EXHIBIT 10.14

 

MONACO COACH CORPORATION

 

2005 SHORT-TERM INCENTIVE COMPENSATION PLAN

 

(adopted March 28, 2005 by the Compensation Committee)

 

Introduction

 

The purpose of the Monaco Coach 2005 Short-Term Incentive Compensation Plan (the
“Plan”) is to (i) establish short-term compensation incentives that are
market-based and promote the hiring and retention of key personnel; (ii) ensure
that executive compensation awards align the interests of the Company’s Plan
participants with stockholders; and (iii) develop a comprehensive compensation
structure that maintains management’s flexibility to recognize and reward
individual goal accomplishments.

 

Administration of the Plan

 

The Compensation Committee of the Board of Directors (the “Committee”) will
approve or disapprove final disposition of all matters pertaining to the
administration of the Plan.

 

The Chief Executive Officer has the responsibility to administer the Plan,
except in respect of compensation matters pertaining to the Chief Executive
Officer, which shall be administered by the Committee or the Board of Directors.

 

Plan Participants

 

The officers of the Company (Vice President and higher) are eligible to
participate in this Plan, as well as any other key managers of the Company as
may be identified by the Chief Executive Officer or the Committee.

 

Participants must be full time employees of the Company to be eligible for bonus
payments.  Any employee who voluntarily resigns or is terminated for cause
during 2005 will not be eligible for any bonus payment under the Plan. 
Termination of employment as a result of death or disability, or other
circumstances as determined by the Compensation Committee, will result in a pro
rata award for the affected Plan participant based on the period of employment
during 2005.

 

Plan Performance Measures

 

Performance measures under the Plan were established in March 2005, and consist
of the following:

 

•                  The annual performance target for Plan participants is based
on planned EBITDA (earnings before interest, tax, depreciation and amortization)
for the 2005 fiscal year as the primary incentive measure.

 

•                  Target bonus opportunities for each participant are
established and are represented as a percentage of base salary . The actual
bonus opportunity targets range from 40% for key managers to 100% for the Chief
Executive Officer(1), depending upon the grade level of the participant’s
position.

 

•                  The actual bonus earned for each participant can vary from 0
to 200% of the individual’s stated target, depending on Company performance
relative to the annual EBITDA measure.

 

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(1) For 2005, Kay L. Toolson, the Company’s Chief Executive Officer, is the sole
participant in the Company’s Section 162(m) plan and any bonus payment to him
will be an award of “performance-based compensation” under that plan.

 

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•

 

Threshold (50% of Business Plan)

 

No Bonus

•

 

75% of Business Plan

 

50% of Target Bonus

•

 

Target (100% of Business Plan)

 

100% of Target Bonus

•

 

125% of Business Plan

 

150% of Target

•

 

Maximum (150% of Business Plan)

 

200% of Target Bonus

 

•                  Individual performance, as determined by the Chief Executive
Officer and the President, may further affect the actual bonus payment amount
for each Plan participant.

 

•                  A minimum threshold of corporate-level performance, equal to
a 6% return-on-equity to stockholders with respect to fiscal 2005, will be
applied to ensure that bonus amounts under the Plan are paid only after
attainment of a reasonable level of financial performance by the Company.

 

•                  Bonus payments under the Plan will be paid in 2006, upon
ascertainment of the performance contributions of the Plan participants in 2005.

 

Amendment or Termination of the Plan

 

The Committee may terminate, amend or modify the Plan at any time.

 

Other Considerations

 

No right or interest of any participant in the Plan is assignable or
transferable, or subject to any lien, directly or by operation of law, or
otherwise.

 

The eligibility of or participation by an employee of the Company under this
Plan does not guarantee any right to continued employment, and the Company
reserves the right to terminate the employment of any Plan participant at any
time and for any reason.

 

The Company has the right to deduct from all awards under this Plan any taxes
required by law to be withheld with respect to such awards.

 

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