<PAGE>   1
PERFORMANCE INCENTIVE PLAN -- C97                                  EXHIBIT 10.r
                 
POLICY
------

CERTAIN EXEMPT EMPLOYEES OF THE CORPORATION AND ITS SUBSIDIARIES SHALL BE GIVEN
CONSIDERATION FOR PAYMENT UNDER THE CORPORATION'S PROFIT SHARING BONUS PLAN
PROVIDED THEY HAVE COMPLETED SIX (6) MONTHS OF SERVICE BY CALENDAR YEAR
END.

PAYMENTS WILL BE CONSIDERED ON THE BASIS OF CORPORATE AND HUFFY COMPANY
FINANCIAL RESULTS AND, FOR SOME POSITIONS, INDIVIDUAL PERFORMANCE AGAINST
OBJECTIVES.


THE SCHEDULES SET FORTH BELOW ARE GUIDELINES ONLY AND PAYMENTS MAY BE MODIFIED
OR OMITTED BY MANAGEMENT, OR BY THE COMPENSATION COMMITTEE OF THE BOARD OF
DIRECTORS, IN THEIR SOLE DISCRETION.


PAYMENTS SHALL BE MADE ONLY TO EMPLOYEES WITH AT LEAST "MEETS SOME BUT NOT
ALL PERFORMANCE REQUIREMENTS" JOB EVALUATION.

<TABLE>
<CAPTION>
FINANCIAL BONUS
---------------
                                                     Bonus opportunity as a % of
I.  Basis and Level of Awards                            Actual Base Salary      
    -------------------------                       -----------------------------
                                                    Min.       Target        Max.
                                                    ---        ------        --- 
<S>                                                   <C>       <C>         <C>
A.  Chairman and President                  
    ----------------------                  

    Corporate E.P.S. vs. PP                           0         20.0%       40.0%
    Corporate RONA vs. PP                             0         20.0%       40.0%
                                                    -----       -----       -----
                                                      0%        40.0%       80.0%
                                            
B.  Other Corporate Officers                
    ------------------------                
                                            
    Corporate E.P.S. vs. PP                           0        12.00%       24.0%   
    Corporate RONA vs. PP                             0        12.00%       24.0%   
                                                    -----       -----       -----
                                                      0%       24.00%       48.0%
                                            
C.  Huffy Company Heads                     
    -------------------                     
                                            
    1.   HBC, HSC, HSF, TTH and WIS          
                                            
         Huffy Company RONA vs. PP                    0         12.0%       24.0%
         Huffy Company EBIT vs.  PP                   0         12.0%       24.0%
                                                    -----       -----       -----
                                                      0%        24.0%       48.0%
</TABLE>


                                                                    Page 1 of 15

<PAGE>   2
<TABLE>
C.  Huffy Company Heads (Cont'd)                               Min.       Target         Max.
    -------------------                                        ---        ------         --- 
<S>                                                             <C>       <C>         <C>
    2.   GBPC
         Huffy  Company  (without  GWPC)
           RONA vs.  PP                                         0         9.6%        19.2%
         GWPC RONA vs. PP                                       0         2.4%         4.8%
         Huffy Company (without GWPC) EBIT vs. PP               0         9.6%        19.2%
         GWPC EBIT vs. PP                                       0         2.4%         4.8%
                                                               ---       ------       ----- 
                                                                0%       24.0%        48.0%

D.  Huffy Company Staffs
    --------------------
    1.   HBC, HSC, WIS, TTH and HSF

         Huffy  Company  RONA vs.  PP                           0         6.0%        12.0%
         Huffy Company EBIT vs. PP                              0         6.0%        12.0%
                                                               ---       ------       ----- 
                                                                0%       12.0%        24.0%

    2.   GWPC Vice President & General Manager

         GWPC EBIT vs.  PP                                      0         6.0%        12.0%
         GWPC RONA vs. PP                                       0         6.0%        12.0%
                                                               ---       ------       ----- 
                                                                0%       12.0%        24.0%

    3.   GBPC Staff (excluding GWPC V.P./General Manager)

         Huffy Company (without GWPC) EBIT vs. PP               0         4.8%         9.6%
         Huffy Company (without GWPC) RONA vs. PP               0         4.8%         9.6%
         GWPC RONA vs. PP                                       0         1.2%         2.4%
         GWPC EBIT vs. PP                                       0         1.2%         2.4%
                                                               ---       ------       ----- 
                                                                0%       12.0%        24.0%

E.  Corporate Exempt
    ----------------

    1.   Positions with 700 or more Hay points

         Corporate E.P.S. vs. PP                                 0        6.0%        12.0%
         Corporate RONA vs. PP                                   0        6.0%        12.0%
                                                               ---       ------       ----- 
                                                                 0%      12.0%        24.0%
</TABLE>





                                                                    Page 2 of 15

<PAGE>   3
<TABLE>
E.  Corporate Exempt (Cont'd)                                  Min.       Target         Max.
    ----------------                                           ---        ------         --- 
<S>                                                             <C>       <C>           <C>         <C>
    2.   Positions with less than 700 Hay points

                 Corporate E.P.S. vs. PP                         0%        4.0%          8.0%
                 Corporate RONA vs. PP                           0%        4.0%          8.0%
                                                               ----      ------        ------
                                                                 0%        8.0%         16.0%

F.  Other Exempt
    ------------

    1.   Huffy Company Exempt (except HSF Exempt;
         GBPC Exempt; GWPC Exempt; WIS Field
         Management (see Policy 701-B for WIS Field
         Management personnel) and Exempt; TTH
         Canadian District Sales Manager and TTH
         Wood Mills Exempt Employees)

         Huffy Company EBIT vs.  PP                              0%        5.0%        10.0%
         Huffy Company RONA vs. PP                               0%        5.0%        10.0%
                                                               ----      ------        -----
                                                                 0%       10.0%        20.0%

    2.   HSF District Managers

         District Gross Field Profit % vs. PP                    0         2.5%         5.0%       
         District Gross Field Profit $ vs. PP                    0         2.5%         5.0%       
         Huffy Company EBIT vs. PP                               0         2.5%         5.0%
         Huffy Company RONA vs. PP                               0         2.5%         5.0%
                                                               ----      ------        -----
                                                                 0%       10.0%        20.0%

    3.   HSF Area Managers

         Area Gross Field Margin % vs. PP                        0         2.5%         5.0%        
         Area Gross Field Margin $ vs.  PP                       0         5.0%         5.0%        
         Huffy Company EBIT vs. PP                               0         2.5%         5.0%
         Huffy Company RONA vs. PP                               0         2.5%         5.0%
                                                               ----      ------        -----
                                                                 0%       10.0%        20.0%

    4.   HSF Zone Merchandising Managers                                                            (Rev.)

         Zone AGMM% vs. PP                                       0         2.5%         5.0%        (Rev.)
         HSF EBIT vs. PP                                         0        1.25%         2.5%        (Rev.)
         HSF RONA vs. PP                                         0        1.25%         2.5%        (Rev.)
                                                               ----      ------        -----
                                                                 0%       5.00%        10.0%        (Rev.)

    5.   Merchandising Operations Managers                                                          (Rev.)

         Gross Merchandising Profit%                             0         5.0%        10.0%        (Rev.)
         HSF EBIT vs. PP                                         0         2.5%         5.0%        (Rev.)
         HSF RONA vs. PP                                         0         2.5%         5.0%        (Rev.)
                                                               ----      ------        -----
                                                                 0%       10.0%        20.0%        (Rev.)

    6.   HSF Other Exempt

         Huffy Company EBIT vs. PP                               0         5.0%        10.0%
         Huffy Company RONA vs. PP                               0         5.0%        10.0%
                                                               ----      ------        -----
                                                                 0%       10.0%        20.0%
</TABLE>
                                                                   Page 3 of 15

<PAGE>   4
<TABLE>
<CAPTION>
                                                               Min.      Target         Max.
                                                               ----      ------         ----
<S>                                                             <C>       <C>           <C>
7.   GBPC Financial Staff (including
     all Denver-based MIS, Credit and
     Accounting employees except for MIS
     LAN  Administrator and Cost Accountant)

     Huffy Company (without GWPC) EBIT vs. PP                   0          4.0%          8.0%
     Huffy Company (without GWPC) RONA vs. PP                   0          4.0%          8.0%
     GWPC RONA vs. PP                                           0          1.0%          2.0%
     GWPC EBIT vs. PP                                           0          1.0%          2.0%
                                                               ----      ------        ------
                                                                0%        10.0%         20.0%

8.   GBPC Director - Sales, GBPC Director -
     Marketing, GBPC Director - International
     Sales and Marketing, GBPC Sales
     Administrator, GBPC Consumer Relations
     Supervisor, GBPC Sales Managers, GBPC
     Customer Service Manager, GBPC Business
     Line Manager for GWPC, GBPC Manager of
     Design

     Huffy Company (without GWPC) EBIT vs. PP                   0          4.0%          8.0%
     Huffy Company (without GWPC) RONA vs. PP                   0          4.0%          8.0%
     GWPC RONA vs. PP                                           0          1.0%          2.0%
     GWPC EBIT vs. PP                                           0          1.0%          2.0%
                                                               ----      ------        ------
                                                                0%        10.0%         20.0%

9.   Other GBPC Exempt

     Huffy Company (without GWPC) EBIT vs. PP                   0          5.0%         10.0%      
     Huffy Company (without GWPC) RONA vs. PP                   0          5.0%         10.0%
                                                               ----      ------        ------
                                                                0%        10.0%         20.0%

10.  GWPC Exempt

     GWPC EBIT vs.  PP                                          0          5.0%         10.0%
     GWPC RONA vs. PP                                           0          5.0%         10.0%
                                                               ----      ------        ------
                                                                0%        10.0%         20.0%
</TABLE>


                                                                 Page 4 of 15

<PAGE>   5
<TABLE>
                                                                   Min.       Target         Max.
                                                                   ---        ------         --- 
<S>                                                                 <C>        <C>          <C>
11.  TTH Canadian District Sales Manager

     Net Sales $ vs.  Sales Objective $*                            0%         10.0%        20.0%
                                                                   ---        ------        ----- 
                                                                    0%         10.0%        20.0%
</TABLE>

* Threshold payment of 2% applies when 90% of pre-established Sales Objective $
  are attained, 10% when 100% of Sales Objective $ are attained, and 20% when 
  110% of Sales Objective $ are obtained.
        

<TABLE>
<CAPTION>
<S>                                                                 <C>        <C>          <C>   
12.   TTH Wood Mills Exempt                                                                              

      Huffy Company EBIT vs. PP                                     0          5.0%         10.0%*       
      Huffy Company RONA vs. PP                                     0          5.0%         10.0%*       
      Huffy Company Gainsharing Plan                                0            --         12.0%*       
                                                                   ---        ------        ----- 
                                                                    0%        10.0%         20.0%*       

* Either category of bonus payment may pay up to the maximum award shown, but                            
  the maximum total bonus  payable shall not exceed 20.0%.                                               
</TABLE>

<TABLE>
13.   All WIS exempt positions with Manager or
      Director titles (excluding WIS National Account
      Manager; WIS National Sales Manager; and
      WIS Field Management Personnel)

<S>                                                                 <C>        <C>          <C>          
      Huffy Company EBIT vs. PP                                     0          5.0%         10.0%
      Huffy Company RONA vs. PP                                     0          5.0%         10.0%
                                                                   ---        ------        ----- 
                                                                    0         10.0%         20.0%

14.   WIS National Account Manager

      Huffy Company EBIT vs. PP                                     0          5.0%         10.0%        
      Huffy Company RONA vs. PP                                     0          5.0%         10.0%        
                                                                   ---        ------        ----- 
                                                                    0%        10.0%         20.0%

15.   Other WIS Exempt and WIS Service
      Managers, and WIS Managers in
      Training (excluding WIS Field
      Management; WIS National Account                                                                   
      Manager and WIS National Sales                                                                     
      Manager                                                                                            
                                                                                                         
</TABLE>


                                                                 Page 5 of 15

<PAGE>   6
<TABLE>
<CAPTION>
                                                                         Min.       Target         Max.
                                                                         ---        ------         --- 
      <S>                                                                 <C>        <C>          <C>
      Huffy Company EBIT vs.  PP                                          0          2.5%         5.0%    
      Huffy Company RONA vs. PP                                           0          2.5%         5.0%
                                                                         ---        ------       ----- 
                                                                          0          5.0%        10.0%
</TABLE>
II.   Corporate Internal Audit Staff
      ------------------------------

      Corporate Internal Audit staff are members of the Corporate Exempt
      category and bonus recommendations will generally be made on that basis. 
      Such bonus recom-mendations will be subject to approval by the Audit
      Committee of the  Board of Directors.


III.  Award Scales(1)
      ---------------
<TABLE>
<CAPTION>
      Huffy Company RONA vs. Plan                                                                                
      Huffy Company EBIT vs. Plan                                   % of Targeted
      Corporate RONA vs. Plan                                       Award Earned(2)
      ----------------------------------------------------          --------------- 
      <S>                                                           <C>                                          
      A separate letter will be sent to each Huffy                                                               
      Company with their applicable award scale.                                                                 
</TABLE>

<TABLE>
<CAPTION>
                                                                    % of Targeted
      Corporate EPS vs. Plan                                        Award Earned(2)
      ------------------------------------------------------        --------------- 
      <S>                                                           <C>                                          
      The 1997 award scale is maintained by the                                                                  
      Vice President and Controller.                                                                             
</TABLE>

<TABLE>
<CAPTION>
      HSF District Gross                                            % of Targeted
      Field Profit $ vs. PP                                         Award Earned(2)
      ---------------------                                         --------------- 
          <S>                                                             <C>   
          Under   90%                                                     -0-
                  90                                                       25
                 100                                                      100
                 110+                                                     200
</TABLE>

<TABLE>
<CAPTION>
      HSF Area Gross Field                                          % of Targeted
      Margin $  vs.  PP                                             Award Earned
      ------------------------                                      ------------
          <S>                                                             <C>   
          Under  90%                                                      -0-
                 90                                                        25
                100                                                       100
                110+                                                      200
</TABLE>


                                                                   Page 6 of 15


<PAGE>   7
<TABLE>
<CAPTION>
                                                       % of Targeted
                                                        Award Earned
                                                        ------------
                                                                                                
HSF District Gross Field Profit % vs. PP                            
HSF Area Gross Field Margin % vs. PP                                
------------------------------------
<S>                                                         <C>                                 <C>
  Greater than  -1.00% below                                -0-     
                -1.00           Threshold                    25     
                -0.67                                        50     
                -0.33                                        75     
                PP%             Target                      100     
                +0.5                                        133     
                +1.0                                        167     
                +1.5            Maximum                     200     


                                                       % of Targeted
                                                        Award Earned
                                                        ------------
HSF Zone Merchandising Managers
------------------------------------
  Greater than  -1.00% below                                -0-                                 (REV.)
                -1.00                                        25                                 (REV.)
                -0.67                                        50                                 (REV.)
                -0.33                                        75                                 (REV.)
                PP%                                         100                                 (REV.)
                +0.5                                        133                                 (REV.)
                +1.0                                        167                                 (REV.)
                +1.5                                        200                                 (REV.)
</TABLE>

     1.   The scales are sliding.  When actual performance falls between the 
          points on the scale, it will be adjusted to the nearest 1/10th of 1% 
          and interpolated to determine the award level.

     2.   Percent of targeted award earned is used as a multiple of bonus 
          target which varies by level of employee.  Refer to Section I.

IV.  Positions Covered

     A.   Corporate Officers and Huffy Company Presidents

          Corporate Officers
          ------------------

          Chairman of the Board, President & CEO
          Vice President - Finance and CFO
          Vice President - Controller
          Vice President - General Counsel and Secretary
          Vice President - Treasurer and Director, Investor Relations

          Huffy Company Presidents
          ------------------------

          President and General Manager - Huffy Bicycle Company
          President and General Manager - Huffy Sports Company
          President and General Manager - Gerry Baby Products Company
          President and General Manager - Washington Inventory Service 
          President and General Manager - Huffy Service First, Inc.  
          President and General Manager - True Temper Hardware Company

                                                               Page 7 of 15

<PAGE>   8

     B.   Huffy Company Staff
<TABLE>
          <S>                                                             <C>
          -  HBC
             ---
             
             V.P./G.M. - Celina
             V.P./G.M. - Farmington
             V.P. Marketing
             V.P. Controller
             V.P. Plant Operations and Logistics
             V.P. Human Resources
             V.P. Sales                                                  

          -  HSC
             ---

             V.P. Sales and Marketing                                    
             V.P. Controller
             V.P. Product Engineering/Quality Assurance
             V.P. Manufacturing
             V.P. Materials Management

          -  GBPC
             ----

             V.P. Sales/Marketing/Design
             V.P. Controller
             V.P. Operations and Engineering
             V.P. Human Resources
             V.P. General Manager - GWPC
             V.P. and Corporate Counsel                                  

          -  HSF
             ---

             V.P. Operations
             V.P. Controller
             V.P. Sales/Marketing
             V.P. Human Resources

          -  WIS
             ---

             V.P. Operations
             V.P. Finance and Controller
             V.P. Technology & Information Systems
             V.P. Sales and Account Management

</TABLE>


                                                                   Page 8 of 15

<PAGE>   9
     -  TTH
        ---

        V.P. Sales and Marketing
        V.P. Operations
        V.P. Controller
        V.P. Human Resources
        Managing Director, TT Ireland

V.  Individual Personal Objectives
    ------------------------------
<TABLE>
<CAPTION>
                                                            Bonus Opportunity as a % of
                                                                Actual Base Salary              
                                                     ---------------------------------------
                                                        Below
                  Position                           Threshold        Threshold      Maximum
                  --------                           ---------        ---------      -------
    <S>  <C>                                           <C>               <C>           <C>
    
    A.   Chairman and President                         0%               10.0%         20.0%
         -----------------------                                                          
    
    B.   Corporate Officers and
         ----------------------
         Huffy Company Heads                            0%                6.0%         12.0%
         -------------------                                                 
    
    C.   Huffy Company Staff                            0%                3.0%          6.0%
         -------------------                                                 
    
    D.   Corporate Exempt
         ----------------
    
         1.  Positions with 700 or
             more Hay Points                            0%                3.0%          6.0%
    
         2.  Positions with less than
             700 Hay Points                             0%                2.0%          4.0%
</TABLE>

For those individuals who have a portion of their bonus measured on this basis,
the following implementation procedure will be used:

    1.   Each individual will draw up objectives covering the calendar year 
         based on supporting the supervisor's objectives and his own.

    2.   These objectives should have the following characteristics:

         a)   Not be associated with EBIT or RONA goals in the Profit Plan. 
              (Financial goals for such things as cost reduction or similar 
              projects are appropriate goals.)


Page 9 of 15

<PAGE>   10
<TABLE>
<CAPTION>
        <S>   <C>                                                                   <C>
         b)   Be as specific and as measurable as to successful attainment as 
              possible. (A project need not be completed in the calendar year.
              The objective can be to obtain a specific status in the project
              by calendar year end.)

         c)   1)   Chairman and President shall each develop no more than 7 to 8     (Rev.)
                   objectives.

              2)   Other Corporate Officers and Huffy Company Presidents shall 
                   each develop no more than 6 objectives.

              3)   Huffy Company Staff and Corporate Officer Direct Reports in 
                   positions with 700 or more Hay points and Other Corporate
                   Exempt shall each develop no more than 3 objectives.

         d)   A "degree of difficulty" should be assigned to each objective on 
              the basis of 1 to 10.
</TABLE>


    3.   The objectives and degrees of difficulty shall be reviewed between the 
         individual and his supervisor and agreement reached on:

                           a)   Completeness of list
                           b)   State of objectives
                           c)   Degree of difficulty

         It is the supervisor's responsibility to ensure that there is some
         consistency in the measurement of "degree of difficulty" among all his
         subordinates, and the Corporate Officer's responsibility to review for
         consistency in measurement of "degree of difficulty" among Huffy       
         Company Staff personnel within his function.

<TABLE>
<CAPTION>
    4.   Personal Objectives Schedule
         ----------------------------
         <S>                        <C>                                                            
                                                                                                         
                                                                                                         
                                                                                                         
         Upon Approval by           The CEO's and COO's objectives shall be communicated to              
         Compensation               the Corporate Officers and Huffy Company Presidents                  
         Committee                  promptly following approval by Compensation Committee of             
                                    the Board of Directors.                                              
                                                                                                         
                                                                                                         
         15 days later              Corporate Officers and Huffy Company Presidents shall                
                                    develop their objectives and submit them to their                    
                                    respective supervisor.                                       
</TABLE>


                                                                   Page 10 of 15

<PAGE>   11
<TABLE>
           <S>                                <C>                                                           <C>
                                              Corporate Officers' and Huffy Company Presidents'
           10 days later                      objectives shall be approved by their respective              
                                              immediate supervisors.  Corporate Officers and Huffy
                                              Company Presidents shall communicate their approved
                                              objectives to their respective Corporate Officer Direct
                                              Reports in positions with 700 or more Hay points
                                              ("Corporate Staff") and Other Corporate Exempt and Huffy
                                              Company Staffs ("Huffy Staff").
           
           30 days later                      Huffy Staff personnel shall have submitted and received       
                                              approval of their objectives from their respective Huffy      
                                              Company President.  Corporate Staff shall have submitted      
                                              and received approval of their objectives from their          
                                              respective Corporate Officer.  Other Corporate Exempt         
                                              shall have submitted and received approval of their           
                                              objectives from their respective Corporate Staff              
                                              supervisor or, if applicable, supervising Corporate           
                                              Officer.                                                      
                                                                                                            
</TABLE>

      5.   Personal Objectives Results Schedule
           ------------------------------------

<TABLE>
           <S>                                <C>                                                           <C>
           First Friday in                    Corporate Staff and Other Corporate Exempt shall submit
           December                           their results for the year ending for evaluation to the
                                              appropriate Corporate Officer and immediate supervisor,
                                              respectively, and, with respect to Huffy Staff, to their
                                              Huffy Company President.
           
           10 days later                      Personal objective results for Corporate Staff, Other
                                              Corporate Exempt and Huffy Company Staff shall have been
                                              reviewed and have received comments as follows:
                                              - Corporate Officers shall comment to their Corporate
                                                Staff and Other Corporate Exempt, if immediately
                                                supervised.                                                 
                                              - Supervisors of Other Corporate Exempt.                      
                                              - Huffy Company Presidents to Huffy Staff.                    

           10 days later                      CEO and COO provide Compensation Committee of Board of        
                                              Directors with their results for evaluation and approval.     
</TABLE>


                                                                  Page 11 of 15

<PAGE>   12
<TABLE>
         <S>                              <C>                                                            <C>
                                          Corporate Staff and Other Corporate Exempt and personnel
         5 days later                     results shall be approved by their immediate supervisors.     
                                          Huffy Staff personnel results shall be approved by Huffy      
                                          Company Presidents.  Corporate Officers and Huffy Company
                                          Presidents shall submit their results for the year ending
                                          to their immediate supervisor for evaluation and
                                          approval.
         
         
         Feb. 1                           The evaluation and approval of personal objectives
                                          results are to be completed.

    6.   The participant shall evaluate his own performance and then submit the
         evaluation to his supervisor who shall review and approve the
         evaluation.

         This score is not binding.  The supervisor shall use his judgment to
         arrive at a final rating.  However, ONLY performance on the written
         objectives shall be evaluated, not performance on any other
         matters.

    7.   Each individual shall be informed by his supervisor of his performance 
         rating but only AFTER all approvals have been secured.

    8.   Notwithstanding the foregoing, payments for personal objectives 
         performance are expressly conditioned upon and made subject to the
         following base financial criteria:

   (A)   ALL CORPORATE OFFICERS, HUFFY COMPANY PRESIDENTS, HUFFY STAFF,                                 
         CORPORATE STAFF AND OTHER CORPORATE EXEMPT.                                                    
                                                                         
         A separate letter outlining the parameters of Personal                                         
         Objectives eligibility shall be forwarded to each Huffy                                        
         Company President and Corporate Officer.                                                       


</TABLE>

VI.  Implementation
     --------------

     1.  Eligibility
         -----------

         All exempt employees on the payroll on or before the first business day
         of the calendar year shall be eligible for consideration for a full
         bonus opportunity.

         Hires:    Employee coming on the payroll after the first business day 
                   of the calendar year but on or before the first business day
                   of July will be eligible for consideration for one-half      
                   the annual bonus opportunity.

                                                                  Page 12 of 15

<PAGE>   13
              Exception:      HSF Regional Operations, District and Area
                              Managers, and eligible WIS personnel hired after
                              January 1 of the calendar year shall be eligible
                              for consideration for the percentage of annual
                              bonus opportunity shown below:

<TABLE>
<CAPTION>
                                                                 Percentage  of  Annual
                              Hire Date                            Bonus Opportunity   
                              ---------                         -----------------------
                              <S>     <C>  <C>                            <C>
                              
                              During  1st  quarter                         75%
                              During  2nd  quarter                         50%
                              During  3rd  quarter                         25%
                              During  4th  quarter                          0%
</TABLE>

         Transfers, Promotions or Demotions: Individuals transferred, promoted
         or demoted during the calendar year shall have bonus   opportunity as
         follows:

<TABLE>
<CAPTION>
                                                              Calculation Based on
                                                              --------------------
                                                          Old Oppor.        New Oppor.
                                                          ----------        ----------
                                                          Old Actual        New Actual
                                                          ----------        ----------
                                                         Base Salary       Base Salary
                                                         -----------       -----------
                                                       Old. Opp. Level   New Opp. Level
                                                       ---------------   --------------
 <S>                                                          <C>              <C>
       Transferred, Promoted or Demoted                                                 
       During 1st Quarter                                  25%               75%
       During 2nd Quarter                                  50%               50%
       During 3rd Quarter                                  75%               25%
       During 4th Quarter                                 100%                0%
</TABLE>
     
       Note:      Non-exempt and/or hourly employees promoted to exempt 
                  positions are eligible for bonus consideration as above but
                  only for those quarters in which they held exempt positions. 
                  Also, status changes (including transfers, promotions and
                  demotions, but excluding new hires) for bonus eligible
                  employees at WIS which are effective for the first pay period
                  beginning on or after the first day of the quarter shall be
                  treated for bonus purposes as if they  were effective the     
                  first day of the quarter.
        
       Terminations:     To be eligible to receive the Profit Sharing payment 
                         for a calendar year, an employee must be on the
                         active payroll at the time payment for that calendar
                         year is made OR HAVE BEEN TERMINATED DUE TO A
                         CURTAILMENT OF PRODUCTION BETWEEN JULY 1 OF THAT
                         CALENDAR YEAR AND THE DATE OF BONUS PAYMENT, HAVING MET
                         ALL ELIGIBILITY REQUIREMENTS OF THE PLAN AND HAVING
                         PERFORMED ALL DUTIES AND RESPONSIBILITIES IN AT LEAST
                         AN AVERAGE MANNER. UNDER

                                                                   Page 13 of 15

<PAGE>   14
              THESE CIRCUMSTANCES, SUCH EMPLOYEES MUST HAVE BEEN ON THE PAYROLL
              AT THE BEGINNING OF THE CALENDAR YEAR IN ORDER TO QUALIFY FOR
              BONUS FOR THAT CALENDAR YEAR.  APPROVAL OF THE CEO IS REQUIRED IN
              ALL SUCH CASES.  EXEMPT EMPLOYEES TERMINATED DUE TO A CURTAILMENT
              OF PRODUCTION SHALL BE ELIGIBLE FOR BONUS OPPORTUNITY AS
              FOLLOWS:

                                                       BONUS AS PERCENT PAYMENT 
              TERMINATION DATE                        OF FULL BONUS OPPORTUNITY 
              JULY 1 - SEPTEMBER 30                              50%
              OCTOBER I - DECEMBER 31                            75%
              JANUARY 1 - DATE OF PAYMENT                       100%

         Death or Retirement:     Employees who retired or died during or after
                                  the calendar year for which bonus is being   
                                  calculated and who met the requirement of    
                                  being on the active payroll during the year  
                                  will be given consideration for a bonus      
                                  payment on basis of the following percentage 
                                  of full bonus opportunity: retired or died in
                                  1st Qtr - 25%; 2nd Qtr 50%; 3rd Qtr - 75%;   
                                  4th Qtr - 100%.                              

                                  Payment for deceased employees shall be made
                                  to the beneficiary designated under the
                                  Salaried Employees Group Term Life    
                                  Insurance Plan.

                                  Active payroll is defined as receiving wages
                                  (recorded on the Federal W-2 form) from the
                                  Corporation or one of the Huffy Companies. 
                                  Except for those terminated or retiring or
                                  deceased employees described above, employees
                                  absent for any reason and not receiving wages
                                  (as defined above) are not considered on      
                                  the active payroll.

         Exception to the eligibility requirements must be approved by the CEO
         at the time approval is obtained for transfer or hire.

    2.   Payment
         -------

         Except as noted below, payment for Profit Sharing shall be annual and
         shall occur in March of each year for the prior calendar year's
         results.

    3.   Calculations
         ------------

         All bonus calculations will be rounded up to the nearest $25.00
         increment and the minimum bonus payment to be paid will be $125.00 per
         employee, provided employee is eligible for bonus and such bonus is
         approved.

                                                                 Page 14 of 15

<PAGE>   15
              Definitions
              -----------

              Consolidated RONA        Profit after tax after cost of plan plus 
              -----------------        tax affected interest expense divided by
                                       the twelve (12) month rolling average of
                                       total assets less current liabilities   
                                       excluding all interest bearing debt.    
                                                                               
                                                                               
                                                                               
                                                                               
              E.P.S.                   Earnings per common share.
              ------

              Huffy Company RONA       Earnings before interest and taxes, tax
              ------------------       affected at the current profit plan tax
                                       rate, divided by the twelve (12) month 
                                       rolling average of total assets other  
                                       than goodwill less current liabilities 
                                       excluding all interest bearing debt.   
                                                                              
                                                                              
                                                                              
                                                                              
              EBIT                     Earnings before interest and taxes.
              ----
                        
              Actual Base Salary       Employee's actual base salary as of the 
              ------------------       January 1 of the calendar year for which
                                       bonus is calculated.                    

                                                                               
                                                                               
                                                                               
        
              Promotion                15% upward difference in Hay points 
              ---------                (see Corporate Policy 113).


              Demotion                 15% downward difference in Hay points 
              --------                 (see Corporate Policy 113).


              Transfer                 A change in position with substantially 
              --------                 different duties and responsibilities
                                       which does not constitute a promotion or
                                       demotion.

Distribution of This Policy
---------------------------


    Restricted to Corporate Officers, Huffy Company Presidents, Huffy Company
    Staff, and Corporate Officers Direct Reports in positions with 700 or more
    Hay points, except for Policy 701-B and 701-C which is restricted to
    Corporate Officers and President and General Manager of WIS.          


/s/ DONALD R. SCHEICK                      /s/ RICHARD L. MOLEN   
____________________________________       ____________________________________
Director, Corporate Human Resources        Chairman and Chief Executive Officer


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