Exhibit 10.1


 





 


The TriMas 


Incentive Compensation
Plan


 


TriMas Corporation is committed to ensuring
that our total compensation program is consistent with market competitive pay
practices, while providing opportunities to attract and retain excellent performers
essential to our business success. As a component of your total compensation,
the Incentive Compensation Plan (“ICP” or the “Plan”), a discretionary bonus
plan, works to support our overall business objectives by aligning individual
goals with the goals of shareholders and focusing attention on the key measures
of success.  This plan is designed to
reward achievement of key business goals and individual performance based on
your contributions.


 


Participation


 


The ICP Committee identifies the specific positions that are eligible
for participation in the plan.  The ICP
Committee consists of the CEO, CFO and Corporate HR Director of TriMas.  In general, the Committee will award
eligibility to SBU leadership, facility leadership and their direct reports (depending
on size of the operation), in addition to corporate leadership.


 


Performance Measures


 


Performance measures have been designed for each Strategic Business
Unit (SBU) and TriMas Corporate participants. 
Each SBU participant will be rewarded based on the participant’s SBU’s
specific performance in the areas of sales/profitability, cash flow from
operations, inventory turns and % of new products/market sales, as well as
achievement of personal objectives during the year.


 


TriMas
Corporate participants will be rewarded based on total TriMas performance in
measures related to sales/profitability, leverage/liquidity, earnings per
share, return on net tangible assets and personal objectives during the year.


 


Each
year, baseline performance levels for the measures will be established through
the business planning process and then adjusted to better reflect the upcoming
year’s goals and objectives.  Definitions
of the SBU and TriMas Corporate component performance measures are set forth in
the attached appendix.


 


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ICP Steps – Beginning of the Year


 


At the beginning of each year, we go through the following five steps:


 


Beginning of Year – Step 1:  Determine Your Target Incentive Award


 


As part of the total compensation package, your Target Incentive Award
will be reviewed at the beginning of each TriMas fiscal year.  The centerpoint for your Target Incentive Award
is based on your position and scope of responsibility.  The centerpoint amount is subject to change
based on approval from the ICP Committee.


 


Beginning of Year – Step 2:  Determine Position and Related Components


 


The SBU ICP award will consist of five components:1)
Sales/Profitability, 2) Cashflow from Operations, 3) Inventory Turns, 4) % New
products/Market Sales and 5) Personal Objectives.


 


The
TriMas Corporate ICP award will consist of five components:  1) Sales/Profitability, 2)
Leverage/Liquidity, 3) Earnings per Share, 4) Return on Net Tangible Assets,
and 5) Personal Objectives.


 


Beginning of Year – Step 3:  Determine the Corresponding Component
Weighting


 


Each component of your ICP award has a “weighting” that indicates the
component’s relative importance to your overall Plan award, as stated in the
following chart:


 


	
  Strategic Business Unit (SBU)

  	
   

  	
  TriMas Corporate

  	
   

  
	
  Component

  	
   

  	
  Weight Factor

  	
   

  	
  Component

  	
   

  	
  Weight Factor

  	
   

  
	
  Sales/Profitability

  	
   

  	
  40

  	
  %

  	
  Sales/Profitability

  	
   

  	
  40

  	
  %

  
	
  Cashflow from Operations

  	
   

  	
  20

  	
  %

  	
  Leverage/Liquidity

  	
   

  	
  15

  	
  %

  
	
  Inventory Turns

  	
   

  	
  20

  	
  %

  	
  Earnings
  Per Share

  	
   

  	
  15

  	
  %

  
	
  New Products/Market Sales

  	
   

  	
  5

  	
  %

  	
  Return
  on Net Tangible Assets

  	
   

  	
  10

  	
  %

  
	
  Personal Objectives

  	
   

  	
  15

  	
  %

  	
  Personal
  Objectives

  	
   

  	
  20

  	
  %

  



 


Beginning of Year –Step
4:  Determine Target Performance for the
Year


 


The Plan’s financial targets are established through the annual
business planning process.   Each fiscal
year (the “Plan Year”), you will receive the target performance worksheet that
outlines the Target Incentive Award centerpoint for each performance measure
for the coming year.  The worksheet will
also provide you with detail relating to the overachievement or
underachievement of the various performance measures.


 


Beginning of Year – Step 5:  Set Your Individual Goals for the Year


 


Each Plan Year, you and your immediate supervisor will establish
measurable performance goals that are consistent with organizational
goals.  Your individual goals and
objectives must be approved by the next higher level of management.  Each year, there may be a corporate-wide focus
on some or all of the individual objectives.


 


ICP Steps – End of the Year


 


At the end of each Plan Year, ICP awards will be determined following
these three steps:


 


End of Year – Step
1:  Determine Actual Performance Result


 


At the end of each Plan Year, performance is measured based on final
fiscal year financial results.  The
results achieved for each performance measure are compared to the Target
Incentive Award centerpoints determined in the business planning process, while
personal objective results are compared to the goals set at the beginning of
the year (in each case, the results are called the “Performance Payment Factor”).


 


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End of Year – Step
2:  Multiply by Component Weighting


 


After determining the applicable Performance Payment Factor for each
award component based on the actual results achieved for each performance
measure, each Performance Payment Factor is multiplied by the applicable
component weighting as determined at the beginning of the year.


 


End of Year – Step
3:  Sum of Weighted Payment Factors
Equals Actual Award


 


The third and final step to determine the actual ICP award is to sum
the weighted Performance Payment Factors for each component, and to multiply
this composite weighted performance payment factor by the Target Incentive Award
amount to determine the actual ICP award that will be paid.


 


Additional
Information


 


Discretion
of Payments


 


The ICP Committee reserves the right to defer, increase/reduce
or cancel any payments under the Plan at any time (including during the Plan
Year) based on the best interests of TriMas and its shareholders, including,
but not limited to, circumstances relating to: (1) individual performance;
(2) TriMas’ overall consolidated financial performance: or (3) TriMas’
future performance objectives.


 


Prorated Awards


 


If you move between business
units within the Plan Year, your award will be calculated on a pro-rata basis
to reflect the time spent in each unit based on full year SBU results.  If you move into or out of an ICP eligible
position, you will receive a prorated award based on your salary while in an
eligible position.


 


Payment of Awards


 


Payment
will be made no later than the March 15th after the prior Plan Year ended December 31st.


 


Termination of
Employment


 


If you terminate employment prior to the end of the Plan Year due to
death, retirement or disability, you will be eligible for a pro-rata share when
awards are paid.  If you terminate for
any other reasons prior to the plan payout, you forfeit your award for the Plan
Year.


 


Administration


 


The ICP Committee will administer the Plan.  In the event of any conflict between
authority granted to the ICP Committee and authority reserved to the TriMas
Compensation Committee, the TriMas Compensation Committee prevails.


 


Future
of the Plan


 


The ICP
Committee reserves the right to amend, interpret or cancel this discretionary
plan at any time based on the best interests of TriMas and its
shareholders.  This Plan supersedes all
prior documentation relating to the Annual Value Creation Plan (AVCP).


 


Questions


 


If you
have questions about the Incentive Compensation Plan described here, or about
any other aspect of your TriMas compensation program, contact your local Human
Resources representative.


 


Note:  At no time is this plan to be considered an
employment contract between the participants and TriMas or any of its
subsidiaries.  It does not guarantee
participants the right of continued employment. 
It does not affect a participant’s right to leave TriMas or TriMas’
right to discharge a participant.


 


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Appendix I – Definitions


 


SBU Component Performance
Measures


 


Sales / Profitability – The recurring Operating Profit amount
excluding non-recurring charges (cash and non-cash) associated with business
restructuring, cost savings projects, and asset impairments (“Recurring
Operating Profit”), determined as a percentage of Net Sales.  Operating Profit is defined as earnings
before interest, taxes and other income /expense, all as reported in TriMas’ OutlookSoft
financial reporting system (the “Reporting System”).  For purposes of this computation, Net Sales
is defined as net trade sales excluding all intercompany activity.


 


Cashflow from Operations –Cashflow from Operations is the sum of
Recurring Operating Profit, plus / minus other income / expense, plus
depreciation and amortization, plus / minus the change in working capital, and
minus capital expenditures, all as reported in the Reporting System.


 


Inventory Turns – The number of Inventory Turns
is computed based on the annual Cost of Sales amount
as reported in the Reporting System divided by the arithmetic average of end of
month Inventory, Net amounts (i.e., the sum of end of month inventory balances
during the Plan year divided by 12).


 


% New Products / Markets
Sales – The % New Products / Markets
Sales is a computed amount based on the Net Sales amount for
specifically identified new products or new markets divided by Net Sales for
the SBU, each of which shall be agreed as part of the annual business planning process and
as reported in the Reporting System (in the case of Net Sales) and as reported
in an SBU’s subsidiary sales ledger (in the case of Net Sales for specifically
identified new products or new markets, as the case may be).


 


Component Performance Measures


 


Sales / Profitability – The consolidated recurring Operating Profit amount
excluding non-recurring charges (cash and non-cash) associated with business
restructuring, cost savings projects, and asset impairments,  determined as a percentage of consolidated Net Sales.  Operating
Profit is defined as earnings before interest, taxes and other income /expense,
all as reported in the Reporting System. 
For purposes of this computation, Net Sales is defined as net trade
sales excluding all intercompany activity.


 


Leverage / Liquidity – For each quarter within the Plan Year, the Average
Leverage Cushion is derived as follows: (1) subtracting TriMas’
Actual Leverage Ratio, as computed each fiscal quarter end and reported to
JPMorgan, from the Leverage Ratio covenant requirement for such quarter (as
defined in TriMas’ Amended and Restated Credit Agreement dated August 2,
2006 and as may be amended from time to time) to determine the Leverage Cushion; and (2) adding the Leverage Cushion
amounts computed for each quarter during the Plan Year  and dividing the sum by 4.


 


Earnings Per Share –Earnings Per Share is the earnings per
share – diluted amount (from continuing operations), as reported in TriMas’ Reports
on Form 10-Q and 10-K filed with the Securities and Exchange Commission,
adjusted to exclude the after-tax impact of non-recurring charges (cash and
non-cash) associated with business restructuring, cost savings projects, and
asset impairments.


 


Return on Net Tangible
Assets – The Return on Net Tangible
Assets % is a computed amount based on Recurring Operating Profit as
defined herein divided by Total Operating Tangible
Assets, each determined on a continuing operations basis.  Total Operating Tangible Assets is the sum of
Total Shareholders’ Equity less Goodwill, Net, less Intangible Assets, Net
(other than Goodwill, Net), less Other Adjustments, all as reported in the Reporting
System.  For purposes of this
computation, both the nature and amount of Other Adjustments shall
be agreed as part of the annual
business planning process and as to the actual reported amounts in the Reporting
System or other agreed-to subsidiary ledger reporting process.


 


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