Document:

Exhibit 10.3

 

EXHIBIT 10.3

LONG-TERM INCENTIVE PLAN CASH AWARD LETTER

Date:                     

Dear [                    ],

     Pursuant to the authority of Oakley, Inc. (the “Company”) to grant performance-based cash
bonus awards, you are hereby granted the right to receive a target amount of $                    , contingent
on the terms and conditions set forth herein (the “Cash Award”).

I. CASH AWARD PROVISIONS

     1.1. Cash Award. The Cash Award shall vest and become payable in accordance with the
provisions of Sections 1.2 through 1.4 below, less applicable withholding taxes.

     1.2. Performance Goals. The performance goals for purposes of determining whether,
and the extent to which, the Cash Award shall be payable shall be based on (i) the Company’s 2008
earnings per share (“EPS”), as publicly reported, (ii) the Company’s return on invested capital
(“ROIC”) and (iii) the Company’s achievement of both 2007 and 2008 budgeted EPS (collectively, the
“Performance Goals”) as determined by the Compensation and Stock Option Committee of the Board of
Directors of Oakley, Inc. (the “Administrator”). Subject to Sections 1.3 through 1.5 below, upon
determination of the Company’s 2008 EPS and ROIC, your entitlement to the Cash Award shall be fixed
and nonforfeitable.

       1.2.1. If the Company’s 2008 EPS is less than $1.10 per share, then 0% of the Cash
Award shall be payable.

       1.2.2. If the Company’s 2008 EPS is at least $1.10 per share but less than $1.19 per
share, but the Company’s 2008 ROIC is less than 13.35% and the Company has not achieved
both 2007 and 2008 budgeted EPS targets, then 65% of the target Cash Award shall be
payable.

       1.2.3. If the Company’s 2008 EPS is at least $1.10 per share but less than $1.19 per
share, and the Company’s 2008 ROIC is at least 13.35%, but the Company has not achieved
both 2007 and 2008 budgeted EPS targets, then 95% of the target Cash Award shall be
payable.

       1.2.4. If the Company’s 2008 EPS is at least $1.10 per share but less than $1.19 per
share, and the Company has achieved both the 2007 and 2008 budgeted EPS targets, but the
Company’s 2008 ROIC is less than 13.35%, then 85% of the target Cash Award shall be
payable.

       1.2.5. If the Company’s 2008 EPS is at least $1.10 per share but less than $1.19 per
share, the Company’s 2008 ROIC is at least 13.35% and the Company has achieved both 2007
and 2008 budgeted EPS targets, then 100% of the target Cash Award shall be payable.

       1.2.6. If the Company’s 2008 EPS is at least $1.19 per share, but the Company’s 2008
ROIC is less than 13.35% and the Company has not achieved both 2007 and 2008 budgeted EPS
targets, then 130% of the target Cash Award shall be payable.

 

 

       1.2.7. If the Company’s 2008 EPS is at least $1.19 per share, and the Company’s 2008
ROIC is at least 13.35%, but the Company has not achieved both 2007 and 2008 budgeted EPS
targets, then 140% of the target Cash Award shall be payable. In addition, for every one
basis point in 2008 ROIC above 13.35%, up to 75 basis points, the percentage of the target
Cash Award payable would increase by two-thirds of one percent, so that a maximum of 190%
of the target Cash Award shall be payable.

       1.2.8. If the Company’s 2008 EPS is at least $1.19 per share, and the Company has
achieved both the 2007 and 2008 budgeted EPS targets, but the Company’s 2008 ROIC is less
than 13.35%, then 150% of the target Cash Award shall be payable.

       1.2.9. If the Company’s 2008 EPS is at least $1.19 per share, the Company’s 2008 ROIC
is at least 13.35% and the Company has achieved both 2007 and 2008 budgeted EPS targets,
then 150% of the target Cash Award shall be payable. In addition for every one basis point
in 2008 ROIC above 13.35%, up to 75 basis points, the percentage of target Performance
Units payable would increase by two-thirds of one percent, so that a maximum of 200% of the
target Cash Award shall be payable.

     1.3. Time Based Vesting Schedule. Upon the Administrator’s certification of the
Performance Goals, 100% of the Cash Award that is payable pursuant to the satisfaction of the
Performance Goals shall vest and become immediately payable, subject to Section 1.5 below.

     1.4. Severance. In the event your employment by the Company is (i) terminated by the
Company other than for Cause, death or Disability (your incapacity due to physical or mental
illness), or (ii) by you with Good Reason, in connection with or within 12 months following the
consummation of a Change in Control (as defined in the Amended and Restated Oakley, Inc. Officer
Severance Plan, effective June 3, 2004 (“Severance Plan”)), and such termination occurs prior to
the certification of the Performance Goals by the Administrator, the Cash Award granted hereunder
shall become payable as set forth in the Severance Plan, as amended from time to time, for such
awards.

     1.4.1. For purposes of this letter, “Cause” shall mean (1) your willful and continued failure
to substantially perform your duties with the Company (other than by reason of your physical or
mental incapacity) after written notice of such failure is given to you by the Company), (2) your
willful engaging in misconduct with regard to the Company or in the performance of your duties
(including, but not limited to a material violation of any material policies or procedures of the
Company) that is demonstrably and materially injurious to the Company, monetarily or otherwise, (3)
your conviction of, or entry of a plea of guilty or nolo contendere to, a felony or other crime
involving moral turpitude, (4) your commission of any act of theft, embezzlement or fraud in
connection with your employment with the Company, (5) your material breach of any of the material
terms of this letter or any other material agreement that you now have or later have with the
Company and/or any of its subsidiaries or affiliates, which breach is not cured within 15 days
after the giving of written notice thereof or is not capable of cure, and (6) your knowing
appropriation (or attempted appropriation) of a material business opportunity of the Company,
including attempting to secure or securing from anyone other than the Company any personal profit
without the Company’s consent in connection with any transaction entered into on behalf of the
Company.

     1.4.2. For purposes of this letter, “Good Reason” shall mean (1) diminution in your title; (2)
material diminution in your duties, power or authority that is not cured by the Company within
fifteen (15) days of the giving of written notice thereof; (3) failure within fifteen (15) days

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after written notice to pay you any amounts due; (4) your relocation from the Company’s executive
offices or relocation of such offices 50 miles or more farther away from your principle residence
at such time; (5) failure of a successor to the Company to deliver an assumption agreement to you
within fifteen (15) days after written notice; and (6) a material breach by the Company of this
letter that is not cured within fifteen (15) days of the giving of written notice thereof.

     1.5. Termination of Employment. Except as otherwise provided herein in Section 1.4,
in the event of your termination of employment with the Company for any reason (including by reason
of your death or Disability), any then unvested portion of the Cash Award shall be immediately and
irrevocably forfeited.

     1.6. No Right to Employment. Neither this letter, the granting of any Cash Award nor
any other action taken pursuant to this letter or Cash Award shall constitute or be evidence of any
agreement or understanding, express or implied, that you have a right to continue to provide
services as an employee of the Company or any parent, subsidiary or affiliate of the Company for
any period of time or at any specific rate of compensation. Further, the Company may at any time
dismiss you, free from any liability or any claim under this letter, except as otherwise expressly
provided herein.

     1.7. Interpretation. Any dispute regarding the interpretation of this letter shall be
submitted by you or the Company to the Company’s Board of Directors for review. The resolution of
such a dispute by the Company’s Board of Directors shall be final and binding on you and the
Company.

     1.8. Binding Effect On Successors. The Company may assign any of its rights under
this letter. This letter shall be binding upon and inure to the benefit of the successors and
assigns of the Company.

	 	 	 	 	 	 
	 	 	Sincerely,	 
	 
	 	 	 	 	 
	 	 	OAKLEY, INC.,

a Washington corporation	 	 
	 
	 	 	 	 	 
	 

	 	By:	 	 	 
	 

	 	Name:
	 

	 	 
	 

	 	Title:	 	 	 

3Exhibit 10.4

 

EXHIBIT 10.4

LONG-TERM INCENTIVE PLAN CASH AWARD LETTER

Date:                     

Dear Mr. Scott Olivet,

     Pursuant to the authority of Oakley, Inc. (the “Company”) to grant performance-based cash
bonus awards, you are hereby granted the right to receive a target amount of $                    , contingent
on the terms and conditions set forth herein (the “Cash Award”).

I. CASH AWARD PROVISIONS

     1.1. Cash Award. The Cash Award shall vest and become payable in accordance with the
provisions of Sections 1.2 through 1.4 below, less applicable withholding taxes.

     1.2. Performance Goals. The performance goals for purposes of determining whether,
and the extent to which, the Cash Award shall be payable shall be based on (i) the Company’s 2008
earnings per share (“EPS”), as publicly reported, (ii) the Company’s return on invested capital
(“ROIC”) and (iii) the Company’s achievement of both 2007 and 2008 budgeted EPS (collectively, the
“Performance Goals”) as determined by the Compensation and Stock Option Committee of the Board of
Directors of Oakley, Inc. (the “Administrator”). Subject to Sections 1.3 through 1.5 below, upon
determination of the Company’s 2008 EPS and ROIC, your entitlement to the Cash Award shall be fixed
and nonforfeitable.

       1.2.1. If the Company’s 2008 EPS is less than $1.10 per share, then 0% of the Cash
Award shall be payable.

       1.2.2. If the Company’s 2008 EPS is at least $1.10 per share but less than $1.19 per
share, but the Company’s 2008 ROIC is less than 13.35% and the Company has not achieved
both 2007 and 2008 budgeted EPS targets, then 65% of the target Cash Award shall be
payable.

       1.2.3. If the Company’s 2008 EPS is at least $1.10 per share but less than $1.19 per
share, and the Company’s 2008 ROIC is at least 13.35%, but the Company has not achieved
both 2007 and 2008 budgeted EPS targets, then 95% of the target Cash Award shall be
payable.

       1.2.4. If the Company’s 2008 EPS is at least $1.10 per share but less than $1.19 per
share, and the Company has achieved both the 2007 and 2008 budgeted EPS targets, but the
Company’s 2008 ROIC is less than 13.35%, then 85% of the target Cash Award shall be
payable.

       1.2.5. If the Company’s 2008 EPS is at least $1.10 per share but less than $1.19 per
share, the Company’s 2008 ROIC is at least 13.35% and the Company has achieved both 2007
and 2008 budgeted EPS targets, then 100% of the target Cash Award shall be payable.

       1.2.6. If the Company’s 2008 EPS is at least $1.19 per share, but the Company’s 2008
ROIC is less than 13.35% and the Company has not achieved both 2007 and 2008 budgeted EPS
targets, then 130% of the target Cash Award shall be payable.

 

 

       1.2.7. If the Company’s 2008 EPS is at least $1.19 per share, and the Company’s 2008
ROIC is at least 13.35%, but the Company has not achieved both 2007 and 2008 budgeted EPS
targets, then 140% of the target Cash Award shall be payable. In addition, for every one
basis point in 2008 ROIC above 13.35%, up to 75 basis points, the percentage of the target
Cash Award payable would increase by two-thirds of one percent, so that a maximum of 190%
of the target Cash Award shall be payable.

       1.2.8. If the Company’s 2008 EPS is at least $1.19 per share, and the Company has
achieved both the 2007 and 2008 budgeted EPS targets, but the Company’s 2008 ROIC is less
than 13.35%, then 150% of the target Cash Award shall be payable.

       1.2.9. If the Company’s 2008 EPS is at least $1.19 per share, the Company’s 2008 ROIC
is at least 13.35% and the Company has achieved both 2007 and 2008 budgeted EPS targets,
then 150% of the target Cash Award shall be payable. In addition for every one basis point
in 2008 ROIC above 13.35%, up to 75 basis points, the percentage of target Performance
Units payable would increase by two-thirds of one percent, so that a maximum of 200% of the
target Cash Award shall be payable.

     1.3. Time Based Vesting Schedule. Upon the Administrator’s certification of the
Performance Goals, 100% of the Cash Award that is payable pursuant to the satisfaction of the
Performance Goals shall vest and become immediately payable, subject to Section 1.5 below.

     1.4. Severance. In the event your employment by the Company is (i) terminated by the
Company other than for Cause, death or Disability (your incapacity due to physical or mental
illness), or (ii) by you with Good Reason, in connection with or within 24 months following the
consummation of a Change in Control (all as defined in your Employment Agreement dated September
19, 2005), and such termination occurs prior to the certification of the Performance Goals by the
Administrator, the Cash Award granted hereunder shall become payable as set forth in the Amended
and Restated Oakley, Inc. Officer Severance Plan, effective June 3, 2004, as amended from time to
time (“Severance Plan”), for such awards, or pursuant to an agreement between you and the Company
that relates to post-termination severance obligations.

     1.5. Termination of Employment. Except as otherwise provided herein in Section 1.4,
in the event of your termination of employment with the Company for any reason (including by reason
of your death or Disability), any then unvested portion of the Cash Award shall be immediately and
irrevocably forfeited.

     1.6. No Right to Employment. Neither this letter, the granting of any Cash Award nor
any other action taken pursuant to this letter or Cash Award shall constitute or be evidence of any
agreement or understanding, express or implied, that you have a right to continue to provide
services as an employee of the Company or any parent, subsidiary or affiliate of the Company for
any period of time or at any specific rate of compensation. Further, the Company may at any time
dismiss you, free from any liability or any claim under this letter, except as otherwise expressly
provided herein.

     1.7. Interpretation. Any dispute regarding the interpretation of this letter shall be
submitted by you or the Company to the Company’s Board of Directors for review. The resolution of such a dispute by the Company’s Board of Directors shall be final and binding on
you and the Company.

2

 

     1.8. Binding Effect On Successors. The Company may assign any of its rights under
this letter. This letter shall be binding upon and inure to the benefit of the successors and
assigns of the Company.

	 	 	 	 	 	 
	 	 	Sincerely,	 
	 
	 	 	 	 	 
	 	 	OAKLEY, INC.,

a Washington corporation	 	 
	 
	 	 	 	 	 
	 

	 	By:	 	 	 
	 

	 	Name:
	 

	 	 
	 

	 	Title:	 	 	 

3

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