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2007 Key Executive

Incentive Compensation Plan




			
	Name:	 	 
	Title:	 	 
	Effective Date:
	 	January 1, 2007






Plan Description




	 	 	 
	Plan Objective:

	 	To provide key executives with incentives and
rewards for achieving and exceeding 2007 LTF
business goals.
	 
	 	 
	Performance Measure:
	 	 
	 

	 	•   Year-to-Date Earnings Before Taxes (EBT)
	 

	 	•   Annual Return on Invested Capital (ROIC)






Cash — Annualized




Target Pay: $_________




Guaranteed Pay: $_________




Incentive Details





	•	 	Performance is based on LTF 2007 Fiscal Year, 1/1/07 – 12/31/07
	 
	•	 	Monthly payout opportunity
	 
	•	 	Based on Year-To-Date EBT Actual vs. Plan as of Month-End
	 
	•	 	Year end opportunity if ROIC is better than plan




 









 











2007 Key Executive

Incentive Compensation Plan




Monthly Incentive Formula




(Actual YTD EBT / Plan YTD EBT times YTD Target Pay) minus YTD Guaranteed Pay = Incentive Payout




Year-End Incentive Formula




(EBITDA minus Maintenance Capital Expenditures plus Rent Expense minus Taxes) / [Average Working
Capital plus Average Fixed Assets plus (Rent Expense multiplied by 7)]



Examples




Compensation Data





	 	•	 	Annual Target Pay: $120,000
	 
	 	•	 	Annual Guaranteed Pay: $100,000
	 
	 	•	 	Monthly Target Pay: $10,000
	 
	 	•	 	Monthly Guaranteed Pay: $8,333





Example #1





	 	•	 	YTD EBT Plan: $1,000,000
	 
	 	•	 	YTD EBT Actual: $1,100,000
	 
	 	•	 	Percent of Plan Attained: $1,100,000 / $1,000,000 = 110%
	 
	 	•	 	Incentive Payout: (110% x $10,000) — $8,333 = $2,667





Example #2





	 	•	 	YTD EBT Plan: $1,000,000
	 
	 	•	 	YTD EBT Actual: $900,000
	 
	 	•	 	Percent of Plan Attained: $900,000 / $1,000,000 = 90%
	 
	 	•	 	Incentive Payout: (90% x $10,000) — $8,333 = $667





Example #3 (ROIC)





	 	•	 	Annual Target Pay: $120,000
	 
	 	•	 	ROIC Plan: 15.00%
	 
	 	•	 	ROIC Actual: 15.15%
	 
	 	•	 	Favorable to Plan: 1% (.15 / 15)
	 
	 	•	 	Incentive Payout: 1% x $120,000 = $1,200










 









 











Administration




ROIC / EBT Performance





	•	 	If Actual ROIC vs. Plan is unfavorable during the year, the
company may withhold payout on the EBT component to offset
the future negative variance.





Payout Timing





	•	 	All payouts for the monthly incentive will be made via the
payroll run which follows the month-end close
(24th of the following month). The incentive
amount reflects the previous month’s YTD performance.






	•	 	Any year-end ROIC incentive will be made via the payroll
run which follows the December month-end close, typically
January 24th of the following year.





Plan Eligibility





	•	 	Eligibility for a payout is cancelled when a plan
participant voluntarily or involuntarily terminates
employment before the payout date.






	•	 	If the plan participant moves to a new position during the
period, which has a different target pay opportunity, any
incentive payments will be prorated for time in the
respective positions.






	•	 	Newly hired or promoted plan participants are eligible for
plan participation beginning with the first day of the
month following their hire date.






	•	 	A pro-rated payment of the earned monthly incentive payout
will be made if plan participant dies or becomes disabled
during the eligibility period.





Approvals





	•	 	All payouts must to be approved by the Internal
Compensation Committee of Life Time Fitness, Inc., or its
delegate(s).






	•	 	The Compensation Committee of the Board of Directors of
Life Time Fitness, Inc. must approve any and all exceptions
to this plan in advance of any incentive payout.





IMPORTANT NOTE:

The plan, and any terms contained in the plan does not represent an employment agreement and does
not assure or give evidence of continued employment or claim to continued employment of any plan
participant for any time or period or position at any specified pay level.



This plan may be amended or terminated at any time by the Compensation Committee of the Board of
Directors of Life Time Fitness, Inc. The plan, as described above, supersedes any and all plans,
or earlier descriptions of the plan.