EXHIBIT
10.14


 


MONACO
COACH CORPORATION


 


2005
SHORT-TERM INCENTIVE COMPENSATION PLAN


 


(adopted March 28,
2005 by the Compensation Committee)


 


Introduction


 


The purpose of the Monaco Coach 2005
Short-Term Incentive Compensation Plan (the “Plan”) is to (i) establish
short-term compensation incentives that are market-based and promote the hiring
and retention of key personnel; (ii) ensure that executive compensation
awards align the interests of the Company’s Plan participants with
stockholders; and (iii) develop a comprehensive compensation structure
that maintains management’s flexibility to recognize and reward individual goal
accomplishments.


 


Administration of the Plan


 


The Compensation Committee of the Board of
Directors (the “Committee”) will approve or disapprove final disposition of all
matters pertaining to the administration of the Plan.


 


The Chief Executive Officer has the
responsibility to administer the Plan, except in respect of compensation
matters pertaining to the Chief Executive Officer, which shall be administered
by the Committee or the Board of Directors.


 


Plan Participants


 


The officers of the Company (Vice President
and higher) are eligible to participate in this Plan, as well as any other key
managers of the Company as may be identified by the Chief Executive Officer or
the Committee.


 


Participants must be full time employees of
the Company to be eligible for bonus payments. 
Any employee who voluntarily resigns or is terminated for cause during
2005 will not be eligible for any bonus payment under the Plan.  Termination of employment as a result of
death or disability, or other circumstances as determined by the Compensation
Committee, will result in a pro rata award for the affected Plan participant
based on the period of employment during 2005.


 


Plan Performance Measures


 


Performance measures under the Plan were
established in March 2005, and consist of the following:


 


•                  The
annual performance target for Plan participants is based on planned EBITDA
(earnings before interest, tax, depreciation and amortization) for the 2005
fiscal year as the primary incentive measure.


 


•                  Target
bonus opportunities for each participant are established and are represented as
a percentage of base salary . The actual bonus opportunity targets range from
40% for key managers to 100% for the Chief Executive Officer(1), depending upon
the grade level of the participant’s position.


 


•                  The
actual bonus earned for each participant can vary from 0 to 200% of the
individual’s stated target, depending on Company performance relative to the
annual EBITDA measure.


 










(1) For 2005, Kay L. Toolson, the Company’s Chief Executive
Officer, is the sole participant in the Company’s Section 162(m) plan and
any bonus payment to him will be an award of “performance-based compensation”
under that plan. 


 





















 


	
  •

  	
   

  	
  Threshold (50% of Business Plan)

  	
   

  	
  No Bonus

  
	
  •

  	
   

  	
  75% of Business Plan

  	
   

  	
  50% of Target Bonus

  
	
  •

  	
   

  	
  Target (100% of Business Plan)

  	
   

  	
  100% of Target Bonus

  
	
  •

  	
   

  	
  125% of Business Plan

  	
   

  	
  150% of Target

  
	
  •

  	
   

  	
  Maximum (150% of Business Plan)

  	
   

  	
  200% of Target Bonus

  



 


•                  Individual
performance, as determined by the Chief Executive Officer and the President,
may further affect the actual bonus payment amount for each Plan participant.


 


•                  A
minimum threshold of corporate-level performance, equal to a 6%
return-on-equity to stockholders with respect to fiscal 2005, will be applied
to ensure that bonus amounts under the Plan are paid only after attainment of a
reasonable level of financial performance by the Company.


 


•                  Bonus
payments under the Plan will be paid in 2006, upon ascertainment of the
performance contributions of the Plan participants in 2005.


 


Amendment or Termination of the Plan


 


The Committee may terminate, amend or modify
the Plan at any time.


 


Other Considerations


 


No right or interest of any participant in
the Plan is assignable or transferable, or subject to any lien, directly or by
operation of law, or otherwise.


 


The eligibility of or participation by an
employee of the Company under this Plan does not guarantee any right to
continued employment, and the Company reserves the right to terminate the
employment of any Plan participant at any time and for any reason.


 


The Company has the right to deduct from all
awards under this Plan any taxes required by law to be withheld with respect to
such awards.