Document:

EX-10(A) LESCO MANAGEMENT BONUS PLAN FOR 2006

 

Exhibit 10(a)

Corporate Policy #C-004

Created on June 7, 2002

Revised on February 16, 2006

LESCO MANAGEMENT BONUS PLAN

	POLICY: 	 	The purpose of the LESCO Management Bonus Plan is
to promote the strategic interests of
LESCO by providing key management with
financial incentive awards for
performance that contributes
significantly to the success of the
company, as determined by meeting or
exceeding specific strategic goals.

RESPONSIBLE OFFICER: Chief Executive Officer

PROCEDURE:

I. ELIGIBILITY AND PARTICIPATION

	 	A.	 	Eligibility to participate in the Plan shall be limited to key management and
other associates as recommended by the Vice President Human Resources with final
approval by the Chief Executive Officer.

	 	B.	 	Following the start of the calendar year, the list of participants for a Plan
year can be revised upon authorization of the Chief Executive Officer. Any associate
that is hired or selected to participate after the start of the calendar year shall
participate on a prorated basis. This is determined by multiplying the maximum bonus
opportunity by a fraction, the numerator of which shall be the number of days of
his/her participation in the calendar year and the denominator of which shall be 365.

	 	C.	 	Suggested Participation Levels

	 	 	 	 	 
	Management Level	 	Target Bonus as % of Base	 
	 
	 	 	 	 
	Sr. Director / Director
	 	15% - 25%	 
	 
	 	 	 	 
	Sr. Manager / Manager
	 	10% - 20%	 

	 	 	 	Note: The Board of Directors and the Chief Executive Officer approve associate’s
participation levels.

	 	D.	 	Participation in the Plan as recommended and approved is not guaranteed from
one year to the next.

II. PAYMENT OF BONUS AWARD EARNED

	 	A.	 	Bonuses are earned after the last day of the Plan Year. Associates must be
actively employed at the time of payment to receive prior Plan Year’s bonus.

	 	B.	 	Termination due to retirement or death will result in a prorated incentive
award upon approval of the Chief Executive Officer.

 

 

Corporate Policy #C-004

Created on June 7, 2002

Revised on February 16, 2006

	 	C.	 	With respect to Section 1, paragraph B. above, the whole amount of the bonus
earned in the Plan Year shall be paid to each eligible associate after the company’s
audited financial results are available, but no later than March 15th of the
following year.

	 	D.	 	An associate will not receive a bonus even when financial performance measures
have been met, when in the judgment of the CEO:

	 	1.	 	The associate’s overall performance for the period is
consistently below expectations.
	 
	 	2.	 	The associate has failed to achieve agreed upon goals.
	 
	 	3.	 	The associate has violated corporate policies or has broken
federal, state, and/or local laws.
	 
	 	4.	 	The CEO determines at his discretion, that an award should not
be given based on the current state of the company.

	 	E.	 	Following release of the Company’s audited financial statements, the Board of
Directors and the Chief Executive Officer can increase, decrease or eliminate awards
when it is determined that the amount of the awards is unreasonable in view of any
unique circumstances or the Company’s overall performance.

	 	F.	 	All payouts for eligible participants shall be at the discretion of the Chief
Executive Officer and Board of Directors.

III. PLAN YEAR

	 	A.	 	The Plan Year is defined as January 1st through December 31st,
or the fiscal year when not a calendar year.

IV. OPERATING RULES

	 	A.	 	Each participant will have a Target Bonus that will be the amount earned for
meeting the Plan’s performance measurements. The Target Bonus will be expressed as a
percentage of actual base salary and will be reviewed by the Vice President Human
Resources and approved by the Chief Executive Officer.

	 	B.	 	Bonus payouts will be calculated based on the attainment of corporate goals of
Basic Earnings Per Share (BEPS), Return on Invested Capital (ROIC), Sales Growth
Percentage over Prior Year, and an Individual Performance Goal. Weighting for each
goal against total target bonus percent is outlined in the Bonus Participation Letter.

	 	C.	 	Attainment of the financial Plan measurements are paid out between threshold
and maximum as defined in the following Payout Matrix.

 

 

Corporate Policy #C-004

Created on June 7, 2002

Revised on February 16, 2006

	 	 	 	Bonus Plan Payout Matrix

	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	% of
Target	 	% of
Target
Dollars	 	 	 
	 	 	Achieved	 	Payable	 	Definitions	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	Threshold
	 	 	90	%	 	 	80	%	 	Threshold performance pays at 80% of
Target Dollars prorated up to Target.
	 
	 	 	91	%	 	 	82	%	 	 	 	 
	 
	 	 	95	%	 	 	90	%	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	Target
	 	 	100	%	 	 	100	%	 	Target pays at 100% of Target Dollars.
	 
	 	 	105	%	 	 	110	%	 	 	 	 
	 
	 	 	110	%	 	 	120	%	 	 	 	 
	 
	 	 	115	%	 	 	130	%	 	 	 	 
	 
	 	 	120	%	 	 	140	%	 	 	 	 
	 
	 	 	125	%	 	 	150	%	 	 	 	 
	 
	 	 	130	%	 	 	160	%	 	 	 	 
	 
	 	 	135	%	 	 	170	%	 	 	 	 
	 
	 	 	140	%	 	 	180	%	 	 	 	 
	 
	 	 	145	%	 	 	190	%	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	Maximum
	 	 	150	%	 	 	200	%	 	Above Target pays at a 2:1 ratio up to
maximum of 200% of Target Dollars.

	 	D.	 	Attainment of the Individual Performance Achievement measurement is paid based
on your agreed upon goals and performance rating as defined in the following
Performance Matrix. This measurement is paid only when the minimum achievement is
reached for at least one of the three financial measures; EPS, ROIC and/or Sales Growth
Percentage over Prior Year.

	 	 	 	Bonus Plan Individual Performance Matrix

	 	 	 	 	 
	Agreed Upon Goals /	 	% of Target Paid for Personal	 
	Performance Rating	 	Performance Component	 
	 
	 	 	 	 
	Doesn’t Meet (1)
	 	 	0% - 20%	 
	Meets (2)
	 	 	70% - 100%	 
	Exceeds (3)
	 	 	100% - 120%	 

	 	E.	 	Personalized Bonus Plan documents will be presented to all participants that
detail their approved target percent, target dollars and performance measures or
individual targets for the current Plan year.

V. GUIDELINES

	 	A.	 	Bonus Plan participants’ base salary in effect January 1 of the Plan
Year will be the basis for calculating target and actual bonus dollars.

 

 

Corporate Policy #C-004

Created on June 7, 2002

Revised on February 16, 2006

	 	B.	 	An associate who is hired or promoted after January 1st and
qualifies for participation during the Plan Year will receive a payment for earned
rewards (see section 1, paragraph B) based on prorated salary data in effect with
regard to either date of hire or promotion.

	 	C.	 	Only full-time, regular associates are eligible to participate in the Bonus
Plan. When an associate is on a Leave of Absence for any portion of the calendar year,
the associate will participate in the Plan on a prorated basis as long as the associate
is on active status for a minimum of ninety (90) days during the calendar year.

	 	D.	 	Attainment of goals is based on actual results.
	 
	 	E.	 	All percentages will be rounded to the nearest tenth of a percent.
	 
	 	F.	 	Bonus awards are included as compensation for the LESCO, Inc. Stock Investment
and Salary Savings and Trust (401(k) Plan) and the LESCO, Inc. Restoration Plan, but
are excluded in calculating all other associate benefits.

VI. RIGHT OF PARTICIPANTS AND FORFEITURE

	 	A.	 	Nothing in this Plan shall:

	 	1.	 	Confer upon any associate any right with respect to
continuation of employment with LESCO.

	 	2.	 	Interfere in any way with the right of the Company to terminate
his or her employment at any time, or

	 	3.	 	Confer upon any associate or any person any claim or right to
any distribution under the Plan except in accordance with its terms.

	 	B.	 	No right or interest of any Associate in the Plan shall, prior to actual
payment or distribution of such Associate, be assignable or transferable in whole or
part, either voluntarily or by operation of law otherwise, or be subject to payment of
debts of any Associate by execution, levy, garnishment, attachment, pledge, bankruptcy
or in any other manner.

VII. PLAN ADMINISTRATION

	 	A.	 	The Plan shall be administered by LESCO. LESCO can at any time amend, suspend,
terminate or reinstate any or all of the provisions of the Plan as may seem necessary
or advisable for the administration of the Plan.

The Chief Executive Officer must approve any exceptions to this policy.

	 	 	 	 	 	 	 	 
	Approved:

	 	 	 	Date:	 	 
	 

	 	 
	 	 	 	 
	 

	 	Jeffrey L. Rutherford, CEOEX-10(B) LESCO EXECUTIVE BONUS PLAN FOR 2006

 

Exhibit 10(b)

Corporate Policy C-214

Issued: February 16, 2006

LESCO EXECUTIVE BONUS PLAN

	POLICY: 	 	The purpose of the LESCO Executive Bonus Plan is to promote the
strategic and financial interests of LESCO and its Shareholders
by providing executives with financial incentive awards for
performance that contributes significantly to the success of the
company, as determined by meeting or exceeding specific
strategic goals.

RESPONSIBLE
PARTY:  Compensation, Governance and Nominating Committee

PROCEDURE:

I. ELIGIBILITY AND PARTICIPATION

	 	A.	 	Eligibility to participate in the Plan shall be limited to the executive staff
associates that report directly to the Chief Executive Officer.

	 	B.	 	Any executive associate that is hired or selected to participate after the
start of the calendar year shall participate on a prorated basis. This is determined
by multiplying the maximum bonus opportunity by a fraction, the numerator of which
shall be the number of days of his/her participation in the calendar year and the
denominator of which shall be 365.

	 	C.	 	Suggested Participation Levels

	 	 	 	 	 
	Executive Level	 	Target Bonus as % of Base	 
	 
	 	 	 	 
	CEO
	 	60%	 
	 
	 	 	 	 
	Direct
Reports
	 	20% - 40%	 

	 	 	 	Note: The Compensation, Governance & Nominating Committee approves executive’s
participation levels.

	 	D.	 	Participation in the Plan as recommended and approved is not guaranteed from one
year to the next.

II. PAYMENT OF BONUS AWARD EARNED

	 	A.	 	Bonuses are earned after the last day of the Plan Year. The executive must be
actively employed at the time of payment to receive prior Plan Year’s bonus.

	 	B.	 	Termination due to retirement or death will result in a prorated incentive
award upon approval of the Compensation, Governance and Nominating Committee.

 

 

Corporate Policy C-214

Issued: February 16, 2006

	 	C.	 	With respect to Section I, Paragraph B above, the whole amount of the bonus
earned in the Plan Year shall be paid to each eligible executive after the company’s
audited financial results for such Plan Year are available, but no later than March
15th of the following year.

	 	D.	 	The executive associate will not receive a bonus even when financial measures
have been met, when in the judgment of the Compensation, Governance and Nominating
Committee:

	 	1.	 	The executive’s overall performance for the period is below
expectations and did not contribute to the success of the Company.

	 	2.	 	The executive has not delivered on agreed strategies and goals.

	 	3.	 	The executive has violated corporate policies or has broken
federal, state, and/or local laws.

	 	4.	 	The Compensation, Governance and Nominating Committee determine
at their discretion, that an award should not be given.

	 	E.	 	Following release of the Company’s audited financial statements, the
Compensation, Governance and Nominating Committee can increase, decrease or eliminate
awards when it is determined that the amount of the awards is unreasonable in view of
any unique circumstances or the Company’s financial performance.

	 	F.	 	All payouts for eligible executives shall be at the discretion of the
Compensation, Governance and Nominating Committee.

III. PLAN YEAR

	 	A.	 	The Plan Year is defined as January 1st through December 31st
or the fiscal year when not a calendar year.

IV. OPERATING RULES

	 	A.	 	Each executive will have a target bonus that will be the amount earned for
meeting the Plan’s performance measurements. The target bonus will be expressed as a
percentage of actual base salary as of January 1 of the Plan Year and will be approved
in advance by the Compensation, Governance and Nominating Committee.

	 	B.	 	Bonus payouts will be calculated based on the attainment of corporate goals of
Basic Earnings Per Share (BEPS), Return on Invested Capital (ROIC), Sales Growth
Percentage over Prior Year, and a Personal Performance Goal. Weighting for each goal
against total target bonus percent is outlined in the Bonus Participation Letter.

 

 

Corporate Policy C-214

Issued: February 16, 2006

	 	C.	 	Attainment of each of the individual financial parameters is paid between
threshold and maximum as defined in the following Payout Matrix. The matrix applies to
each financial parameter: BEPS, ROIC and Sales Growth Percentage over Prior Year.

	 	 	Bonus Plan Payout Matrix

	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	% of
Target	 	% of
Target
Dollars	 	 	 
	 	 	Achieved	 	Payable	 	Definitions	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	Threshold
	 	 	90	%	 	 	80	%	 	Threshold performance pays
at 80% of
Target Dollars target bonus up to Target.
	 
	 	 	91	%	 	 	82	%	 	 	 	 
	 
	 	 	95	%	 	 	90	%	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	Target
	 	 	100	%	 	 	100	%	 	Target pays at 100% of Target Dollars.
	 
	 	 	105	%	 	 	110	%	 	 	 	 
	 
	 	 	110	%	 	 	120	%	 	 	 	 
	 
	 	 	115	%	 	 	130	%	 	 	 	 
	 
	 	 	120	%	 	 	140	%	 	 	 	 
	 
	 	 	125	%	 	 	150	%	 	 	 	 
	 
	 	 	130	%	 	 	160	%	 	 	 	 
	 
	 	 	135	%	 	 	170	%	 	 	 	 
	 
	 	 	140	%	 	 	180	%	 	 	 	 
	 
	 	 	145	%	 	 	190	%	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	Maximum
	 	 	150	%	 	 	200	%	 	Above Target pays at a 2:1 ratio up to
maximum of 200% of Target Dollars.

	 	D.	 	Attainment of the Personal Performance Achievement measurement is paid based on agreed
goals and performance rating as defined in the following Performance Matrix. This
measurement is paid only when the EBIT goal is achieved as well as the minimum achievement
is reached for at least one of the three financial measures: BEPS, ROIC and/or Sales Growth
Percentage over Prior Year.

	 	 	Bonus Plan Individual Performance Matrix

	 	 	 	 	 
	Agreed Upon Goals /	 	% of Target Paid for Personal	 
	Performance Rating	 	Performance Component	 
	 
	 	 	 	 
	Doesn’t Meet (1)
	 	 	0% - 20%	 
	Meets (2)
	 	 	70% - 100%	 
	Exceeds (3)
	 	 	100% - 120%	 

	 	E.	 	Personalized Executive Bonus Plan documents will be presented to all executives that
detail their approved target percent, target dollars and performance measures or individual
targets for the current Plan Year.

 

Corporate Policy C-214

Issued: February 16, 2006

	 	F.	 	Notwithstanding anything to the contrary contained herein, if actual EBIT of the Company
for the Plan Year (“Actual EBIT”) is less than or equal to the Company’s EBIT goal for the
Plan Year (the “EBIT Goal”), no bonuses will be paid under the Plan. If (i) Actual EBIT
minus the EBIT Goal (the “Bonus Pool”) is greater than or equal to (ii) the aggregate bonus
amount payable to all participants for such Plan Year (calculated based on actual
performance with respect to corporate financial goals and personal performance goals during
such Plan Year and without regard to this Section IV.F) (the “Aggregate Bonus Amount”), each
participant shall be entitled to receive the bonus payable to such participant based on such
actual performance. If Actual EBIT is greater than the EBIT Goal but the amount of the
Bonus Pool is less than the Aggregate Bonus Amount, each participant shall be entitled to
receive a bonus in an amount equal to (i) the Allocation Fraction multiplied by (ii) such
participant’s target bonus for the Plan Year as a percentage of base salary for such Plan
Year multiplied by (iii) the Bonus Pool. As used herein, the term “Allocation Fraction”
means a fraction the numerator of which is an amount equal to the Bonus Pool and the
denominator of which is an amount equal to the aggregate bonus amount payable to all
participants for the Plan Year assuming performance at the target level with respect to all
corporate financial goals and personal performance goals.

V. GUIDELINES

	 	A.	 	Executive Bonus Plan participants’ base salary in effect January 1
of the Plan Year will be the basis for calculating target and actual bonus dollars.

	 	B.	 	An executive who is hired or promoted after January 1st and
qualifies for participation during the Plan Year will receive a payment for earned
rewards (see Section I, Paragraph B) based on target bonus salary data in effect with
regard to either date of hire or promotion.

	 	C.	 	When an executive is on a Leave of Absence for any portion of the calendar
year, the executive will participate in the Plan on a prorated basis as long as the
executive is on active status for a minimum of ninety (90) days during the calendar
year.

	 	D.	 	Attainments of goals are based on actual results.

	 	E.	 	All percentages will be rounded to the nearest tenth of a percent.

	 	F.	 	Bonus awards are included as compensation for the LESCO, Inc. Stock Investment
and Salary Savings and Trust (401(k) Plan) and the LESCO, Inc. Restoration Plan, but
are excluded in calculating all other executive benefits.

 

 

Corporate Policy C-214

Issued: February 16, 2006

VI. RIGHT OF PARTICIPANTS AND FORFEITURE

	 	A.	 	Nothing in this Plan shall:

	 	1.	 	Confer upon any executive any right with respect to
continuation of employment with LESCO.

	 	2.	 	Interfere in any way with the right of the Company to terminate
his or her employment at any time, or

	 	3.	 	Confer upon any executive or any person any claim or right to
any distribution under the Plan except in accordance with its terms.

	 	B.	 	No right or interest of any executive in the Plan shall, prior to actual
payment or distribution of such executive, be assignable or transferable in whole or
part, either voluntarily or by operation of law otherwise, or be subject to payment of
debts of any executive by levy, garnishment, attachment, pledge, execution, bankruptcy,
or in any other manner.

VII. PLAN ADMINISTRATION

	 	A.	 	The Plan shall be administered by LESCO. LESCO can at any time amend, suspend,
terminate or reinstate any or all of the provisions of the Plan as may seem necessary
or advisable for the administration of the Plan.

	 	B.	 	The most current version of this policy as revised from time to time is the
governing document for Plan interpretation. The Company is the owner of, and
interprets the policy.

The Compensation, Governance and Nominating Committee must approve any exceptions to this policy.

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