bonuscriteria.htm


    Annual Executive Cash Bonus Criteria

    
      CONSOLIDATED-TOMOKA
LAND CO.

      Criteria
for Cash Bonus System 

      March
2008

    

    


    Prior to
2008, the Company’s annual cash bonuses have been based on the Company’s
after-tax earnings per share (“EPS”) in general conformity with the current cash
incentive policy attached as Exhibit A. Annual Company revenues were primarily
generated from third-party land sales.

    


    Net
income from operations, including the sale of property to third parties in any
calendar year, were calculated in conformity with U.S. generally accepted
accounting principles, as reported in the Company’s Annual Report and
accompanying Form 10-K, filed with the SEC. Land leases, build-to-suit lease
backs, and self-development were not part of the calculation.

    


    Beginning
in 2008, the Compensation and Stock Option Committee and Board of Directors
believe that it is equally important to motivate and reward management for
achievements in these additional areas, which are also a part of the Company’s
adopted business plan. This revision to the current cash bonus plan is intended
to incentivize management to also engage in land leases, self-development, and
build-to-suit by providing equivalent cash incentives, which would be realized
from third-party land sales and conversion into 1031 income
properties.

    


    In order
to provide an annual plan that balances executive performance, the Company, for
purposes of determining eligibility and potential bonus pool amounts, will now
include in the annual executive bonus criteria a one-time per project
equivalency calculation that represents the hypothetical after-tax net income,
which would have been recognized on the land portion of any land lease,
build-to-suit lease, or self-development project in that year had the property
been sold to a third party. The fair market value of the unimproved land value
used to calculate the lease payment or in the cases of self-development or
build-to-suit lease backs, per the value stated in the Board-approved
proforma.

    


    


    Example
1:   If land was
leased to a third party and the lease payments were based on a value of
$2,000,000, then the calculation would be as follows:

    


             $2,000,000, less the
land’s cost basis, less the applicable federal and state tax rate, divided by
the average outstanding number of shares during the year.

    


    Example
2:   If a
build-to-suit lease was based on a value of $8,000,000 and the land component
was $2,250,000, then the calculation would be as follows:

    


             $2,250,000 less the
land’s cost basis, less the applicable federal and state tax rate, divided by
the average outstanding number of shares during the year.

    


    Example
3:   If the land
value used in the Board-approved self-development proforma was $1,950,000 then
the calculation would be as follows:

    


             $1,950,000 less the
land’s cost basis, less the applicable federal and state tax rate, divided by
the average outstanding number of shares during the year.

    


    Example

    
The
following example illustrates how equivalent earnings per share would be added
to basic earnings to determine adjusted EPS for executive bonus
calculations:

    
 

    
      
        
          	
                  Basic
      Earnings per Share (in conformity with U.S. Generally
      accepted 

                    
      accounting principles)     

                	 	 	
                   

                	 	$	2.37	 
	 	 	 	 	 	 	 	 
	
                  Add
      (Land sales equivalency earnings per share)

                	 	 	 	 	 	 	 
	 Project "A" a
      third party land
      lease                           
      	 	$	.19	 	 	 	 	 
	
                                                  
      Project “B” a build to suit lease back

                	 	$	.21	 	 	 	 	 
	
                                                 
       Project “C” a self development project 

                	 	$	.17	 	 	 	 	 
	 	 	$	.57	 	 	$	.57	 
	
                  Equivalent earnings per share
      for eligibility determination
      and calculation of executive bonus
      (per exhibit “A”) would be: 

                	 	 	 	 	 	$	2.94	 


        

         

         

      

    

    
      
        	
                 
      

              	
                The
      Company=s
      annual cash bonus plan was instituted to reward short-term
      performance

              


      

      
        	
                 
      

              	
                Awards
      are currently tied to the Company=s EPS
      achievement for the plan year.

              


      

      


                      
Bonus payouts are limited as follows:

      


      
        	
                CEO

              	
                up
      to 200% of base annual salary

              
	
                Senior  VP
      & Executive Officers

              	
                up
      to 100% of base annual salary

              
	
                Vice
      Presidents

              	
                up
      to  75% of base annual salary

              
	
                Managers
      designated in the plan

              	
                up
      to  50% of base annual
salary

              


      

      


      
        	
                 
      

              	
                Annually,
      the bonus pool is established based on the target EPS, and is adjusted for
      the number of
      employees in the plan at each
level.

              


      

      
        
        

      

      


      
        	
                 
      

              	
                Estimated
      pay out guidelines as a percentage of employees base salary are as
      follows:

              


      

      


       

      
        
          
            
              
                
                  
                    
                      
                        
                          
                            
                              
                                
                                  
                                    
                                      
                                        
                                          
                                            
                                              
                                                
                                                  
                                                    
                                                      
                                                        
                                                          
                                                            
                                                              
                                                                
                                                                  
                                                                    
                                                                      
                                                                        
                                                                          
                                                                            
                                                                              
                                                                                
                                                                                  
                                                                                    
                                                                                      
                                                                                        
                                                                                          
                                                                                            
                                                                                              
                                                                                                	
                                                                                                        EPS

                                                                                                      	 	 	
                                                                                                        CEO

                                                                                                      	 	 	
                                                                                                        SR
      VP

                                                                                                      	 	 	
                                                                                                        VP

                                                                                                      	 	 	
                                                                                                        Managers

                                                                                                      	 
	$	1.50	 	 	 	43	%	 	 	22	%	 	 	16-20	%	 	 	6-20	%
	$	2.00	 	 	 	52	%	 	 	27	%	 	 	20-24	%	 	 	8-25	%
	$	2.50	 	 	 	65	%	 	 	33	%	 	 	25-30	%	 	 	10-32	%
	$	3.00	 	 	 	78	%	 	 	40	%	 	 	30.36	%	 	 	12-38	%
	$	3.50	 	 	 	94	%	 	 	48	%	 	 	36-43	%	 	 	15-50	%
	$	4.00	 	 	 	112	%	 	 	58	%	 	 	43-52	%	 	 	18-50	%
	$	4.50	 	 	 	135	%	 	 	70	%	 	 	52-62	%	 	 	22-50	%
	$	5.00	 	 	 	162	%	 	 	84	%	 	 	62-75	%	 	 	27-50	%
	$	5.50	 	 	 	194	%	 	 	100	%	 	 	75	%	 	 	33-50	%
	$	6.00	 	 	 	200	%	 	 	100	%	 	 	75	%	 	 	40-50	%


                                                                                              

                                                                                            

                                                                                          

                                                                                        

                                                                                      

                                                                                    

                                                                                  

                                                                                

                                                                              

                                                                            

                                                                          

                                                                        

                                                                      

                                                                    

                                                                  

                                                                

                                                              

                                                            

                                                          

                                                        

                                                      

                                                    

                                                  

                                                

                                              

                                            

                                          

                                        

                                      

                                    

                                  

                                

                              

                            

                          

                        

                      

                    

                  

                

              

            

          

        



      
        	
                 
      

              	
                Bonuses
      are not usually awarded at earnings levels of less than $1.50 per share
      unless the Board
      determines that the overall economic conditions of the real estate
      industry are such that
      Company performance below $1.50 was outstanding when compared to industry
      peers.  Actual
      awards are based on two factors, the Company=s EPS
      achieved for the plan year and  the individual
      participant=s
      performance. The CEO makes recommendations to the Compensation Committee
      based on each participant=s
      performance.  A participant=s
      actual award may be reduced or
      eliminated if, in the judgment of the CEO, his/her performance or other
      issues warrant this action Awards
      may be pooled and reallocated between two are more participants, and in
      certain instances awards
      to an individual participant may be increased above these
      guidelines.

              


      

      
        
        

      

      
        
        

      

      
        
        

      

      
        
        

      

      
        
        

      

      
        
        

      

      
        
        

      

      
        
        

      

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