EXHIBIT 10.2
LOJACK CORPORATION
ANNUAL INCENTIVE PLAN
 
THE PLAN
 
LoJack Corporation, a Massachusetts corporation (the “Company”), previously
adopted the LoJack Corporation Cash Incentive Plan.  Effective as of January 1,
2010, the Company hereby amends and restates the LoJack Corporation Cash
Incentive Plan, which shall now be known as the LoJack Corporation Annual
Incentive Plan (the “Plan”).
 
1.  Purpose
 
The purpose of this Plan is to advance the interests of the Company by providing
a means to pay performance-based short-term and long-term incentive compensation
to those employees upon whose judgment and efforts the Company is largely
dependent for the successful conduct of its operations.  It is anticipated that
the opportunity to earn such compensation will stimulate the efforts of those
employees on behalf of the Company, strengthen their desire to continue in the
service of the Company, and will prove attractive to promising new employees and
will assist the Company in attracting such employees.
 
2.  Definitions
 
As used in this Plan and in connection with any Award, the terms set forth below
shall have the following meanings.
 
(a)  “Award” means the opportunity to earn compensation under this Plan, subject
to the achievement of one or more Performance Goals with respect to a
Performance Period and such other terms and conditions as the Committee may
impose in its sole discretion.
 
(b)  “Board” means the Board of Directors of the Company.
 
(c)  “Committee” has the meaning specified in Section 3(a).
 
(d)  “Company” has the meaning specified in the first paragraph.
 
(e)  “Participant” means any employee of the Company or its Subsidiaries who has
been granted an Award.
 
(f)  “Performance Goal(s)” means one or more measures determined with respect to
one or more of the following metrics as applied to the Company and its
Subsidiaries as a whole, or solely to the Company or a Subsidiary, or a division
or other unit of the Company or a Subsidiary:  revenue; operating income; net
income; basic or diluted earnings per share; return on revenue; return on
assets; return on equity; return on total capital; total shareholder return;
EBITDA; or working capital.  Any such criteria
 

 
-1-

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

 

may be adjusted to deviate from generally accepted accounting principles where
such modified definition is used by the Company or a Subsidiary in a contract.
 
The Committee may also, in its discretion, establish one or more Performance
Goals that are unique to the job of a particular Participant.
 
The Committee may, with respect to Participant specific and non-Participant
specific Performance Goals, exclude the effect of acquisitions or dispositions
of business units, restructuring charges, discontinued operations, extraordinary
items, cumulative effects of accounting changes, and other unusual or
nonrecurring items, and asset impairment and the effect of foreign currency
fluctuations, in each case as those terms are defined under generally accepted
accounting principles.
 
(g)  The “Performance Period” for an Award means the period of time for the
measurement of the extent to which the applicable Performance Goals are
attained.
 
(h)  “Plan” means this LoJack Corporation Annual Incentive Plan, as amended and
in effect from time to time.
 
(i)  “Subsidiary” means a corporation in which the Company directly or
indirectly owns 25% or more of the total combined voting power or value of all
classes of stock or, in the case of an unincorporated entity, a 25% or more
interest in the capital and/or profits.  A Subsidiary may be a U.S. domestic or
foreign entity.
 
(j)  “Termination of Employment” of a Participant means the termination of the
Participant’s employment with the Company and the Subsidiaries.
 
3.  Administration
 
(a)  Unless the Board provides otherwise, this Plan shall be administered by the
Compensation Committee of the Board (the “Committee”).  The Committee shall have
full and final authority, in its discretion but subject to the express
provisions of this Plan, to determine the eligibility for Awards among all
Company and Subsidiary employees, establish the terms and conditions of Awards
including, without limitation, Performance Goals and the related Performance
Period, determine the extent to which Awards are actually earned, determine the
form of payment of any Award, interpret this Plan, and make all determinations
necessary or advisable for the administration of this Plan.
 
(b)  The determination of the Committee on all matters relating to this Plan and
all Awards shall be made in its sole discretion, and shall be conclusive and
final.  No member of the Committee shall be liable for any action or
determination made in good faith with respect to this Plan or any Award.
 
4.  Eligibility
 
Awards may be granted to any employee of the Company or any Subsidiary.
 

 
-2-

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

 

5.  Establishment of Awards
 
(a)  Basic Terms of Awards.  In connection with the grant of each Award, the
Committee shall (i) determine the Performance Goals (whether Participant
specific, Non-Participant specific, or some combination thereof) and Performance
Period applicable to the Award, (ii) establish the formula for determining the
amounts payable based upon achievement of the applicable Performance Goals,
(iii) determine the consequences for the Award of the Participant’s Termination
of Employment for various reasons or the Participant’s demotion or promotion
during the Performance Period, (iv) determine the form of payment of the Award,
and (v) establish such other terms and conditions for the Award as it may deem
appropriate.
 
(b)  Establishment of Performance Goals.  Non-Participant specific Performance
Goals may take the form of absolute goals or goals relative to the performance
of one or more other companies comparable to the Company or of an index covering
multiple companies, each as determined by the Committee in its
discretion.  Participant specific Performance Goals may be based on such
criteria as the Committee shall determine to be appropriate.
 
If Performance Goals are not fully achieved, the Committee may provide that less
than 100% of an Award may be paid.  The Committee may also, in its discretion,
reduce (including to $0) an Award based on any of the following
criteria:  extent to which objective financial measurements achieved for the
fiscal year satisfied the Company’s or Participant’s short-term or long-term
goals; shareholder confidence in the Company, as evidenced in part by the
Company’s stock price; and the overall performance and financial health of the
Company and its Subsidiaries.
 
6.  Payment of Awards
 
The Committee shall announce, generally no later than the close of the
applicable Performance Period, the form in which an Award will be paid, which
may include all cash, all Company stock, or any combination thereof.  To the
extent Awards are made in the form of stock, the Committee may use shares
otherwise available for issuance under the LoJack Corporation 2008 Stock
Incentive Plan, or any similar such plan or arrangement.
 
Payment of an Award shall only be made after determination by the Committee of
the Participant’s entitlement thereto under the Plan, except that the Committee
may at any time provide that achievement of Performance Goals will be waived in
whole or in part upon the death or disability of the Participant or other
Termination of Employment.  Any payment made to a Participant pursuant to an
Award shall be made no later than March 15 of the calendar year following the
last day of the applicable Performance Period provided the Participant remains
employed on the payment date (or the Participant’s death or disability or other
Termination of Employment, if applicable) and shall be subject to all applicable
federal, state, local, and foreign tax withholding.  The Committee may, in its
discretion, waive the requirement that the Participant remain employed on the
actual payment date.
 

 

 
-3-

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

 

7.  Miscellaneous Provisions
 
(a)  Non-Uniform Awards.  The Committee’s Awards hereunder, including the terms
and conditions applicable thereto, need not be uniform and the Committee need
not treat similarly situated employees in a similar manner.
 
(b)  Nontransferability.  Awards granted hereunder shall not be assignable or
transferable other than by will or the laws of descent and distribution.
 
(c)  Funding.  The Company shall not be required to fund, or otherwise segregate
assets to be used for payment of, benefits under this Plan.
 
(d)  No Employment Rights.  Neither the establishment of this Plan, nor the
granting of any Award, shall be construed to (i) give any Participant the right
to remain employed by the Company or any of its Subsidiaries or to any benefits
not specifically provided by this Plan or (ii) in any manner modify the right of
the Company or any of its Subsidiaries to modify, amend or terminate any of its
employee benefit plans.
 
(e)  Controlling Law.  The law of the Commonwealth of Massachusetts, except its
law with respect to choice of law, shall be controlling in all matters relating
to this Plan.
 
8.  Amendment and Termination of this Plan and Awards
 
The Board may from time to time in its discretion amend or modify this Plan or
terminate the Plan without the approval of the stockholders of the Company;
provided that except as provided in the next sentence, no such amendment or
termination shall adversely affect any previously-granted Award without the
consent of the Participant.  Notwithstanding the foregoing, the Board may from
time to time amend this Plan, and the Committee may from time to time amend
Awards, without the consent of affected Participants to comply with applicable
law, stock exchange rules or accounting rules.
 
 
 
 
 -4-

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