Exhibit 10.4
Fiscal 2007 Annual Performance Bonus Program
for John D. Carter and Tamara Adler Lundgren
The Employment Agreements between the Company and each of John D. Carter and
Tamara Adler Lundgen provide for annual cash bonuses for fiscal 2007, 2008 and
2009 under bonus programs to be developed by the Compensation Committee (the
Committee), with bonuses payable based on Company financial performance and
achievement of management objectives as determined by the Committee at the
beginning of each fiscal year. The Committee approved an annual performance
bonus program for Mr. Carter and Ms. Lundgren for fiscal 2007 with two
components. The first component consists of awards under the Company’s Executive
Annual Bonus Plan, with cash payouts based on achievement of Company financial
performance targets. The second component is based on the achievement of
management objectives determined by the Committee. The two components of the
2007 annual performance bonus program shall operate independently, and the
Committee shall make determinations with respect to the second component without
regard to the outcomes under the first component.
Company Performance Targets — Awards under Executive Annual Bonus Plan
     Calculation of Cash Payout. For fiscal 2007, the performance targets under
the Executive Annual Bonus Plan shall be the Company’s EPS Growth and Return on
Capital Employed (ROCE) and each performance target shall be weighted equally.
Cash payouts to the participants under this component of the bonus program shall
be determined based on the level of achievement of each performance target. The
Committee has established performance targets for EPS Growth and ROCE and
corresponding payouts as a percentage of a participant’s target amount. Payouts
begin at positive levels of EPS Growth and ROCE, and the maximum aggregate
payout per participant is equal to the maximum permitted under the Executive
Annual Bonus Plan. Each performance target operates independently and payout is
determined based solely on that performance target.
     Participants’ Target Amounts. The target amount for Mr. Carter for each
performance target shall be 25% of his annual base salary as in effect on
August 31, 2007. The target amount for Ms. Lundgren for each performance target
shall be 25% of her annual base salary as in effect on August 31, 2007.
     EPS Growth. The EPS Growth for fiscal 2007 shall be equal to the EPS for
that year minus the EPS for fiscal 2006, with that difference then divided by
the EPS for fiscal 2006. For purposes of this bonus program, the EPS for fiscal
2006 shall be deemed to be $3.97 reflecting the elimination of certain large
non-recurring items. The EPS for fiscal 2007 shall mean the Company’s diluted
earnings per share for that fiscal year before extraordinary items and
cumulative effects of changes in accounting principles, if any, as set forth in
the audited consolidated financial statements of the Company and its
subsidiaries for that fiscal year.
     ROCE. The Company’s ROCE for fiscal 2007 shall be equal to the Company’s
Adjusted Net Income for fiscal 2007 divided by the Company’s Average Capital
Employed for fiscal 2007. Adjusted Net Income for fiscal 2007 shall mean the
amount determined by excluding interest expense from the Company’s income before
income taxes for fiscal 2007,

 

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recalculating the income tax expense for the year based on the adjusted income
before income taxes, and then calculating net income before extraordinary items
and cumulative effects of changes in accounting principles, if any, all in a
manner consistent with the actual calculations reflected in the audited
consolidated financial statements of the Company and its subsidiaries for fiscal
2007. Average Capital Employed for fiscal 2007 shall mean the average of 5
numbers consisting of the Capital Employed as of the last day of the fiscal year
and as of the last day of the four preceding fiscal quarters. Capital Employed
as of any date shall mean the Company’s total assets minus the sum of all of its
liabilities other than debt for borrowed money and capital lease obligations, in
each case as set forth on the consolidated balance sheet of the Company and its
subsidiaries as of the applicable date.
     Change in Accounting Principle. If the Company implements a change in
accounting principle during fiscal 2007 either as a result of issuance of new
accounting standards or otherwise, and the effect of the accounting change was
not reflected in the Company’s business plan at the time of approval of this
award, then EPS Growth and ROCE shall be adjusted to eliminate the impact of the
change in accounting principle.
     Certification. Following the end of fiscal 2007 and prior to the payment of
any bonus based on the performance targets, the Committee shall certify in
writing the level of attainment of each performance target for the year and the
calculation of the bonus amounts for each participant. Payouts shall be made in
cash to the participants as soon as practicable after October 31, 2007 following
the certification by the Committee.
     Conditions to Payment. Subject to the terms of a participant’s employment
agreement and change in control agreement, a participant must be employed by the
Company on August 31, 2007 to receive this component of the annual bonus.
     IRS Section 162(m). This component of the annual bonus program is
implemented pursuant to the Executive Annual Bonus Plan, which was approved by
shareholders in 2005 and is intended to qualify as performance-based
compensation under Section 162(m) of the Internal Revenue Code. The EPS Growth
and ROCE performance targets are among performance goals approved by
shareholders in the Executive Annual Bonus Plan.
Management Objectives
The second component of the annual bonus program is based on the achievement of
management objectives determined by the Committee. The Committee shall establish
the management objectives and shall specify the weight to be assigned to each
objective. Following the end of the fiscal year, the Committee shall evaluate
the performance of each participant against the management objectives, determine
the extent to which each objective has been met and determine the amount of the
bonus to be paid. The target bonus amount of this component of the bonus program
shall be 50% of the annual base salary of the participant as in effect on
August 31, 2007. The actual amount of the bonuses under this component shall be
determined by the Committee. There is no cap or maximum amount of bonus that can
be paid to either Mr. Carter or Ms. Lundgren.

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