EXHIBIT 10.5

 

Chart Industries, Inc.

Form of 2005 Chart Incentive Compensation Plan Award Conditions

 

PURPOSE

 

The Chart Incentive Compensation Plan is an important tool to help focus
individuals and teams to meet the respective financial goals and objectives of
each Operating Group, which in turn will enable Chart Industries, Inc. to meet
its overall financial goals and objectives. The goal is to enhance shareholder
value and improve bottom line performance by providing meaningful incentives to
employees and to financially reward employees for attaining predetermined
performance objectives.

 

SCOPE

 

This plan applies to non-bargaining unit employees at all locations within Chart
and certain bargaining units where a Site Incentive Compensation Plan has been
implemented. The plan does not apply to sales employees who are part of a Chart
Sales Commission Plan.

 

OVERVIEW

 

Chart will establish individual Operating Group and Chart consolidated
performance targets on an annual basis. In order to ensure that employees are
involved in helping the Operating Group to meet its annual target, Chart will
establish appropriate incentives to reward employees if the performance targets
are met.

 

2005 INCENTIVE COMPENSATION PLAN

 

Chart believes that performance targets and incentive rewards need to be focused
and tailored to the unique situation of each Operating Group and the targets and
incentives need to be consistent with the overall Goals and Objectives of Chart.

 

A. 2005 Performance Targets. The 2005 Performance Targets have been set using
earnings before interest, taxes, depreciation, amortization and restructuring
charges (EBITDAR) targets (see Performance Targets below in Table A). Meeting of
the Group EBITDAR performance target and the Chart consolidated EBITDAR
performance target can pay up to a maximum of 150% of an individual employee’s
Incentive Target.

 

Table A

 

     EBITDAR Performance Targets,

--------------------------------------------------------------------------------

     (Net of Incentives, in 000’s)

--------------------------------------------------------------------------------

     0%

--------------------------------------------------------------------------------

   100%

--------------------------------------------------------------------------------

   150%

--------------------------------------------------------------------------------

     (Minimum Threshold)          

E&C

   $      $      $  

D&S

                    

Biomed

                    

Biomed-Denver

                    

Chart Consolidated

   $      $      $  

 

B. The Incentive Target is an incentive dollar amount assigned to an individual
employee. Incentive Targets vary based on an individual’s position in Chart.

--------------------------------------------------------------------------------

Chart Industries, Inc.

Form of 2005 Chart Incentive Compensation Plan Award Conditions

 

  1. Each employees Incentive Target is made up of an Operating Group component
and a Chart consolidated component as outlined below.

 

Employee Grouping

--------------------------------------------------------------------------------

   Group Performance
Weighting

--------------------------------------------------------------------------------

    Chart Performance
Weighting

--------------------------------------------------------------------------------

 

Group Presidents

   35 %   65 %

Direct Reports to Group Presidents

   50 %   50 %

All Other Non-Corporate Employees

   65 %   35 %

Corporate

   0 %   100 %

 

C. Actual EBITDAR performance below the 100% performance target but above the
minimum threshold, as outlined in Table A, entitles employees to a prorated
payment of their individual Incentive Target based on the linear relationship
between the 100% performance target and the minimum threshold. See hypothetical
example below:

 

     EBITDAR Performance Targets
(Net of Incentives)

--------------------------------------------------------------------------------

  

Actual EBITDAR

Performance Example

--------------------------------------------------------------------------------

       0% (Min.
Threshold)

--------------------------------------------------------------------------------

   100%
Target

--------------------------------------------------------------------------------

   150%
Target

--------------------------------------------------------------------------------

   Actual
Performance
(EBITDAR)

--------------------------------------------------------------------------------

   %
Performance

--------------------------------------------------------------------------------

 

E&C

   $      $      $      $      71.71 %

Chart Consolidated

   $      $      $      $      36.37 %

 

Therefore, as an example, if E&C’s and Chart’s actual EBITDAR performance for
2005 were as outlined above, and an E&C employee’s Incentive Target were $1,000
and they were in the 65% Group Performance, 35% Chart Performance category, then
the actual earned incentive payout would be as follows:

 

  1. E&C Group Component: ($1,000 X 65%) X 71.71% = $466.12

 

  2. Chart Consolidated Component: ($1,000 X 35%) X 36.37% = $127.30

 

Total Payout ($466.12 + $127.30) = $593.42

 

D. Actual Operating Group EBITDAR performance below the minimum threshold
negates any incentive payouts for the Operating Group component as well as for
the Chart Consolidated component. Thus the Operating Group must meet the minimum
threshold in order to earn any incentive payout.

 

     EBITDAR Performance Targets
(Net of Incentives)

--------------------------------------------------------------------------------

  

Actual EBITDAR

Performance Example

--------------------------------------------------------------------------------

       0% (Min.
Threshold)

--------------------------------------------------------------------------------

   100%
Target

--------------------------------------------------------------------------------

   150%
Target

--------------------------------------------------------------------------------

   Actual
Performance
(EBITDAR)

--------------------------------------------------------------------------------

   %
Performance

--------------------------------------------------------------------------------

 

E&C

   $      $      $      $      0.00 %

Chart Consolidated

   $      $      $      $      36.37 %

 

2 of 5

--------------------------------------------------------------------------------

Chart Industries, Inc.

Form of 2005 Chart Incentive Compensation Plan Award Conditions

 

Therefore, as an example, if E&C’s and Chart’s actual EBITDAR performance for
2005 were as outlined above, and an E&C employee’s Incentive Target were $1,000
and they were in the 65% Group Performance, 35% Chart Performance category, then
the actual earned incentive payout would be as follows:

 

  1. E&C Group Component: ($1,000 X 65%) X 0.00% = $0.00

 

  2. Chart Consolidated Component: ($1,000 X 35%) X 0.00%* = $0.00

 

Total Payout ($0.00 + $0.00) = $0.00

 

--------------------------------------------------------------------------------

* Incentive payout becomes 0% for the Chart Consolidated Component because the
E&C actual EBITDAR performance is below the minimum target for the E&C Group.

 

E. Actual Chart Consolidated EBITDAR performance below $ negates all incentives
(both Group and Consolidated) otherwise earned under this plan, or limits the
incentives earned to the point where actual EBITDAR performance (net of
incentives) will not fall below EBITDAR of $.

 

F. Actual EBITDAR performance below the 150% Performance Target but above the
100% Performance Target, as outlined in Table A, entitles employees to a
prorated payment of their individual Incentive Target based on the linear
relationship between the 100% Performance Target and the 150% Performance
Target. See hypothetical example below:

 

    

EBITDAR Targets

(Net of Incentives)

--------------------------------------------------------------------------------

   Actual EBITDAR
Performance Example

--------------------------------------------------------------------------------

       0% (Min.
Threshold)

--------------------------------------------------------------------------------

   100%
Target

--------------------------------------------------------------------------------

   150%
Target

--------------------------------------------------------------------------------

   Actual
Performance
(EBITDAR)

--------------------------------------------------------------------------------

   Payout w /
>100%
Performance

--------------------------------------------------------------------------------

 

E&C

   $      $      $      $      131.91 %

Chart Consolidated

   $      $      $      $      120.84 %

 

Therefore, as an example, if E&C’s and Chart’s actual EBITDAR consolidated
performance for 2005 were as outlined above, then that same E&C employee with a
$1,000 incentive target at 100% would receive an actual earned incentive payout
as outlined below:

 

  1. E&C Component: ($1,000 X 65%) X 131.91% = $857.42

 

  2. Chart Component: ($1,000 X 35%) X 120.84% = $422.94

 

Total Payout ($857.42 + $422.94) = $1,280.36

 

G. “Half Year Minimum Earned Incentive”. Chart will not be making a mid year
payout in 2005 as it did in 2004, but instead is implementing a Half-Year
Performance Target and the opportunity for eligible participants to earn a
minimum incentive. The “Half-Year Minimum Earned Incentive” is designed to
reward eligible participants if Business Unit and Chart Consolidated Performance
Targets are achieved through the June 30, 2005 time frame. Obtaining that level
of performance will guarantee that the incentive earned through that date can
not be lost because of a decline in Business Unit and/or Chart consolidated
performance through the remainder of 2005. Failure to meet the 2005-0
Performance targets outlined in Table B below through the June 30, 2005 period
will not result in a guaranteed payment under the plan, but it will not affect
the potential to earn incentive under this Plan. Any earned incentive will be
paid according to the terms and conditions of the 2005 Incentive Compensation
Plan.

 

3 of 5

--------------------------------------------------------------------------------

Chart Industries, Inc.

Form of 2005 Chart Incentive Compensation Plan Award Conditions

 

2005-0 Performance Targets through June 30, 2005. The 2005-0 Performance Targets
through June 30, 2005 have been set using earnings before interest, taxes,
depreciation, amortization and restructuring charges (EBITDAR) targets (see
Performance Targets below in Table B). Meeting the half year operating Group
EBITDAR performance target and the half year Chart consolidated EBITDAR
performance target below in Table B can earn an eligible participant up to 30%
of the estimated earned incentives for calendar year 2005. Actual Operating
Group or Chart Consolidated EBITDAR performance below the half year Performance
targets in Table B negates the “earning” of any incentive under this
calculation. However, participants will continue to be eligible to earn
incentives under the 2005 Incentive Compensation Plan.

 

Table B

 

EBITDAR Performance Targets

--------------------------------------------------------------------------------

   EBITDAR Performance Targets,

--------------------------------------------------------------------------------

(Net of Incentives, in 000’s)

--------------------------------------------------------------------------------

   (Net of Incentives, in 000’s)

--------------------------------------------------------------------------------

     Half Year Performance
Target

--------------------------------------------------------------------------------

   0%

--------------------------------------------------------------------------------

   100%

--------------------------------------------------------------------------------

   150%

--------------------------------------------------------------------------------

E&C

   $      $      $      $  

D&S

                           

BioMed

                           

BioMed-Denver

                           

Consolidated

   $      $      $      $  

 

As an example, if E&C’s and Chart’s actual EBITDAR performance through June 30,
2005 were as outlined directly below and an E&C employee’s Incentive Target were
$1,000 and they were in the 65% Group Performance, 35% Chart Performance
category, then the actual earned incentive would be as follows:

 

EBITDAR Performance Targets

--------------------------------------------------------------------------------

   Actual EBITDAR

--------------------------------------------------------------------------------

 

(Net of Incentives, in 000’s)

--------------------------------------------------------------------------------

   Performance Example

--------------------------------------------------------------------------------

       Half Year Performance
Target

--------------------------------------------------------------------------------

   Actual
Performance
(EBITDAR)

--------------------------------------------------------------------------------

   %
Performance

--------------------------------------------------------------------------------

 

E&C

   $      $      0.00 %

Consolidated

   $      $      100.00 %

 

  1. E&C Group Component: ($1,000 X 65%) X 0.00% = $0.00

 

  2. Chart Consolidated Component: ($1,000 X 35%) X 0.00%* = $0.00

 

Total Payout ($0.00 + $0.00) = $0.00

 

--------------------------------------------------------------------------------

* No Chart Consolidated Component incentive is earned under the 2005 Half-Year
Management Incentive Compensation Plan through 6/30/05 because the E&C actual
EBITDAR performance is below the 100% target for the E&C Group and thus the
employee will not earn any incentive under the Chart Consolidated component
either.

 

4 of 5

--------------------------------------------------------------------------------

Chart Industries, Inc.

Form of 2005 Chart Incentive Compensation Plan Award Conditions

 

Actual EBITDAR performance above the Half year Performance Target, as outlined
in Table B, entitles the employee to earn 30% of the estimated earned incentives
for calendar year 2005.

 

As an example, if E&C’s and Chart’s actual EBITDAR performance through June 30,
2005 were as outlined below and the E&C and Chart Consolidated forecasted
performance was as below, then that same E&C employee with a $1,000 incentive
target would have a “minimum earned incentive” as outlined below:

 

  1. E&C Component: ($1,000 X 65%) X 131.91% = $857.42 X 30% = $257.23

 

  2. Chart Component: ($1,000 X 35%) X 120.84% = $422.94 X 30% = $126.88

 

Total “Minimum Earned” ($257.23 + $126.88) = $384.11

 

EBITDAR Performance Targets

--------------------------------------------------------------------------------

   Actual EBITDAR

--------------------------------------------------------------------------------

   2005 Calendar Year Targets

--------------------------------------------------------------------------------

   Forecasted Performance

--------------------------------------------------------------------------------

(Net of Incentives, in 000’s)

--------------------------------------------------------------------------------

   Performance Example

--------------------------------------------------------------------------------

   Net EBITDAR Targets

--------------------------------------------------------------------------------

        Half Year
Performance
Target (6/30/05)

--------------------------------------------------------------------------------

   Actual
Performance
(EBITDAR)
through
6/30/05

--------------------------------------------------------------------------------

   %
Performance

--------------------------------------------------------------------------------

   0% (Min.
Threshold)

--------------------------------------------------------------------------------

   100%
Target

--------------------------------------------------------------------------------

   150%
Target

--------------------------------------------------------------------------------

   Forecasted
Performance
(EBITDAR)
as of 6/30/05

--------------------------------------------------------------------------------

   Forecasted
Performance
for Calendar
Year 2005

--------------------------------------------------------------------------------

E&C

   $      $      100.00%    $      $      $      $      %

Consolidated

   $      $      100.00%    $      $      $      $      %

 

H. This “minimum earned incentive” means that earned incentives as of June 30,
2005 will not be reduced if business unit and/or Chart consolidated performance
declines for the remainder of the year. The “minimum earned incentive”
calculation is 30% of the estimated earned incentive for calendar year 2005 if
the respective Business Unit and/or Chart achieve the 100% half year performance
targets outlined in Table B.

 

I. An employee must remain employed through December 31, 2005 to be eligible to
receive this “minimum earned incentive”. If earned, this “minimum earned
incentive” will be paid in 2006 in accordance with the terms elsewhere in this
2005 Incentive Compensation Plan.

 

J. OTHER 2005 INCENTIVE COMPENSATION PLAN CONDITIONS

 

  1. Employee must be actively on the payroll as of December 31, 2005 in order
to be eligible for a payment under this Plan.

 

  2. Incentive payouts for new hires in 2005 or employees that experience a
leave of absence during the year will be adjusted on prorated basis to account
for the time not worked. Exhibit A will be used to determine to prorated
adjustment. Employees hired after October 1, 2005 are ineligible for an
incentive in 2005 and employees who work less than 14 weeks in 2005 are also
ineligible for an incentive in 2005.

 

  3. The Mid Year “minimum earned incentive” is part of the overall 2005 CIC
Plan and not an additional payment outside of the Plan.

 

  4. Earned incentive payments will be paid to employees in the late February or
early March time frame, but no later than March 15, 2006.

 

  5. New hires on or after April 1, 2005 are not eligible for the Half year
minimum earned incentive.

 

5 of 5