Exhibit 10.1

  






 





 


ANNUAL MANAGEMENT BONUS PLAN


 


1.              PURPOSE


 


The purpose of
this plan is to increase the rate of profitability growth of the company by
stimulating key employees to superior performance.  It reflects Argosy’s Guiding Principles for
Executive Compensation and provides a direct link to company annual financial
results and individual achievement of goals and objectives.  To those ends, the bonus program provides
incentive compensation that is competitive with the industry and with other
companies to attract, motivate, and retain high performing individuals working
together as a team and to reward and recognize exceptional performance.


 


2.              DEFINITIONS


 


Unless the context otherwise requires, words and word
groups as used herein shall have the following meanings:


 


	
  Company

  	
   

  	
  Argosy Gaming Company

  
	
   

  	
   

  	
   

  
	
  Property

  	
   

  	
  Argosy Gaming Company Operating Subsidiary

  
	
   

  	
   

  	
   

  
	
  Plan

  	
   

  	
  Annual Management Bonus Plan for the Company

  
	
   

  	
   

  	
   

  
	
  Plan Year

  	
   

  	
  Each calendar year for which the Plan is authorized

  
	
   

  	
   

  	
   

  
	
  Compensation Committee

  	
   

  	
  A committee of the Board of Directors composed of directors
  of the Company who are not employees of the Company or who are not otherwise
  eligible to participate in the Plan

  



 


3.              ELIGIBILITY


 


Eligibility will
be generally restricted to full-time key executives whose input and actions are
likely to have an effect on Company profitability.  A pro-rata bonus payment may be awarded to an
individual participating less than the full calendar year.


 


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To be eligible to
receive a bonus payout an individual 
(i) must be actively employed in an identified position in the plan
year (ii) must be employed on each payout date and (iii) cannot be on probation
at the time of payout.


 


4.              OUTLINE OF THE
PLAN


 


The incentive award for any participant will be
determined by:


 


(1)                                  The
Guideline Bonus established for his/her position; this will be a fixed
amount established by the CEO for each position.  The guideline bonus will be paid when the
company objectives have been achieved. 
Guideline Bonuses for Officers of the Company (generally as a percent of
base salary) will be approved by the Compensation Committee.


 


(2)                                  Corporate
Performance.  A portion of the
guideline bonus will be directly based upon the performance of the Company.  This portion will be established by the CEO
prior to the start of each Plan year and may vary by the participant’s level
within the Company.  The amount of this
part of the bonus depends on actual corporate results achieved against approved
targets.


 


(3)                                  Property
Performance.  A portion of the
guideline bonus will be directly based upon the performance of the Property for
property level participants.  This
portion will be established by the CEO prior to the start of each Plan year and
may vary by the participant’s level within the Company.  The amount of this part of the bonus depends
on actual property results achieved against approved targets.


 


5.     GUIDELINE BONUS AWARDS


 


The CEO will approve employees who will participate in
the Plan, their entry into the plan and their level of guideline bonus
award.  The Compensation Committee will
review and approve the participation for Company Officers.


 


In general, the guideline bonus award will be in the
range of 10% to 70% of the participants’ annual base salary.


 


6.     CORPORATE PERFORMANCE


 


Corporate performance will normally be measured
against achievements of profitability and return on invested capital (ROIC)
which are set by the CEO and the Compensation


 


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Committee.   The
profitability target will normally be consolidated Earnings Before Interest,
Tax, Depreciation and Amortization (EBITDA) in the Operating Plan approved by
the Board prior to the commencement of the Plan Year.   The ROIC target will normally be
consolidated Return On Invested Capital (ROIC) in the Operating Plan approved
by the Board prior to the commencement of the Plan Year.


 


The targets will be determined prior to the beginning
of each Plan Year.  At the same time, the
CEO and the Compensation Committee will set a threshold level below which no
bonus will be paid and a ceiling level which defines the maximum award against
corporate performance.


 


The target, threshold and the ceiling will be reviewed
at the end of the Plan Year and may be adjusted for special or significant
unforeseen factors.  These adjustments,
if any, will be clearly defined and communicated to Plan Participants.


 


For Example:


 


	
   

  	
   

  	
  Actual

  EBITDA

  	
   

  	
  Actual

  ROIC

  	
   

  	
  Corporate Performance

  Bonus Award Percentages

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Threshold

  	
   

  	
  $

  	
  235

  	
  M

  	
  10.5

  	
  %

  	
  0% of Guideline

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  EDITDA Target

  	
   

  	
  $

  	
  250

  	
  M

  	
  11.3

  	
  %

  	
  100% of Guideline

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Ceiling

  	
   

  	
  $

  	
  265

  	
  M

  	
  11.9

  	
  %

  	
  150% of Guideline

  	
   

  



 


In this example, if the EBITDA achieved was $235.4
million or less and the ROIC achieved was 10.5% or less then no bonus award
will be paid.


 


Intervening values will be determined by straight-line
interpolation.


 


7.     PROPERTY PERFORMANCE


 


Property performance will normally be measured against
achievements of profitability and invested capital targets that are set by the
CEO.   The profitability target will
normally be property EBITDA in the Operating Plan prepared prior to the
commencement of the Plan Year.   The
invested capital target will normally be property ROIC in the Operating Plan
prepared prior to the commencement of the Plan Year.


 


The targets will be determined prior to the beginning
of each Plan Year.  At the same time, the
CEO will set a threshold level, below which no bonus will be paid and a ceiling
level which defines the maximum award against corporate performance.


 


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The target, threshold and ceiling will be reviewed at
the end of the Plan Year and may be adjusted for special or significant
unforeseen factors.  These adjustments,
if any, will be clearly defined and communicated to Plan Participants.


 


 


For Example:


 


	
   

  	
   

  	
  Actual

  EBITDA

  	
   

  	
  Actual

  ROIC

  	
   

  	
  Property Performance

  Bonus Award Percentages

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Threshold

  	
   

  	
  $

  	
  15.6

  	
  m

  	
  17.7

  	
  %

  	
  0% of Guideline

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  EDITDA Target

  	
   

  	
  $

  	
  18.3

  	
  m

  	
  20.1

  	
  %

  	
  100% of Guideline

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Ceiling

  	
   

  	
  $

  	
  19.6

  	
  m

  	
  21.2

  	
  %

  	
  150% of Guideline

  	
   

  



 


In this example, if the property EBITDA achieved was
$15.6 million or less and the property ROIC achieved was 17.7% or less then no
bonus award will be paid.


 


Intervening values will be determined by straight-line
interpolation.


 


Bonus awards will be
determined after annual business results are finalized.   Bonus awards will be paid in two equal
installments after the end of the calendar year (50% in March, 50% in July).


 


8.     PAYMENT OF BONUS AWARDS


 


Bonus awards will be
determined after annual business results are finalized.   Bonus awards will be paid in two equal
installments after the end of the calendar year (50% in March, 50% in July).


 


Bonus Awards will be paid
in cash, and will be calculated against actual base salary received during the
period for which the participant is eligible in the relevant Plan year.


 


In the case of
permanent disability, death or change of control a pro-rata share of the bonus
award for the year will be made.


 


 


9.     MANAGEMENT DISCRETIONARY BONUS


 


A
Management Discretionary Bonus will be available to compensate other management
employees for their significant contribution to the profitability and success
of the property. Discretionary bonuses are paid quarterly and may not exceed
10% of the individual’s quarterly salary. 
All recommended discretionary bonuses must be reviewed and approved by
the Senior Vice President, Human Resources.


 


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10.  ADMINISTRATION


 


The Plan will be
adopted by the Compensation Committee of the Board of Directors.  The Committee at their sole discretion may at
any time and from time to time amend, suspend or terminate the Plan in whole or
in part.


 


The CEO shall
interpret the Plan and make all determinations necessary or desirable for its
administration.


 


The decision of
the CEO on any questions concerning the interpretation or administration of the
Plan will be final and conclusive. 
Nothing in the Plan will be deemed to give any officer or employee or
his legal representative or heirs any right to participate in the Plan or in
any payment under the plan except to such extent, if any, as the Compensation
Committee may determine pursuant to the provisions of the Plan.


 


This plan and all
rights hereunder shall be subject to and interpreted by any and all
governmental laws and regulations including taxation that may exist from time
to time.


 


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