Exhibit 10.4

STRATTEC SECURITY CORPORATION

TEAM INCENTIVE PLAN FOR STRATTEC

Bonus For:

 

•

Non-Employee Members of the Board of Directors

Effective July 2, 2018

 

 

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STRATTEC SECURITY CORPORATION

TEAM INCENTIVE PLAN FOR STRATTEC

 

Bonus For:

 

•

Non-Employee Members of the Board of Directors

 

 

TABLE OF CONTENTS

 

 

 

Page

 

 

 

I.

Plan Objectives

1

 

 

 

II.

Plan Administration

1

 

 

 

III.

Definitions

2

 

 

 

IV.

Eligibility

3

 

 

 

V.

Bonus Calculation

4

 

 

 

VI.

Performance Factors

4

 

 

 

VII.

Change in Status During the Plan Year

5

 

 

 

VIII.

Bonus Payment

6

 

 

 

IX.

Administrative Provisions

6

 

 

 

X.

Miscellaneous

7

 

 

 

 

 

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I.

PLAN OBJECTIVES

 

 

A.

To promote the maximization of economic value over the long term by providing
incentive compensation to non-employee members of the Board of Directors of
STRATTEC SECURITY CORPORATION (the "Company") in a form, which is, designed to
financially reward participants for an increase in the value of the Company.

II.

PLAN ADMINISTRATION

 

 

A.

The Compensation Committee of the STRATTEC SECURITY CORPORATION Board of
Directors (the "Compensation Committee") shall be responsible for the design,
administration, and interpretation of the Plan. The Compensation Committee shall
have full and complete authority, in its sole and absolute discretion, (i) to
exercise all of the powers granted to it under the Plan, (ii) to construe,
interpret and implement the Plan and any related document, (iii) to prescribe,
amend and rescind rules relating to the Plan, (iv) to make all determinations
necessary or advisable in administering the Plan, and (v) to correct any defect,
supply any omission and reconcile any inconsistency in the Plan.

 

 

B.

The actions and determinations of the Compensation Committee or others to whom
authority is delegated under the Plan on all matters relating to the Plan and
any awards issued hereunder shall be final and conclusive.  Such determinations
need not be uniform and may be made selectively among persons who receive, or
are eligible to receive, such awards under the Plan, whether or not such persons
are similarly situated.

 

C.

The Compensation Committee may retain such accountants, attorneys, and other
experts as it deems necessary or desirable in connection with the administration
of the Plan. The Company shall pay all reasonable expenses of administering the
Plan, including, but not limited to, the payment of any such professional and
expert fees of individuals and entities retained under the Plan by the
Compensation Committee.

 

D.

The Compensation Committee may delegate to others the authority to execute and
deliver such instruments and documents, to do all such acts and things, and to
take all such other steps deemed necessary, advisable or convenient for the
effective administration of the Plan in accordance with its terms and purposes,
which may include delegation of such authority and duties to the Company’s TIPS
Committee as determined hereunder or in the discretion of the Compensation
Committee.

 

E.

The Compensation Committee and others to whom the Compensation Committee has
delegated such duties shall keep a record of all their proceedings and actions
and shall maintain all such books of account, records and other data as shall be
necessary for the proper administration of the Plan.

 

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III.

DEFINITIONS

 

In addition to the terms defined elsewhere herein, the following terms shall
have the following meanings:

 

 

A.  

“Accrued Bonus” means the bonus, which is calculated in the manner set forth in
Section V.A. below.

 

 

B.

"Actual TIPS Performance" means, for the Company on a consolidated basis and in
accordance with U.S. generally accepted accounting principles, pre-tax income,
prior to any bonus payments, any provision for bonuses or any accrual reversals
for bonuses, and after adjusting for non-controlling interests and also adjusted
for other unusual income or expense items, all as determined by the Compensation
Committee from the Company’s annual consolidated financial statements.  By way
of clarification, Actual TIPS Performance and Target TIPS shall each be
determined and/or set prior to taking into account any accruals or payments for
bonuses earned (or any reversals for over accrual of bonuses) under this Plan,
any similar team incentive plan adopted by the Company (or any successor such
bonus plan) or other discretionary bonus payments earned or accrued.

 

 

C.

"Code" means the Internal Revenue Code of 1986, as amended from time to time,
and as interpreted by applicable regulations and rulings.

 

 

D.

"Company" means STRATTEC SECURITY CORPORATION.

 

E.

"Earned Wages" means all fees paid to a member of the Board of Directors in cash
during the applicable Plan Year.  

 

 

F.

"Effective Date" means July 2, 2018.  This Plan replaced and supersedes the EVA
plan for Non-Employee Members of the Board of Directors which began on June 30,
1997.

 

 

G.

"Participant" means any individual who has satisfied the eligibility
requirements of the Plan as provided in Section IV. below and who is selected
for participation in the Plan by the Compensation Committee during such Plan
Year.

 

 

H.

"Plan" means this STRATTEC SECURITY CORPORATION Team Incentive Plan For STRATTEC
which has been established by the Company for participation by non-employee
members of the Board of Directors.

 

 

I

"Plan Year" means the one‑year period coincident with the Company’s fiscal
year.  

 

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J.

"Target Incentive Award" means the target bonus award level each Participant is
eligible to receive and which is equal to a percentage of Earned Wages for such
Participant.

 

 

K.

"Target TIPS" means the Target Incentive Award level and target Actual TIPS
Performance amount established under this Plan by the Compensation Committee for
the Plan Year (See Section VI.A. below) and, with respect to the target Actual
TIPS Performance amount, shall be calculated and determined in the manner
consistent with the definition of Actual TIPS Performance.

 

 

L.

"TIPS Committee" means the President and Chief Financial Officer of the Company.

 

IV.

ELIGIBILITY

 

 

A.

Eligibility.  Members of the Company’s Board of Directors who are not regular
full-time employees of the Company or one of its directly or indirectly owned
subsidiaries are the only individuals eligible to participate in the Plan.

 

B.

Awards.  Except as otherwise provided in this Plan, the grant of an opportunity
to receive cash incentive compensation under the Plan to a Participant (an
"Award") and the terms of an Award shall be determined in the discretion of the
Compensation Committee in accordance with the terms and purposes of the
Plan.  In general, each Award shall pay a bonus amount if the Company attains
the specified performance targets that are measured over a specific period of
time (the "Measurement Period") related to specified criteria ("Performance
Criteria") established by the Compensation Committee consistent with the terms
of this Plan.  Awards may vary from Measurement Period to Measurement Period and
from Participant to Participant. A Participant shall have no right to receive a
grant of an Award hereunder.  Whether to grant an Award or to pay compensation
under an Award shall be completely within the discretion of the Compensation
Committee.  Nothing contained hereunder shall be construed as giving any
Participant or any other person any equity or interest of any kind in any assets
of the Company or creating a trust of any kind or a fiduciary relationship of
any kind between the Company and any such person.  As to any claim for any
unpaid amounts under the Plan, any Participant or any other person having a
claim for payments shall be an unsecured creditor.

 

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V.

BONUS CALCULATION

 

 

A.

Bonus Formula.  Each Participant’s bonus Award under this Plan will be
determined as a function of the Participant’s Earned Wages, the Participant’s
Target Incentive Award (provided in Section V.B., below), and the Target TIPS
(provided in Section VI.A. below) for the Plan Year. Each Participant’s bonus
Award will be calculated as follows:

 

Participant’s

Earned Wages

 

X

Target

Incentive

Award

 

X

Actual

Target TIPS

Performance

 

 

B.

Target Incentive Award. The Target Incentive Award for all non-employee
Directors will be 40% of Earned Wages.

 

VI.

PERFORMANCE FACTOR

 

 

A.

Performance Criteria.  Target TIPS minimum and maximum financial goals will be
set annually by the Compensation Committee of the Board of Directors.  The
minimum financial goal would have performance of zero and in the event the
Company’s Actual TIPS Performance is below the minimum financial goal for such
Plan Year set by the Compensation Committee no bonus amount would be paid to
Participants for such Plan Year. The maximum financial goal would have
performance of two and any Actual TIPS Performance between the minimum and
maximum financial goal would be adjusted on a pro rata basis.  

 

For example, for fiscal 2019 (beginning July 2, 2018), the minimum financial
goal for Actual TIPS Performance is set at $12 million and the maximum financial
goal for Actual TIPS Performance is $36 million.  After Actual TIPS Performance
equals $12 million for a Plan Year, employees start accruing a bonus.  The
target percentage will increase incrementally starting at $12 million and ending
at $36 million.  For example, to earn a target of .5 the Actual TIPS Performance
would need to be $18 million and to earn a target of one (1) the Actual TIPS
Performance needs to be $24 million and to earn a target of two (2) the Actual
TIPS Performance would need to be $36 million or higher. A target of two is the
maximum level of Company performance that will be paid annually to any
Participant under the Plan.  If the fiscal 2019 Actual TIPS Performance is less
than $12 million, no bonus amount will be paid to any Participant.

 

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B.

Adjustments to Company Performance.  When Company performance is based on
Economic Value Added or any other quantifiable financial or accounting measure,
it may be necessary to exclude significant, unusual, unbudgeted or
noncontrollable gains or losses from actual financial results in order to
measure performance properly.  The Compensation Committee and the TIPS Committee
will decide those items that shall be considered in adjusting actual
results.  For example, some types of items that may be considered for exclusion
in determining Actual TIPS Performance are:

 

 

(1)

Any gains or losses which will be treated as extraordinary in the Company’s
financial statements (e.g. Pension Settlement Charge)

 

 

(2)

Material gains or losses not in the budget and/or the goal which are of a
nonrecurring nature and are not considered to be in the ordinary course of
business.  Some of these would be as follows:

 

 

(a)

Gains or losses from the sale or disposal of real estate or property.

 

 

(b)

Gains resulting from insurance recoveries when such gains relate to claims filed
in prior years.

 

 

(c)

Losses resulting from natural catastrophes, when the cause of the catastrophe is
beyond the control of the Company and did not result from any failure or
negligence on the Company’s part.

 

VII.

CHANGE IN STATUS DURING THE PLAN YEAR

 

 

A.

New Board Members. A newly appointed or elected non-employee Director will
accrue a pro rata bonus Award based on Earned Wages received during the first
Plan Year in which that Director joins the Board of Directors.

 

 

B.

Removal.  A non-employee Director removed from the Board of Directors by due
process during the Plan Year shall not be eligible for a bonus with respect to
that Plan Year.

 

 

C.

Resignation, Death, Disability and Retirement.  Except in the event of removal
as provided above in Section VII.B., a non-employee Director who ceases to
function as a member of the Board of Directors during the Plan Year will be
eligible for a pro rata bonus Award based on Earned Wages received.  

 

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VIII.

BONUS PAYMENT

 

After approval of the Company performance for the applicable Plan Year by the
Compensation Committee, payment of the Accrued Bonus earned for the Plan Year
shall be made in cash as soon as administratively feasible following the end of
the Plan Year in which the Accrued Bonus was earned, but in no event later than
September 15 of such Plan Year.

 

IX.

ADMINISTRATIVE PROVISIONS

 

 

A.

Amendments.  The Compensation Committee or the full Board of Directors of the
Company shall have the right to amend or restate the Plan at any time and from
time to time.  The Company reserves the right to suspend or terminate the Plan
at any time.  No modification, amendment, suspension, or termination of the Plan
shall, without the consent of any affected Participants (or beneficiaries of
such Participants in the event of death), reduce the rights of any such
Participants (or beneficiaries, as applicable) to a payment or distribution
already earned under the terms of the Plan that were in effect prior to such
change.  The provisions of the Plan as in effect at the time of a Participant’s
termination of employment shall control as to that Participant, unless otherwise
specified in the Plan.  

 

 

B.

Authority to Act.  Except as otherwise provided herein, the Compensation
Committee shall act on behalf of the Company for purposes of the Plan.

 

 

C.

Interpretation of Plan.  Any decision of the Compensation Committee with respect
to any issues concerning individuals selected for awards, the amount, terms,
form and time of payment of awards, and interpretation of any Plan guideline,
definition, or requirement shall be final and binding.

 

 

D.

Right to Continued Service; Additional Awards.  The receipt of a bonus award
shall not give the recipient any right to continued membership on the Company’s
Board of Directors.   In addition, the receipt of a bonus award with respect to
any Plan Year shall not entitle the recipient to an award with respect to any
subsequent Plan Year.

 

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X.

MISCELLANEOUS

 

 

A.

Fiduciary Liability; Indemnification.  The Plan is not subject to ERISA.  Under
ERISA and related federal laws, the Company is not a fiduciary with respect to
the Plan, and has no fiduciary obligation with respect to any Participant,
beneficiary or other person claiming a right hereunder.  Further, nothing herein
contained, and no action or inaction arising pursuant hereto shall give rise
under state or federal law to a trust of any kind or create any fiduciary
relationship of any kind or degree for the benefit of Participants, any
beneficiary, or any other person. The Compensation Committee or TIPS Committee
shall not be liable for, and shall be indemnified and held harmless by the
Company from any loss, cost, liability, or expense that may be imposed upon or
reasonably incurred in connection with any claim, action, suit, or proceeding to
which a Compensation Committee or TIPS Committee Member may be a party by reason
of any action taken or failure to act under this Plan.  The foregoing right of
indemnification shall not be exclusive of any other rights of indemnification to
which such person(s) may be entitled under the Company’s Articles of
Incorporation of By-Laws, as a matter of law, or otherwise, or any power that
the Company may have to indemnify them or hold them harmless.

 

 

B.

Expenses of the Plan.  The expenses of administering this Plan shall be borne by
the Company.

 

 

C.

Governing Law. The Plan is intended to satisfy the requirements for the deferral
of compensation under Code section 409A, or an exemption thereto.  All terms
used in the Plan and this Agreement shall be interpreted to the maximum extent
possible to satisfy Code section 409A, or an exemption thereto.  This plan shall
be construed in accordance with a governed by federal law and the laws of the
State of Wisconsin.

 

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D.

No Trust Created.  Nothing contained in this Plan and no action taken pursuant
to its terms shall create or be construed to create a trust of any kind, or a
fiduciary relationship between the Company or the Compensation Committee and any
Participant, his or her designated beneficiary(ies), or any other
person.  Participant and the beneficiaries thereof have the status of general
unsecured creditors of the Company.  The Plan constitutes a mere promise by the
Company to make benefit payments in the future.  To the extent that any person
acquires a right to receive payments from the Company under this Plan, such
right shall be no greater than the right of any unsecured general creditor of
the Company.  It is the intention of the parties that the arrangements hereunder
be unfunded for tax purposes and for purposes of Title I of ERISA. Nothing in
this Plan will require the Company to purchase assets or place assets in a trust
or other entity to which contributions are made or otherwise to segregate any
assets for the purpose of satisfying any obligations under the Plan.

 

 

E.

Offset; Clawback, Restoration or Repayment. Notwithstanding any provision of the
Plan to the contrary, the Company shall have the right to offset any payment to
which a Participant or beneficiary is entitled hereunder by the amount of any
debt or other amount owed to the Company by the Participant at the time of such
payment.  Each Participant in the Plan who has received an Award under such Plan
acknowledges and agrees that any award, whether in the form of a cash payment,
an equity grant or in any other form, is subject to any clawback policy,
restoration or repayment rules or similar policy adopted now or in the future by
the Company, or otherwise by operation of law.

 

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