<PAGE>
 
                                                                EXHIBIT 10(d)(7)

                                   K2, INC.

                Executive Officers' Incentive Compensation Plan



1.   Purpose of the Plan.

     The Executive Officers' Incentive Compensation Plan (the "Plan") is
     intended to allow executive officers of K2, Inc. (the "Company") who
     materially contribute to the success of the Company to share in that
     success.  The Plan is designed so that the rewards earned by an individual
     are commensurate with that individual's contribution to the Company's
     success.


2.   Definitions.

     (a)  "Board" means the Board of Directors of the Company.

     (b)  "Committee" means the Compensation Committee of the Board of
          Directors.

     (c)  "Company" means K2, Inc. or any successor.

     (d)  "Executive Officer" means any person who is a regular full-time
          employee of the Company or any of its Subsidiaries, and an executive
          officer of the Company.

     (e)  "Incentive Award" means an award earned by a Participant in the Plan
          on the basis of Company and individual performance.

     (f)  "Incentive Compensation Income" means the consolidated net income of
          the Company as shown in the annual report but before (1) extraordinary
          items (as that term is used in generally accepted accounting
          principles), (2) incentive compensation awarded under this Plan, and
          (3) provision for state and federal income taxes.

     (g)  "Incentive Compensation Pool" means the amount of incentive
          compensation available to be paid as Incentive Awards.

     (h)  "Net Worth" means the average annual consolidated shareholders' equity
          in the year for which performance is being measured, calculated by
          dividing by 13 the sum of the consolidated shareholders' equity at the

                                      -1-
<PAGE>
 
          beginning of the year and the 12 subsequent month-end balances of such
          equity.

     (i)  "Participant" means with respect to any year an Executive Officer
          selected by the Committee to receive an Incentive Award under this
          Plan.

     (j)  "Performance Criteria" means the performance measures selected by the
          Committee for use in determining the amount of incentive compensation
          to be allocated from the Incentive Compensation Pool to Executive
          Officers eligible for participation in the Plan.

     (k)  "Plan" means this Executive Officers' Incentive Compensation Plan as
          set forth herein and as amended from time to time.

     (l)  "Return on Equity (ROE)" is defined as Incentive Compensation Income
          divided by Net Worth.

     (m)  "Subsidiary" means any consolidated subsidiary of K2, Inc.


3.   Administration.

     (a)  The Plan shall be administered by the members of the Committee.

     (b)  The Committee shall have full and final authority to administer the
          Plan on behalf of the Company.  This authority includes, but is not
          limited to, the following:

          (i)    Determination of eligibility for Incentive Awards

          (ii)   Allocation of Incentive Awards from the Incentive Compensation
                 Pool

          (iii)  Direction of the Company to make the accruals and payments
                 provided for by the Plan

          (iv)   Interpretation of the Plan

     (c)  All Committee interpretations, determinations and actions shall be
          made in its sole and absolute discretion, and will be final,
          conclusive and binding on all parties.

                                      -2-
<PAGE>
 
4.   Eligibility.

     Awards will be granted to Executive Officers taking into account their
     responsibilities, their present and potential contributions to the success
     of the Company and such other factors as the Committee shall deem relevant
     in connection with the accomplishment of the purpose of the Plan.


5.   Incentive Awards.

     (a)  Prior to the commencement of each new year, or as soon as practicable
          thereafter, the Committee will:

          (i)  Determine the specific Performance Criteria relevant to the
               Company's overall business objectives.

          (ii) Prescribe the minimum level of Incentive Compensation Income to
               be achieved before an Incentive Compensation Pool will accrue,
               and the rate at which the Incentive Compensation Pool will
               accrue.

     (b)  At or about the end of each year the Committee will:

          (i)  Calculate the total Incentive Compensation Pool available for
               Incentive Awards based on the specified percentages of Incentive
               Compensation Income in excess of the threshold levels of ROE that
               were prescribed pursuant to Section 5(a)(ii).

          (ii) Allocate the Incentive Compensation Pool to Participants on the
               basis of the Committee's assessment of each Participant's
               relative contributions to the Company's results, taking into
               account such criteria (including the specific Performance
               Criteria determined pursuant to Section 5(a)(i)) as the Committee
               determines to be appropriate.  Incentive Awards will be paid
               pursuant to Section 6 herein.

     (c)  In the event any Executive Officer's continuous employment with the
          the Company or any Subsidiary terminates for any reason, the Committee
          shall decide in its sole and absolute discretion what amounts, if any,
          under the Plan may be awarded to the Executive Officer for the year in
          which his employment terminates.

     (d)  If, during the year, the Committee believes that any matter determined
          or prescribed pursuant to Section 5(a) is no longer suitable or
          appropriate 

                                      -3-
<PAGE>
 
          owning to a change or changes in the Company's business, operations,
          corporate structure, capital structure or other conditions that the
          Committee deems to be material, the Committee may modify such
          determination or other matter as it considers appropriate and
          equitable.


6.   Payment of Awards.

     Awards shall be paid no lAter than March 14 of the year following the year
     in which the Incentive Compensation Pool was accrued.


7.   Mergers, Acquisitions and Other Events.

     On dissolution or liquidation of the Company, or on a reorganization,
     merger or consolidation of the Company with one or more companies as a
     result of which the Company is not the surviving company, or on the sale of
     all or substantially all of the assets of the Company, or in the event of a
     Change in Control, all then unpaid instalments of Incentive Awards will
     become immediately payable.

     For purposes of this Section 7, a Change in Control shall be deemed to have
     occurred if:

     (a)  An event that would be required to be reported in response to Item
          6(a) of Schedule 14A of Regulation 14a promulgated under the
          Securities Exchange Act of 1934, as in effect on the date the Plan is
          adopted, occurs; or

     (b)  Any person (other than any person who as of the date of adoption of
          the Plan) or group of persons acting in concert becomes the beneficial
          owner of 20% or more of the Company's outstanding voting securities or
          securities convertible into such amount of voting securities; or

     (c)  Within two years after a tender offer or exchange offer, or as the
          result of a merger, consolidation, sale of substantially all of the
          Company's assets or a contested election of the Board of Directors, or
          any combination of such transactions, the persons who are directors of
          the Company prior to the transaction do not constitute a majority of
          the Board of Directors of the Company or its successor;

     provided, however, that no such event shall be deemed to constitute a
     Change in Control if, but only if, two-thirds of the Prior Directors of the
     Company and the Successor Directors, if any, voting together, within 5 days
     after such Prior 

                                      -4-
<PAGE>
 
     Directors receive notice of such event, adopt a resolution stating that
     such event, for purposes of the Plan, shall not be deemed to constitute a
     Change in Control. For purposes of this Agreement, Prior Directors are
     those directors of the Company in office immediately prior to such event,
     and Successor Directors are successors to Prior Directors who were
     recommended to succeed Prior Directors by a majority of the Prior Directors
     then in office.


8.   Agreement by Participant Regarding Withholding Taxes.

     The Company shall deduct any federal, state and local taxes that are
     required by law to be withheld in connection with any Incentive Award.
     Alternatively, if the Committee shall so require, as a condition for
     receiving an Incentive Award, the Participant will pay to the Company or
     make arrangements satisfactory to the Committee to pay any such taxes.
     Such payment will be made no later than the date of receipt of any award
     granted hereunder.


9.   Amendment and Termination of the Plan.

     The Board of Directors of the Company at any time and from time to time may
     suspend, terminate, modify or amend, in whole or in part, any or all
     provisions of the Plan.  However, no suspension, amendment, modification or
     termination may, without the person's consent, apply to the award made to
     any Participant prior to the effective date of such suspension, amendment,
     modification or termination.


10.  General Provisions.

     (a)  Nothing in this Plan or in any Incentive Award granted pursuant hereto
          shall confer on an individual any right to continue in the employ of
          the company or any of its Subsidiaries or interfere in any way with
          the right of the Company or any Subsidiary to terminate any
          employment.

     (b)  The Plan shall take effect on its adoption by the Board.

     (c)  Incentive Awards granted under the Plan shall not be transferable
          other than by will or by the laws of descent and distribution, and may
          be realized during the lifetime of the Participant only by the
          Participant or by his guardian or legal representative.

     (d)  The section and subsection headings are for convenience only and 
          shall not affect the construction hereof.

                                      -5-