ERP asset.

 

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