Document:

Esterline Technologies 2010 Annual Incentive Compensation Plan

 EXHIBIT 10.1 
 FY10 Annual Incentive Compensation Plan 
 Esterline
Technologies Corporation 
  

	1.	Purpose. The Board of Directors has established this Plan to encourage Esterline officers and senior managers to make prudent decisions that will
strengthen current year financial results for shareholders. The Plan is designed to reward participants for successful achievement of an earnings objective, and to provide incentives for them to achieve outstanding results. 

 

	2.	Membership. The Board will appoint selected officers and senior managers from among Esterline’s corporate staff to Plan membership. Individuals
become members upon return of a signed acceptance. 

  

	3.	Objective. The Plan’s earnings objective will be determined by the Board’s Compensation Committee, and approved by the Board at the beginning of the
fiscal year. 

  

	4.	Incentive Formula. 

  

	 	a.	Target Incentive Compensation. The Board will establish a target incentive compensation award level for each member (“target IC”), which will range
from 5% to 60% of the member’s base salary as of fiscal year-end. Esterline will pay the target IC amount if the corporation achieves its earnings objective, subject to other terms of this Plan. 

  

	 	b.	Threshold. Members will earn no IC if the corporation’s earnings fall below a minimum established by the Board (“Plan threshold”). At the Plan
threshold, members will earn 25% of their target IC. 

  

	 	c.	Maximum. Members may earn up to 200% of their target IC for exceptional achievement if corporate earnings exceed the Plan’s objective and reach this
“Plan maximum”. Plan members will earn no additional IC for achievement above the Plan maximum. 

  

	 	d.	Proportionate Awards. Between the Plan threshold and Plan maximum, member earnings will increase or decrease from target levels in direct proportion to
incremental achievement. 

  

	5.	General Terms. 

  

	 	a.	Plan Administration. The Board has delegated administrative authority to its Compensation Committee, which shall consider any issues arising under the Plan,
oversee Plan award calculations, and make recommendations to the Board for final approval. 

  

	 	b.	Adjustments. The Compensation Committee may exercise its discretion to recommend the Board either subtract from or add to computed awards, provided, however,
that the Compensation committee may not adjust awards for any member who is a covered employee for purposes of Section 162(m) of the Internal Revenue Code of 1986 in such a manner as would increase the amount of compensation

 
otherwise payable to that employee. The maximum range of such adjustments is limited to either 25% of the member’s computed award or 25% of the member’s target IC, whichever is greater.

  

	 	c.	Calculations. Esterline will calculate earnings per share on a fully-diluted basis, as audited, and before extraordinary items. 

  

	 	d.	Payment. Esterline will pay Plan awards within 60 days following fiscal year-end, provided: 

  

	 	•	 	 Company auditors have issued an opinion that supports earnings calculations; 

  

	 	•	 	 The Board has approved the proposed awards; and, 

  

	 	•	 	 Members remain employed through the entire fiscal year and through the payment date, except as provided in sections 5f and 5g below.

  

	 	e.	Employment. This Plan does not affect members’ terms of employment, except as specifically provided here. This Plan does not guarantee continued employment.
Members remain subject to usual Esterline policies and practices. 

  

	 	f.	Partial Year Membership. If an employee is appointed to the Plan mid-year, Esterline will pay a pro-rata amount based on the member’s period of employment,
and on the terms under which they were appointed to the Plan. 

  

	 	g.	Termination. If a member leaves Esterline employment prior to the Plan payment date for any reason, whether voluntary or involuntary, s/he shall forfeit any IC
award otherwise earned, except: 

  

	 	i.	The Board may exercise its discretion to grant a pro-rata award to a terminated employee based on his/her period of employment; or, 

  

	 	ii.	If a member leaves due to retirement, disability or death, Esterline will pay a pro-rata amount based on the member’s period of active employment.

  

	 	h.	Entire Agreement. This Plan, together with the member’s appointment letter comprise the entire agreement between the member and Esterline with respect to
these subjects. 

  

	 	i.	Modification. The Board may modify or terminate this Plan at any time, provided it pays members on a pro-rata basis for any IC earned prior to such
change. 

 Approved by the Board and issued on its behalf: 
  

	
	 /s/ R. Bradley Lawrence

	R. Bradley Lawrence
	President & CEO
	December 10, 2009

 

 

 FY10 Annual IC Plan 
 Page 2Esterline Technologies Corporation Long-Term Incentive Plan

 EXHIBIT 10.2 
 Esterline Technologies Corporation 
 2004 Equity
Incentive Plan 
 LONG TERM INCENTIVE PLAN 
 1.      Purpose. Esterline Technologies Corporation (the “Company”) has designed this Long
Term Incentive Plan (“LTIP”) to reward its officers and selected senior executives for their contributions to the long-term performance of the Company. The LTIP rewards effective use of the Company’s resources to achieve expected and
superior performance. 
 2.      Participation. 
 (a) The Company’s officers and other senior executive employees are eligible to participate in this LTIP, subject to selection
and appointment by the Company’s Board of Directors (“the Board”) at the beginning of each performance period. Appointment as a participant in one or more performance periods does not entitle employees to continued participation for
subsequent periods. Each participant in this LTIP for a particular performance period will receive an appointment in the form attached. 
 (b) The Board may also appoint new participants during any current performance period. They will receive a pro-rata award based on the remaining portion of the performance period. 
 3.      Performance Periods. The LTIP performance periods will be three years in duration, beginning on
the first day of the Company’s fiscal year and ending on the last day of the third fiscal year thereafter, except for an initial implementation phase. A new three-year performance period will start with each new fiscal year, such that when the
LTIP is fully-implemented, there will be three overlapping LTIP performance periods at any given time, as illustrated below. The Board may establish shorter performance periods as it determines are reasonable to implement this LTIP. 

 

 

 4.      Performance Measures & Goals. The LTIP has two
performance measures: average return on invested capital (“ROIC”); and cumulative compound earnings per share growth (“EPSG”). At the beginning of each performance period the Board will set ROIC and EPSG goals 

 

 

 
combined on a matrix to show their relative relationship and importance (“LTIP Matrix”). A sample LTIP matrix is attached. 
 5.        Target and Actual Awards. The Board will establish a target cash award for each
participant. Participants’ actual awards will equal their target awards if the Company fully achieves the target LTIP goals. Participants’ actual awards will vary from their target awards if the Company performs above or below target LTIP
goals. Participants will receive no award for performance less than the minimum LTIP goals. Actual awards for superior performance are subject to a maximum of 400% of a participant’s target award. 
 6.        Calculations. The Board will use the following formulas to determine Company
performance and actual awards: 
 (a) Average Return on Invested Capital (ROIC) – Fiscal year end net income (before
extraordinary items), divided by the monthly average invested capital during the corresponding fiscal year, averaged over the applicable performance period, and expressed as a percentage. 
 (b) Cumulative Compound Earnings Per Share Growth (EPSG) – Cumulative growth in fully diluted EPS (net income before
extraordinary items, divided by the monthly average of total common shares outstanding), measured as the annualized percentage compound growth over the applicable performance period. 
 (c) Pro-rata participants – For participants appointed during a performance period under section 2c above, the Company will
calculate a pro forma amount as though the participant had been appointed for the full performance period, and then reduce that amount by an appropriate factor, based on the participant’s appointment date. 
 7.        Adjustments. In rare circumstances, the Board may exercise its discretion,
consistent with the 2004 Plan, to either: (a) subtract from or add to a participant’s actual award; or (b) adjust the LTIP’s performance goals. This would occur only if unusual events or business conditions develop after the
beginning of a performance period, such as significant acquisitions or divestitures that materially alter earnings or returns. Provided, however, the Board may not adjust awards for any participant who is a covered employee for purposes of
Section 162(m) of the Internal Revenue Code of 1986 in such a manner as would increase the amount of compensation otherwise payable to that employee. 
 8.        Payments. The Company will pay LTIP awards no later than two-and-a-half months following approval by the Board’s Audit Committee of the
Company’s financial reports for the pertinent fiscal periods. 
 9.        Continuous Employment. Except as provided below, to receive an LTIP award payment participants must be actively employed by the Company throughout the entire performance period and
through the date on which the Company pays LTIP awards for that performance period. Appointments will end automatically for participants who do not satisfy this employment condition and no LTIP award payments will be earned or due. The Company
considers approved leaves of absence to be active employment, provided they do not exceed the amount of leave to which a participant might be entitled under applicable Company policies, and under disability, family and medical leave laws. For
approved leaves that exceed such limits, payment of LTIP awards, if any, is subject to Board discretion. 

 

 

 Long Term Incentive Plan 
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 10.      End of Employment. 
 (a) Suspension, Resignation, or Discharge. All a participant’s rights under this plan will be suspended during any period of
suspension from employment. A participant’s appointment will automatically end when s/he leaves employment with the Company for any reason other than Retirement, Disability, or death. 
 (b) Retirement, Disability, or Death. If a participant leaves employment with the Company due to Retirement, Disability, or death,
the Company will pay the participant’s actual award for the full performance period in the normal course, provided the participant completed at least one year of continuous, active employment during the performance period. If a participant does
not complete this minimum employment period, his/her appointment will automatically end, and no LTIP award will be earned or due. 
 (c) Other. The Board may immediately cancel a participant’s appointment and recover any payments made if it discovers facts that, if known earlier, would have constituted grounds for termination of employment for Cause.

 11.      LTIP Terms. The Company established this LTIP pursuant to its 2004 Equity
Incentive Plan (“2004 Plan”). The terms of a participant’s appointment, this LTIP document, and the 2004 Plan together constitute the “LTIP terms.” 
 12.      Employment Terms. The LTIP terms do not affect participants’ terms of employment, except
as specifically provided in the LTIP terms. They do not guarantee continued employment. Participants remain subject to usual Company policies and practices, and to any other employment agreements, service terms, appointments, or mandates to which
they are otherwise subject. 
 13.      Plan Administration. The Board has delegated
administrative authority to its Compensation Committee (“Committee”), which will consider any issues arising under the LTIP terms, oversee award calculations, and make recommendations to the Board for final approval. The Board has sole and
final authority to determine Plan achievement and actual awards. 
 14.      Plan
Interpretation. All references to the “Company” include a “Related Company”, as that term is defined in the 2004 Plan. Definitions in the 2004 Plan apply to terms used in this LTIP unless otherwise defined here. On any issues
of interpretation, the Committee’s decisions will be final and binding. 
 15.      Modification. The Board may modify or terminate this LTIP at any time. 
 Approved by the
Board December 10, 2009. 
  

	
	 /s/ R. Bradley Lawrence

	 R. Bradley Lawrence

	 President & CEO

 

 

 Long Term Incentive Plan 
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