Rexnord Management Incentive Compensation Plan



 Exhibit 10.14 

REXNORD 

MANAGEMENT 

INCENTIVE 

COMPENSATION PLAN 

(“MICP”) 







 REVISED: June 18, 2009 

Plan Name: 
 Rexnord Management Incentive
Compensation Plan (MICP) 
 Plan Objectives: 

Establish a meaningful variable compensation component of an attractive pay-for-performance total cash compensation program designed to support the
achievement of Outstanding Strategic, Financial and Operational Performance 
 Plan Term: 

The Plan commences on the first day of the fiscal year and ends on the last day of the fiscal year 

Plan Eligibility: 
 As approved by the
CEO, in consultation with the Chairman of the Board. 
 Target Bonus Levels: 

Determined based on a mix of level-of-impact toward the achievement of Company objectives, and sound pay-for-performance total cash compensation
guidelines 
 Performance Measures: 
  

	•	 	 Budgeted EBITDA (Earnings before interest, taxes, depreciation and amortization) 



 

	•	 	 Debt Reduction / Divisional Cash Flow 


  

	•	 	 Non-financial Goals & Objectives (Personal Performance Factor) 



Plan Design: 
 Payout Determined by
Formula 
  

																	
	Year End	 		 	Individual	 		 	Financial*	 		 	Personal	 		 	  
 Bonus

Payout

	Base	 	X	 	Target	 	X	 	Factor	 	X	 	Performance	 	=	 
	Salary	 		 	Bonus %	 		 		 		 	Factor	 		 

  

	*	NOTE - Financial Factor may be determined by a “mix” of more than one Organizational Financial Factor (percentage weighted – example: 80% Division
+ 20% Corporate) 








 Performance Criteria: 

 

					
	Individual Achievements	 	=	 	“Personal Performance Factor”
			
	TEAM Achievements	 	=	 	“Financial Factor”

 Company Financial Factor
based on: 
  

	•	 	 EBITDA* 


  

	•	 	 Debt Reduction/Divisional Cash Flow* 


  

	*	NOTES: 

  

	 	•	 	 EBITDA & Debt Reduction/Cash Flow targets will be recommended by Management, reviewed/approved by the Chairman, and then approved by the
Compensation Committee of the Board of Directors of RBS Global, Inc, (the “Compensation Committee”). 


  

	 	•	 	 % weighting of EBITDA and Debt Reduction/Cash Flow will normally be 50%/50% (variances from this weighting will be recommended by Management and
reviewed/approved by the Chairman) 


 Financial Thresholds 

Minimum EBITDA or Minimum Debt Reduction/Divisional Cash Flow thresholds must be achieved in order to trigger a potential bonus payment under the plan
(“The Cliff”) 
  

					
	“Cliff”	 	=	 	80% - 90% of Target*

  

	*	NOTES 

  

	 	•	 	 Corporate will be at 90% 


  

	 	•	 	 Business Units will normally be at 80% (Chairman to approve any business units at the 90% cliff) 



 

					
	Upper Limit	 	=	 	None (No Cap)

 Performance Range: 

 

	 	•	 	 See examples in Addendum A 









 Financial Factor Calculation Example: 

 

						
	 EBITDA as a % of the Financial Factor calculation
	  	=	  	50	% 
	 Debt Reduction as a % of the Financial Factor
	  	=	  	50	% 
	 Cliff
	  	=	  	90	% 
			
	 % of EBITDA Target Achieved
	  	=	  	110	% 

  

								
	 % of Divisional Cash Flow Achieved
	  	=	  	97	% 
				
	 Calculation:
	 	1.25 x .50	  	=	  	.625	  
		 	.85 x .50	  	=	  	.425	  
	  
 Company
Financial Factor
	  	=	  	1.05	  

 Personal Performance
Factor 
  

	•	 	 Based primarily on Individual Non-Financial Goals & Objectives 



 

	 	•	 	 Re-enforce Cross-Functional / Business Teamwork 


  

	 	•	 	 DIFFERENTIATE for Performance 


  

	•	 	 Range 


  

					
	0	 	1.0	 	1.5
	Unacceptable	 	Meets Expectations	 	Outstanding

  

	•	 	 Focus - No More Than Five Personal Objectives Which: 


  


	 	•	 	 Generally Tie to Strategy Deployment Objectives 


  

	 	•	 	 Are Aggressive 


  

	 	•	 	 Are Measurable 


  

	 	•	 	 Are Critical to Business Success 










	•	 	 Setting Objectives 


  

	 	•	 	 Common Format 


  

													
	
 



  

	MICP Non-Financial Goals & Objectives
	PARTICIPANT INFORMATION	 	 	 	 	  	 	 	 
	Name:	 	  	 	  	 	  	  	 	 	 
	Title:	 	  	 	Fiscal Year:	 	  	  	 	 	 
	Business Unit:	 	  	 	  	 	  	  	 	 	 
	Supervisor	 	  	 	  	 	  	  	 	 	 
	 	 	 	 	 	 	 	 	 	  	Supervisor Evaluation
	#	 	 Non-Financial Objectives
	 	Goals
(Measures/Targets)	 	 Results
	 	Weight
(%)	  	Personal
Performance
Factor
(see scale below)	 	Weighted
PPF
	1	 		 		 	Associate Comments:	 		  		 	0
	 		 		 	 	 		  		 
	 		 		 	Supervisor Comments:	 		  		 
	 	 	 	 	 	 	 	 	  	 	 
	2	 		 		 	Associate Comments:	 		  		 	0
	 		 		 	 	 		  		 
	 		 		 	Supervisor Comments:	 		  		 
	 	 	 	 	 	 	 	 	  	 	 
	3	 		 		 	Associate Comments:	 		  		 	0
	 		 		 	 	 		  		 
	 		 		 	Supervisor Comments:	 		  		 
	 	 	 	 	 	 	 	 	  	 	 
	4	 		 		 	Associate Comments:	 		  		 	0

	 		 		 	 	 		  		 
	 		 		 	Supervisor Comments:	 		  		 
	 	 	 	 	 	 	 	 	  	 	 
	5	 		 		 	Associate Comments:	 		  		 	0
	 		 		 	 	 		  		 
	 		 		 	Supervisor Comments:	 		  		 
	 	 	 	 	 	 	 	 	  	 	 
	 	 	 Personal Performance Factor Scale


0.0                      
                                         
 1.0                                        
                        1.5                 
       

Unacceptable                    
            Meets expectations (“Budget”)        Outstanding Performance (“SOP”)
	 	0%	  	 	 	0.00


 

													
	GOAL & OBJECTIVES AGREED TO
AT THE BEGINNING OF 
THE YEAR	 	 EVALUATION OF GOALS & OBJECTIVES
AT THE
END OF THE YEAR

		 		 		 		 		  		 	
	 	 	 	 	 	 	 	 	 	  	 	 	 
	Associate Signature & Date	 	 Associate Signature &
Date

		 		 		 		 		  		 	
	 	 	 	 	 	 	 	 	 	  	 	 	 
	Manager Signature & Date	 	 Manager Signature &
Date

		 		 		 		 		  		 	
	 	 	 	 	 	 	 	 	 	  	 	 	 
	One-over-One Manager Signature & Date	 	 One-over-One Manager Signature & Date


	 	 	 Following Signature the “One-Over-One Manager” should
send copies of this form to the Associate’s Manager and HR
 (it will be HR’s responsibility to ensure that this
closed-loop process is followed)
	 	 	 	 Following Signature the “One-Over-One Manager” should
send copies of this form to the Associate’s Manager and HR
 (it will be HR’s responsibility to ensure that this
closed-loop process is followed)
	 	 	  	 	 	 
	 PLEASE NOTE: ALTHOUGH THE FORM CALLS FOR
SIGNATURE FOLLOWING YEAR-END; THIS SHOULD NOT BE CONFUSED WITH THE NEED FOR VERY REGULAR/MONTHLY REVIEW BETWEEN ASSOCIATE & MANAGER THROUGHOUT THE YEAR ON PROGRESS/ COUNTERMEASURES – THE OBJECTIVE IS TO ENABLE ACHIEVEMENT OF THE
HIGHEST LEVEL OF STRETCH PERFORMANCE POSSIBLE









 Annual Payout Calculation Example: 

 

													
	Year End	 		 	Individual's	 		 	Company	 		 	Personal
	Base	 	X	 	Target	 	X	 	Financial	 	X	 	Performance
	Salary	 		 	Bonus%	 		 	Factor	 		 	Factor

  

					
	March 31st Base Salary	 	=	 	$115,000
	Individual Target Bonus % / $	 	=	 	15% / $17,250
	Company Financial Factor	 	=	 	1.05
	Personal Performance Factor	 	=	 	1.15

 Actual Payout = $115,000 x .15 x 1.05 x 1.15 =
$20,829 
 Miscellaneous Plan Guidelines: 
  

	•	 	 The Plan will be administered in accordance with the following guidelines: 



 

	 	•	 	 Plan Design & Continuation – to be determined by the Compensation Committee. 



 

	 	•	 	 Plan Participation – to be determined by the CEO, in consultation with the Chairman. 



 

	 	•	 	 Payout Calculations and Timing – the Compensation Committee shall approve the total annual payout, as well as specific payouts to the CEO and the
other Named Executive Officers. The rest of the payouts shall be approved by the CEO, in consultation with the Chairman. 


  

	 	•	 	 The CEO shall apply discretionary management judgment, as appropriate, in administering all other aspects of the Plan, based on specific business
situations or individual considerations. The CEO may delegate the daily administration of the Plan to other managers and associates, including payments of the amounts to be issued to participants under the Plan. 



 

	•	 	 Plan participants must be employed by the Company on the date of payment in order to qualify for payout (normally June) 



 

	 	•	 	 Exceptions due to retirement, disability, or death will be at the sole discretion of the CEO, in consultation with the Chairman.



  

	•	 	 Promotions / Transfers 


  

	 	•	 	 Where a transfer from one organizational unit to another organizational unit occurs during the Plan year, the individual will receive a pro-rated award
based on time and base salary / target MICP % in the multiple assignments 


  

	 	•	 	 When a promotion occurs and the associate remains in the same organizational unit, the base salary and target MICP % in effect @ year-end
(3/31) will be used for the entire year 


  

	•	 	 Partial Year participants will normally be eligible for a payment on a pro rata amount calculated at a rate of 1/12 of the annual amount for each
complete calendar month 


  

	•	 	 Each Plan Participant will receive individual written notification of the following plan details at the beginning of each fiscal year:



  

	 	•	 	 Financial Factor “Mix” 


  

	 	•	 	 Applicable EBITDA and Debt Reduction/Divisional Cash Flow Targets 



 

	 	•	 	 % Weighting of EBITDA & Debt Reduction/Divisional Cash Flow in calculating Financial Factor 



 

	 	•	 	 Guidelines for Establishing Participant’s Annual Personal Objectives 









 Addendum A 

(Performance Ranges by Cliff %) 
  

	•	 	 For 90% Cliff 


  

																	
	Performance of EBITDA & Debt Reduction / Modified Cash Target Achievement	 	 90% of

Target
	 	 100% of
 Target
	 	 105% of
 Target
	 	 110% of
 Target
	 	 115% of
 Target
	 	 120% of
 Target
	 	 125% of
 Target
	 	 130%
 or > of

Target

									
	Financial Factor	 	50%	 	100%	 	112.5%	 	125%	 	150%	 	175%	 	200%	 	 225%
 and
>*


  

	**	For each additional 5% increase in the percent of Target Bonus Plan Achievement above 115%, the financial factor will increase 25%. 


 

	•	 	 For 80% Cliff 


  

																			
	Performance of EBITDA & Debt Reduction / Modified Cash Target Achievement	 	 80% of

Target
	 	 90% of
 Target
	 	 100% of
 Target
	 	 105% of
 Target
	 	 110% of
 Target
	 	 115% of
 Target
	 	 120% of
 Target
	 	 125% of
 Target
	 	 130%
 or > of

Target

										
	Financial Factor	 	40%	 	50%	 	100%	 	107.5%	 	115.5%	 	130.5%	 	145.5%	 	160.5%	 	 175.5%
 and
>*


  

	*	For each additional 5% increase in the percent of Target Bonus Plan Achievement above 115%, the financial factor will increase 15%. 


 

	*	NOTE – Regardless of Cliff %, any business segment with financial targets that are either negative or under a million dollars will be treated outside the
payout matrix above. The payout methodology will be developed and agreed upon between the Management Team and Finance and will be approved by the CEO, in consultation with the Chairman.