A. T. Cross Company

Worldwide Executive Incentive Plan - 2002 

 

Introduction

The following Annual Executive Compensation Incentive Plan (the "Plan") will be implemented for 2002.  The purpose of the Plan is to motivate, retain and reward managerial and executive employees for the achievement of certain business objectives.  For 2002, the Plan will be based on a combination of achievement of Operating Income Before Taxes (OIBT), Net Sales, Return on Assets, Consolidated Inventory and Individual Performance Objective Targets.  Individual participants in the Plan will be assigned different performance measurements, considering their specific responsibilities and may be measured based on corporate, regional or territory results.  The combination of the performance objectives and performance targets for each participant will be determined based on individual positions and agreed upon by the President and CEO along with the appropriate Vice President.

How the Plan Works

Participants of Groups I - V are eligible to receive a percentage of their base salary earnings as additional compensation, based on the Company's and/or individual achievement of specified performance targets consistent with the Company's business plan.

Performance Measures

The OIBT component of the bonus will be established at threshold level when 85% of the Operating Income Before Tax target is achieved and maximizes at 120%.

The net sales component is established when any of the participants achieve 95% of the target and maximizes at 120%.

The return on assets component is established when any of the participants achieve 95% of the target and maximizes at 120%.

The consolidated inventory component is established when any of the participants achieve 105% of the target and maximizes at 95% of target.

The individual performance objective component is established when any of the participants achieve one of his or her objectives and maximizes at 20% to 75% of the plan target bonus percentage depending on the individual's performance goals.  The number and weighting of performance goals will vary.  To qualify for any payout in this component, the objective must be fully and completely accomplished.  The payout is zero or 100% on each objective.  Proposed objectives will be approved by the appropriate Manager, Vice President and the President & CEO.  Completed objectives will also be evaluated and approved by the appropriate Manager, Vice President, and the President and CEO.

Group II participants who qualify for a bonus under this plan will have a 50% reduction if they exceed their annual expense budget without prior written approval of the CEO and CFO.

Eligibility

The Compensation Committee of A. T. Cross Company may appoint - based on job content and performance - any salaried employee to be a Group I, II, III, IV or V participant in the compensation program.  Individuals are placed in Groups I - V based on similar levels of responsibility and ability to directly impact the financial results of the Company.  Participating employees remain members until the end of the fiscal year in which they were appointed.  Eligible employees must be re-appointed to participate each year.

Employees may participate for part of a year but must be actively employed by the Company (except in cases of death or disability) as of December 31 to be eligible for incentive awards relating to that year.

Funding Levels