oct09cashbonuscriteria.htm


    CONSOLIDATED-TOMOKA
LAND CO.

    Annual
Executive Cash Bonus Plan

    


    The
Executive Cash Bonus Plan for Consolidated-Tomoka Land Co. is designed to
provide incentive compensation for eligible Company officers and managers, whose
participation has been approved by the Compensation Committee of the Board of
Directors.  To be eligible for the bonus, an officer or manager must
be employed as a full-time employee from January 31 through December 31 of the
bonus plan year unless otherwise recommended  by the Compensation
Committee and approved by the Board of Directors.   The
discretionary award will be based on the overall profitability of the Company
and each participant’s overall performance in contributing to the profitability
of the Company for that given year.  Bonuses will be paid no later
than March 15 following the end of the preceding bonus plan year.

     

    The
Annual Executive Cash Bonus Plan is provided at the discretion of
Consolidated-Tomoka Land Co. and its Board of Directors.  The Company
reserves the right to modify, or terminate the Plan with or without
notice.

     

    Prior to
2008, the Company’s annual cash bonuses have been based on the Company’s
after-tax earnings per share (“EPS”) in general conformity with the current cash
incentive policy attached as Exhibit A.  Annual Company revenues were
primarily generated from third-party land sales.

     

    Net
income from operations, including the sale of property to third parties in any
calendar year, were calculated in conformity with U.S. generally accepted
accounting principles, as reported in the Company’s Annual Report and
accompanying Form 10-K, filed with the SEC. Land leases, build-to-suit lease
projects, and self-development projects were not part of the
calculation.

     

    Beginning
in 2008, the Compensation and Stock Option Committee and Board of
Directors  determined that it was equally important to motivate and
reward management for achievements in those three additional areas, which are
also a part of the Company’s adopted business plan. This revision to the current
cash bonus plan is intended to provide an incentive to management to also engage
in land leases, build-to-suit lease projects, and self-development projects by
providing equivalent cash incentives, which would be realized from third-party
land sales and conversion into 1031 income properties.

     

    In order
to provide an annual plan that balances executive performance, the Company, for
purposes of determining eligibility and potential bonus pool amounts, will now
include in the annual executive bonus criteria a one-time per project
equivalency calculation that represents the after-tax net income, which would
have been recognized on the land portion of any approved land lease,
build-to-suit lease, or self-development project occurring in that year had the
property instead been sold to a third party at market value. The market value of
the unimproved land shall be determined by using the unimproved land value used
in the calculation of the land lease or in the build-to-suit lease projects, or
in the case of self-development projects the unimproved land value stated in the
Board-approved proforma less any costs to date allocated to the unimproved
land.

     

    Operating
losses from any self-development projects will be calculated in basic EPS and
will reduce current EPS and potential bonuses.

     

    
 

    
      
        
        

      

      
        
        

        
        

      

      
        
        

      

    

    Annual
Executive Cash Bonus Plan (continued)

    Page
-2-

    


    Examples of Projects
Qualifying for Bonus Eligibility:

    


    Example
1: If land was leased to a third party and the lease payments were based on a
value of $2,000,000, then the calculation would be as follows:

    


    $2,000,000,
less the land’s cost basis, less the applicable federal and state tax rate,
divided by the average outstanding number of shares during the
year.

    


    Example
2: If a build-to-suit lease was based on a value of $8,000,000 and the land
component was $2,250,000, then the calculation would be as follows:

    


    $2,250,000
less the land’s cost basis, less the applicable federal and state tax rate,
divided by the average
outstanding number of shares during the year.

    


    Example
3: If the land value used in the Board-approved self-development proforma was
$1,950,000 then the calculation would be as follows:

    


    $1,950,000
less the land’s cost basis, less the applicable federal and state tax rate,
divided by the average
outstanding number of shares during the year.

    


    If in any
of the above examples the participant had received a prior bonus based on an
increase in land value, that increased land value would become the new adjusted
land basis when determining any subsequent equivalent EPS for
bonuses.

    Example

    


    The
following example illustrates how equivalent earnings per share would be added
to basic earnings to determine adjusted EPS for executive bonus
calculations:

     

    
      	
              Basic Earnings per Share in conformity
      with 

                           
      Generally accepted accounting
      principles                   
      

                            
      (Includes negative adjustments to EPS from any operating 

                              
      losses attributed to non-performing assets)   

            	
               

               

            	
               

               

               

              $2.37

            
	
               

               

            	
               

               

            	
               

               

            
	
              Add (Land sales equivalency earnings per
      share)

            	
              $.19

            	
               

            
	
                         
      Project “A” a third party land lease

            	
              $.21

            	
               

            
	
                         
      Project “B” a build to suit lease back

            	
              $.17

            	
               

            
	
                         
      Project  “C” a self development project

            	
              $.57

            	
              $
    .57

            
	
               

            	
               

            	
               

            
	
              Deduct (the adjusted land value equal to
      the amount 

                 used to calculate any
      prior bonus payout 

                 previously
      recognized)

                                     
      Self-development project sold less

                                     
      previous gain on undeveloped land recognition

            	
               

               

            	
               

               

               

               

              -.12

            
	
               

            	
               

            	
               

            
	
              Equivalent earnings per share for
      eligibility 

                         
      determination and calculation of executive 

                         
      bonus (per exhibit “A”) would be:

            	
               

            	
               

               

              $2.82

            


    

    


    Adopted:  January
28, 2009

    REVISED:  October
28, 2009

    
 

    

      
        
           


        

        
           


          
          

        

        
           


        

      


      EXHIBIT
A

      


      CONSOLIDATED-TOMOKA
LAND CO.

      Criteria
for Cash Bonus Plan

      


      


      
        	
                1)

              	
                The
      Company’s annual cash bonus plan was instituted to reward short-term
      performance.   Awards are currently tied to the Company’s
      Earnings Per Share (“EPS”) achievement for the plan
  year.

              


      

       
 

      
        	
                2)

              	
                Bonus
      payouts are limited as follows:

              


      

      


      
        	
                Chief
      Executive Officer

                Senior
      VP and Executive Officers

              	
                up
      to 200% of base annual salary

                up to 100% of base annual
salary

              


      

      
      

      
        	
                Vice
      Presidents

              	
                up
      to  75% of base annual
salary

              


      

      
        	
                Managers
      designated in the plan

              	
                up
      to  50% of base annual
salary

              


      

      


      
        	
                3)

              	
                Annually,
      the bonus pool is established based on the target EPS, and is adjusted for
      the number of employees in the plan at each
  level.

              


      

      
 

      
        	
                4)

              	
                Estimated
      pay out guidelines as a percentage of employees’ base salary are as
      follows:

              


      

      
 

      
        	
                EPS

              	 	
                CEO

              	 	
                SR VP

              	 	
                VP

              	 	
                Managers

              
	
                $1.50

              	 	
                43%

              	 	
                22%

              	 	
                16-20%

              	 	
                6-20%

              
	
                $2.00

              	 	
                52%

              	 	
                27%

              	 	
                20-24%

              	 	
                8-25%

              
	
                $2.50

              	 	
                65%

              	 	
                33%

              	 	
                25-30%

              	 	
                10-32%

              
	
                $3.00

              	 	
                78%

              	 	
                40%

              	 	
                30-36%

              	 	
                12-38%

              
	
                $3.50

              	 	
                94%

              	 	
                48%

              	 	
                36-43%

              	 	
                15-50%

              
	
                $4.00

              	 	
                112%

              	 	
                58%

              	 	
                43-52%

              	 	
                18-50%

              
	
                $4.50

              	 	
                135%

              	 	
                70%

              	 	
                52-62%

              	 	
                22-50%

              
	
                $5.00

              	 	
                162%

              	 	
                84%

              	 	
                62-75%

              	 	
                27-50%

              
	
                $5.50

              	 	
                194%

              	 	
                100%

              	 	
                75%

              	 	
                33-50%

              
	
                $6.00

              	 	
                200%

              	 	
                100%

              	 	
                75%

              	 	
                40-50%

              


      

       

      
      

       

      
        	
                Bonuses
      are not normally awarded to participants at earnings levels of less than
      $1.50 per share
      unless the Board determines that an individual participant’s contribution
      was 

                outstanding
      when compared to industry peers.

              


      

       

      
      

      
      

      


      
        	
                5)

              	
                Actual
      awards are based on two factors--the Company’s EPS achieved for the plan
      year and the individual participant’s performance. The CEO makes
      recommendations to the Compensation Committee based on each participant’s
      performance, and the Compensation Committee then reviews these
      recommendations and makes its recommendations to the Board of Directors
      for final approval.  The Compensation Committee makes a
      recommendation to the Board of Directors for the CEO’s bonus based on EPS
      and individual performance.  A participant’s actual award may be
      increased, decreased, or eliminated if, in the judgment of the
      Compensation Committee, his/her performance or other issues warrant this
      action. Awards may be pooled and reallocated between two are more
      participants, and in certain instances awards to an individual participant
      may be increased above these
guidelines.

              


      

      


      
        	
                6)

              	
                Upon
      the recommendation of the Compensation Committee, the Board of Directors,
      in its discretion, may also award discretionary cash bonuses to
      participants whose performance is determined to have been outstanding
      during the plan year or otherwise merits a special one-time cash
      bonus.

              


      

      


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