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Exhibit 10.1
Summary Description of The Dixie Group, Inc.
2011 Incentive Compensation Plan/Range of Incentives
 as effective on January 31, 2011
 
The following is a description of the Company's 2011 Incentive Plan (“Plan”) for its executive officer as effective January 31, 2011.
 
Compensatory Arrangements of Certain Officers
Effective January 31, 2011, the Compensation Committee of the Board of Directors of The Dixie Group, Inc. (the “Company) established the performance goals and the range of incentives for the Company's 2011 Incentive Compensation Plan (the “Plan”).  The Committee set the goals and range of incentives in accordance with the terms of the Plan and the performance goals approved by the Company's shareholders at the annual meeting in 2006.
Pursuant to the Plan, each executive officer will have the opportunity to earn a Cash Incentive Award, a Primary Long-Term Incentive Award of restricted stock, and an award of restricted stock denominated as “Career Shares.”  In order to receive any incentive award under the Plan, an executive officer must be employed by the Company at the time such award is paid.  The potential range of cash incentives and conditions to vesting awards of Primary Long Term Incentive Shares and Career Shares are described below.
Cash Incentive Awards
For the CEO and all executive officers whose responsibilities are primarily related to corporate-level administration, the Cash Incentive Award component provides each participant with the opportunity to earn a cash incentive ranging from 15% to 75% of such participant's base salary.  For executive officers in this category, 40% of the amount of the Cash Incentive Award is determined based on the achievement of specified levels of annual earning before interest and taxes (“EBIT”) for the Company's  Residential business operations, as adjusted for unusual items, 40% of the amount is determined based on achievement of specified levels of the Company's annual consolidated EBIT, as adjusted for unusual items, and 20% of the amount is determined based on achievement of specified levels of the Company's annual EBIT for the Company's contract operations, as adjusted for unusual items.  The Compensation Committee may reduce the amount of any award by up to 30% of the amount otherwise earned based on the participant's failure to achieve individual performance goals set by the Compensation Committee.
For executive officers whose responsibilities are primarily related to one of the Company's business units, the Cash Incentive Award component provides each participant with the opportunity to earn a cash incentive ranging from 15% to 75% of such participant's base salary.  For executive officers in this category, 50% of the amount of the Cash Incentive Award is determined based on the achievement of specified levels of their annual business unit EBIT, as adjusted for unusual items, 25% of the amount is determined based on the achievement of specified levels of the Company's annual consolidated EBIT, as adjusted for unusual items, and 25% of the amount is determined based on the achievement of specified levels of the annual EBIT of the Company's other business units, as adjusted for unusual terms.  The Compensation Committee may reduce the amount of any award by up to 30% of the amount otherwise earned based on the participant's failure to achieve individual performance goals set by the Compensation Committee.
Cash Incentive Awards earned under the Plan will be based on the participant's base salary as established by the Compensation Committee, and it is anticipated that such awards will be paid to participants in cash on or prior to March 2, 2012.  
Primary Long-Term Incentive Awards and Career Shares
A Primary Long-Term Incentive Award will be made in restricted shares to each executive officer, the value of which will be equal to 35% of the executive's base salary plus any Cash Incentive Award paid for such year.  Career Shares will be awarded to each executive officer as an award of restricted stock valued at 20% of such officer's base salary.  Such awards will be valued based on the market price of the Company's common stock at the time of grant of the award; provided, however, that, for purposes of determining the number of shares to be issued with respect to 2011, in no event shall the Company's common stock be valued at an amount less than $5.00 per share.
Primary Long-Term Incentive Awards will vest over 3 years, and Career Shares will vest when the participant becomes 

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(i) qualified to retire from the Company and (ii) has retained the Career Shares for 24 months following the grant date, subject to accelerated vesting or forfeiture as described below.  For any participant who becomes age 60 (or any participant who is already age 60 at the time of an award) restricted shares will vest equally over the stated vesting or retention period (three years in the case of Primary Long-Term Incentive awards and two years in case of Career Shares awards); provided, however, that in no case will such awards be issued later than two and one half months following the year in which such awards vest or are no longer subject to a substantial risk of forfeiture.
Special Conditions to Awards
The Primary Long-Term Incentive Award will only be made if the minimum corporate EBIT levels, as adjusted, are attained; Career Share Awards will only be made if the Company's EBIT, as adjusted, for fiscal 2011 improves over comparable results for fiscal 2010.  Death, disability or a change in control of the Company will cause immediate vesting of all restricted stock issued as Career Shares and as Primary Long-Term Incentive Share Awards.  Termination without cause will result in immediate vesting of all Career Share Awards, and acceleration of vesting of Primary Long-Term Incentive Share Awards to the extent such shares have been expensed by the Company.  Voluntary termination of employment prior to retirement, or termination of employment for cause will result in the immediate forfeiture of all unvested wards under the Plan.  Upon an executive's retirement, vesting will accelerate to the extent that the Company has recognized compensation expense related to the shares.  In the event the Plan does not have enough available shares of common stock to fulfill the stock awards portion of the Plan, any stock award granted will be subject to the approval of additional shares by the Company's shareholders.
Compensation Committee Oversight of Payments
The Compensation Committee has the authority to review and certify the achievement of the performance goals and to administer and interpret the Incentive Compensation Plan.  As set forth above, any award to a participant for 2011 may be reduced, but not increased, by the Compensation Committee in its sole discretion based on individual performance criteria.  
 
 

2mpr8k201101ex10cb.htm

Exhibit (10)(cb)

 

	
TO:

	
Chief Executive Officer and Chief Financial Officer

	  	  
	
FROM:

	
Raymond J. De Hont

	  	  
	
SUBJECT:

	
FYE 2012 Management Incentive Plan

 

 

Incentive Level:

Participants in the Management Incentive Plan will be eligible for competitive target bonuses as a percentage of salary as shown below:

	
Chief Executive Officer

	
50%

	
Chief Financial Officer

	
40%

Bonuses will be considered and calculated based upon the attainment of the Corporate Net Income and Net Sales targets for FYE 2012.

Corporate Circuit Breaker %:

The participant will not qualify for the FYE 2012 Management Incentive Plan if the actual Corporate Net Income is less than 75% of the Corporate Net Income Target.

 

 Corporate Financial Factors:

The Corporate financial factors are comprised of Corporate Net Income (70%) and Net Sales (30%).

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  

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FYE 2012 Management Incentive Plan

	
1)  

	
Corporate Net Income Multiplier

Under the FYE 2012 Management Incentive Plan, the participant becomes eligible for 70% of the potential Corporate bonus amount (at 100% performance) upon the attainment of the Corporate Net Income target of $               .

The percent of target bonus earned based upon Corporate Net Income is listed below:

	  	  	
Corporate Net

	
Objective Achievement

	  	
Income Multiplier

	
less than 75%

	  	
0.00

	  
	
75%

	  	  	
.35

	  
	
80%

	  	  	
.42

	  
	
85%

	  	  	
.49

	  
	
90%

	  	  	
.56

	  
	
95%

	  	  	
.63

	  
	
100%

	  	  	
 .70

	  
	
105%

	  	  	
 .7875

	  
	
110%

	  	  	
  .875

	  
	
115%

	  	  	
 1.05

	  
	
120%

	  	  	
1.225

	  
	
125%

	  	  	
1.40

	  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  

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FYE 2012 Management Incentive Plan

	
2)  

	
Corporate Net Sales Multiplier

Under the FYE 2012 Management Incentive Plan, the participant becomes eligible for 30% of the potential Corporate bonus amount (at 100% performance) upon the attainment of the Corporate Net Sales target of $                .

The percent of target bonus earned based upon Corporate Net Sales is listed below:

	  	  	
Corporate Net Sales

	
Objective Achievement

	  	
Multiplier

	
less than 85%

	  	
0.00

	  
	
85%

	  	  	
.15

	  
	
90%

	  	  	
.20

	  
	
95%

	  	  	
.25

	  
	
100%

	  	  	
.30

	  
	
105%

	  	  	
 .3375

	  
	
110%

	  	  	
 .375

	  
	
115%

	  	  	
 .45

	  
	
120%

	  	  	
 .525

	  
	
125%

	  	  	
 .60

	  

Bonus Amount:

Salary x Incentive Level x (Corporate Net Income Multiplier + Corporate Net Sales Multiplier)

The participant will not qualify for the FYE 2012 Management Incentive Plan if the actual Corporate Net Income is less than 75% of the Corporate Net Income Target.

Note:

This Management Incentive Plan (“Plan”) is not a contract that entitles you to an award if the Plan objectives for the fiscal year are met; rather, this Plan is a discretionary short term cash bonus plan administered by the Compensation and Management Development Committee of the Board of Directors (the “Committee”). The Committee retains the sole and absolute discretion to deny and not pay bonuses under the Plan and to reduce bonuses payable under the Plan, notwithstanding the attainment of objectives under the Plan; to increase or pay bonuses under the Plan, even if the objectives under the Plan have not been met; and to further condition, modify or amend the objectives and conditions of eligibility under the Plan. The Committee also retains the sole discretion with respect to awards to be paid, if any, in connection with separations from employment that occur during a Plan year.

 

 

 

 

 

 

 

 

 

 

  

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FYE 2012 Management Incentive Plan

 

 

Examples of Individual Award with Salary of $100,000 and Incentive Level of 50%:

Example #1:

Goals achieved:

1) Corporate Net Income = 100%

2) Corporate Net Sales = 100%

Bonus amount = $100,000 x 50% x (.70 + .30)

                                    = $50,000

Example #2:

Goals achieved:

1) Corporate Net Income = 80%

2) Corporate Net Sales = 80%

Bonus amount = $100,000 x 50% x (.42 + 0.00)

                                    = $21,000

Example #3:

Goals achieved:

1) Corporate Net Income = 70%

2) Corporate Net Sales = 100%

Bonus amount = $100,000 x 50% x (0.00 + 0.00)

                                    = $0   Net Income Threshold of 75% not met

Example #4:

Goals achieved:

1) Corporate Net Income = 125%

2) Corporate Net Sales = 125%

Bonus amount = $100,000 x 50% x (1.40 + .60)

                                    = $100,000

 

 

 

 

 

 

 

 

 

 

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