bm20100222_8k-ex101.htm


    

    


    Bell
Microproducts Inc.

    Management
Incentive Plan Description

    Year
2010

    


    The
Management Incentive Plan (the “Plan”) is established to provide the Chief
Executive Officer, other executive officers, and division heads of Bell
Microproducts Inc. (the “Company”) with a financial incentive to meet and exceed
financial and other objectives.  The following is a description of the
Plan.

    


    
      1.Participation

    

    The
Compensation Committee of the Board of Directors (the “Committee”), upon the
recommendation of the Chief Executive Officer, is responsible to designate
participants in the Plan, approve Plan goals, establish target incentives, and
approve Plan payouts.

    


    
      	
               2.

            	
              Performance
      Targets

            


    

    Performance
goals are established at the beginning of the year for the first half of the
year based on the Annual Operating Plan.  The goals for the second
half of the year will be established at the beginning of the second half of the
fiscal year.  The goals will consist of one or more of the following
elements:

    


    Earnings
Per Share (EPS), Net Income, Pretax Profit (PTP), Operating Contribution,
Operating Income, Return on Equity (ROE), Return on Invested Capital (ROIC),
Return on Working Capital (ROWC), and Individual Objectives (short-term tactical
MBOs as well as objectives based on strategic initiatives).  At the
discretion of the Committee, these financial metrics may include non-cash and
other adjustments.

    Note:

    
      	
              ·  

            	
              ROE
      is derived by dividing net income for the period by common shareholder
      equity.

            


    

    
      	
              ·  

            	
              ROIC
      is derived by dividing business unit pretax profit into Bell Micro’s
      investment/intercompany loans, including acquisition interest, to the
      business unit.  At the corporate level, after tax profit is used
      instead of pretax profit.

            


    

    
      	
              ·  

            	
              ROWC
      is derived by dividing business unit pretax profit into working capital
      (A/R + Inventory – AP).

            


    

    


    
      	
              3.  

            	
              First Half Plan and
      Second Half Plan

            


    

    For 2010,
the Plan consists of a stand alone First Half Plan based on financial
performance and a stand alone Second Half Plan based on financial performance,
as well as annual objectives or “MBOs,” as follows:

    


    a.      First Half
Plan

    After the
close of the first half of the fiscal year, financial performance for the first
half will be compared to the financial goals for the first half to determine the
amount of incentive each participant earned in the first half.  In
calculating the amount of incentive earned, the payment calculation schedule
shown in Paragraph 4 below shall be used.  Incentive payments require
the review and approval of the Committee prior to payment.

    


    b.      Second Half
Plan

    After the
close of the second half of the fiscal year, financial performance for the
second half will be compared to the financial goals for the second half to
determine the amount of incentive each participant earned in the second
half.  In calculating the amount of incentive earned, the payment
calculation schedule shown in Paragraph 4 below shall be
used.  Incentive payments require the review and approval of the
Committee prior to payment.

    


    The
amount of target incentive applied to each half of the year will generally be
the same as the ratio set forth in the Annual Operating Plan for projected
corporate profit in each half of the fiscal year.

    


    c.      MBOs

    At the
beginning of each year, each participant in the Plan shall submit in writing to
their manager, four to six MBOs, and as directed by the Compensation Committee,
additional MBOs based on strategic initiatives.  The MBOs represent
business priorities for the year.  The MBOs shall be approved by the
Chief Executive Officer.  The objectives for the Chief Executive
Officer shall be approved by the Committee.  The written objectives
must include a statement of the objective, the delivery date, and the expected
result (i.e., a definition of how the accomplishment is to be
measured).  If there is more than one objective, each will be weighted
equally, unless the objective states otherwise.

    


    Because
the actions necessary to accomplish MBOs will generally span several quarters,
payment of the MBO-based incentive will be made on an annual
basis.  After the close of the year, each participant shall review
their approved MBOs and submit in writing to their manager an evaluation of
their performance of each MBO.  The Chief Executive Officer shall
approve or change the recommended achievement level for each MBO and communicate
this to the Committee.  The achievement level for the MBOs of the
Chief Executive Officer shall be reviewed and approved by the
Committee.  Payment for MBO performance of all participants requires
the review and approval of the Committee prior to payment.

    


    
      4.  Payment Calculation
Schedule

    

    


    Payout of
incentives for profit and other financial goals is based on the following
metric:

    


    
      	
              Plan
      Achievement

            	
              Incentive
      Earned

            
	
              <
      Tier 1

            	
              0%

            
	
              At
      Tier 1

            	
              50%

            
	
              At
      Tier  2

            	
              100%

            
	
              150%
      or more of Tier 2

            	
              200%

            


    

            Use
straight-line interpolation between metrics

    


    


    Definitions

    
      	
               
      

            	
              Tier
      I:

            	
              The
      minimal acceptable level of performance for bonus
      eligibility.  If Tier I is achieved, 50% of the target incentive
      applicable to this performance metric will be
  paid.

            


    

    
      	
               
      

            	
              Tier
      II:

            	
              If
      Tier II is achieved, 100% of the target incentive applicable to this
      performance metric will be paid.

            


    

    


    
      	
              5.  

            	
              The
      target incentive for individuals who become participants in the Plan after
      the start of the fiscal year will be prorated for the period of time the
      individual is a Plan participant.

            


    

    


    
      	
              6.  

            	
              Participants
      must be employees of the Company on the date incentives are paid to be
      eligible for payments under the
Plan.

            


    

    


    
      	
              7.  

            	
              The
      Committee, in its sole discretion, has the authority to change the Plan at
      any time, including, but not limited to, increasing incentive payouts
      above target in the event of superior performance; guaranteeing
      achievement under the Plan for one or more participants; in the event of a
      significant overachievement of goals, adjusting payouts to prevent
      unwarranted “windfalls;” and making other changes in the Plan or Plan
      targets that are in the best interests of the
  Company.

            


    

    


    
      	
              8.  

            	
              In
      the event that the Company issues a material restatement of its financial
      statements upon which payments under the Plan were based, the Company, at
      the discretion of the Committee, may require participants in the Plan to
      repay any amounts that would not have otherwise been earned, or will pay
      additional amounts to participants if such additional amounts would had
      been earned, as determined using the restated financial
      statements.

            


    

    


    
      	
              9.  

            	
              In
      the event that the Company raises new equity funds during the year,
      thereby eliminating or reducing interest expense, the Plan may be adjusted
      accordingly.

            


    

    


    
      	
              10.  

            	
              In
      the event of an acquisition or divestiture, the Committee will make a
      determination as to the impact on the financial plan and may modify the
      Plan accordingly.

            


    

    


    
      	
              11.  

            	
              The
      Company, in its sole discretion has the authority to make incentive
      payments in cash, restricted stock units, or a combination
      thereof.