EX-10.2 Hamilton Beach/2006 Ann Incent Comp Plan



 







Exhibit 10.2




HAMILTON BEACH/PROCTOR-SILEX

Annual Incentive Compensation Plan – 2006




Introduction 




     Hamilton Beach/Proctor-Silex, Inc. (the “Company”) has established an Annual Incentive
Compensation Plan (the “Plan”) as part of a competitive compensation program for the officers and
key management employees of the Company and its Subsidiaries. This Plan is also referred to as the
Short Term Incentive Compensation Plan.



Plan Objective 




     The Company desires to attract and retain talented employees to enable the Company to meet its
financial and business objectives. The objective of the Plan is to provide an opportunity to earn
annual incentive compensation to those employees whose performance has a significant impact on the
Company’s short-term and long-term profitability.



Administration 




     The Plan is administered by the Committee of the Board of Directors of the Company (the
“Committee”). The Committee:




	a.	 	May amend, modify, or discontinue the Plan.
	 
	b.	 	Will designate Plan Participants.






	c.	 	Will determine the annual performance criteria which generates the incentive compensation
pool.






	d.	 	Will determine the total amount of both the target and actual annual incentive compensation
pool.






	e.	 	Will approve individual incentive compensation Awards to Participants who are officers and
employees above Hay Salary Job Grade 17.






	f.	 	May delegate to the Chief Executive Officer of the Company the power to approve incentive
compensation Awards to Participants in and below Hay Salary Job Grade 17.






	g.	 	Except as determined by the Committee, a Participant must be employed on December 31 of the
Award Term in order to be entitled to receive an Award hereunder. Notwithstanding the
foregoing, the Committee may approve a pro rata incentive compensation Award for Participants
who terminate employment prior to December 31 of the Award Term, provided those Participants
were actively at work for 90 days in the Award Term and whose employment is terminated (1) due
to death, Disability, Retirement or Facility Closure or Partial Closure or under other
circumstances at the recommendation of the Chief Executive Officer of the Company.





     The Committee shall have complete authority to interpret all provisions of this Plan
consistent with law, to prescribe the form of any instrument evidencing any Award granted or paid
under this Plan, to adopt, amend and rescind general and special rules and regulations for its
administration, and to make all other determinations necessary or advisable for the administration
of this Plan. A majority of the Committee shall constitute a quorum, and the action of members of
the Committee present at any meeting at which a quorum is present or acts unanimously approved in
writing, shall be the act of the Committee. All acts and decisions of the Committee with respect
to any questions arising in connection with the administration and interpretation of this Plan,
including the severability of any or all of the provisions hereof, shall be conclusive, final and
binding upon the Company and all present and former Participants and employees and their respective
descendants, successors and assigns. No member of the Committee shall be liable for any such act
or decision made in good faith.



Determination of Corporate Incentive Compensation Pool 




     Each Participant in the Plan will have an individual target incentive compensation percentage
which is determined by the Participant’s Hay Salary Job Grade.



     This percentage is multiplied by the midpoint of the Participant’s Hay Salary Job Grade to
determine his/her individual target incentive compensation Award.



 









 





     The total of the target incentive compensation Awards of all Participants equals the target
corporate incentive compensation pool (the “Target Pool”). The Target Pool is approved at the
beginning of each Award Term by the Committee.



     The actual corporate incentive compensation pool (the “ Actual Pool”) is determined as of the
end of each Award Term based on the Company’s actual performance against specific criteria
established in the beginning of the Award Term by the Committee. The Target Pool is adjusted
upwards or downwards by corporate performance adjustment factors to determine the Actual Pool. In
no event will the actual Pool exceed 150% of the Target Pool, except to the extent that the
Committee elects to increase the Actual Pool by up to 10%, as described below.



     Subject to the Committee’s right to amend or terminate the Plan at any time, it is the intent
of the Plan that the Actual Pool, as determined above, will be the final total corporate incentive
compensation pool. However, the Committee, in its sole discretion, may increase or decrease by up
to 10% the Actual Pool or may approve an incentive compensation pool where there would normally be
no pool due to Company performance which is below the criteria established for the Award Term.



     The Actual and Target Pools exclude commission personnel such as salespersons, regional
general managers, and manufacturers representatives.



Determination of Individual Incentive Compensation Awards 




     Hay Salary Job Grades and the corresponding target incentive percentage for each Participant
in the Plan will be established at the beginning of each Award Term and approved by the Committee.
Individual target incentive compensation will then be adjusted by the appropriate pool factor.
Such adjusted individual incentive compensation will then be further modified based on a
Participant’s performance as compared to his individual goals for the year. If a Participant’s
performance during the Award Term is determined to be unsatisfactory, the Committee reserves the
right to reduce the Participant’s Award for the Award Term to zero. The total of all individual
incentive compensation Awards must not exceed the Actual Pool for the Award Term.



Payment Date/Taxes




     Promptly following the Committee’s approval of the final Awards, the Company shall pay the
amount of such Awards to the Participants in cash, subject to all withholdings and deductions
described in the following sentence; provided, however, that (i) no Award shall be payable to a
Participant except as determined by the Committee and (ii) in no event shall the Awards be paid
later than two and one-half months after the close of the Award Term. Any Award paid to a
Participant under this Plan shall be subject to all applicable federal, state and local income tax,
social security and other standard withholdings and deductions.



Definitions




     (a) “Award” means cash paid to a Participant under the Plan for the Award Term in an amount
determined in accordance with the Plan.



     (b) “Award Term” means the period from January 1, 2006 through December 31, 2006.



     (c) “Disability” means an approved application for disability benefits under the Company’s
long term disability plan or under any applicable government program.



     (d) “Facility Closure or Partial Closure” means any layoff which requires a WARN Act notice in
the United States or, in Mexico, any layoff of 50 or more employees.



     (e) “Participant” means any person who is classified by the Company as a salaried employee and in
Hay Salary Job Grades 14 and above, who in the judgment of the Committee occupies a key position in
which his efforts may significantly contribute to the profits or growth of the Company; provided,
however, that the Committee may select any employee who is expected to contribute, or who has
contributed, significantly to the Company’s profitability to participate in the Plan and receive an
Award hereunder; and further provided,



 









 







however, that following the end of the Award Term the Committee may make one or more discretionary
Awards to employees of the Company who were not previously designated as Participants. Directors
of the Company who are also employees of the Company are eligible to participate in the Plan. The
Committee shall have the power to add Participants at any later date in the Award Term if
individuals subsequently become eligible to participate in the Plan; provided that they were first
hired by the Company prior to August 31st of an Award Term. Each Participant shall be
notified that he is eligible to receive an Award and the amount of his target Award. If a
Participant receives a change in salary midpoint, such Participant shall be notified of any
resulting change in his target Award. Notwithstanding the foregoing, in no event shall any person
who is classified by the Company as commissioned personnel be included as a Participant in the Plan
(including, without limitation, salespersons, regional general managers and manufacturers
representatives).



     (f) “Retirement” means a termination of employment with the Company at or after age 60 and the
completion of 10 or more years of service with the Company.



General Plan Provisions




     (a) No Right of Employment. Neither the adoption or operation of this Plan, nor any
document describing or referring to this Plan, or any part thereof, shall confer upon any employee
any right to continue in the employ of the Company, or shall in any way affect the right and power
of the Company to terminate the employment of any employee at any time with or without assigning a
reason therefor to the same extent as the Company might have done if this Plan had not been
adopted.



     (b) Governing Law. The provisions of this Plan shall be governed by and construed in
accordance with the laws of the State of Virginia.



     (c) Miscellaneous. Headings are given to the sections of this Plan solely as a
convenience to facilitate reference. Such headings, numbering and paragraphing shall not in any
case be deemed in any way material or relevant to the construction of this Plan or any provisions
thereof. The use of the masculine gender shall also include within its meaning the feminine. The
use of the singular shall also include within its meaning the plural, and vice versa.



     (d) American Jobs Creation Act. It is intended that this Plan be exempt from the
requirements of Section 409A of the Internal Revenue Code, as enacted by the American Jobs Creation
Act.



     (e) Limitation on Rights of Participants; No trust. No trust has been created by the
Company for the payment of Awards granted under this Plan; nor have the Participants been granted
any lien on any assets of the Company to secure payment of such benefits. This Plan represents
only an unfunded, unsecured promise to pay by the Company and a Participant hereunder is a mere
unsecured creditor of the Company.



     (f) Payment to Guardian. If an Award is payable to a minor, to a person declared
incompetent or to a person incapable of handling the disposition of his property, the Committee may
direct payment of such Award to the guardian, legal representative or person having the care and
custody of such minor, incompetent or person. The Committee may require such proof of
incompetency, minority, incapacity or guardianship as it may deem appropriate prior to the
distribution of such Award. Such distribution shall completely discharge the Company from all
liability with respect to such Award.



     (g) Effective Date. This Plan shall become effective as of January 1, 2006.



2006 Performance Targets



The performance targets for the Plan are attached as an Addendum to this document.