Exhibit No. 10.93


 


RUSS BERRIE AND COMPANY, INC.

INCENTIVE COMPENSATION (“IC”) PROGRAM


 


I.                                         PURPOSE
AND PHILOSOPHY OF THE IC PROGRAM


 


The IC
Program has been established to provide designated associates of Russ Berrie
and Company, Inc. (the “Company”) and its subsidiaries with an
opportunity, each year that this IC Program is in effect, to earn substantial
cash remuneration based on (i) the attainment of specified operating
objectives by the Company (or specified divisions thereof), (ii) fulfillment
of specified individual goals and objectives established for each participating
associate, and (iii) fulfillment of (x) specified individual initiatives
established for each eligible associate and (y) initiatives to be mutually
agreed upon between such associate and his/her direct supervisor.  Thus, the IC Program provides a framework in
which eligible associates can achieve significant incentive compensation based
not only upon the Company achieving its financial corporate objectives,
but also based upon recognition of and rewards for achieving individual
goals and objectives and individual initiatives. In addition, the IC
Program seeks to, among other things, (1) more closely align associates’
interests with those of shareholders, (2) reward associates for contributing
to the short and long-term growth of the business, (3) provide associates
with a more meaningful role in the attainment of maximum compensation levels, (4) provide
a competitive platform for compensation vis-à-vis the marketplace, and (5) serve
as a recruitment and retention tool.


 


II.                                     ASSOCIATES ELIGIBLE FOR PARTICIPATION;

LEVEL OF IC ELIGIBLITY


 


Eligibility


 


Individuals from specified participant groups (“Participant
Groups”) selected on an annual basis by the CEO in his sole discretion and in
consultation with the heads of business units and certain senior executives of
his choice, in each case as approved by the Compensation Committee of the Board
of Directors of the Company (the “Comp Committee”).  Eligible individuals will generally have the
rank of vice president or above, but titles will not be determinative.  Participant Groups currently consist of the
following:


 


A.                                    Corporate
Participants:  Individuals whose
responsibilities are not limited to a particular business unit of the Company.


 


B.                                    Gift
U.S.A. Participants:  Individuals who
operate primarily in the Company’s core U.S.A. gift business.


 





















 


C.                                    International
Participants:   Individuals who
operate primarily in either the Company’s core or non-core international
business.


 


D.                                    Sassy
Participants:  Individuals who
operate primarily in the Company’s Sassy business; provided that individuals party to employment agreements
with Sassy will not be eligible to participate in this IC Program.


 


E.                                      Kids
Line Participants: Individuals who operate primarily in the Company’s Kid’s
Line business; provided that
individuals party to employment agreements with Kids Line will not be eligible
to participate in this IC Program.


 


All decisions with respect to eligibility to participate in the IC
Program, definition of Participant Groups and categorization in a particular
Participant Group shall be final and binding on all associates of the Company.


 


Applicable Percentage


 


Members of each Participant Group will be eligible
to participate in the IC Program at specified IC Percentages Ranges (expressed
as a percent of annual base salary at the time payout is determined).  The IC Percentage Ranges for each Participant
Group will be determined on an annual basis by the CEO and approved by the Comp
Committee.  The particular IC Percentage
of a participant within the applicable IC Percentage Range (such participant’s “Applicable
Percentage”) will be determined on an annual basis by the CEO in his sole
discretion, in each case as approved by the Comp Committee.  Each Participant’s Applicable Percentage for
the subsequent year (and whether an associate has been selected to participate
in the IC Program for such year) shall be communicated to such participant
during his/her year-end performance appraisal. 
All decisions with respect to IC Percentage Ranges and the determination
of Applicable Percentages shall be final and binding on all participants.


 


III.                                 COMPOSITION OF INCENTIVE COMPENSATION


 


Each
participant’s annual base salary multiplied by such participant’s Applicable
Percentage (as described above) shall equal a number (the “IC Factor”) that
will be used to determine such participant’s total incentive compensation
earned for the relevant year (the “Earned IC Amount”).


 


Each participant’s Earned IC Amount will be
comprised of three separate components (described in detail in Section IV
below).  Each component may entitle a
participant to earn a specified percentage of the IC Factor, summarized as
follows:


 


•                                          Part A
Component:  From 0% to
100% of a participant’s IC Factor can be earned in the event that the Company
(in the case of Corporate Participants) or specified business units (in the
case of all other Participant Groups) achieves the specified levels of
performance measurements set forth on Exhibit A, which exhibit will be
amended each year.


 


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•                                          Part B
Component:  From 0% to
30% of a participant’s IC Factor can be earned in the event of achievement by
such participant of his/her individual goals and objectives.


 


•                                          Part C
Component:  From 0% to
20% of a participant’s IC Factor can be earned in the event of achievement by
such participant of his/her individual initiatives.


 


IV.                                CALCULATION OF EARNED IC AMOUNTS


 


A participant’s total Earned IC Amount is calculated
as follows:


 


•                                          Establishing
Corporate Objectives for the Part A Component:


 


Corporate
objectives for each Participant Group will consist of three separate levels of
achievement (“Targets”) with respect to one or several specified measures of
operating performance each year, such as operating income, EBITDA, etc. (the “Chosen
Metric”).  Both the Chosen Metric and the
Targets required will be determined by the CEO on an annual basis, as approved
by the Comp Committee.  There is no
requirement that the Targets be based on or refer to budgeted levels of
operating performance, or to any other plan or projection with respect to the
Company’s business.


 


The
Targets will consist of the following: (i) a specified minimum level of
achievement in the Chosen Metric required to earn a specified amount of IC
compensation (the “Minimum Target”), (ii) a specified level of achievement
in the Chosen Metric in excess of the Minimum Target (the “Target”), and (iii) a
specified level of achievement in the Chosen Metric in excess of the Target
(the “Maximum Target”).  Note that (i) the
Chosen Metric may change from year to year, e.g., operating income in one year
and EBITDA in another, (ii) different measurements may be used for
different Participant Groups within the same year, e.g., operating income for
Corporate Participants and EBITDA for Sassy Participants, and (iii) the
Targets will change each year).  The
Targets will be based on consolidated Company performance in the case of
Corporate Participants and will be based on the performance of the relevant
business unit in the case of all other Participant Groups.  All determinations with respect to (i) the
Chosen Metrics, (ii) the applicable Targets and (iii) whether and/or
to what extent the Company (or the relevant business unit) has achieved the
applicable Targets shall be final and binding on all participants in the IC
Program.


 


The
Chosen Metrics and Targets for each Participant Group for each year will be set
forth on Exhibit A hereto.  Exhibit A
will be amended each year (and such amendment will be distributed to associates
designated to participate in the IC Program for such year during such associate’s
year-end performance appraisal)


 


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and will reflect (x) the Chosen Metrics for such year
and (y) the Targets required in the applicable Chosen Metric for each
Participating Group for such year.  With
respect to the International Participant Group, different Targets may be set
for participants in the Company’s operations in Canada, Australia and Europe.


 


•                                          Calculating the
Part A Component:


 


For all
participants, 50% of such participant’s IC Factor shall be referred to herein
as the “Part A Amount”.  If the Company, or the relevant business
unit, as applicable, achieves the Minimum Target, then an amount equal to 20%
of the Part A Amount will be paid.  If the Company, or relevant business unit, as
applicable, achieves the Target, then an amount equal to 100% of the Part A Amount will be paid. 
If the Company, or relevant business unit, as applicable, achieves the
Maximum Target, then an amount equal to 200% of the Part A Amount (or 100% of the IC Factor) will be paid.  Earned IC Amounts for achievement of results
in between (i) the Minimum Target and the Target and (ii) the Target
and the Maximum Target, will in each case be determined by a straight-line
interpolation.  No Earned IC Amount will
be paid for achievement of results below the Minimum Target.  No additional Earned IC Amount will be paid
for achievement of results in excess of the Maximum Target.


 


•                                          Calculating the
Part B Component:


 


The
individual goals and objectives for each participant for each year will
be determined by the CEO in his sole discretion in the event that the CEO is
the participant’s direct supervisor, or by the CEO in consultation with the
participant’s direct supervisor in the event that the CEO is not the direct
supervisor of the participant.  Each
participant’s individual goals and objectives will be communicated to such
participant during his/her year-end performance appraisal, and may be modified
by the CEO or the participant’s direct supervisor, as applicable, in the
participant’s subsequent mid-year performance appraisal.  Each participant’s individual goals and
objectives will be evaluated by the participant’s direct supervisor, who will
determine in his/her sole discretion whether and to what extent such goals and
objectives have been met, and what, if any, percentage (from 0% to 30%) of the
IC Factor has been earned.  Note that not
all goals and objectives will be given equal weight in the determination of
what percentage of the IC Factor, if any, has been earned for the Part B
component.  Such evaluation and
determination shall be communicated to the participant during his/her year-end
performance appraisal.  All decisions
with respect to the extent of achievement of individual goals and objectives
and the percentage of IC Factor earned, if any, shall be final and binding on
all participants. Anywhere between 0% and 30% of the IC Factor can be earned
with respect to the Part B component of the IC Program.


 


•                                          Calculating the
Part C Component:


 


The
individual initiatives, which will reflect a participant’s contributions
that favorably affect sales, gross margin, profitability, expenses and/or other
efficiencies, will


 


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be determined by the CEO in his sole discretion in the
event that the CEO is the participant’s direct supervisor, or by the CEO in
consultation with the participant’s direct supervisor in the event that the CEO
is not the direct supervisor of the participant.  Each participant’s individual initiatives
will be communicated to such participant during his/her year-end performance
appraisal, and may be modified by the CEO or the participant’s direct supervisor,
as applicable, in the participant’s subsequent mid-year performance
appraisal.  Individual initiatives will
also include initiatives which have been mutually agreed upon by the associate
and his/her direct supervisor.  Each
participant’s individual initiatives will be evaluated by the participant’s
direct supervisor, who will determine in his/her sole discretion whether and to
what extent such initiatives have been achieved and what, if any, percentage
(from 0% to 20%) of the IC Factor has been earned.  Note that not all initiatives will be given
equal weight in the determination of what percentage of the IC Factor, if any,
has been earned for the Part C component. 
Such evaluation and determination shall be communicated to the
participant during his/her year-end performance appraisal.  All decisions with respect to the extent of
achievement of individual initiatives and the percentage of IC Factor earned,
if any, shall be final and binding on all participants.  Anywhere between 0% and 20% of the IC Factor
can be earned with respect to the Part C component of the IC Program.


 


NOTE:  A participant may be paid on the Part B
or Part C component even if the no amount of the Part A component has been earned.


 


IC PARTICIPANT POTENTIAL EARNED IC AMOUNT EXAMPLE


 


	
  Annual Base
  Salary:

  	
   

  	
  $

  	
  225,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Applicable Percentage

  	
   

  	
  40

  	
  %

  
	
   

  	
   

  	
   

  	
   

  
	
  IC Factor ($225,000 x 40%)

  	
   

  	
  $

  	
  90,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Part A Amount (50% of IC Factor)

  	
   

  	
  $

  	
  45,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Part B Maximum Amount (30% of IC
  Factor)

  	
   

  	
  $

  	
  27,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Part C Maximum Amount (20% of IC
  Factor)

  	
   

  	
  $

  	
  18,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Part A Earning Potential:

  	
   

  	
  $

  	
  0-$90,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Part B Earning Potential:

  	
   

  	
  $

  	
  0-$27,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Part C Earning Potential

  	
   

  	
  $

  	
  0-$18,000

  	
   

  



 


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Earned IC Amount Calculation Example: 
Part A


 


	
  Chosen
  Metric:

  	
   

  	
  Consolidated Operating Income

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Minimum Target:

  	
   

  	
  $

  	
  40,000,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Target:

  	
   

  	
  $

  	
  46,000,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Maximum Target:

  	
   

  	
  $

  	
  55,000,000

  	
   

  



 


	
  If the Company achieves $40,000,000, then
  payout is 20% of the Part A Amount: 

  	
   

  	
  $

  	
  9,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  If the Company achieves $46,000,000, then
  payout is 100% of the Part A Amount:

  	
   

  	
  $

  	
  45,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  If the Company achieves $55,000,000, then
  payout is 200% of the Part A Amount:

  	
   

  	
  $

  	
  90,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  If the Company achieves $50,500,000, then
  payout is 150% of the Part A Amount:

  	
   

  	
  $

  	
  67,500

  	
   

  



 


Earned IC Amount Calculation Example: 
Part B


 


Payout can
range from $0 - $27,000 on the Part B component (0% to 30% of the IC
Factor).


 


Earned IC Amount Calculation Example: 
Part C


 


Payout can
range from $0 - $18,000 on the Part C component (0% to 20% of the IC
Factor)


 


	
  Total potential Earned IC Amount:

  	
   

  	
  $

  	
  135,000

  	
   

  



 


V.                                    EXCLUSIONS AND OTHER PROGRAMS


 


Notwithstanding anything herein to the contrary,
members of the sales force are not eligible to participate in this IC
Program.  Such individuals may be
eligible for a different bonus program based on achieving certain sales growth
levels.


 


Non-sales associates who are not eligible for the IC
Program may be eligible to receive a discretionary bonus.  The Discretionary Bonus Program is described
in a separate document.


 


Associates who are eligible to participate in this
IC Program (i) are not eligible to participate in the Company’s
Discretionary Bonus Program, and (ii) are not entitled to the December holiday
bonus of one week’s pay.


 


The IC Program supersedes the Company’s former (i) worldwide
“annual bonus program”, (ii) worldwide “annual performance bonus program”,
and such programs and policies shall be of no further force and effect.


 


Note additional exclusions to the Sassy Participants
and the Kids Line Participants set forth in Section II above.


 


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VI.                                NO RIGHT OF CONTINUED EMPLOYMENT


 


Participation in the IC Program confers no right of
continued employment.  Employment remains
“at will” and may be terminated at any time, with or without cause, by the
associate or by the Company, without any entitlement to any IC payment.


 


VII.                            ACCRUAL FOR AND TIMING OF IC PAYMENTS


 


IC payments will be accrued on the Company’s financial
statements throughout the year.  Targets
will be calculated to include a reserve to fund IC payments.  Earned IC Amounts will be paid as soon as is
reasonably practicable after the first meeting of the Board of Directors of the
Company following the closing of the books for the relevant year (the “Payout
Date”).  IC payments are subject to
applicable withholding taxes.


 


VIII.                        VESTING OF IC PAYMENTS


 


Unless otherwise provided in a participant’s
employment agreement, a participant must be employed by the Company through and
including the Payout Date in order to receive any Earned IC Amounts for the
preceding year.  For purposes of
clarification, Earned IC Amounts to which a participant would otherwise be
entitled will not be paid in whole or in part
in the event that the employment of a participant terminates for any reason
prior to the Payout Date.


 


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IX.                                TERMINATION RIGHTS


 


The Company has the right to terminate the entire IC
Program at any time, without notice, for any reason, without incurring any
liability to any participant therein.


 


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