Exhibit 10.2(a)


 


SHORT-TERM INCENTIVE PLAN


 


Effective January 1, 2005


 


 


ARTICLE I


 


Statement of Purpose


 


1.1           The
purpose of the Plan is to provide a system of incentive compensation which will
promote the maximization of shareholder value over the long term. In order to
align eligible salaried employees’ incentives with shareholder interests,
incentive compensation will reward the creation of value. The Plan will tie
incentive compensation to Economic Value Added (“EVA®”) and, thereby, reward employees
for creating value. Effective for the fiscal year commencing January 1,
2005, this Plan replaces the Management Incentive Compensation Plan (Economic
Value Added (EVA®) Bonus Plan), created effective July 4, 1993, as amended
(the “Prior Plan”), subject to the Bonus Bank transition rules set forth
in Article IV.


 


1.2           EVA is the performance measure of value creation. EVA reflects the
benefits and costs of capital employment. Employees create value when they
employ capital in an endeavor that generates a return that exceeds the cost of
the capital employed. Employees destroy value when they employ capital in an
endeavor that generates a return that is less than the cost of capital employed.
By imputing the cost of capital upon the operating profits generated by a business
group, EVA measures the total value created by employees.


 


EVA =
(Net Operating Profit After Tax - Capital Charge)


 


1.3           Each Plan
Participant is placed in a classification. Each classification has a prescribed
target annual incentive award (bonus) opportunity (expressed as a percentage of
base salary). A Participant’s target award opportunity, in any one year, is the
result of multiplying their Target Bonus Percentage times the Participant’s
base pay. A Participant’s incentive award earned in any one year is the result
of multiplying the Actual Bonus Percentage times the Participant’s base pay. Incentive
awards earned can range from 20% to 250% of the target award opportunity. Earned
awards will be fully paid out after the end of the year, subject to the
three-year transition period for negative Bank Balances outstanding after the
payment of the fiscal 2004 incentive awards under the Prior Plan (see Section 4.2).


 


1

















 


ARTICLE II


 


Definition of EVA and the Components of EVA


 


Unless the context
provides a different meaning, the following terms shall have the following
meanings.


 


2.1           “Participating
Group” means a business division or group of business divisions which are
uniquely identified for the purpose of calculating EVA and EVA based bonus
awards. Some Participants’ awards may be a mixture of more than one
Participating Group.


 


For
the purpose of this plan, the Participating Groups are listed on Exhibit B.


 


2.2.          “Capital”
means the net investment employed in the operations of each Participating Group.
The components of Capital are as follows:


 


Gross
Accounts Receivable (including trade A/R from another Manitowoc unit – See


Notes
2 and 3)


Plus:       FIFO
Inventory (See Note 3)


Plus:       Other
Current Assets


Less:       Non-Interest
Bearing Current Liabilities (NIBCL’s - See Note 1)


Plus:       Net
PP&E


Plus:       Other
Operating Assets


Plus:       Capitalized
Research & Development


Plus:       Goodwill
acquired after July 3, 1993


Plus:       Accumulated
Amortization on Goodwill acquired after July 3, 1993


Plus
(Less):  Special Items


Equals:   Capital


 


Notes:                                    (1) NIBCL’s
include trade A/P to another Manitowoc unit (see Note 2), but do not include
the contingent liability associated with Bonus Banks and include liabilities
associated with receivable factoring programs as well as capital lease
obligations.


 


(2)  Intercompany trade payables and receivables
will be excluded from EVA capital if outstanding longer than the approved
payment date per intercompany payment terms.


 


(3)  Accounts receivable reserve balances
recorded at acquisition date will be treated as reductions to EVA capital and
changes excluded from NOPAT up to the balance in the acquisition reserve for a
12-month period subsequent to the acquisition date. Inventory reserve balances
recorded at acquisition date will be treated the same as accounts receivable
above except for spare parts inventory which will be excluded from Capital and
NOPAT over a three-year period at a rate of 1/3 less each year.


 


2.3           Each
component of Capital will be measured by computing an average balance based on
the ending monthly balance for the twelve months of the Fiscal Year.


 


2.4           “Cost
of Capital” or “C*” means the weighted average of the after tax cost
of debt and equity for the year in question. The Cost of Capital will be
reviewed annually and revised if it has changed significantly. Calculations
will be carried to one decimal point. The Cost of Capital for fiscal 2004 is
7.5%. In subsequent Plan years the methodology for the calculation of the Cost
of Capital will be (formula is presented in Exhibit A):


 


2

















 


a)   Cost of Equity = Risk Free Rate + (Beta x
Market Risk Premium)


 


b)   Debt Cost of Capital = Debt Yield x (1 - Tax
Rate)


 


c)   The
weighted average of the Cost of Equity and the Debt Cost of Capital is
determined by reference to a fixed debt to capital ratio of 40%. The Risk Free
Rate is the average daily closing yield rate on 30 year U.S. Government Bonds
for the month of December immediately preceding the Plan Year, the BETA is
one, and the Market Risk Premium is 5%. The Debt Yield is the projected
weighted average yield on the Company’s long term obligations for the 12 month
period ending December 31 of the Plan Year, and the tax rate is 39%. (The
actual annual effective tax rate for the corporation (from continuing
operations) will be used to calculate NOPAT for select management participants.


 


The
debt to capital ratio, BETA, and Market Risk Premium assumptions should be
reviewed and updated if necessary at least every three years.


 


d)   Short-term
debt is to be treated as long-term for purposes of computing the cost of
capital.


 


2.5           “Capital
Charge” means the deemed opportunity cost of employing Capital in the
business of each Participating Group. The Capital Charge is computed as
follows:


 


Capital Charge = Capital x Cost of Capital (C*)


 


2.6           “Net
Operating Profit After Tax” or “NOPAT”


 


“NOPAT”
means the after tax cash earnings attributable to the capital employed in the
Participating Group for the year in question. The components of NOPAT are as
follows:


 


Operating
Earnings


Plus:       Increase
(Decrease) in Capitalized R & D (See Note 1)


Plus:       Increase
(Decrease) in Bad Debt Reserve


Plus:       Increase
(Decrease) in Inventory Reserves


Plus:       Amortization
of Goodwill (resulting from annual US GAAP impairment analyses)


Less:       Other
Expense (Excluding interest on debt and including interest on factored
receivables)


Plus:       Other
Income (Excluding investment income)


Equals:   Net
Operating Profit Before Tax


Less:       Taxes
(See Note 2)


Equals:   Net
Operating Profit After Tax


 


(1)   R & D is Capitalized,
and amortized over a five-year period. It is defined as per the U.S. Federal
R&D Tax Credit Regulation.


 


(2)   Taxes are assumed
to be 39% of Net Operating Profit Before Tax. (For exceptions see 2.4(c)).


 


2.7           “Economic
Value Added” or “EVA” means the NOPAT that remains after subtracting
the Capital Charge, expressed as follows:


 


NOPAT


Less:       Capital
Charge


Equals:   EVA
(which may be positive or negative)


 


3

















 


ARTICLE III


 


Definition and Computation of Target Bonus Award


 


3.1           “Actual
EVA” means the EVA as calculated for each Participating Group for the year in
question.


 


3.2           “Target
EVA” for the year in question means the level of EVA that is expected in order
for the Participating Group to receive the Target Bonus Award.


 


Target EVA = Last Year’s Actual EVA+ Expected Improvement in EVA


 


3.3           “Expected
Improvement in EVA” means the constant EVA improvement that is added to shift
the target up each year. This is determined by the expected growth in EVA per
year. The Expected Improvement factors will be evaluated and recalibrated by
the Committee, as appropriate, no less than every three years. See Exhibit C
for the Expected Improvement for each Participating Group.


 


3.4           “Target
Bonus Award” for the year in question means the “Target Bonus Percentage” times
a Participant’s base pay.


 


3.5           “Target
Bonus Percentage” is determined by a Participant’s classification as shown on Exhibit B.


 


3.6           “Actual
Bonus Award” for the year in question means the bonus earned by a Participant
and is computed as the Actual Bonus Percentage times a Participant’s base pay
for the year in question.


 


3.7           “Actual
Bonus Percentage” is determined by multiplying the Target Bonus Percentage by
the Bonus Performance Value.


 


3.8           “Bonus
Performance Value” means the Actual EVA minus the Target EVA, divided by the
Leverage Factor, plus 1.0 [((Actual EVA – Target EVA)/Leverage factor) + 1.0];
provided, however, that (a) if the calculation of the Bonus Performance
Value is less than 0.20, the Bonus Performance Value shall be deemed to be zero
(0), and (b) if the calculation of the Bonus Performance Value exceeds
2.5, the Bonus Performance Value shall be deemed to be 2.5.


 


3.9           “Leverage
Factor” is the negative (positive) deviation from Target EVA necessary before a
zero (two times Target) bonus is earned. The Leverage factors will be evaluated
and recalibrated, as appropriate, no less than every three years. See Exhibit C
for the Leverage Factor of each Participating Group.


 


3.10         “Adjustment
Guidelines” are guidelines the Compensation Committee of the Board of Directors
(Committee) will consider in determining the potential treatment of any
material, non-recurring or unusual items (see Exhibit D).


 


3.11         A
Participant’s classification is determined by the Committee for officers of The
Manitowoc Company, Inc., and by the Senior VP of HR &
Administration for all new participants below the level of corporate officer.


 


4

















 


ARTICLE IV


 


Payment of Actual Bonus Awards; Bonus Bank
Transition


 


4.1           Beginning
with the fiscal 2005 Plan year, Actual Bonus Awards earned will be fully paid
out after the end of the year at such time as the Committee determines, subject
to the three-year transition period for negative Bank Balances outstanding
after the payment of the fiscal 2004 incentive awards made under the Prior Plan.


 


4.2           For Bank Balances
outstanding after the fiscal 2004 awards made under the Prior Plan, the following
will apply:


 


•      Positive
Bank Balances: one-third of the Bank Balance will be paid out each year in cash
(paid at the same time the fiscal 2005 to 2007 incentive awards are paid).


 


•      Negative
Bank Balances: 50% of the amount (if any) by which the Actual Bonus Award
earned (if any) exceeds the Target Bonus Award in each of fiscal 2005, 2006 and
2007, is used to pay down the negative Bank Balance. After three years (fiscal
2005 to 2007 incentive awards), any remaining negative Bank Balances will be
forgiven.


 


4.3           Although a
Bonus Bank may, as a result of negative EVA for fiscal years prior to 2005,
have a negative Bank Balance, no Plan Participant shall be required, at any
time, to reimburse his/her Bonus Bank, except pursuant to the Section 4.2
above.


 


4.4           “Bonus
Bank” means, with respect to each Participant, a bookkeeping record of an
account to which amounts are added to, or deducted from, as the case may be,
from time to time under the Prior Plan (and subject to the transition rules of
this Plan), and from which bonus payments to such Participant are paid out
under the Prior Plan (and subject to the transition rules of this Plan). Subsequent
to the 2007 Plan Year, Bank Balances will no longer exist.


 


4.5           “Bank
Balance” means, with respect to each Participant, a bookkeeping record of the
net balance of the amounts earned and paid out of such Participant’s Bonus Bank
under the Prior Plan (and subject to the transition rules of this Plan).


 


ARTICLE V


 


Plan Participation, Transfers and Terminations


 


5.1           Participants.
Except as otherwise provided (primarily in Section 8.1) the Administrator
will determine who shall participate in the Plan (“Participant(s)”). Employees
designated for Plan participation shall be salaried employees of The Manitowoc
Company, Inc. or its affiliates (the “Company”). In order for a
Participant to receive or be credited with their Actual Bonus Award for a Plan
Year, the Participant must have (I) remained employed by the Company through
the last day of such Plan Year, (ii) terminated employment with the
Company for any reason during the Plan Year at or after the earlier of
attainment of age sixty, or the first of the month following the date on which
the participant’s attained age plus years of service with the Company equal 80,
(iii) suffered a disability within the meaning of Section 5.3 during
the Plan Year, or (iv) died during the Plan Year. In all other cases of
termination of employment prior to the last day of the Plan year, a Participant
shall not be entitled to any Actual Bonus Award for such Plan year.


 


5.2           Transfers.
A Participant who transfers his/her employment from one Participating Unit of
the Company to another shall retain his/her Bonus Bank (subject to the
transition rules of Article IV) and will be eligible to receive future
Plan Awards in accordance with the provisions of the Plan. If a


 


5

















 


Participant
transfers to a non-participating position, any positive Bonus Bank Balance will
be paid out in full as soon as is practical.


 


5.3           Retirement
or Disability. A Participant who terminates employment with the Company, at
the earlier of attainment of age sixty, or the first of the month following the
date on which the Participant’s attained age plus years of service with the
Company equals 80 for retirement, or suffers a “disability,” as such term is
defined in the Company’s long-term disability benefits program, while in the
Company’s employ shall be eligible to receive the balance of the Participant’s Bonus
Bank. In the case of retirement, the Participant will receive any positive Bank
Balance in the year immediately following the Participant’s retirement. In the
case of disability, while in the Company’s employ, the Participant will receive
the Participant’s positive Bank Balance as soon as practical after qualifying
for benefit payments under the Company’s long-term disability benefits program.


 


5.4           Involuntary
Termination Without Cause or Death. A Participant who is terminated without
cause or who dies shall receive any positive Bonus Bank Balance. Such payments
will be made as soon as is practical.


 


5.5           Voluntary
Termination. In the event that a Participant voluntarily terminates
employment with the Company, the right of the Participant to the Participant’s Bonus
Bank shall be forfeited unless a different determination is made by the
Committee.


 


5.6           Involuntary
Termination for Cause. In the event of termination of employment for cause,
the right of the Participant to the Bonus Bank shall be determined by the
Committee.


 


“Cause”
shall mean:


 


(i)        any act or
acts of the Participant constituting a felony under the laws of the United
States, any state thereof or any foreign jurisdiction;


(ii)       any material
breach by the Participant of any employment agreement with the Company or the
policies of the Company or the willful and persistent (after written notice to
the Participant) failure or refusal of the Participant to comply with any
lawful directives of the Board;


(iii)      a
course of conduct amounting to gross neglect, willful misconduct or dishonesty;
or


(iv)      any
misappropriation of material property of the Company by the Participant or any
misappropriation of a corporate or business opportunity of the Company by the
Participant.


 


5.7           Breach
of Agreement. Notwithstanding any other provision of the Plan or any other
agreement, in the event that a Participant shall breach any non-competition
agreement with the Company or breach any agreement with respect to the
post-employment conduct of such Participant, the Bonus Bank held by such
Participant shall be forfeited.


 


5.8           No
Guarantee. Participation in the Plan provides no guarantee that a payment
under the Plan will be made. Selection as a Participant is no guarantee that
payments under the Plan will be made or that selection as a Participant will be
made in any subsequent calendar year.


 


ARTICLE VI


 


General Provisions


 


6.1           Withholding
of Taxes. The Company shall have the right to withhold the amount of taxes,
which in the determination of the Company, are required to be withheld under
law with respect to any amount due or paid under the Plan.


 


6

















 


6.2           Expenses.
All expenses and costs in connection with the adoption and administration of
the Plan shall be borne by the Company.


 


6.3           No
prior Right or Offer. Except and until expressly granted pursuant to the
Plan, nothing in the Plan shall be deemed to give any employee any contractual
or other right to participate in the benefits of the Plan.


 


6.4           Claims
for Benefits. In the event a Participant (a “claimant”) desires to make a
claim with respect to any of the benefits provided hereunder, the claimant
shall submit evidence satisfactory to the Committee of facts establishing their
entitlement to a payment under the Plan. Any claim with respect to any of the benefits
provided under the Plan shall be made in writing within ninety (90) days of the
event which the claimant asserts entitles him to benefits. Failure by the
claimant to submit a claim within such ninety (90) day period shall bar the
claimant from any claim for benefits under the Plan.


 


6.5           Denial
and Appeal of Claims. In the event that a claim which is made by a claimant
is wholly or partially denied, the claimant will receive from the Committee a
written explanation of the reason for denial and the claimant or the claimant’s
duly authorized representative may appeal the denial of the claim to the
Committee at any time within ninety (90) days after the receipt by the claimant
of written notice from the Committee of the denial of the claim. In connection
therewith, the claimant or the claimant’s duly authorized representative may request
a review of the denied claim; may review pertinent documents; and may submit
issues and comments in writing. Upon receipt of an appeal, the Committee shall
make a decision with respect to the appeal and, not later than sixty (60) days
after receipt of a request for review, shall furnish the claimant with a
decision on review in writing, including the specific reasons for the decision
written in a manner calculated to be understood by the claimant, as well as
specific reference to the pertinent provisions of the Plan upon which the
decision is based. In reaching its decision, the Committee shall have complete
discretionary authority to determine all questions arising in the
interpretation and administration of the Plan, and to construe the terms of the
Plan, including any doubtful or disputed terms and the eligibility of a
Participant for benefits.


 


6.6           Action
Taken in Good Faith; Indemnification. The Committee may employ attorneys,
consultants, accountants or other persons and the Company’s directors and
officers shall be entitled to rely upon the advice, opinions or valuations of
any such persons. All actions taken and all interpretations and determinations
made by the Committee in good faith shall be final and binding upon all
employees who have received awards, the Company and all other interested
parties. No member of the Committee, nor any officer, director, employee or
representative of the Company, or any of its affiliates acting on behalf of or
in conjunction with the Committee, shall be personally liable for any action,
determination, or interpretation, whether of commission or omission, taken or
made with respect to the Plan, except in circumstances involving actual bad
faith or willful misconduct. In addition to such other rights of
indemnification as they may have as members of the Board, as members of
the Committee or as officers or employees of the Company, all members of the
Committee and any officer, employee or representative of the Company or any of
its subsidiaries acting on their behalf shall be fully indemnified and
protected by the Company with respect to any such action, determination or
interpretation against the reasonable expenses, including attorneys’ fees
actually and necessarily incurred, in connection with the defense of any civil
or criminal action, suit or proceeding, or in connection with any appeal
therein, to which they or any of them may be a party by reason of any
action taken or failure to act under or in connection with the Plan or an award
granted thereunder, and against all amounts paid by them in settlement thereof
(provided such settlement is approved by independent legal counsel selected by
Company ) or paid by them in satisfaction of a judgment in any action, suit or
proceeding, except in relation to matters as to which it shall be adjudged in
such action, suit or proceeding that such person claiming indemnification shall
in writing offer the Company the opportunity, at its own expense, to handle and
defend the same. Expenses (including attorneys’ fees) incurred in defending a
civil or criminal action, suit or 


 


7

















 


proceeding
shall be paid by the Company in advance of the final disposition of such
action, suit or proceeding if such person claiming indemnification is entitled
to be indemnified as provided in this Section.


 


6.7           Rights
Personal to Participant. Any rights provided to a Participant under the
Plan shall be personal to such Participant, shall not be transferable (except
by will or pursuant to the laws of descent or distribution), and shall be
exercisable, during the Participant’s lifetime, only by such Participant.


 


6.8           Bank
Balance Distribution if Plan Terminates or is Suspended. Upon termination
of the Plan or suspension for a period of more than 90 days, the Bank Balance (if
any) of each Participant shall be distributed as soon as practicable but in no
event later than 90 days from such event. The Committee, in its sole
discretion, may accelerate distribution of the Bank Balance, in whole or
in part, at any time without penalty.


 


6.9           Non-Allocation
of Award. In the event of a suspension of the Plan in any Plan Year, as
provided herein in Section 6.8, the current Bonus for the subject Plan
year shall be deemed forfeited and no portion thereof shall be allocated to
Participants. Any such forfeiture shall not affect the calculation of EVA in
any subsequent year.


 


ARTICLE VII


 


Limitations


 


7.1           No
Continued Employment. Nothing contained herein shall provide any Participant
or employee with any right to continued employment or in any way abridge the
rights of the Company to determine the terms and conditions of employment and
whether to terminate employment of any employee.


 


7.2           No
Vested Rights. Except as otherwise provided herein, no Participant or employee
or other person shall have any claim of right (legal, equitable, or otherwise)
to any award, allocation, or distribution or any right, title, or vested
interest in any amounts in such person’s Bonus Bank and no officer or employee
of the Company or any other person shall have any authority to make
representations or agreements to the contrary. No interest conferred herein to
a Participant shall be assignable or subject to claim by a Participant’s
creditors. The right of the Participant to receive a distribution hereunder
shall be an unsecured claim against the general assets of the Company and the
Participant shall have no rights in or against any specific assets of the
Company as the result of participation hereunder.


 


7.3           Not Part of
Other Benefits. The benefits provided in this Plan shall not be deemed a part of
any other benefit provided by the Company to its employees. The Company assumes
no obligation to Plan Participants except as specified herein. This is a
complete statement, along with the Schedules and Appendices attached hereto, of
the terms and conditions of the plan.


 


7.4           Other
Plans. Nothing contained herein shall limit the Company or the Committee’s
power to grant bonuses to employees of the Company, whether or not Participants
in this Plan.


 


7.5           Limitations.
Neither the establishment of the Plan or the grant of an award hereunder shall
be deemed to constitute an express or implied contract of employment for any
period of time or in any way abridge the rights of the Company to determine the
terms and conditions of employment or to terminate the employment of any
employee with or without cause at any time.


 


7.6           Unfunded
Plan. This Plan is unfunded and is maintained by the Company in part to
provide incentive compensation to a select group of employees and highly
compensated employees. Nothing herein


 


8

















 


shall
create or be construed to create a trust of any kind, or a fiduciary relationship
between the Company and any Participant.


 


ARTICLE VIII


 


Authority


 


8.1           Plan Administration.
“Committee” means the Compensation Committee of the Board of Directors of the
Company, or if there is none, The Board of Directors. “Administrator” means the
Company’s Senior Vice President-Human Resources & Administration or,
if that position is vacant, the Committee. Except as otherwise expressly
provided herein, full power and authority to interpret and administer this Plan
shall be vested in the Committee. The Committee may authorize the
Administrator to determine who shall participate in the Plan, except for the
participation of officers. Participation of officers shall require Committee
approval. The Committee may from time to time make such decisions and
adopt such rules and regulations for implementing the Plan as it deems
appropriate for any Participant under the Plan. Any decision taken by the
Committee arising out of or in connection with the construction,
administration, interpretation and effect of the Plan shall be final,
conclusive and binding upon all Participants and any person claiming under or
through them.


 


8.2           Board
of Directors Authority. The Board shall be ultimately responsible for
administration of the Plan. References made herein to the “Committee” assume
that the Board of Directors has created a Compensation Committee to administer
the Plan. In the event a Compensation Committee is not so designated, the Board
shall administer the Plan. The Board or its Compensation Committee, as appropriate,
shall work with the Company’s CEO and SVP-HR & Administration in all
aspects of the administration of the Plan.


 


ARTICLE IX


 


Notice


 


9.1           Any notice
to be given pursuant to the provisions of the Plan shall be in writing and
directed to the appropriate recipient thereof at their business address or
office location.


 


ARTICLE X


 


Effective Date


 


10.1         This Plan
shall be effective as of January 1, 2005 and it shall remain in effect,
subject to amendment from time to time, until terminated or suspended by the
Committee.


 


9

















 


ARTICLE XI


 


Amendments


 


11.1         This Plan may be
amended, suspended or terminated at any time at the sole discretion of the
Board upon the recommendation of the Committee. Provided, however, that no such
change in the Plan shall be effective to eliminate or diminish the distribution
of any Award that has been allocated to the Bank of a Participant prior to the
date of such amendment, suspension or termination. Notice of any such
amendment, suspension or termination shall be given promptly to each
Participant.


 


ARTICLE XII


 


Applicable Law


 


12.1         This
Plan shall be construed in accordance with the provisions of the laws of the
State of Wisconsin.


 


10

















 


Exhibit A


 


Calculation of the Cost of Capital


 


Inputs
Variables:


 


Risk Free Rate = Average
Daily closing yield on U.S. Government 30 Yr. Bonds (for the month of December preceding
the Plan Year).


 


Market Risk Premium =
5.0% (Fixed)


 


Beta = One (Fixed)


 


Debt/Capital Ratio = 40%
(Fixed)


 


b = Cost of Debt Capital
(Projected & Weighted Average Yield on the Company’s Long Term Debt
Obligations).


 


Marginal Tax Rate = 39.0%
(Historical Average).


 


Calculations:


 


y = Cost of Equity
Capital


   = Risk Free Rate + (Beta x Market Risk
Premium)


 


Weighted Average Cost of
Capital = [Cost of Equity Capital x (1 - Debt/Capital Ratio)] + [Cost of Debt x
(Debt/Capital Ratio) x (1 - Marginal Tax Rate)]


 


c* = [y x (1 -
Debt/Capital)] + [b x (Debt/Capital) x (1 - Marginal Tax Rate)]


 


11

















 


Exhibit B


 


Target Bonus Percentages (as % of base salary)


 




	
  Participant

  Classification

  	
   

  	
  Target Bonus

  Percentage

  	
   

  
	
   I

  	
   

  	
  75

  	
  %

  
	
  II

  	
   

  	
  50

  	
  %

  
	
  III

  	
   

  	
  40

  	
  %

  
	
  IV

  	
   

  	
  35

  	
  %

  
	
   V

  	
   

  	
  30

  	
  %

  
	
  VI

  	
   

  	
  25

  	
  %

  
	
  VII

  	
   

  	
  20

  	
  %

  
	
  VIII

  	
   

  	
  15

  	
  %

  
	
   IX

  	
   

  	
  10

  	
  %

  
	
   X

  	
   

  	
  5

  	
  %

  
	
  XI

  	
   

  	
  2

  	
  %

  






 


12

















 


Exhibit C


 


Expected Improvement and Leverage Factors


 


As of January 1, 2006:


 


	
  Participation Groups

  	
   

  	
  Expected Improvement in EVA

  	
   

  	
  Leverage Factor

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Manitowoc Ice, Inc.

  	
   

  	
  900,000

  	
   

  	
  2,700,000

  	
   

  
	
  Diversified Refrigeration

  	
   

  	
  500,000

  	
   

  	
  2,000,000

  	
   

  
	
  Beverage Group

  	
   

  	
  1,075,000

  	
   

  	
  3,000,000

  	
   

  
	
  Refrigeration Group

  	
   

  	
  850,000

  	
   

  	
  2,500,000

  	
   

  
	
  Foodservice Group

  	
   

  	
  2,500,000

  	
   

  	
  7,500,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Cranes America

  	
   

  	
  2,500,000

  	
   

  	
  7,500,000

  	
   

  
	
  Cranes EMEA (in Euro)

  	
   

  	
  2,500,000

  	
   

  	
  7,500,000

  	
   

  
	
  Cranes Asia

  	
   

  	
  700,000

  	
   

  	
  2,200,000

  	
   

  
	
  Cranes Group

  	
   

  	
  3,500,000

  	
   

  	
  12,500,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Marine Group

  	
   

  	
  600,000

  	
   

  	
  3,000,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Corporate

  	
   

  	
  4,350,000

  	
   

  	
  22,000,000

  	
   

  



 


13

















 


Exhibit D


 


Adjustment Guidelines for
Material and Unexpected Non-Recurring Items


 


•              Potential material
and unexpected “non-recurring items” which the Committee may consider
excluding from the “raw” EVA calculation (i.e., impact net operating profit after-tax
or the cost of capital), in order to ensure employees are assessed on the
performance of continuing operations, based on our experience, include:


 


•        Change in Accounting Principle or Practices (e.g., treatment
of goodwill, FAS 123-revised 2004, etc.). Typically, the company may exclude
the impact from both operating results and performance goals


 


•        Major acquisition (i.e., acquiring a
business with total assets greater than 15% of the company’s/operating unit’s
prior year-end total assets). In the event of a major acquisition, the company may exclude
the performance of the acquired unit from both results and goals for an agreed
upon period of time.


 


•        Major disposition (e.g., disposition as defined by FAS 144).
In the event a disposition is classified as discontinued under FAS 144, the
company may exclude the performance of the disposed unit from both results
and goals.


 


•        Restructuring (i.e., reorganization of a
specific business or operating unit). In the event of a restructuring, the
company may exclude the cost of restructuring from NOPAT but must also
exclude any benefits up to the amount of restructuring costs during the
subsequent 12-month period. The restructuring liability should also be excluded
from the calculation of capital for the same subsequent 12-month period.


 


•        Recapitalization (i.e., significant altering of the company’s
current capital structure). In the event of a recapitalization, the company may exclude
the impact from both results and goals.


 


•        Other unusual or one-time gains/losses
considered on a case-by-case basis relative to their impact on the company’s/operating
unit’s financial results.


 


•        Expenses related to significant ERP system
implementations may be
capitalized and amortized over the same period as the ERP asset.


 


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