ex_10cc.htm


    
 

    
      CTS
Corporation

      
        Form
10-K 2008

      

      
        

        

      

      ­­­­EXHIBIT (10)(cc)



    CTS
Corporation

    Amended
and Restated 2008-2009

    Performance
Restricted Stock Unit Plan

     

    


    SECTION 1.   SUMMARY AND INTERPRETATION:
The 2008-2009 Performance Restricted Stock Unit Plan (the "Plan") is
intended to provide financial and performance incentives to executive officers
and key employees through the use of Restricted Stock Unit awards tied to
specific performance incentives that management and the Board believe will be
beneficial to the Company and its shareholders over the long-term. The CTS
Corporation 2004 Omnibus Long-Term Incentive Plan (the “2004 Omnibus Long-Term
Incentive Plan”) is the governing document for the Plan.  Capitalized
terms not otherwise defined herein shall have the meanings set forth in the 2004
Omnibus Long-Term Incentive Plan, as amended. The Plan is subject to the terms
and conditions of the 2004 Omnibus Long-term Incentive Plan.  In the
event of any inconsistency between the provisions of the Plan and the 2004
Omnibus Long-Term Incentive Plan, the 2004 Omnibus Long-Term Incentive Plan will
govern.

    


    SECTION 2.   PHILOSOPHY: The Board of
Directors believes that compensation of executive officers and key employees
should be partially “at risk” and variable, based in part on the Company’s
performance against its peers in the marketplace, as well as the Company’s
performance against certain pre-established goals.  The Plan, along
with other compensation plans of the Company, is intended to focus the efforts
of the Participants on achieving those objectives in order to help ensure the
sustained profitability and continual long-term growth of the
Company.  The Plan is structured to provide Participants with
Restricted Stock Unit Awards based upon achievement of objectives that
management and the Board believe are beneficial to the Company and shareholders
over the long term.  Therefore, performance will be measured over a
two (2) year performance period, and Restricted Stock Units under the Plan will
be awarded and earned only after a two (2) year performance period.

    


    SECTION
3.   OBJECTIVES:

    


    
      	
              ·  

            	
              To
      attract and retain highly qualified
personnel.

            


    

    
      	
              ·  

            	
              To
      motivate improved financial performance, enhanced growth and shareholder
      value creation.

            


    

    
      	
              ·  

            	
              To
      align the interests of executive officers and key employees of the Company
      with those of its shareholders.

            


    

    
SECTION 4.   ADMINISTRATION:  The
Compensation Committee of the Board of Directors (the “Committee”) shall
administer the Plan.  The decision of the Committee shall be final as
to the interpretation of the Plan or any rule, procedure or action related
thereto.

    


    SECTION 5.   ELIGIBILITY: Only the
employees designated by the Committee (the “Participants”) are eligible to
participate in the Plan. The Committee has determined that the Participants
identified in Exhibit A, attached hereto and incorporated herein by reference,
are "Covered Employees" under this Plan.  Awards to Covered Employees
shall be subject to the provisions of Section 7 of the 2004 Omnibus Long-Term
Incentive Plan.

    


    To
receive an Award under the Plan, a Participant must be an active, full-time
employee throughout the Performance Period, as defined in Section
8.

    


    SECTION
6.   DEFINITIONS:

    


    Award:  means a grant of Restricted
Stock Units.

    


    Performance Period: means
January 1, 2008 through December 31, 2009.

    


    Performance Goals: means Two
Year Sales Growth and Relative Total Stockholder Return.

    


    Two Year Sales Growth: means
the 2009 Corporate Sales divided by 2007 Corporate Sales, resulting in the
expression of increase or decrease in Corporate Sales as a
percentage.

    


    Corporate Sales: means the
Company's Net Sales as stated in the Company’s Consolidated Statement of
Earnings for the relevant fiscal year.  In determining Awards for
Participants who are not Covered Employees, Corporate Sales may be adjusted for
unusual conditions, factors or events as determined by the Committee, provided
that no such adjustment shall be made for any condition, factor or event which
was specifically included in the 2007 CTS Corporation Business Plan or 2008 or
2009 CTS Corporation Business Plans, as applicable.

    


    
      
        
        

      

      
        1

        
          

        

      

      
        
        

      

    

     

    Total Stockholder
Return:  means the appreciation in price of a share of common
stock, plus reinvested dividends (paid in cash or other property), between
January 1, 2008 and December 31, 2009.

     

    Relative Total Stockholder
Return:  means the total stockholder return of the Company
between January 1, 2008 and December 31, 2009, relative to the total stockholder
return of a Peer Group of 29 entities over that same period.  See
Exhibit B for calculation.

    


    Peer Group:  means a
benchmark group of 29 companies, the names of which are attached hereto as
Exhibit C, as the same may be adjusted from time-to-time in accord with the Peer
Group Adjustment Protocol (Exhibit D).

    


    RSU: means a Restricted Stock
Unit to be settled upon vesting on the basis of one Share for each Restricted
Stock Unit.  

    


    Target RSU Incentive: means
the number of RSUs assigned to each Participant as a function of his or her
position for purposes of calculating Awards.

    


    Award Level: means the
multiplier which is applied in calculating an Award based on the level of
achievement of a Performance Goal.

    


    Weight: means the percentage
of Target RSU Incentive allocated to each Performance Goal.

    


    SECTION
7.   PERFORMANCE GOALS AND CALCULATION OF AWARDS:

    


    The
Target RSU Incentive for each Participant is set forth in the 2008-2009 Target
RSU Incentive Statement provided to each Participant.

    


    The
settlement of an Award for any Participant may be as much as twice the Target
RSU Incentive or as little as zero depending upon achieved
results.  After the 7% Sales Growth threshold is met, Award Levels for
the Two-Year Sales Growth Performance Goal will be interpolated between
established steps or levels.  There will be no interpolation of Awards
for Sales Growth between 0% and 7%.  Award Levels for the Relative
Total Stockholder Return Performance Goal will not be interpolated for
performance achievement between any established steps or levels.

    


    The
Performance Goals, Weight and Award Levels for the Performance Period are as
follows:


    Performance
Goal No. 1: Two Year Sales Growth

    Weight:
40%

    


    Two Year Sales Growth
Achievement                                                                         Award
Level

     

    Two Year
Sales Growth less than
7%                                                                         0%
(No Award)

    


    Two Year
Sales Growth greater than or equal to 7%,

    but less
than
15%                                                                                                           50%
- 99% of Target Award

    


    Two Year
Sales Growth greater than or equal to 15%,

    but less
than
23%                                                                                                           100%
- 149% of Target Award

    


    Two Year
Sales Growth greater than or equal to 23%,

    but less
than
31%                                                                                                           150%
- 199% of Target Award

    


    Two Year
Sales Growth greater than or equal to
31%,                                             200%
of Target Award

     

    
      	
              ·  

            	
              Above
      the 7% threshold (below which there will be no Award) actual awards will
      be interpolated between established sales growth
    measurements.

            


    

    


    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

     

     

    Performance
Goal No. 2: Relative Total Stockholder Return (“RTSR”)

    Weight:
60%

    


    Relative Total Stockholder
Return                                                                                 Award
Level

    


    RTSR less
than 30% of Peer
Group                                                                               0%
(No Award)

    


    RTSR
better than or equal to 30% of Peer
Group                                                       50%
of Target Award

    but less
than or equal to 50% of Peer Group

    


    RTSR
better than 50% of Peer
Group                                                                           100%
of Target Award

    but less
than or equal to 70% of Peer Group

    


    RTSR
better than 70% of Peer
Group                                                                           150%
of Target Award

    but less
than or equal to 90% of Peer Group

     

    RTSR
better than 90% of Peer
Group                                                                          
200% of TargetAward

    


    
      	
              ·  

            	
              Awards
      will not be interpolated between established Award
  Levels.

            


    

     

    Example:

    


    Participant has a Target RSU Incentive
of 1,000 shares.

    


    Goal #1:

    
      	
              ·  

            	
              Results
      – Two Year Sales Growth is 15%.

            


    

    
      	
              ·  

            	
              1,000
      Target RSU Incentive times 40% (Weight) times 100% Award Level equals 400
      RSUs.

            


    

    Goal
#2:

    
      	
              ·  

            	
              Results
      – RTSR is 51% of Peer Group.

            


    

    
      	
              ·  

            	
              1,000
      Target RSU Incentive times 60% Weight times 100% Award Level equals 600
      RSUs.

            


    

    


     Participant earns 1,000
RSUs.

    


    The
Committee may, in its discretion, adjust a Participant’s payout of an Award
downward after consideration of other business factors, including overall
performance of the Company and the individual Participant’s contribution to
Company performance. The Committee may adjust a payout of an Award in its
discretion to prevent the enlargement or dilution of the Award because of
extraordinary events or circumstances as determined by the
Committee.  The Committee shall make no such adjustment with respect
to the Award of a Covered Employee, however, if the effect of such adjustment
would be to cause the related compensation to fail to qualify as
"performance-based compensation" within the meaning of Section 162(m) of the
Code.  In no event shall the reduction of any Participant’s potential
Award have the effect of increasing an Award payout payable to a Covered
Employee.  For purposes of Section 7(b) of the CTS Corporation 2004
Omnibus Long-term Incentive Plan, Awards shall constitute awards of Performance
Shares and no Award to a Covered Employee may result in the Covered Employee
receiving more than 125,000 Shares for the Performance Period.

    


    SECTION 8.   APPROVAL AND PAYMENT OF
AWARDS: Participants
must remain in continuous employ of the Company through the end of the
Performance Period in order to earn an Award. Upon completion of Performance
Period, and on or before March 15, 2010, the Compensation Committee shall
certify to what extent the Performance Goals for the Performance Period were met
and determine each Participant's Award. The date of such certification and
determination shall be the "Determination Date".  The Committee's
certification shall be subject to completion of the annual audit and
certification of results by the Company's independent auditor.  Awards
shall be made in the form of a grant of Restricted Stock Units under the terms
and conditions of the form of Restricted Stock Unit Agreement attached hereto as
Exhibit E.  Restricted Stock Units granted under the 2008- 2009
Performance Stock Unit Plan will vest on the Determination Date, and shall be
settled as soon as practicable after the Determination Date, subject to the
exceptions set forth in Exhibit E, but in no event later than March 15,
2010.

    


    SECTION 9.   NO CONTRACT: The Plan is not
and shall not be construed as an employment contract or as a promise or contract
to pay Awards to Participants or their beneficiaries.  The Plan shall
be approved by the Committee and may be amended from time to time by the
Committee without notice.  No Participant or beneficiary may sell,
assign, transfer, discount or pledge as collateral for a loan, or otherwise
anticipate any right to payment of an Award under this Plan.

    


    
      
        
        

      

      
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    EXHIBIT
A

    


    COVERED
EMPLOYEES

    


    


    Vinod M.
Khilnani

    


    Donald R.
Schroeder

     

     

    
      
        
        

      

      
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    EXHIBIT
B

    


    Determining
Relative Total Stockholder Return

     

     

    For
purposes of calculating Relative Total Stockholder Return (rounding shall be to
the nearest tenth of a percent, with all hundredths of a percent equal to or
greater than 5 rounded up to the nearest tenth of a percent):

    


    
      	
              ·  

            	
              Company
      Return.  For the Performance Period, the Company’s Total
      Stockholder Return will be a percentage amount determined based on (1) the
      average closing price of the Shares for the 20 business days immediately
      preceding the last trading day of the Performance Period (including
      aggregate dividends for the Performance Period) compared to (2) the
      average closing price of the Shares for the 20 business days immediately
      preceding the first trading day of the Performance
  Period.

            


    

     

    
      	
              ·  

            	
              Peer
      Return.

            


    

     

    
      	
               
      

            	
              For
      the Performance Period, the Total Stockholder Return for each company in
      the Peer Group, (each a “Peer”) will be a percentage amount determined
      based on (1) the closing stock price on the last trading day of the
      Performance Period (including aggregate dividends for the Performance
      Period and adjusted for stock splits) compared to (2) the closing stock
      price on the first trading day of the Performance Period (including
      aggregate dividends for the Performance Period and adjusted for stock
      splits.)

            


    

     

    
      	
              ·  

            	
              Company
      Ranking.  For each Performance Period, the Company’s and
      each Peer’s Total Stockholder Return will be ranked in decreasing
      order.  Relative Total Stockholder Return equals the percentile
      rank (expressed as a percentage) of the Company’s Total Stockholder Return
      when compared to the rankings, from lowest to highest, of the Total
      Stockholder Returns of the Peers comprising the Peer Group for the
      Performance Period.

            


    

     

    


    
      
        
        

      

      
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    EXHIBIT
C

    


    Peer Group (29
Peers)

     

     

    
 

    
      
        
          
            	NAME	 SYMBOL	 STOCK
      EXCHANGE
	
                    ArvinMeritor,
      Inc.

                  	
                    ARM

                  	
                    New
      York Stock Exchange

                  
	
                    AVX
      Corporation

                  	
                    AVX

                  	
                    New
      York Stock Exchange

                  
	
                    Benchmark
      Electronics, Inc.

                  	
                    BHE

                  	
                    New
      York Stock Exchange

                  
	
                    BorgWarner
      Inc.

                  	
                    BWA

                  	
                    New
      York Stock Exchange

                  
	
                    Celestica
      Inc.

                  	
                    CLS

                  	
                    New
      York Stock Exchange

                  
	
                    EPCOS
      AG

                  	
                    EPC

                  	
                    New
      York Stock Exchange

                  
	
                    Flextronics
      International Ltd.

                  	
                    FLEX

                  	
                    Nasdaq
      Global Select Market

                  
	
                    Frequency
      Electronics, Inc.

                  	
                    FEIM

                  	
                    Nasdaq
      Global Market

                  
	
                    Gentex
      Corporation

                  	
                    GNTX

                  	
                    Nasdaq
      Global Select Market

                  
	
                    Jabil
      Circuit, Inc.

                  	
                    JBL

                  	
                    New
      York Stock Exchange

                  
	
                    KEMET
      Corporation

                  	
                    KEM

                  	
                    New
      York Stock Exchange

                  
	
                    Key
      Tronic Corporation

                  	
                    KTCC

                  	
                    Nasdaq
      Global Market

                  
	
                    Kimball
      International, Inc.

                  	
                    KBALB

                  	
                    Nasdaq
      Global Select Market

                  
	
                    LaBarge,
      Inc.

                  	
                    LB

                  	
                    American
      Stock Exchange

                  
	
                    Lear
      Corporation

                  	
                    LEA

                  	
                    New
      York Stock Exchange

                  
	
                    LittelFuse,
      Inc.

                  	
                    LFUS

                  	
                    Nasdaq
      Global Select Market

                  
	
                    Methode
      Electronics, Inc.

                  	
                    METH

                  	
                    Nasdaq
      Global Select Market

                  
	
                    Molex
      Incorporated

                  	
                    MOLX

                  	
                    Nasdaq
      Global Select Market

                  
	
                    Plexus
      Corp.

                  	
                    PLXS

                  	
                    Nasdaq
      Global Select Market

                  
	
                    RF
      Micro Devices, Inc.

                  	
                    RFMD

                  	
                    Nasdaq
      Global Select Market

                  
	
                    Sanmina-Sci
      Corporation

                  	
                    SANM

                  	
                    Nasdaq
      Global Select Market

                  
	
                    Sparton
      Corporation

                  	
                    SPA

                  	
                    New
      York Stock Exchange

                  
	
                    Spectrum
      Control, Inc.

                  	
                    SPEC

                  	
                    Nasdaq
      Global Market

                  
	
                    Stoneridge,
      Inc.

                  	
                    SRI

                  	
                    New
      York Stock Exchange

                  
	
                    Sypris
      Solutions, Inc.

                  	
                    SYPR

                  	
                    Nasdaq
      Global Market

                  
	
                    Technitrol,
      Inc.

                  	
                    TNL

                  	
                    New
      York Stock Exchange

                  
	
                    Triquint
      Semiconductors, Inc.

                  	
                    TQNT

                  	
                    Nasdaq
      Global Select Market

                  
	
                    Vishay
      Intertechnology, Inc.

                  	
                    VSH

                  	
                    New
      York Stock Exchange

                  
	
                    Williams
      Controls, Inc.

                  	
                    WMCO

                  	
                    Nasdaq
      Global
Market

                  


          

        

      





    
      
        
        

      

      
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    EXHIBIT
D

    


    Peer Group Adjustment
Protocol

     

    If, as of
the last date of the Performance Period, all of the common equity of any Peer
has been delisted from the stock exchange on which any of its common equity was
listed as of the date of this Agreement (and all such common equity (or the
common equity of a successor to all or substantially all of the business of such
Peer) has not been, within 30 days of such delisting, subsequently listed on any
of the New York Stock Exchange, the Nasdaq Stock Market LLC, the London Stock
Exchange or the American Stock Exchange), then:

     

    
      	
              ·  

            	
              such
      Peer will be removed from the Peer Group for purposes of the Performance
      Period; and

            


    

     

    
      	
              ·  

            	
              the
      Relative Total Stockholder Return for the Performance Period will be
      calculated as if such Peer had never been a member of the Peer
      Group.

            


    

     

    For
purposes of this Agreement, Peer includes any successor to all or substantially
all of the business of an entity as set forth on Exhibit B, whether or
not the same legal entity at end of the Performance Period.

    


    If a
company files for bankruptcy or is operating under bankruptcy protection, it
clearly shows bad performance and will, therefore, stay in the Peer Group as a
bottom performer.

    
 

     

    
 

    
      
        
        

      

      
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