EX-10(LXIII) NACCO Incentive Plan



 



Exhibit 10(lxiii)


NACCO MATERIALS HANDLING GROUP. INC.

2004 ANNUAL INCENTIVE COMPENSATION PLAN



General



     NACCO Materials Handling Group, Inc., (the “Company”) has established an
Annual Incentive Compensation Plan (“Plan”) as part of a competitive
compensation program for the officers and key management employees of the
Company and its Subsidiaries.


Plan Objective



     The Company desires to attract and retain talented employees to enable the
Company to meet its financial and business objectives. The objective of the
Plan is to provide an opportunity to earn annual incentive compensation to
those employees whose performance has a significant impact on the Company’s
short-term and long-term profitability.


Administration and Participation



     The Plan is administered by the Nominating, Organization and Compensation
Committee of the Board of Directors of the Company (the
“Committee”).


The Committee:



	 	a.	 	May amend, modify or discontinue the Plan.
	 
	 	b.	 	Will approve participation in the Plan. Generally,
participants will include all employees in NACCO Materials Handling
Group salary grades 22 and above. However, the Committee may select
any employee who has contributed significantly to the Company’s
profitability to participate in the Plan and receive an annual
incentive compensation award. Subject to paragraphs (g) and (h),
below, no employee of NACCO Materials Handling Group shall be
eligible to be a participant in the Plan, and no participant in the
Plan shall be eligible to receive an award, unless such individual
is employed for at least 90 calendar days during the year.
	 
	 	c.	 	Will determine the annual performance criteria which generate
the incentive compensation pool.
	 
	 	d.	 	Will determine the total amount of both the target and actual
annual incentive compensation pool.
	 
	 	e.	 	Will approve individual incentive compensation awards to
officers and employees in NACCO Materials Handling Group above
salary grade 30.
	 
	 	f.	 	May delegate to the Chief Executive Officer of the Company
the approval of incentive compensation awards to NACCO Materials
Handling Group employees in salary grade 30 and below.
	 
	 	g.	 	May consider at the end of each year the award of a
discretionary bonus amount to non-participants as an addition to the
regular incentive compensation pool on a special one-time basis to
motivate individuals not eligible to participate in the Plan.
	 
	 	h.	 	May approve a pro-rated incentive compensation award for
participants in the Plan whose employment is terminated (1) due to
death, disability, retirement or facility closure, such award to be
determined pursuant to the provisions of subparagraphs (e) and (f)
above, or (2) under other circumstances at the recommendation of the
Chief Executive Officer of the Company.



 






 






Determination of Corporate Incentive Compensation Pool



     Each participant in the Plan will have an individual target incentive
compensation percentage which is determined by the participant’s salary grade.
This percentage is multiplied by the mid-point of the participant’s salary
grade to determine his individual target incentive compensation award. The
total of the target incentive compensation awards of all participants equals
the target corporate incentive compensation pool (“Target Pool”). The Target
Pool is approved each year by the Committee.


     The actual corporate incentive compensation pool (“Actual Pool”) is
determined at the end of each year based on the Company’s actual performance
against specific criteria established in the beginning of the year by the
Committee. The Target Pool is adjusted upwards or downwards by corporate
performance adjustment factors to determine the Actual Pool. In no event will
the Actual Pool exceed 150% of the Target Pool, except to the extent that the
Committee elects to increase the Actual Pool by up to 110%, as described below.


     The Target and Actual Pools may consist of the sum of two or more
subpools, provided the subpools have individual objectives.


     It is the intent of the Plan that the Actual Pool, as determined above,
will be the final total corporate incentive compensation pool. However, the
Committee, in its sole discretion, may increase or decrease by up to 10% the
Actual Pool or may approve an incentive compensation pool where there would
normally be no pool due to Company performance which is below the criteria
established for the year.


     The Actual and Target Pools exclude the Marketing Incentive Plan for
regional parts, service, sales and national account managers. However, total
compensation or employees covered by the Marketing Incentive Plan will be based
on competitive levels.


Determination of Individual Incentive Compensation Awards



     Salary grades and the corresponding target incentive percentages for each
participant in the Plan will be established at the beginning of each year and
approved by the Committee. Individual target incentive compensation will then
be adjusted by the appropriate pool or subpool factor. Such adjusted
individual incentive compensation will then be further modified based on the
team performance to which an individual belongs compared to the team goals for
the year, and may be further modified based on a Participant’s performance as
compared to their individual goals for the year.


     The total of all individual incentive compensation awards must not exceed
the Actual Pool for the Year.


     Below are examples of actual pool and individual award calculations.



	 	a.	 	Example calculation for determination actual pool:



	 	 	 	 
	 	 	 	Intentionally Omitted









	b.	 	Example calculation for determination of individual incentive compensation award:




	 	 	 	 
	 	John Doe:	 	Intentionally Omitted