Document:

exv10w4

 

Exhibit 10.4

COMPASS MINERALS INTERNATIONAL, INC. (CMP)

ANNUAL INCENTIVE COMPENSATION PLAN (AIP)

Plan Summary

OVERVIEW

This is a discretionary incentive compensation plan adopted and established by the CMP Board of
Directors. This plan is designed and authorized for execution on an annual basis. The policies,
objectives, purposes and guidelines of this plan are defined by the Compensation Committee, as
designated by the Board. All awards and bonus payments described herein are entirely variable and
at the sole discretion of the Compensation Committee may be evaluated, modified or revoked at any
time.

All awards and bonus payments are based upon specific performance related criterion and as such,
are not considered standard payment for services and are not guaranteed.

OBJECTIVES and PURPOSE

The objective of the Annual Incentive Plan (AIP) is to establish a clear linkage between annual
business results and alignment of compensation for executives and key management contributors.

The purpose of this discretionary incentive plan is to:

	 	•	 	Reward employees for achieving and exceeding individual and CMP objectives.
	 
	 	•	 	Promote teamwork across Business Units and Functions.
	 
	 	•	 	Reinforce and motivate participants to fully utilize CMP resources and continual efforts
to maximize earnings, cash flow and growth.
	 
	 	•	 	Establish Environmental, Health and Safety (EHS) results as a common, primary multiplier
for all AIP awards.

ELIGIBILITY

Employee participation is based on recommendations of the CEO and the Executive Staff. The CEO, in
keeping with established policies, determines and recommends the individual awards for the
executive and key management group. All individual participants are approved by the Compensation
Committee. A participant may be removed from the Plan at any time at the discretion of the
Company.

AWARD CRITERIA

	 	•	 	AIP awards are dependent upon accomplishment of CMP Corporate and Business Unit goals
and objectives. Payments will be based on performance targets established for an incentive
period beginning January 1 through December 31 of a particular year.

 

 

	 	•	 	The CEO and Vice President of Human Resources will develop recommendations for the
Compensation Committee for the Target Percentage assigned to participants in the AIP Plan.
Overall incentive award is capped and shall not exceed 200% of base salary.
	 
	 	•	 	Participants in the AIP are assigned an overall Target Percentage; this is a percent of
base salary and the corresponding dollar amount is the Participant’s Target Award.

	 	o	 	Example: A participant with a base salary of $50,000 and
Target Percentage of 10% would have a Target Award of $5,000 
(= 100% of Target).

	 	•	 	Participant’s base salary reported as of December 31 of the performance year, excluding
bonuses, special pay and other forms of compensation, will be used to calculate AIP Awards.
	 
	 	•	 	All payments made under this plan require approval of the Compensation Committee.

In the event of an accounting restatement which reduces the corporate or divisional financials on
which this incentive award was based, the Company may, at its sole discretion, require repayment
from Participants of all or any portion of any incentive awards which were incorrectly stated. All
Participants who receive an AIP incentive award shall be required to repay the amount specified
upon written notification.

PLAN DESIGN

Specific AIP targets are established each year for each participant based on goals relating to
overall Company performance, business-unit performance and personal performance. Goals are
specified as follows:

	 	•	 	Consolidated Adjusted EBITDA (Adjusted EBITDA is earnings before interest, taxes,
depreciation, depletion and amortization, other income/expense and other special charges)
	 
	 	•	 	Business-unit Adjusted EBITDA
	 
	 	•	 	Operating Cash Flow (Operating Cash Flow is EBITDA less capital spending, cash interest
and cash taxes, less planned acquisitions and adding or subtracting change in working
capital, other assets and liabilities excluding cash)
	 
	 	•	 	Net Sales Revenue (Net Sales Revenue is sales less shipping and handling cost)
	 
	 	•	 	Personal Performance Objectives
	 
	 	•	 	Environmental, Health and Safety (“EHS”) Performance (Incidence rates)

The weighting of these components is based on the responsibilities of the participant. Targets for
participants responsible for a business-unit differ from those for participants with overall
“corporate” responsibility (e.g., Chief Financial Officer), as shown below:

2

 

	 	 	 	 	 	 	 	 	 	 	 	 	 
	CORPORATE PARTICIPANT	 	BUSINESS-UNIT PARTICIPANT
	50	%	Consolidated Adjusted EBITDA	 	 	25	%	 	Consolidated Adjusted EBITDA
	 
	 	 	 	 	 	 	25	%	 	Business-unit Adjusted EBITDA
	20	%	Consolidated Operating Cash Flow	 	 	10	%	 	Consolidated Operating Cash Flow
	 
	 	 	 	 	 	 	10	%	 	Business-unit Operating Cash Flow
	10	%	Consolidated Net Sales Revenue	 	 	5	%	 	Consolidated Net Sales Revenue
	 
	 	 	 	 	 	 	5	%	 	Business-unit Net Sales Revenue
	20	%	Personal Performance Objectives	 	 	20	%	 	Personal Performance Objectives
	 
	100	%	 	 	 	 	 	100	%	 	 	 	 
	+/-10	%	EHS Multiplier	 	 	+/-10	%	 	EHS Multiplier (50% Business-unit and 50% Consolidated)

Award levels with respect to Adjusted EBITDA, Operating Cash Flow and Net Sales Revenue (both
Consolidated and Business-unit) are based on performance as follows:

	 	 	 	 	 	 	 	 	 
	PERCENT OF GOAL ACHIEVED	 	 	PERCENT OF AIP TARGET PAID
	 	£  75	%	 	 	 	0	%	 
	 	100	%	 	 	 	100	%	 
	 	3125	%	 	 	 	200	% (max)	 

AIP bonuses are awarded on a sliding scale based on the achievement of 75 percent or more of the
goals. The maximum potential percent of AIP target paid equals 200 percent of target.

Participants are evaluated on individual personal performance objectives. Payments may range from
0 percent to 200 percent of AIP target.

Finally, an EHS multiplier will be applied to the combined AIP award for all components calculated
above as follows:

	 	 	 	 	 
	EHS RATING ACHIEVED	 	MULTIPLER APPLIED
	125% of goal	 	 	0.9	 
	100% of goal	 	 	1.0	 
	75% of goal	 	 	1.1	 

This EHS multiplier is also applied on a sliding scale in the ranges shown above.

ALLOCATION OF PAYMENTS

	 	Ø	 	Payments are made as soon as practical after annual financial statements are available
and upon final approval of the Compensation Committee.
	 
	 	Ø	 	To be eligible to receive an AIP bonus payment, a participant must have been actively
employed at the time of any approved pay-out.
	 
	 	Ø	 	Any participant who terminates employment, voluntarily or involuntarily, prior to the
time of any approved payout will not receive an AIP bonus payment, except as
stipulated below:

3

 

	 	o	 	In the event of normal retirement, disability or death prior to the end
of an incentive period, an otherwise eligible participant may receive a pro-rated
AIP payment amount, provided an AIP award was approved for the applicable incentive
period.
	 
	 	o	 	In the event of a change in ownership or control resulting in
termination of employment prior to end of the incentive period, an otherwise
eligible participant may receive a pro-rated AIP payment amount, provided an AIP
award was approved for the applicable incentive period.

	 	Ø	 	An employee hired into a position approved for participation after the beginning of an
incentive period may be considered for a pro-rated participation in this plan upon
recommendation of the CEO and approval of the Compensation Committee.
	 
	 	Ø	 	AIP bonus payments are paid-out on a one-time basis as a lump-sum, in cash, as such are
considered compensation and reportable income for all tax reporting purposes.
	 
	 	Ø	 	AIP bonus payments are included in total annual earnings and must be counted for the
purpose of calculating 401k contributions, profit sharing contributions and other
applicable deductions.
	 
	 	Ø	 	A participant, who is not meeting business objectives or job performance expectations
during an incentive period, may be removed from eligibility in the AIP Plan upon approval
of the Vice President of Human Resources and the CEO.
	 
	 	Ø
	 	A participant on a Performance Improvement Plan for job performance is not eligible to
receive an AIP bonus payment.

This document supersedes all other documents that may establish or describe any criteria for
participation in this plan or any other Compass Minerals compensation plan. This plan can be
modified or terminated at any time by the President and CEO of the Company. This document does not
provide nor is it intended to infer any instance of guarantee regarding participation or bonus
pay-out. Furthermore, this document does not establish any contract of employment between the
Company and any employee, nor does it establish any guarantee of employment for any specific period
of time.

4exv10w5

 

Exhibit 10.5

AMENDMENT ONE

COMPASS MINERALS INTERNATIONAL, INC. 2005 INCENTIVE AWARD PLAN

     WHEREAS, Compass Minerals International, Inc. (the “Corporation”) maintains the Compass
Minerals International, Inc. 2005 Incentive Award Plan (the “Plan”) for the purpose of promoting
and enhancing the value of the Corporation by linking the personal interest of its key personnel to
those of the stockholders; and

     WHEREAS, the Corporation now desires to clarify and amend the Plan to reflect that outstanding
awards and the number of shares available for award under the Plan shall be automatically adjusted
upon the occurrence of certain equity restructurings of the Corporation;

     NOW, THEREFORE, Section 11.1 of the Plan is amended to read in its entirety as follows:

     11.1 Adjustments. In the event of any stock dividend, stock split,
combination or exchange of shares, merger, consolidation, spin-off, recapitalization
or other distribution (other than normal cash dividends) of Company assets to
stockholders, or any other change affecting the shares of Stock or the share price
of the Stock, the Committee, as it determines to be necessary to prevent dilution or
enlargement of the rights of Participants, shall proportionately adjust (a) the
aggregate number and kind of shares that may be issued under the Plan (including,
but not limited to, adjustments of the limitations in Sections 3.1 and 3.3); (b) the
terms and conditions of any outstanding Awards (including, without limitation, any
applicable performance targets or criteria with respect thereto); and (c) the grant
or exercise price per share for any outstanding Awards under the Plan, to reflect
such event. Any adjustment affecting an Award intended as Qualified
Performance-Based Compensation shall be made consistent with the requirements of
Section 162(m) of the Code.

     IN WITNESS WHEREOF, the undersigned certifies that this Amendment was adopted by the
Compensation Committee of the Board of Directors of the Corporation on and effective as of the
6th day of March, 2007.

	 	 	 	 	 
	 	 	Compass Minerals International, Inc.
	 
	 	 	 	 
	 

	 	By:
	 	/s/ Victoria Heider
	 

	 	 	 	 
	 

	 	Title:
	 	Vice President, Human Resources
	 

	 	Date:
	 	March 6, 2007

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