Exhibit 10.30


 


United
Industrial Corporation


 


Management
Incentive Plan


 


 


January
2004


 


 


 





 





















 


UIC MANAGEMENT INCENTIVE PLAN


 


TABLE
OF CONTENTS


 


	
  Definitions

  	
   

  
	
  Plan Amendment and
  Termination

  	
   

  
	
  Effective Date of the Plan

  	
   

  
	
  MANAGEMENT INCENTIVE
  PLAN (MIP)

  	
   

  
	
  Philosophy

  	
   

  
	
  General
  Features

  	
   

  
	
  Payments

  	
   

  
	
  Entitlements

  	
   

  
	
  Administration

  	
   

  
	
  Miscellaneous

  	
   

  
	
  SETTING TARGETS AND
  OBJECTIVES

  	
   

  
	
  Business Performance
  Measurement

  	
   

  
	
  Strategic Performance
  Measurement

  	
   

  
	
  Incentive Calculation

  	
   

  
	
  BUSINESS PERFORMANCE FACTOR

  	
   

  
	
  Guidelines
  for Objective Setting and Evaluation

  	
   

  
	
  STRATEGIC PERFORMANCE
  FACTOR

  	
   

  
	
  Guidelines
  for Objective Setting and Evaluation

  	
   

  
	
  Guidelines
  for Reviewing Overall Performance for Strategic Performance Rating

  	
   

  
	
  TARGET INCENTIVE COMPENSATION
  AWARD (TICA) CALCULATION — EXAMPLE

  	
   

  
	
  EARNED
  INCENTIVE COMPENSATION AWARD (EICA) CALCULATION:

  	
   

  
	
  Summary

  	
   

  



 





















Definitions


 


Except as otherwise specified or as the
context may otherwise require, the following terms have the meanings indicated
below for the purposes of this Plan:


 


Company means UIC and all
Subsidiaries of UIC.


Compensation
Year or Year means the fiscal
year of UIC.


 


Disability means
disability according to the terms of the United Industrial Corporation Long-Term
Disability Plan as may from time to time be applicable with respect to the
particular Participant.


 


Layoff means a
termination which is not for cause but rather is due to a permanent or
indefinite reduction in the work force, including, but not limited to, the
elimination of a Participant’s position as a result of a facility closure,
discontinuance or relocation of operations, acquisition, reorganization or sale
(including the sale by the Company of a business unit, division, product line
or functionally related group of assets.)


 


Participant means an eligible Company
employee selected for Plan participation in accordance with the procedures set
forth herein.


Plan means the 2004 Management Incentive Plan
(MIP) as set forth herein.


Plan Compensation means the amounts earned
for the year as a consequence of the Plan.


Retirement means
retirement according to the terms of the Subsidiary retirement plan.


 


Subsidiary means any
corporation in which the Company owns total equity interest.  However, if AAI or UIC owns majority
interest, then any compensation plan must be approved by UIC.


Plan Amendment and Termination


 


UIC may, in its sole and absolute discretion,
amend, suspend or terminate the Plan at any time, with or without advance
notice to Participants.


Effective Date of the Plan


 


This Plan shall be effective as of January 1,
2004.


 





















MANAGEMENT INCENTIVE PLAN (MIP)


Philosophy


 


The UIC Management Incentive
Plan (often called the Bonus Plan or Plan) is a variable cash based incentive
plan designed to focus management attention on performance factors important to
the continued success of their business unit and the Company overall.
Achievement of high standards of business and individual performance should be
rewarded financially and conversely; significant compensation should be at risk
for failing to achieve those high standards. The opportunity to earn
compensation in addition to base salary is an integral part of our total
compensation approach. The Management Incentive Plan serves as a direct link
between a Participant’s compensation and the performance of a business unit or
the Company overall.


General
Features


 


Participants are senior
managers in a position to significantly affect the performance of their
business unit. These are generally managers with responsibility across an
entire business unit, i.e. headquarter executives; product line and other
general or program managers; and selected functional managers.


 


To be eligible to be
selected to participate, a new hire to the Company or a newly eligible employee
must be employed as of 1 September. 
Part-year Participants (i.e., employed after 1 January but prior to 1
September) shall be eligible for awards calculated pro rata to the number of
days employed during the Compensation Year.


 


Target incentive compensation
is over and above the base salary. It is a function of the annual results, both
by the individual and the relevant business unit. Base salary levels are
established using competitive comparisons. The target incentive compensation, a
percent of base salary, is similarly determined, thus ensuring the
competitiveness of UIC’s total target compensation. Base salary and target
annual incentives are considered competitive total compensation. Actual
incentive awards may range from zero to two hundred percent of target. The
target incentive percent varies from 10 to 50 percent of base salary, depending
on the Participant’s salary grade. Incentive awards are not guaranteed. The
Plan requires reasonable risk on the part of the Participant, commensurate with
potential reward-an opportunity to raise total compensation significantly above
the target opportunity.


 


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Payments


 


The distribution of Plan
Compensation shall be made by the end of March following the Compensation Year.


Entitlements


 


General Rule: To receive Plan
Compensation from this Plan, the Participant must be an employee of the Company
at the time of payment of Plan Compensation. 
Exceptions to this rule shall be made in the cases of death, retirement,
layoff, and disability as described in this Section.  UIC may also, in its sole discretion, permit
other exceptions to this rule.


Death,
Retirement, Layoff and Disability:  If a Participant dies, retires, is laid off,
or becomes disabled during the Compensation Year, the individual Target
Incentive Compensation Award (TICA) shall be prorated and payment made by the
end of March following the Compensation Year. 
If death, retirement, layoff or disability occurs after the close of a
Compensation Year, but before payment is made, such event shall not affect
calculations.


Administration


 


The Subsidiary, after
approval by UIC, is authorized and empowered to administer the Plan; interpret
the Plan, prescribe, amend and rescind rules relating to the Plan; and
determine the rights and obligations of Participants under the Plan.  UIC may delegate certain of these activities
and all other matters as it solely determines.


Miscellaneous


 


No Contract or Guarantee of Continued Employment.  Eligibility to participate and participation
in the Plan is not a guarantee of continued employment.  The Plan does not constitute a contract of
employment and the Company specifically reserves the right to terminate a
Participant’s employment at any time with or without cause and with or without
notice or assigning a reason.


No Guarantee of Plan Compensation.   Eligibility to participate and participation
in this Plan does not guarantee the payment of Plan Compensation.


The UIC Board determines plan participation for each
Compensation Year and participation of one year does not guarantee
participation in future years.


Assignment and Transfers.   With the exception of transfer by will or by
the laws of descent and distribution, rights under the Plan may not be
transferred or assigned.


Withholding
Tax.  The Company will deduct taxes
required by law to be withheld with respect to such payments from all cash
payment due a Participant.


 


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SETTING TARGETS AND OBJECTIVES


 


Key to an effective and
equitable management incentive plan are the quality, realism and stretch of the
targets and objectives. In setting these targets and objectives we focus on
high standards, continuous improvement and Participant involvement. TICA and
performance measurements are built around two basic factors: business
performance factor (BPF) and strategic performance factor (SPF). The weighting
of those factors can vary from one business unit to another, reflecting the
relative importance of business to individual performance for that unit during
any Compensation Year.  Between them, BPF
and SPF total 100 percent.  The BPF uses
financial performance measures important to the business unit.  Budgets as well as past and expected future
performance results are the criteria used in setting BPF targets.


 


These are reviewed and
approved by the CEO. Achievement of the business performance targets results in
a 1.0 BPF rating. SPF objectives are set annually for each Participant. They
are intended to be significant results that need to be achieved if the business
unit’s strategic and overall performance objectives are to be realized.


 


SPF objectives are important
personal objectives directly related to a Participant’s major responsibilities.
For example, these objectives could include such areas as market and/or
customer share improvement; cost improvements; product development; pricing;
inventory levels; introduction or improvement of products, processes or
systems; health, safety and environmental performance; or management development.


 


UIC recognizes circumstances change throughout the year.  Significant achievements during the
Compensation Year, not contemplated at the inception of the Compensation Year,
will be reviewed and incorporated in the final determination of Plan Compensation.


Business Performance Measurement


 


Actual BPF is adjusted to
level the effect of accounting changes, acquisition costs, land sales,
strategic restructuring costs, capital expenditures, etc. Adjusted performance
results are compared with the previously set targets and the zero (0) and two
(2.0) performance levels. This comparison results in a BPF rating for each
business unit that is somewhere on a scale of zero to two.


 


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Strategic Performance Measurement


 


SPF objectives are mutually
agreed to by the Participant and his or her manager. These objectives should be
documented, along with the results expected and measurements to be used. In
rating SPF, achievement of SPF objectives, overall job performance, response to
unplanned major events and contributions to the overall management team are all
to be considered. Performance is rated using the entire zero to two spectrum.
Guides for SPF rating are provided.


Incentive Calculation


 


To determine a Participant’s
incentive, both performance factors, BPF and SPF are rated and weighted
according to the predetermined split. The two results are totaled and
multiplied by the Participant’s Compensation Year base salary earnings
(prorated for partial-year participation) to determine the Plan Compensation.


BUSINESS PERFORMANCE FACTOR


Guidelines for Objective Setting and Evaluation


 


The 1.0 targets are the
levels at which the unit is expected to perform for the Compensation Year. Each
unit’s budget is the primary starting point for 1.0 target levels. No incentive
is paid for results at or below the zero level, and twice the target incentive
is paid for results at or above the 2.0 level.


 


•    The
1.0 targets are generally established at levels judged to have a reasonable
chance of attainment and match the commitments made to the UIC Board; the zero
and 2.0 extremes are normally established in terms of reasonable stretch and
relative risk.


 


•    Targets
are first developed by unit/division management. The CEO and appropriate staff
discuss the targets and agree upon zero, one and two levels.


 


•    In
determining the business performance ratings, actual performance is adjusted to
level the effect of accounting changes, acquisition costs, land sales,
strategic restructuring costs, capital expenditures, etc.


 


•    Adjusted
performance results are compared with targets which results in a BPF rating for
each business unit that is somewhere on the scale of zero to two.


 


•    Business
performance targets are finalized early in the Compensation Year but can be
adjusted by the Board in cases of substandard change in the business.


 


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STRATEGIC PERFORMANCE FACTOR


Guidelines for Objective Setting and Evaluation


 


Each Participant submits
strategic performance objectives in writing to his/her manager. Performance
objectives are based on the major job responsibilities assigned to the
individual and are related to the business unit’s strategic and/or UIC’s
overall performance objectives.


 


•    To
develop individual performance objectives, each Participant must understand and
commit to the operating unit’s business and human resources strategies.


 


•    The
two to five most important individual objectives should be submitted to the
next higher-level manager for review and approval.  Objectives should state results required
ensuring that the performance can be measured. 
In many cases, measurement of results cannot be quantified. When this
quantification is not possible, there should be a clear statement of the
criteria that will be used to judge the accomplishment of the SPF. For example,
if the SPF is to develop a strategic plan, success is not determined primarily
by a plan being developed on time but rather the quality of thinking that the
plan portrays. The SPF should lay out the criteria to determine the
quality.  Measurements enable the
Participant and manager to determine whether the objective or a portion of the
objective has been successfully achieved.


 


•    Objectives
should be stated in measurable terms and should include timing.


 


•    Objectives
should identify specific achievements expected and not merely restate major
responsibilities or plans to accomplish them.


 


•    Objectives
should be realistic with some stretch and be based on actual conditions.


 


The degree of difficulty may
vary among the objectives. A priority ranking or assessment of relative
difficulty, included in the objectives statement, will be of value during the
review to determine the strategic performance factor rating. 


 


In determining the strategic
performance rating, the following will be considered:


 


•    The
accomplishment of annual objectives and the significance of those objectives to
overall business unit results.


 


•    Degree
of difficulty of the objectives.


 


•    Overall
performance of major responsibilities including self-development.


 


•    Performance
in response to unanticipated circumstances or opportunities.


 


 


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•    Contributions
to the management team and important corporate initiatives.


Guidelines for Reviewing Overall Performance for
Strategic Performance Rating


 


Creates five general levels
of performance with definitions of possible performance and a suggested range
of ratings for each.


 


	
  0
  to .5

  	
   

  	
  Overall performance
  considerably less than standard. Did not meet objectives primarily because of
  own performance. Performance in unplanned circumstances was below
  expectations. Individual did not demonstrate satisfactory improvement during
  the year.

  
	
   

  	
   

  	
   

  
	
  .5
  to .9

  	
   

  	
  Overall performance of
  major position responsibilities did not meet all expectations. Some
  objectives achieved but not in a totally satisfactory manner. Measurable
  progress made during the year and current progress is satisfactory.

  
	
   

  	
   

  	
   

  
	
  .9
  to 1.1

  	
   

  	
  Overall performance of
  major responsibilities meets current standards. Objectives substantially met,
  especially those of greater significance to business objectives. Performance
  in unplanned circumstances met or exceeded expectations.

  
	
   

  	
   

  	
   

  
	
  1.1
  to 1.5

  	
   

  	
  Overall performance
  consistently met or exceeded standards for all responsibilities. Objectives
  were generally exceeded during the year. Function for which responsible has
  shown significant progress. Significant unplanned circumstances occurred
  during the year and related performance exceeded expectations

  
	
   

  	
   

  	
   

  
	
  1.5
  to 2.0

  	
   

  	
  Outstanding performance in
  all aspects of current job. All objectives exceeded with recognition of these
  accomplishments. Has demonstrated success of at least one major breakthrough
  or significant project. Professional performer on all job functions and
  recognized as such by peers and superiors.

  



 


Achievement of tougher
objectives receives a higher strategic performance factor rating, which
translates into a higher incentive award. 
For example, a Participant who sets unusually demanding objectives and
then misses one might receive a 1.4 SPF rating. 
A Participant who set more easily achieved objectives and then hits them
all might receive a 1.0 SPF rating.


 


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TARGET INCENTIVE COMPENSATION AWARD (TICA) CALCULATION
— EXAMPLE


 


(The actual percentages of SPF and BPF and
the metrics used for BPF are only examples and may vary by organization or
specific business needs year to year.)


 


Your SPF Factor is weighted at 20% and BPF Factor weighted
at 80%. Within the BPF, Cash Flow (CF) and Earnings Before Interest, Taxes,
Depreciation and Amortization (EBITDA) are weighted 70% and 30%, respectively.


 


This year, the Cash Flow
rating was 1.2 and the EBITDA was 1.0. Your SPF rating was  .8


Your Target Incentive
Compensation Award Eligible Earnings were: $130,000


Your Target Incentive
Compensation Award Percentage is: 25%


Your Target Incentive
Compensation Award Amount was: $32,500


EARNED INCENTIVE COMPENSATION AWARD (EICA)
CALCULATION:


 


1.  WEIGHTED
SPF DETERMINATION


 


Your SPF Rating X SPF Weight
= Weighted SPF Rating


.8 X .20 = .16


 


2.  WEIGHTED CF/EBITDA DETERMINATIONS


 


CF Contribution


The weight used to calculate CF Contribution below is the
cash portion (70%) of the BPF weight (80%)


 


EBITDA Contribution


CF Rating X Weight = CF Weighted Rating


1.2 X .56 = .672


The weight used to calculate EBITDA
Contribution below is the EBITDA portion (30%) of the BPF weight (80%)


 


EBITDA
Rating X Weight = EBITDA Weighted Rating


1.00 X .24 = .24


 


3.  YOUR TOTAL RATING
DETERMINATION


 


Weighted
SPF Rating + Weighted CF Rating + Weighted EBITDA Rating =Total Rating


.16 + .672 + .24 = 1.072


 


4.  YOUR EICA DETERMINATION (ROUNDED TO NEAREST
DOLLAR)


 


Target Amount X Total Rating
= Actual Incentive Award


$32,500 x
1.072 = $34,840


 


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Summary


 


UIC’s Management Incentive
Plan is an integral part of our competitive total compensation program,
offering incentives and rewards offset by commensurate risk.  Participants are individually selected from
among those managers whose decisions significantly affect UIC’s performance.


 


Business and strategic
performance targets and objectives are set in areas that require focus and
emphasis in the Compensation Year including actions intended to execute longer
term strategies. Performance is rigorously measured against the targets,
objectives and on an overall basis.


 


Both business unit and
individual performance affect incentive awards.


 


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