Exhibit 10.01
Description of Annual Incentive Bonus Plan for Fiscal 2010
On May 14, 2009, the Board approved the Company’s annual incentive bonus plan
for fiscal 2010. The plan provides its executive officers with the opportunity
to earn quarterly cash bonuses based upon the achievement of pre-established
performance goals. Bonus opportunities will be based on achievement of quarterly
targets, provided that the free cash flow performance metric will be measured
solely on an annual basis. 50% of the quarterly payouts (if any) will be held
back and will not be payable until after the fiscal year end. In addition,
payout levels not achieved based on quarterly results may be recouped based on
annual results. Performance goals under the plan will be: quarterly earnings per
share, operating profit (as a percentage of sales), return on invested capital
and SG&A targets, and annual free cash flow targets, at the Company level; and
quarterly, operating profit (as a percentage of sales), inventory turnover, cash
conversion cycle and vertical integration targets at the business unit level for
certain executives. The plan allows awards to provide for different metrics,
target levels and weightings for different executives.
Under the annual incentive bonus plan, target award opportunities are set at
various percentages of base salary, which will be: 150% of base salary in the
case of the Chief Executive Officer; 100% of base salary in the case of the
Chief Financial Officer; and between 60% and 80% of base salary in the cases of
other officers. Actual payout opportunities for each bonus component will range
from 50% of target to a maximum of 300% of target (200% in the cases of the CEO
and CFO) based on achievement of the performance measures. If the Company fails
to achieve the threshold level for any performance measure, no payout is awarded
for that measure. For purposes of determining achievement of award
opportunities, the annual bonus plan uses adjusted, non-GAAP measures.