Exhibit 10.2


 





 


2006
EXECUTIVE BONUS PLAN


 


Effective
Date:  January 1, 2006


 


I.                                         INTERPRETATION


 


Where this Plan refers to the
Company in relation to employment but the Plan Participant is employed not by
SPX Corporation, but by a subsidiary or affiliate of SPX Corporation,
references to “the Company” shall be interpreted as referring to the employing
subsidiary.


 


II.                                     PURPOSE


 


The objectives of the SPX Corporation
2006 Executive Bonus Plan (the “Plan”) are to link incentive awards for Plan
Participants (defined below) to the creation of investor wealth and to promote
a culture of performance and ownership. Accordingly, the Plan rewards sustained
improvements in investor value. In addition to the individuals’ general working
performance, the incentives offered to Participants under this Plan with its
various elements shall particularly reward the individuals’ ongoing loyalty to
SPX Corporation during and also after the Participants’ employment as well as
those results of the Participants’ work that are not already compensated by the
Participants’ regular remuneration.


 


The Plan is a statement of SPX
Corporation’s intentions and does not constitute a guarantee that any bonus
shall be paid. This Plan is operated at the sole initiative of the Company and
it does not create a contractual relationship or any contractually enforceable
rights for Participants. A bonus shall be payable under the Plan if the
Compensation Committee of the Board of Directors of SPX Corporation or its
designee(s) (the “Compensation Committee”) determine that a Participant is
entitled to one according to the rules of the Plan. The Compensation
Committee may delegate such authority, as it deems appropriate, in its
sole discretion.


 


III.                                 PLAN ADMINISTRATION


 


The
Compensation Committee shall be responsible for the management and
administration of the Plan. The Compensation Committee has full authority to
interpret and apply the Plan as may be deemed to be in the best interests
of SPX Corporation and its shareholders. Any decision by the Compensation
Committee relating to the Plan or to awards thereunder shall be final and
binding on the Participants. The Compensation Committee has delegated to SPX
Corporate Human Resources day-to-day management and administrative
responsibilities of the Plan.


 


After approval, payment of awards under the Plan
will typically be made in March of the year following the Plan Year
(defined below) (the “Award Payment Date”). Business unit and business unit
executives will coordinate with SPX Corporation representatives to ensure that
accrual accounts for payment of awards under this Plan are adequately funded.


 

















 


IV.                                EFFECTIVE DATE


 


The Plan is effective as of January 1, 2006 for the 2006 calendar
year, unless modified or terminated earlier by SPX Corporation (the “Plan Year”);
provided, however, that no amendment or termination shall impair or alter any
award that has been previously declared or granted to a Participant.


 


V.                                    ELIGIBILITY


 


Officers and key managers in both line and staff positions who have
significant impact on the achievement of the strategic objectives of SPX
Corporation or the subsidiary with which they are employed and who are not
participating in any other Company-sponsored bonus or incentive plan, are
eligible to be considered for participation in the Plan. Senior Executive
Officers’ participation requires approval by the SPX Corporation Chief
Executive Officer (the “CEO”) and the Compensation Committee; and, together
with other senior executives as may be specified by the Compensation
Committee, such participation is subject to the terms and conditions contained
in the Executive Annual Bonus Plan as may be approved by the SPX
Corporation shareholders. Participation for all other employees will be based
on the recommendation of the business unit president and/or supervising
corporate officer.


 


Upon approval by the Compensation
Committee, participation shall be offered to eligible employees conditioned
upon such eligible employee’s agreement to sign a non-competition and
confidentiality agreement and any other documents as the Company may require.
The terms of the non-competition and confidentiality agreement and such other
required documents shall be on terms acceptable to the Company. Once an
eligible employee has executed all the necessary documents as required by the
Company, he/she shall become a Participant in the Plan (a “Participant”).


 


VI.                                PLAN
COMPONENTS & OVERVIEW


 


The Plan is designed to link incentive awards for Participants to the
creation of investor wealth and to promote a culture of performance and
ownership. Specifically, the Plan is closely linked to key performance measures
– operating profit/margin and operating cash flow.


 


Under the Plan, the
performance measures help us focus on the following:


•                  Improving
operating performance


•                  Controlling
corporate overhead expenses


•                  Quality
of earnings, as measured by operating profit/margin


•                  Volume
of earnings, as measured by operating cash flow


•                  Efficient
use of capital, as measured by operating cash flow
with goals reflecting targeted cash conversion rate.


 


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Operating cash flow and operating profit/margin can be generally
understood as follows:


 





 






*** This metric may be expressed as a percent of revenues or as a
dollar amount, depending on your business unit matrix.


 


Maximum and Target:


 


The Maximum Award Opportunity for Participants in the Plan is 200% of
the Target Award Amount. A Participant’s Target Award Amount is calculated by
multiplying his/her year-end base salary (as of 31st December) by his/her
Target Bonus Percent, e.g., 100,000 x 20% = 20,000 Target Award Amount. In this
example, the Maximum Award Opportunity is 40,000.


 


Business Unit
Matrix:


 


The Business
Unit Matrix specifies the operating profit/margin and operating cash flow goals
that must be achieved for various bonus levels from zero to the maximum 200%
level (the “Business Unit Metric Achieved”). The Business Unit Matrix may, at
the discretion of SPX Corporation, specify the business goals in percentages or
absolute dollar amounts.


 


Total Potential Bonus:


 


Provided a bonus is achieved according to the Business Unit Matrix and
subject to the Maximum Award Opportunity limitation, the Participant’s Total
Potential Bonus is determined by multiplying the Participant’s Target Award
Amount by the Business Unit Metric Achieved.


 


Eighty percent (80%) of the Total Potential Bonus is allocated to the
Business Unit Performance Award, and is payable subject to the Plan’s terms and
conditions. The remaining twenty percent


 


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(20%) is allocated to the Individual Performance Award at the
discretion of management according to the factors discussed below. Individual
Performance Awards can range from 0% to 20% of the Total Potential Bonus.


 


The Individual Performance Award can be
earned only after achieving a bonus according to the Business Unit Matrix. At
the end of the Plan Year each Participant’s immediate supervisor will evaluate
the Participant’s performance considering multiple factors. These factors will
include appropriate consideration of each Participant’s compliance with and
advancement of the SPX Leadership Standards, Code of Business Conduct, and
overall commitment to conducting all of the Company’s activities with the
highest standards of ethics and integrity. Additionally, the 9-Block assessment
tool (see below) can be used by managers as a guideline  to assist in determining an Individual
Performance Award.


 


9-BLOCK ASSESSMENT GUIDELINES


 





 


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Bonus Calculation Steps and Example:


 


The
following illustrates a bonus calculation under the Plan by way of example. In all cases, your Business Unit
Matrix will govern the actual bonus calculation.


 


THE
FOLLOWING IS AN EXAMPLE MATRIX AND AWARD CALCULATION


 





 





 


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VII.                            NEW
PARTICIPANTS, PROMOTIONS, OR TRANSFERS


 


Subject to the terms and conditions contained in this Plan, a new
Participant will be eligible to receive a potential bonus based on his/her
length of service during the Plan Year, expressed as a percent of the total
Plan Year. In the event the Participant works in more than one business unit
during the Plan Year, the terms of Paragraphs VIII C and D, as applicable, will
apply.


 


VIII.                        ADMINISTRATIVE
MATTERS


 


All decisions made by the Compensation Committee pursuant to the
provisions of the Plan shall be made in its sole discretion and shall be final,
conclusive, and binding upon all parties.


 


General:  Except as otherwise expressly provided in this
Plan, a Participant must be an active employee of the Company or one of its
subsidiaries (including active employment during any contractual notice period)
on 31st December of the Plan Year in order to be eligible for
an award from the Plan. An “active” employee includes employees on temporary
lay-off subject to recall, and those on temporary disability who are expected
to return to work.


 


For Participants employed in the UK by a UK
entity: An “active” employee does not include
employees who are serving out a notice period on “garden leave”. Furthermore,
for any Participants on maternity leave, this bonus payment does not constitute
part of your “wages and salary” as that term is used in relevant
legislation. As a result, a bonus payment of this nature will not ordinarily be
paid in relation to any period during which a Participant elects to take either
ordinary or additional maternity leave. A
bonus payment will, however, usually be paid on a pro-rated basis for the
balance of any Plan Year in which a Participant is partially absent.


 


For Participants employed in France by a
French entity: An “active” employee includes employees
who are released from working their notice period, or any employee whose
contract is suspended when this suspension is assimilated by law as an “effective
work.”


 


A.                                   Termination
Prior to Year End:


 


When a Participant who
is 55 years of age or more, has five years of continuous service in which at
least three of the five years are SPX Company service, retires, or when a
Participant, regardless of age and service, becomes disabled (as determined by
the SPX Corporation, in its sole discretion), or if employment is terminated
due to a death, the Participant, his designated beneficiary, or his estate will
receive a pro rata portion of the award determined as of the end of the Plan
Year. The pro ration will be based on the Participant’s ending base salary for
the Plan Year and the achieved levels of business unit performance and
individual performance as of the end of the Plan Year. The pro rated award will
be paid at the same time as awards are paid to active Participants.


 


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If a Participant’s
employment with the Company terminates for any reason other than (1) death,
(2) retirement, (3) disability, or (4) for Participants employed
in Europe by a European entity, transfer of the employment relationship to a
third party under the transfer of business regulations in Section 613a
German Civil Code (Burgerliches Gesetzbuch), the Acquired Rights Directive or
similar transfer of business regulations applicable to Participants in their
respective countries, no bonus award or expectancy will be earned or payable
for the Plan Year in which the termination or resignation occurred.


 


B.                                     Termination
After Plan Year End:


 


If a Participant’s
employment terminates between 31st December and the Award
Payment Date for willful misconduct or any other form of gross misconduct,
or dismissal following a repeated breach of the employee’s obligations as
determined by the Company, no bonus award or expectancy will be earned or
payable for the Plan Year or the year in which the termination occurred.


 


C.                                     Plan
or Business Unit Transfers Throughout the Year:


 


(1)          When a Participant is
moved from one business unit (or distinct unit or division specified for bonus
measurement purposes) to another during the course of a Plan Year, a pro-rated
amount will be calculated based upon each business unit’s performance and the
number of months employed in each business unit.


 


(2)          If the Participant
remains in the same business unit, yet changes from the 2006 Associate Bonus
Plan or other commission, bonus or incentive plan to the 2006 Executive Bonus
Plan (or vise-versa), a pro rated amount will be calculated only on the time
spent as a Participant in each respective plan and according to the rules of
each plan.


 


(3)          If the Participant is
removed from the 2006 Executive Bonus Plan for any reason including being
placed in a business unit incentive or commission plan, a pro rated amount will
be calculated only on the time spent as a Participant in the Plan.


 


D.                                    Business
Unit and Corporate Performance:


 


Some Participants may have a portion of
their bonus tied to SPX Corporation’s corporate performance and the
performance of another business unit. The bonus for these Participants shall be
calculated by allocating one portion of the Target Bonus Percent to corporate
performance and the other portion to the business unit.


 


E.                                      Change
of Control:


 


In the event of a change of control of SPX
Corporation (defined in Attachment A), the change-of control date shall be
treated as if it were the end of that Plan Year, the Business


 


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Unit Performance Award shall be measured, and
the Participant shall be paid the higher of that full Plan Year’s Target Award
Amount or the actual earned bonus.


 


F.                                      Administration
of the Plan:


 


Subject to the provisions of the Plan, the
Compensation Committee shall have the sole authority and discretion:


 


(1)                                  To
construe and interpret the Plan;


 


(2)                                  To
establish, amend, change, add to, alter and/or and rescind rules, regulations
and guidelines for administration of the Plan;


 


(3)                                  To
make all designations and determinations specified in the Plan;


 


(4)                                  To
determine the amount of awards and payments to be made under the Plan and the
status and rights of any Participant to payments under the Plan with the
exception of the Senior Executive Officers, which will require approval by the
CEO and the Compensation Committee;


 


(5)                                  To
decide all questions concerning the Plan and to make all other determinations
and to take all other steps necessary or advisable for the administration of
the Plan.


 


G.                                     Plan
Continuation:


 


Notwithstanding anything else in these rules,
the Compensation Committee, subject to limitations by mandatory laws and under
observance of the regulations referenced in Sec. IX of this Plan, may at
any time amend, suspend, discontinue or terminate this Plan. It also reserves
the right to (i) reduce or modify any bonus payments under this Plan based
on such factors mentioned under Sec. IX of this Plan to the full extent legally
permissible under applicable local laws and (ii) decide all questions and
issues arising under the Plan. The Compensation Committee’s decisions shall be
final and binding on all parties.


 


H.                                    No
Right of Assignment:


 


Except as expressly provided herein, no right
or benefit under the Plan shall be subject to anticipation, alienation, sale,
assignment, pledge, encumbrance or charge. No right or benefit hereunder shall
in any manner be liable for or subject to the debts, contracts, liabilities or
torts of the person entitled to such right or benefit.


 


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I.                                         No
Guarantee:


 


The Plan is a statement of the intentions of
SPX Corporation and does not constitute a guarantee that any bonus shall be
paid. It does not create a contractual relationship or any contractually
enforceable rights for Participants. Further, nothing in the Plan shall be
construed to give any Participant any right to be granted any award other than
at the Compensation Committee’s sole discretion, to limit the right of the
Company to terminate the employment of any Participant at any time, or to be
evidence of any agreement or understanding, express or implied, of a
Participant’s right to continued employment. Consequently, any entitlement
arises only once the Compensation Committee has determined that a Participant
is entitled to receive an award according to the rules of the Plan.


 


J.                                        Company’s
Books and Records Conclusive:


 


The Company’s books and records and internal
methods of accounting shall be conclusive for all purposes under the Plan.


 


K.                                    Right
to Withhold Taxes: 


 


To the extent legally permissible under
applicable laws, the Company shall have the right to withhold such amounts from
any payment under this Plan as it determines necessary to fulfill any federal,
state, or local wage or compensation withholding requirements.


 


L.                                      No
Claim Against Company Assets:


 


Nothing in this Plan shall be construed as
giving any Participant or his or her legal representative, or designated
beneficiary, any claim against any specific assets of the SPX Corporation or
its affiliates or as imposing any trustee relationship upon the Company in
respect of the Participant. Neither SPX Corporation nor the Company shall be
required to segregate any assets in order to provide for the satisfaction of
the obligations hereunder. If and to the extent that the Participant or his or
her legal representative or designated beneficiary acquires a right to receive
any payment pursuant to this Plan, such right shall be no greater than the
right of an unsecured general creditor of SPX Corporation or the Company, as
the case may be.


 


M.                                 No
Other Agreements or Understandings:


 


Except as expressly provided in this Plan, or
in a written agreement between the Company and a Participant that specifically
refers to awards under this Plan, this Plan represents the sole understanding
between the Company and Participants concerning its subject matter and it
supersedes all prior agreements, arrangements, understandings, warranties,
representations, and statements, whether written or oral, between the parties
concerning its subject matter.


 


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N.                                    Governing
Law:


 


The Plan and all actions taken pursuant
thereto shall be governed by, and construed in accordance with, the laws of the
State of North Carolina applied without regard to conflict of law principles.


 


O.                                    Headings:


 


Section headings are used in this Plan
for convenience of reference only and shall not affect the meaning of any
provision of the Plan.


 


P.                                      Non-Competition
and Non-Disclosure:


 


For purposes of the Plan, if a
Participant leaves the Company with rights to future payments from the Plan,
until those payments are distributed to the Participant, he/she shall not
directly or indirectly own, manage, operate, join, control, become employed by
or participate in the management, operation or control of, any business which
is a competitor, customer or supplier of SPX Corporation or any subsidiary or
division thereof without the specific consent of the Company; except as a
shareholder of a publicly-held competitor, customer or supplier corporation
where such ownership does not exceed one percent (1%) of the total shares
outstanding.


 


Additionally, the Participant
shall not disclose any confidential information pertaining to the business of
the Company, including the location and identity of its customers and
suppliers, its costs of operation, the pricing of its products and services,
its operating practices and its product details without the express written
approval of the Company.


 


The failure of a Participant or
former Participant to comply with the provisions of this Paragraph shall result
in forfeiture of any payments that might otherwise be due to him/her because of
his/her participation in the Plan.


 


IX.                                DISCLAIMER


 


While it is not the intention of SPX Corporation to change the Plan
during the Plan Year, SPX Corporation reserves the right to modify or terminate
the Plan, if, in particular due to unforeseen changes in legal or factual
circumstances, a continuation of the Plan at all or on unchanged terms and
conditions would constitute an unreasonable hardship for SPX Corporation or the
Company, provided however that no amendment or termination shall impair or
alter any award which has been previously declared or granted to a Participant.
Such hardship could be seen in:


 


i.                       continuation
leading to the employing entity’s insolvency,


ii.                    mandatory
payment obligations to official authorities (e.g. taxes, social security
contributions) arising or increasing at an amount that would increase the total
costs involved with the Plan for the employing entity by 20% or more, or


 


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iii.                 any other
reasonable and objective causes that substantially impede the Company’s normal
operation.


 


X.                                    EXCEPTIONS
TO THE PLAN


 


Exceptions to the
Plan are discouraged. Requests for exceptions are reviewed on a case-by-case
basis and require the approval of the Corporate Executive Vice President -
Human Resources & Asia Pacific.


 


XI.                                PLAN
INTERPRETATION


 


The Compensation Committee shall have full
discretion and authority to answer questions or make interpretations that may arise
in the final administration of this Plan.


 


XII.                            FRAUD,
MANIPULATION OR NEGLIGENCE


 


Any Participant who falsifies, manipulates or
is negligent in the processing of information in connection with the
computation of performance measures or payments under the Plan forfeits all
outstanding awards and will be subject to disciplinary action up to and
including termination.


 


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ATTACHMENT
A


Change of Control of SPX
Corporation


 


A.                                   “Change of Control” shall be deemed to have occurred if:


 


(a)                                  Any
“Person” (as defined below), excluding for this purpose SPX Corporation (the “Company”)
or any subsidiary of the Company, any employee benefit plan of the Company or
of any subsidiary of the Company, or any entity organized, appointed or
established for or pursuant to the terms of any such plan which acquires
beneficial ownership of common shares of the Company, is or becomes the “Beneficial
Owner” (as defined below) of twenty percent (20%) or more of the common shares
of the Company then outstanding; provided, however, that no Change of Control
shall be deemed to have occurred as the result of an acquisition of common
shares of the Company by the Company which, by reducing the number of shares
outstanding, increases the proportionate beneficial ownership interest of any
Person to twenty percent (20%) or more of the common shares of the Company then
outstanding, but any subsequent increase in the beneficial ownership interest
of such a Person in common shares of the Company shall be deemed a Change of
Control; and provided further that if the Board of Directors of the Company
determines in good faith that a Person who has become the Beneficial Owner of
common shares of the Company representing twenty percent (20%) or more of the
common shares of the Company then outstanding has inadvertently reached that
level of ownership interest, and if such Person divests as promptly as
practicable a sufficient number of shares of the Company so that the Person no
longer has a beneficial ownership interest in twenty percent (20%) or more of
the common shares of the Company then outstanding, then no Change of Control
shall be deemed to have occurred. For purposes of this paragraph (a), the
following terms shall have the meanings set forth below:


 


(i)                                     “Person”
shall mean any individual, firm, limited liability company, corporation or
other entity, and shall include any successor (by merger or otherwise) of any
such entity.


 


(ii)                                  “Affiliate”
and “Associate” shall have the respective meanings ascribed to such terms in Rule 12b-2
of the General Rules and Regulations under the Securities Exchange Act of
1934, as amended (the “Exchange Act”).


 


(iii)                               A
Person shall be deemed the “Beneficial Owner” of and shall be deemed to “beneficially
own” any securities:


 


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(A)                              which
such Person or any of such Person’s Affiliates or Associates beneficially owns,
directly or indirectly (determined as provided in Rule 13d-3 under the
Exchange Act);


 


(B)                                which
such Person or any of such Person’s Affiliates or Associates has (1) the
right to acquire (whether such right is exercisable immediately or only after
the passage of time) pursuant to any agreement, arrangement or understanding
(other than customary agreements with and between underwriters and selling
group members with respect to a bona fide
public offering of securities), or upon the exercise of conversion rights,
exchange rights, rights (other than rights under the Company’s Rights Agreement
dated June 25, 1996 with The Bank of New York, as amended), warrants or
options, or otherwise; provided, however, that a Person shall not be deemed the
Beneficial Owner of, or to beneficially own, securities tendered pursuant to a
tender or exchange offer made by or on behalf of such Person or any of such
Person’s Affiliates or Associates until such tendered securities are accepted
for purchase or exchange; or (2) the right to vote pursuant to any
agreement, arrangement or understanding; provided, however, that a Person shall
not be deemed the Beneficial Owner of, or to beneficially own, any security if
the agreement, arrangement or understanding to vote such security (a) arises
solely from a revocable proxy or consent given to such Person in response to a
public proxy or consent solicitation made pursuant to, and in accordance with,
the applicable rules and regulations promulgated under the Exchange Act
and (b) is not also then reportable on Schedule 13D under the
Exchange Act (or any comparable or successor report); or


 


(C)                                which
are beneficially owned, directly or indirectly, by any other Person with which
such Person or any of such Person’s Affiliates or Associates has any agreement,
arrangement or understanding (other than customary agreements with and between
underwriters and selling group members with respect to a bona fide
public offering of securities) for the purpose of acquiring, holding, voting
(except to the extent contemplated by the proviso to subparagraph
(a)(iii)(B)(2), above) or disposing of any securities of the Company.


 


Notwithstanding anything in this definition
of Beneficial Ownership to the contrary, the phrase “then outstanding,” when
used with reference to a Person’s beneficial ownership of securities of the
Company, shall mean the number of such securities then issued and outstanding
together with the


 


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number of such securities not then actually
issued and outstanding which such Person would be deemed to own beneficially
hereunder.


 


(b)                                 During
any period of two (2) consecutive years, individuals who at the beginning
of such two-year period constitute the Board of Directors of the Company and
any new director or directors (except for any director designated by a person
who has entered into an agreement with the Company to effect a transaction
described in paragraph (a), above, or paragraph (c), below) whose election by
the Board or nomination for election by the Company’s shareholders was approved
by a vote of at least two-thirds of the directors then still in office who either
were directors at the beginning of the period or whose election or nomination
for election was previously so approved, cease for any reason to constitute at
least a majority of the Board; or


 


(c)                                  Approval
by the shareholders of (or if such approval is not required, the consummation
of) (i) a plan of complete liquidation of the Company, (ii) an
agreement for the sale or disposition of the Company or all or substantially
all of the Company’s assets, (iii) a plan of merger or consolidation of
the Company with any other corporation, or (iv) a similar transaction or series of
transactions involving the Company (any transaction described in parts (i) through
(iv) of this paragraph (c) being referred to as a “Business
Combination”), in each case unless after such a Business Combination the
shareholders of the Company immediately prior to the Business Combination
continue to own at least eighty percent (80%) of the voting securities of the
new (or continued) entity immediately after such Business Combination, in
substantially the same proportion as their ownership of the Company immediately
prior to such Business Combination.


 


A “Change of Control” shall not include any transaction described in
paragraph (a) or (c), above, where, in connection with such transaction, a
Participant and/or any party acting in concert with that Participant shall
substantially increase their, his/her or its, as the case may be,
ownership interest in the Company or a successor to the Company (other than
through conversion of prior ownership interests in the Company and/or through
equity awards received entirely as compensation for past or future personal
services).


 


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