IEC Electronics Corp.

 

Summary of 2013 Long-Term Incentive Plan

 

 

  

The purpose of the Company's Long-Term Incentive Plan ("LTIP") is to motivate
the Company’s executive officers and certain designated key employees
(collectively, the "Participants") to enhance the long-term value of the Company
by aligning their interests with those of the stockholders. The LTIP is also
designed to help attract and retain talented personnel with outstanding
abilities and skills. The Company’s Chief Financial Officer is not eligible for
awards under the 2013 LTIP.

 

The LTIP provides for awards of restricted stock (“Awards”) to be made under the
Company’s 2010 Omnibus Incentive Compensation Plan ("2010 Plan"), to enable and
encourage the Participants to increase their ownership in the Company by
rewarding achievement of a high level of corporate financial performance through
providing opportunities to participate in stockholder gains. The LTIP for fiscal
2013 was approved by the Compensation Committee on November 21, 2012.

 

The LTIP measures Company performance over a one-year fiscal period and the
Award is paid out at the end of the fiscal period based on the attainment of
annual performance goals, measured company-wide, and pre-established by the
Compensation Committee. The Compensation Committee has established a single
performance goal (“Goal”) for fiscal 2013, revenue growth, which is the metric
that the Compensation Committee believes is key to building long-term
stockholder value. Revenue growth was chosen as an objective measure of building
long-term stockholder value because it best captures the nature of the Company’s
business strategy. IEC’s customers seek contract manufacturing partners that
provide high quality, long-term stable capabilities that enhance their supply
chain. Establishing and growing these relationships requires several years to
build trust, and once that trust is established, these relationships can extend
over several years. Moreover, potential customers often rely on IEC’s current
customers as tangible signals of IEC’s capabilities. Growing revenues today
generates future revenues and hence future value for the shareholders.

 

The Compensation Committee also has established:

 

(i)       a minimum plan entry performance level (“Minimum”), set at a level in
excess of prior fiscal year achievement to assure that stockholders receive the
first portion of the benefit of increased value, and

 

(ii)      a target performance level (“Target”), based on the Company budget.

 

If the Goal is achieved at Target, the respective Participants will earn Awards
with a value equal to the following percentages of base salary: (i) for the CEO
– 60%, (ii) for the President – 55%, (iii) for the EVP – 55% and (iv) for other
Participants – 20%. If performance is less than the Target, but at least the
Minimum, the Award will be pro rated, using a calculation base of 50% of the
Award at Target for achievement at exactly the Minimum. If the Target is
surpassed, the Award at Target will increase pro rata up to a cap of 200% of the
Target level Award. The Compensation Committee has the right to review and
consider performance above the 200% cap. No Award will be made if the Minimum is
not achieved.

 

 

 

 

The equivalent dollar value of each Award, as calculated based on the applicable
percentage of base salary, is the “Calculated Value”. Each Award will be number
of shares of restricted stock equal to the Calculated Award divided by the
average closing price of the Company’s common stock on the NYSE MKT for all
trading days falling within the period beginning July 1, 2013 and ending
September 30, 2013.

 

After the end of the fiscal year, the Compensation Committee will determine the
extent to which the Goal has been achieved and approve the amount of the Equity
Award to be paid to each Participant. However, (i) based on his evaluation of a
Participant’s performance, the CEO may recommend that the Calculated Value for
that Participant be modified by plus or minus up to 25%, and (ii) the
Compensation Committee may recommend that the Calculated Value for the CEO be
modified by plus or minus up to 25%. Use of the modification factor is not
expected to be an annual event. All modifications to a Calculated Value for any
Participant must be approved by the Compensation Committee. Additionally, any
modification to the Calculated Value for the CEO must be approved by the
independent members of the Board of Directors.

 

All Awards shall be evidenced by a Restricted Stock Award Agreement in the
manner set forth in 2010 Plan. Each Award will be subject to a five-year period
of restriction designed to provide a retention incentive, and until earned
through vesting the restricted stock may not be sold or otherwise transferred.
As to one half (1/2) of the restricted shares, the restrictions will lapse and
the shares will vest on the date four (4) years after the date the Award is
granted. As to the other one half (1/2) of the shares, the restrictions will
lapse and the shares will vest on the date five (5) years after the date the
Award is granted. If a Participant's employment with the Company is terminated
for any reason whatsoever, other than death, disability, retirement or change in
control, before the lapse of the restrictions, the unvested restricted stock
will be deemed forfeited by the Participant and will be returned to or cancelled
by the Company. The Restricted Stock Award Agreements may contain such other
terms and conditions deemed appropriate by the Compensation Committee. Such
provisions need not be uniform among all grants of Awards among all
Participants.

 

Awards earned as provided above generally will be made within fifteen (15) days
after receipt by the Company of the audited financial statements for fiscal
2013. In order to receive an Equity Award, a Participant must be an employee of
the Company on the date such Equity Award is granted. For purposes of the LTIP,
the grant date is the date on which the Compensation Committee approves the
Equity Awards for all Participants except the Chief Executive Officer, for whom
the grant date will be the date on which the independent director members of the
Board approve the Equity Award.

 

The Compensation Committee reserves the right in its discretion to modify
categories or goals. In addition, (i) the Compensation Committee may adjust the
plan for non-operating events that affect goals, and (ii) the Performance Goals
set forth in the 2013 LTIP are based upon the organic growth of the Company. The
impact of acquisitions will be reviewed separately by the Compensation
Committee.

 

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