exv10w4



 





Exhibit 10.4




Fiscal 2007 Annual Performance Bonus Program

for John D. Carter and Tamara Adler Lundgren



The Employment Agreements between the Company and each of John D. Carter and Tamara Adler
Lundgen provide for annual cash bonuses for fiscal 2007, 2008 and 2009 under bonus programs to be
developed by the Compensation Committee (the Committee), with bonuses payable based on Company
financial performance and achievement of management objectives as determined by the Committee at
the beginning of each fiscal year. The Committee approved an annual performance bonus program for
Mr. Carter and Ms. Lundgren for fiscal 2007 with two components. The first component consists of
awards under the Company’s Executive Annual Bonus Plan, with cash payouts based on achievement of
Company financial performance targets. The second component is based on the achievement of
management objectives determined by the Committee. The two components of the 2007 annual
performance bonus program shall operate independently, and the Committee shall make determinations
with respect to the second component without regard to the outcomes under the first component.




Company Performance Targets — Awards under Executive Annual Bonus Plan




     Calculation of Cash Payout. For fiscal 2007, the performance targets under the Executive
Annual Bonus Plan shall be the Company’s EPS Growth and Return on Capital Employed (ROCE) and each
performance target shall be weighted equally. Cash payouts to the participants under this
component of the bonus program shall be determined based on the level of achievement of each
performance target. The Committee has established performance targets for EPS Growth and ROCE and
corresponding payouts as a percentage of a participant’s target amount. Payouts begin at positive
levels of EPS Growth and ROCE, and the maximum aggregate payout per participant is equal to the
maximum permitted under the Executive Annual Bonus Plan. Each performance target operates
independently and payout is determined based solely on that performance target.



     Participants’ Target Amounts. The target amount for Mr. Carter for each performance target
shall be 25% of his annual base salary as in effect on August 31, 2007. The target amount for Ms.
Lundgren for each performance target shall be 25% of her annual base salary as in effect on August
31, 2007.



     EPS Growth. The EPS Growth for fiscal 2007 shall be equal to the EPS for that year minus the
EPS for fiscal 2006, with that difference then divided by the EPS for fiscal 2006. For purposes of
this bonus program, the EPS for fiscal 2006 shall be deemed to be $3.97 reflecting the elimination
of certain large non-recurring items. The EPS for fiscal 2007 shall mean the Company’s diluted
earnings per share for that fiscal year before extraordinary items and cumulative effects of
changes in accounting principles, if any, as set forth in the audited consolidated financial
statements of the Company and its subsidiaries for that fiscal year.



     ROCE. The Company’s ROCE for fiscal 2007 shall be equal to the Company’s Adjusted Net Income
for fiscal 2007 divided by the Company’s Average Capital Employed for fiscal 2007. Adjusted Net
Income for fiscal 2007 shall mean the amount determined by excluding interest expense from the
Company’s income before income taxes for fiscal 2007,



 









 







recalculating the income tax expense for the year based on the adjusted income before income
taxes, and then calculating net income before extraordinary items and cumulative effects of changes
in accounting principles, if any, all in a manner consistent with the actual calculations reflected
in the audited consolidated financial statements of the Company and its subsidiaries for fiscal
2007. Average Capital Employed for fiscal 2007 shall mean the average of 5 numbers consisting of
the Capital Employed as of the last day of the fiscal year and as of the last day of the four
preceding fiscal quarters. Capital Employed as of any date shall mean the Company’s total assets
minus the sum of all of its liabilities other than debt for borrowed money and capital lease
obligations, in each case as set forth on the consolidated balance sheet of the Company and its
subsidiaries as of the applicable date.



     Change in Accounting Principle. If the Company implements a change in accounting principle
during fiscal 2007 either as a result of issuance of new accounting standards or otherwise, and the
effect of the accounting change was not reflected in the Company’s business plan at the time of
approval of this award, then EPS Growth and ROCE shall be adjusted to eliminate the impact of the
change in accounting principle.



     Certification. Following the end of fiscal 2007 and prior to the payment of any bonus based
on the performance targets, the Committee shall certify in writing the level of attainment of each
performance target for the year and the calculation of the bonus amounts for each participant.
Payouts shall be made in cash to the participants as soon as practicable after October 31, 2007
following the certification by the Committee.



     Conditions to Payment. Subject to the terms of a participant’s employment agreement and
change in control agreement, a participant must be employed by the Company on August 31, 2007 to
receive this component of the annual bonus.



     IRS Section 162(m). This component of the annual bonus program is implemented pursuant to the
Executive Annual Bonus Plan, which was approved by shareholders in 2005 and is intended to qualify
as performance-based compensation under Section 162(m) of the Internal Revenue Code. The EPS
Growth and ROCE performance targets are among performance goals approved by shareholders in the
Executive Annual Bonus Plan.



Management Objectives



The second component of the annual bonus program is based on the achievement of management
objectives determined by the Committee. The Committee shall establish the management objectives
and shall specify the weight to be assigned to each objective. Following the end of the fiscal
year, the Committee shall evaluate the performance of each participant against the management
objectives, determine the extent to which each objective has been met and determine the amount of
the bonus to be paid. The target bonus amount of this component of the bonus program shall be 50%
of the annual base salary of the participant as in effect on August 31, 2007. The actual amount of
the bonuses under this component shall be determined by the Committee. There is no cap or maximum
amount of bonus that can be paid to either Mr. Carter or Ms. Lundgren.





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