Document:

UNITED STATES

Exhibit 10.6

A.T. Cross Company

Incentive Compensation Plan - 2004

 

Introduction

The following Incentive Plan (the "Plan") will be implemented for 2004.  The purpose of the Plan is to drive participants towards achievement of corporate goals and to motivate, retain and reward participants.  For 2004, the Plan will calculate incentive awards for all participants based on achieving annual corporate financial and individual objectives.  For 2004, the corporate financial objective will be a combination of operating income before taxes (OIBT) and net sales targets.  All other performance objectives and weighting of the corporate and individual bonus segments will be determined based on individual responsibilities (including but not limited to net sales, profit, programs and/or projects) and agreed upon by the President and CEO with the appropriate Vice President.

Performance Measures

OIBT is the primary driver of the award.  The corporate incentive award will be established based on a funding matrix (example below) considering both OIBT and net sales.

The corporate incentive pool is created when certain levels of OIBT and net sales are achieved.  The individual incentive pool is created when any individual objective is achieved.  Based on the level of achievement, and considering the funding matrix, the pool will be created by multiplying the corporate payout multiple from the matrix for the achievement level by the base pay of participants and then by the target bonus level of participants.

	
Corporate Incentive Pool =

Base Pay of Participants X Target Awards of Participants X Weighting of

Corporate Segment of Participants X Payout Multiple

Example Only

	
	
Worldwide Revenue Achievement of Plan
	

	
	
	
0 to $200.0
	
$200.0-$400.0
	
$400.0-$600.0
	
$600.0 +
	

	
	
	
	
	
	
	

	
Pre-Bonus
	
Less than $15MM
	
0%
	
0%
	
0%
	
0%
	
Percent

	
OIBT
	
$15MM - $25MM
	
50%
	
60%
	
70%
	
80%
	
of

	
Achievement
	
$25MM - $35MM
	
80%
	
90%
	
100%
	
110%
	
Pool

	
of Plan
	
$35 MM +
	
110%
	
120%
	
130%
	
150%
	
Funded

Each individual objective will be evaluated on the following scale.

	
	
Modifier for Achievement of Individual Objectives

	
	
	

	
	
Objective Rating
	
Multiplier

	
	
	

	
	
Did Not Achieve
	
0.00

	
	
Achieved Most Results
	
0.50

	
	
Achieved All Results
	
1.00

	
	
Exceeded Some Results
	
1.20

	
	
Exceeded All
	
1.40

The Exceeded All rating will be reserved for use by the President/CEO and responsible Vice President.  The ratings on each objective will be multiplied by the cash value of the individual objective and then totaled to calculate the individual objective bonus amount. 

Eligibility

All executives and exempt staff with base pay greater than $60,000 who are actively employed on December 31st of the plan year are eligible to participate.  The eligibility criteria are based on competitive market review.

Target Bonus Levels

Target bonus incentives will be expressed as a percentage of base salary earned during the year.  Targets will be based on market data regarding competitive compensation levels.  Minimum and maximum incentive levels will be determined by the size of the corporate incentive pool and performance on business unit/territory/region and individual/other goals.  Incentive levels at threshold achievement will be approximately 50 percent of target and approximately 150 percent at maximum levels of achievement.

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Base Salary Range ($000)
	
Incentive Target Salary

(as a % of base)

	
	
	
	

	
	
Level A
	
$170 - $220
	
35%

	
	
Level B
	
$130 - $170
	
25%

	
	
Level C
	
$100 - $130
	
20%

	
	
Level D
	
  $80 - $100
	
15%

	
	
Level E
	
$60 - $80
	
10%

Payout of Plan Awards

Annual Incentive Awards will be distributed as soon as is practicable after the close of the fiscal year.  Awards, if earned, will be a percent of base salary paid for such fiscal year.  Base salary does not include any bonus payable under this Plan or any other incentive plan, any life insurance premiums, special compensation, pension benefits, profit sharing trust or Crossaver savings plan matching allocations.

Bonus funding levels will be interpolated between threshold and target and between target and maximum to yield the final bonus calculations.

Changes in Employment Status

Employees who are participants in the Plan for only part of a fiscal year may participate in the Plan for the period or periods of membership on a pro rata basis.  Bonuses will be prorated for employees who participate in more than one bonus level during the year, considering all bonus levels.  However, participants must be actively employed by the Company as of December 31 to be eligible for incentive awards relating to that year.

Disability or Death

For participants who become disabled (i.e., eligible for Company LTD benefits) or die while a member of the Plan, awards will be determined in a prorated manner to reflect the period of time the participant was an active member of the Plan.  Payout will be made - at the time the normal payout would have been made - to the participant or participant's beneficiary(ies) if on file; otherwise, payment will be made to the participant's estate.

Administration

The Compensation Committee of the Board of Directors of A. T. Cross Company, whose decisions in all matters will be final, will administer the Plan.  The Committee reserves the right, subject to the full Board's approval, to modify, amend, or discontinue this Plan at any time.  Any changes or amendments to the Plan will not affect a participant's rights prior to the modification unless the participant provides written consent.

Participation in this Plan does not confer any right to continued employment by A. T. Cross.  Similarly, selection for participation in any one year does not necessarily guarantee participation in future years.  No member of the Compensation Committee shall have any personal liability in connection with the administration of the Plan.  

Definitions

Operating Income Before Taxes (OIBT)

OIBT is defined as the pretax operating income excluding any adjustment for LIFO inventories, restructuring or other non-recurring items and before allowance for bonus payment under this plan.  The corporate target will be approved by the Board of Directors considering the annual operating plan.

Net Sales

Net sales is defined as gross sales of the unit, less returns and allowances, cash discounts, and rebates.

Corporate Targets

Corporate targets include operations of A.T. Cross Company and subsidiaries, branches and divisions as of January 1, 2004 including cross retail ventures.

International Calculations

Participants who are located internationally will have their targets and actual results determined utilizing budgeted exchange rates.  By utilizing budgeted exchange rates, there will be neither a favorable or unfavorable impact as a result of fluctuations in foreign exchange.  Also, participants who operate in a single country will be measured using local currency, while participants who operate in multiple countries will be measured in United States dollars (utilizing budgeted exchange rates) on a consolidated basis.

39UNITED STATES

Exhibit 10.7

A.T. Cross Company

Executive Compensation Program

Long Term Incentive Performance Cash Plan

January, 2004

Introduction

A.T. Cross is in the process of implementing significant operational changes that are expected to have positive impact over the next three years.  This plan is designed to align the long-term compensation program with the Company's business plan and priorities.  The major components of the management and executive compensation program are base salary, the Annual Incentive Plan and this Long Term Incentive Performance Cash Plan (the "LTIPC Plan").  This document describes the Performance Cash Plan, which is designed to provide significant additional compensation opportunities for achieving a challenging, multi-year financial goal.  This is a one-time, three-year plan, which is divided into two stand alone segments. For its duration, it will replace the stock option program.

Purpose of the Plan

While the Annual Incentive Plan rewards the achievement of sales and operating profit goals, the LTIPC Plan provides compensation for achieving operating cash flow goals for 2005 and for 2006.  Achieving these cash flow goals is consistent with significantly improving the Company's financial performance over the next three years.  Accordingly this plan is designed to:

	Encourage long-term growth and performance

	Link a portion of pay directly to the success of the Company's long-term business strategies

	Provide above market compensation if aggressive goals are met

	Support efforts to recruit and retain outstanding top executives over the long term

Eligibility

Participants in the plan will consist of the CEO, the Operations Committee and the Leadership Council.  Additional participants may be included at the discretion of the Compensation Committee and/or the CEO.  Individuals participating in the LTIPC Plan in 2004 will fully participate in the plan; new entrants in the plan in 2005 will have their award prorated; and new entrants in 2006 will not be permitted to participate.

Participants must be employed on December 31, 2005 to receive the 2005 award and must be employed on December 31, 2006 to receive the award attributable to that year.

How The Plan Works

The plan will award participants one time their annual salary (two times annual salary for the CEO) in the event certain operating cash flow targets are met over the next three years.  One-third of the award will be paid if certain cash flow targets are met for fiscal 2005 with the remaining two-thirds balance paid if cash flow targets are met for fiscal 2006.  For the purposes of determining the size of an award, the participant's base annual salary at the time the award is paid will determine the award size. 

Performance Measure

The Performance Cash Plan is based on the ability to meet three-year operating cash flow targets.

Payout of Plan Awards

If the 2005 goal is achieved, the Compensation Committee of the Board will award the first segment.  As of January 2004, only the first segment of the program has been approved by the Board of Directors.  The first award will be payable before the end of the first quarter 2006; if approved, the second part will be payable before the end of the first quarter 2007.

Changes in Employment Status

Employees who are participants in the Plan for only part of the three-year cycle may participate as described above.  However, (except in the case of death or disability) participants must be actively employed on December 31, 2005 and 2006 to be eligible for the bonus award attributable to that segment.

Disability or Death

For participants who become disabled or die while a member of the Plan, awards under the Plan, if earned, will be determined in a prorated manner to reflect the period of time the participant was a member of the Plan.  Payout will be made - at the time the normal payout would have been - to the participant or participant's beneficiary(ies) if on file, otherwise payment will be made to the participant's estate.

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