base salary. Between the low and high ends of the Eligibility Ranges, the percentage of basesalary which each participant would have been eligible to receive increased as net incomeincreased.     For the 2011 Cash Incentive Program, the Eligibility Range for Mr. Black is $85.5 million to$94.1 million of net income and the Eligibility Range for the Executive Vice Presidents is $88.5million to $95.3 million of net income. If the Company earns net income below the low end of theapplicable Eligibility Range, the Executive Officer will not receive an award payment under thisprogram. At $85.5 million of net income, Mr. Black will be eligible to receive up to 60% of hisbase salary; at $88.5 million of net income, each Executive Vice President will each be eligible toreceive up to 10% of his base salary. At or above $94.1 million of net income, Mr. Black will beeligible to receive up to approximately 151.6% of his base salary; at or above $95.3 million of netincome, each of the Executive Vice Presidents will be eligible to receive up to 65% of theirrespective base salaries. Between the low and high ends of the Eligibility Ranges, the percentageof base salary which each participant will be eligible to receive will increase as net incomeincreases.**Equity Incentive Programs**     The Company’s Compensation Committee established for the Executive Officers the 2010 EquityIncentive Program and the 2011 Equity Incentive Program (the “Equity Incentive Programs”) pursuantto the Equity Incentive Plan. The Equity Incentive Programs permit the Company to grant“performance-based compensation” within the meaning of Section 162(m) of the Internal Revenue Code,thereby preserving the Company’s ability to receive federal income tax deductions for those awardsto the extent that they in fact comply with that Code section. Award payments under the 2010Equity Incentive Program will be paid in Performance RSUs and, if payable under the 2011 EquityIncentive Program, award payments are expected to be paid in Performance RSUs.     The performance goals under the Equity Incentive Programs are qualitatively the same as theperformance goals under the respective Cash Incentive Programs, i.e. such goals are based upon theCompany earning net income within or above an Eligibility Range for the applicable fiscal yearsand, with respect to the Executive Vice Presidents, personal goals as set forth above under “CashIncentive Programs.” However, the levels of net income within the Eligibility Ranges for the EquityIncentive Programs are higher than those established under the Cash Incentive Programs.     If the Company’s net income is below the Eligibility Range for the Applicable year’s EquityIncentive Program, no Performance RSUs can be earned under the applicable program. If the Company’snet income is within the Eligibility Range, the number of Performance RSUs which the ExecutiveOfficers are eligible to earn increases as net income increases, up to 100% of the award target. Ifthe Company’s net income is at or above the highest level of net income within the EligibilityRange, each Executive Officer is eligible to earn his maximum award target.     For the 2010 Equity Incentive Program, the Compensation Committee established for Mr. Black anEligibility Range of $72.6 million to $78.4 million of net income and for the Executive VicePresidents an Eligibility Range of $76.9 million to $79.4 million of net income. If the Companyearned net income below the low end of the Eligibility Range, the applicable
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participant would not have earned Performance RSUs under this program. At $72.6 million of netincome, Mr. Black would have been eligible to earn up to a value of $175,000 of Performance RSUs;at $76.9 million of net income, each of the Executive Vice Presidents would have been eligible toearn up to a value of $50,000 of Performance RSUs. At or above $78.4 million of net income, Mr.Black was eligible to earn up to a value of $1,925,000 of Performance RSUs; at or above $79.4million of net income, each of the Executive Vice Presidents was eligible to earn up to a value of$150,000 of Performance RSUs. Between the low and high ends of the Eligibility Ranges, the value ofPerformance RSUs which each participant would have been eligible to earn increased as net incomeincreased. The “value” of the Performance RSUs, and the number of Performance RSUs granted, wasdetermined by reference to the closing price of the Company’s stock on June 17, 2010.     For the 2011 Equity Incentive Program, the Compensation Committee established for Mr. Black anEligibility Range of $90.7 million to $94.1 million of net income and for the Executive VicePresidents an Eligibility Range of $94.5 million to $96.2 million of net income. If the Companyearns net income below the low end of the Eligibility Range, the applicable participant cannot earnPerformance RSUs under this program. At $90.7 million of net income, Mr. Black will be eligible toearn up to a value of $897,715 of Performance RSUs; at $94.5 million of net income, each of theExecutive Vice Presidents will be eligible to earn up to a value of $50,000 of Performance RSUs. Ator above $94.1 million of net income, Mr. Black will be eligible to earn up to a value of$1,965,425 of Performance RSUs; at or above $96.2 million of net income, each of the Executive VicePresidents will be eligible to earn up to a value of $150,000 of Performance RSUs. Between the lowand high ends of the Eligibility Ranges, the value of Performance RSUs which each participant willbe eligible to earn will increase as net income increases. The “value” of the Performance RSUs, andthe number of Performance RSUs to be granted, will be determined by reference to the closing priceof the Company’s stock on March 29, 2011.**2011 Supplemental Equity Incentive Program**     As a special incentive to the Executive Officers to achieve extraordinary results in fiscalyear 2011, the Company’s Compensation Committee established for the Executive Officers the 2011Supplemental Equity Incentive Program pursuant to the Equity Incentive Plan for fiscal year 2011.The 2011 Supplemental Equity Incentive Program permits the Company to grant “performance-basedcompensation” within the meaning of Section 162(m) of the Internal Revenue Code, thereby preservingthe Company’s ability to receive federal income tax deductions for those awards to the extent thatthey in fact comply with that Code section. If payable under the 2011 Supplemental EquityIncentive Program, award payments are expected to be paid in Performance RSUs.     The performance goals under the 2011 Supplemental Equity Incentive Program are very similar tothe performance goals under the Cash Incentive Programs and the Equity Incentive Programs, i.e.such goals are based upon the Company earning a certain amount net income for fiscal year 2011 and,with respect to the Executive Vice Presidents, personal goals as set forth above under “CashIncentive Programs.” However, instead of being based upon Eligibility Ranges of net income, the2011 Supplemental Equity Incentive Program is based on a single level of net income. In the eventthe Company earns at least $103.0 million of net income in fiscal year 2011, Mr. Black will beeligible to earn up to a value of $250,000 of Performance
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RSUs and each of the Executive Vice Presidents will be eligible to earn up to a value of$50,000 of Performance RSUs. The “value” of the Performance RSUs, and the number of PerformanceRSUs to be granted, will be determined by reference to the closing price of the Company’s stock onMarch 29, 2011.**Negative Discretion**     For each of the Incentive Programs (i.e., the Cash Incentive Programs, the Equity IncentivePrograms and the 2011 Supplemental Equity Incentive Program), the Compensation Committee mayexercise negative discretion to reduce the amount of a cash award that otherwise would have beenpayable to, or to reduce the number of Performance RSUs that would otherwise have been earned by,an Executive Officer at any particular level of net income achieved by the Company, even if theCompany’s net income is within or above the applicable Eligibility Range or level. In decidingwhether, and to what extent, to pay a cash award to, or to certify the earning of Performance RSUsby, an Executive Vice President, an important factor which may be considered by the CompensationCommittee in exercising its negative discretion is Mr. Black’s evaluation of the individualperformance of each Executive Vice President. Generally, Mr. Black makes his recommendation basedupon his evaluation of the Executive Vice President’s individual contributions to the performanceof the Company and such other factors as he may deem relevant. The final determination of theamount of a cash award that will be paid to, or the number of Performance RSUs that will be earnedby, each Executive Officer is made by the Compensation Committee; however, the CompensationCommittee may not increase the cash award payable to, or the number of Performance RSUs which willbe earned by, an Executive Officer above the amount or number that is otherwise applicable at anyparticular level of net income achieved by the Company.
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