Document:

ex10-1.htm

Exhibit 10.1

 

 

 

 

 

 

 

 

 

 

 

 

LSI INDUSTRIES INC.

 

FISCAL YEAR 2018 SHORT TERM INCENTIVE PLAN

FOR NAMED EXECUTIVE OFFICERS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Document date: August 16, 2017

  

 

1

 

    

LSI INDUSTRIES INC.

 

FISCAL YEAR 2018 SHORT TERM INCENTIVE PLAN FOR NEOs

 

August 16, 2017

 

The Fiscal Year 2018 Short Term Incentive Plan (STIP) for Named Executive Officers (“NEOs”) is designed to incentivize Named Executive Officers to drive LSI to attain the FY2018 Business Plan goals for Net Sales and Operating Income. The STIP has been approved by the Compensation Committee of the LSI Board of Directors and provides for the payment of cash incentive awards if the stated FY2018 Business Plan objectives are achieved. There are three elements of this STIP.

 

	 	
1.
	
Bonus Potential determines the percentage incentive award payout to Named Executive Officers based on the attainment of the FY 2018 Business Plan goals, as approved by the Compensation Committee, in the table below.

 

	 	 	
Threshold 

75% Plan 

Achievement 
	 	 	
Target 

100% Plan 

Achievement
	 	 	
Maximum 

130% Plan 

Achievement
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 
	
B6 Chief Executive Officer
	 	 	50.0	%	 	 	100.0	%	 	 	200.0	%
	
B5 Other NEOs 
	 	 	20.0	%	 	 	40.0	%	 	 	80.0	%

                         

 

	 	
2.
	
Performance Mix determines the percentage assigned to the performance of the Company and / or to the performance of a specific business segment.

 

     Named Executive Officers    

100% Corporate Performance

 

 

	 	
3.
	
Metrics determine the percentage weighting assigned to Net Sales and Operating Income. In FY 2017 the STIP was based upon attainment of the Net Sales goal (30% weighting) and Operating Income goal (70% weighting). These metrics have been changed in FY 2018 to a weighting of 50% for attainment of the Net Sales goal and 50% for the attainment of the Operating Income goal.

 

 

	
Metrics %
	
 FY 2017
	
 FY 2018

	
Sales 
	
 30% 
	
 50%

	
Operating Income   
	
 70%
	
 50%

	
Total 
	
 100% 
	
 100%

                                             

 

 

2

 

                                         

The following example calculation is provided for illustrative purposes only:

 

 

	 	 	 	 	 	 	 	 	 	 	 	achievement	 	 	 	75	%	 	 	100	%	 	 	130	%
	
Example Calculation: B5 Named Executive Officer
	 	 	 	 	 	 	 	bonus potential	 	 	 	20	%	 	 	40	%	 	 	80	%
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	
Plan
	 	 	
Actual
	 	 	
% of Plan
	 	 	
Bonus 

Potential
	 	 	
Performance 

Mix
	 	 	
Sales / OI 

Metric
	 	 	
Incentive 

Payout 
	 
	Corporate	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
Net Sales
	 	$	500,000	 	 	$	520,000	 	 	 	104.0	%	 	 	45.33	%	 	 	100.0	%	 	 	50.0	%	 	 	22.67	%
	
Operating Income
	 	$	50,000	 	 	$	51,000	 	 	 	102.0	%	 	 	42.67	%	 	 	100.0	%	 	 	50.0	%	 	 	21.34	%
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	Total Payout Percentage	 	 	 	44.00	%
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	Annual Base Salary	 	 	$	100,000	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	Bonus Payment	 	 	$	44,000	 

   

The following rules govern the STIP: 

 

	 	
A.
	
The STIP has been approved by the Compensation Committee which has the ability to interpret and administer the STIP in its sole and absolute discretion. The STIP covers only the Named Executive Officers as identified by the Compensation Committee.

 

	 	
B.
	
The STIP will take into account LSI consolidated results. The use of consolidated LSI results as a determinant of the incentive payment provides motivation for the Named Executive Officers to work for the good of the entire corporate enterprise.

 

	 	
C.
	
The Compensation Committee may make modifications of or adjustments to the calculated incentive award to decrease or increase a Named Executive Officer’s incentive for special objectives, developments, factors or circumstances.

 

	 	
D.
	
The determination of the achievement of LSI’s Net Sales and Operating Income will be calculated based upon actual reported fiscal 2018 results and may be adjusted for certain unusual or non-recurring items as approved by the Compensation Committee. There will be a straight line interpolation of actual achievement as compared to the fiscal 2018 business goals when determining the actual incentive payment percentage.

 

	 	
E.
	
STIP participants must be employed by LSI on the date when incentive payments are issued related to fiscal 2018. A Named Executive Officer who terminates employment or whose employment is terminated on or before the incentive payment date is not eligible for an incentive payment.

 

	 	
F.
	
Any type of lengthy leave of absence may result in an adjustment of the calculated award. Leaves of absence include time away from work for reasons of short term disability, FMLA leave, military leave, or other leave of absence.

 

 

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G.
	
If a Named Executive Officer retires during the fiscal year at normal retirement age or under an LSI approved plan of retirement, the Compensation Committee may consider a pro-rated incentive award payment based upon the actual amount of base salary received during the fiscal year prior to the date of retirement.

 

	 	
H.
	
If a Named Executive Officer becomes disabled (as defined by Social Security) or dies during a fiscal year, the Compensation Committee may consider the payment of a pro-rata award to such Named Executive Officer’s beneficiary based upon the actual amount of base salary received in the fiscal year prior to the date of death or disability.

 

	 	
I.
	
Incentive payments are subject to assignment laws and other laws that require payment of the bonus to other than the named executive officer (e.g., IRS tax levies, child support arrearages, etc.). LSI will comply with all such applicable assignment laws.

 

	 	
J.
	
Except as may be otherwise determined by the Compensation Committee, the Net Sales and Operating Income metrics in the STIP shall exclude the positive and negative effects of extraordinary developments, such as acquisitions, as disclosed in LSI’s Form 10-K. 

 

	 	
K.
	
LSI reserves the right to amend, reduce, modify, interpret or discontinue all or part of the STIP with or without reason as the Compensation Committee deems advisable in its sole and absolute discretion.

 

	 	
L.
	
The STIP does not create or imply the existence of a contract of employment.

 

	 	
M.
	
The Named Executive Officer’s base salary rate as of January 1, 2018 shall be used to calculate the incentive amount that may be awarded under the STIP.

 

	 	
N.
	
The Company reserves the right to require each Named Executive Officer to execute and deliver to the Company a non-compete / non-solicitation agreement as a condition of the grant or the payment of any incentive award as may be due under the STIP.

 

 

 

   

 

 

 

 

 

 

 

 

 

File: LSI FY 2018 NEO STIP Short Term Incentive Plan

 

4ex10-2.htm

Exhibit 10.2

 

 

 

 

 

 

 

 

 

 

 

LSI INDUSTRIES INC.

 

FISCAL YEAR 2018 LONG TERM INCENTIVE PLAN

FOR NAMED EXECUTIVE OFFICERS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Document Date: August 16, 2017

 

 

1

 

 

 

LSI INDUSTRIES INC.

 

FY 2018 LONG TERM INCENTIVE PLAN (LTIP) FOR NEOs

 

August 16, 2017

 

The LSI Industries Inc. Amended and Restated 2012 Stock Incentive Plan authorizes the Compensation Committee of the Board of Directors to issue share-based incentive awards. The Fiscal Year 2018 LSI Long Term Incentive Plan (LTIP) for Named Executive Officers contemplates three types of share-based awards. All LTIP awards are granted effective August 17, 2017 and at such other times and in such other manner as may be approved or authorized by the Compensation Committee.

 

	 	
1.
	
Service –Based Stock Options. LSI may issue stock options to Named Executive Officers to motivate them to cause LSI to achieve its business plan resulting in higher stock prices, thereby creating value in the stock options that have been awarded. Stock options issued to Named Executive Officers are approved by the Compensation Committee. Service-based stock option awards have a ten year exercise term, three year ratable vesting period and a stated and fixed exercise price set by the Compensation Committee at the date of the grant. The exercise price will be the closing price on the day of grant.

 

	 	
2.
	
Service-Based Restricted Stock Units. In order to encourage Named Executive Officers to maintain long-term employment with the Company, LSI may award restricted stock units (RSUs) to the Named Executive Officers, as approved by the Compensation Committee. The RSUs are service-based and have a three year ratable vesting period. The RSUs are non-voting, but shall accrue cash dividends at the same dividend per share rate (one RSU = one LSI common share) as cash dividends declared and paid on LSI common shares. LSI common shares are released to the Named Executive Officer when RSUs vest, at which time the accrued dividends are paid in cash. Vested RSUs are subject to a one year holding period.

 

	 	
3.
	
Performance-Based Stock Options. In order to align Named Executive Officer long-term incentive compensation with LSI shareholders’ interests, and to encourage Named Executive Officers to maintain long term employment with the Company, LSI may grant performance-based stock options, as approved by the Compensation Committee. Such stock option awards will vest based upon the attainment of the Operating Income goal set for fiscal 2018 in 33.33% increments. The first 33.33% will vest at the end of fiscal 2018 assuming the planned Operating Income is achieved. The second 33.33% will vest at the end of fiscal 2019 and the third 33.33% will vest at the end of fiscal 2020. The exercise price will be the closing price on the day of grant. The Operating Income goal and the vesting schedule are set forth below.

   

 

 

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FY 2018 Plan

 

Operating Income Goal as a % of Planned Net Sales = 4.7%

 

Grant Date: August 17, 2017

 

33.33% Vesting Date: August 17, 2018

33.33% Vesting Date: August17, 2019

33.33% Vesting Date: August 17, 2020

 

Partial Awards will be vested based upon the following goal attainment schedule:

 

95-100% attainment = 100% vesting

90-94% attainment = 90% vesting

85-89% attainment = 80% vesting

 

 

The following rules shall govern the three types of share-based awards contemplated by this LTIP.

 

	 	
a.
	
The LTIP is a pay-for-performance plan designed to incentivize Named Executive Officers to drive the achievement of superior operating results and to maintain long-term employment with LSI.

 

	 	
b.
	
The LTIP covers only the Named Executive Officers as identified by the Compensation Committee.

 

	 	
c.
	
The LTIP has been approved by the Compensation Committee who has the ability to interpret and administer the LTIP in its sole and absolute discretion.

 

	 	
d.
	
The determination of the achievement of LSI’s Operating Income will be calculated based upon actual reported results with adjustments for certain unusual or non-recurring items or developments as may be approved by the Compensation Committee.

 

	 	
e.
	
Each Named Executive Officer qualified for the LTIP must be employed at LSI on the vesting dates in order to exercise the stated award. Vesting will be determined in accordance with “retirement eligibility” rules as defined in the 2012 Stock Incentive Plan.

 

	 	
f.
	
Any type of lengthy leave of absence may result in an adjustment of the calculated award. Leaves of absence include time away from work for reasons of short term disability, FMLA leave, military leave, or other leave of absence.

 

	 	
g.
	
If a Named Executive Officer retires during the plan period at normal retirement age or under an LSI approved plan of retirement, the Compensation Committee may consider a pro-rated award based upon the actual amount of base salary received in the plan period, subject to the terms and conditions of the 2012 Stock Incentive Plan.

 

 

 

3

 

  

	 	
h.
	
If a Named Executive Officer becomes disabled (as defined by Social Security) or dies during the plan period, the Compensation Committee may consider an adjusted award for such Named Executive Officer’s beneficiary, subject to the terms and conditions of the 2012 Stock Incentive Plan.

 

	 	
i.
	
Some incentive awards may be subject to assignment laws and other laws that require payment to other than the employee (such as IRS tax levies, child support arrearages, etc.). LSI will comply with all such applicable assignment laws.

 

	 	
j.
	
Except as may be otherwise determined by the Compensation Committee, the Operating Income goal in the LTIP shall exclude the positive and negative effects of extraordinary developments, such as acquisitions, as may be disclosed in LSI’s Form 10-K.

 

	 	
k.
	
LSI reserves the right to amend, reduce, modify, interpret or discontinue all or part of the LTIP with or without reason as the Compensation Committee deems advisable, subject to the terms and conditions of the 2012 Stock Incentive Plan.

 

	 	
l.
	
This LTIP does not create or imply the existence of a contract of employment.

 

	 	
m.
	
In the event LSI is required to prepare an accounting restatement due to the material noncompliance of LSI with any financial reporting requirement under the federal securities laws, the Compensation Committee shall require reimbursement to LSI of any performance-based awards granted hereunder where: (i) the payment was predicated upon achieving certain financial results that were subsequently the subject of a substantial restatement of LSI financial statements filed with the SEC; (ii) the Compensation Committee determines the officer engaged in intentional misconduct that caused or substantially caused the need for the accounting restatement; and (iii) a lower payment would have been made to such officer based upon the restated financial results. In each such instance, LSI will, to the extent practicable, seek to recover from the officer the amount by which any performance-based awards paid to such officer for the relevant period exceeded the lower payment that would have been made based on the restated financial results. This compensation recovery policy applies to financial statements for periods ending after June 30, 2016.

 

	 	
n.
	
In the event and to the extent LSI common shares are issued pursuant to awards granted under the LTIP, each Named Executive Officer who receives such LSI common shares is required to retain for one year 100% of net after tax shares received upon exercise of the stock options or vesting of RSUs, as the case may be.

 

	 	
o.
	
The Company reserves the right to require each Named Executive Officer to execute and deliver to the Company a non-compete / non-solicitation agreement as a condition of the grant of any award or the payment of any amounts as may be due under the LTIP.

 

 

 

 

 

File: LSI FY 2018 NEO Long Term Incentive Plan

 

4

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