Document:

exhibit_10-2.htm

    
      
         

        
          
            Exhibit
10.2

          

        

      

      

      

      

      TENNANT’S

      LONG-TERM

      INCENTIVE

      PLAN

      (LTIP)

      

      2008

      
        
          
             

          

           

        

        
           

          
            

          

        

        
           

          
            
              Tennant
Company Long Term Incentive Plan 

            

            
              
                

              

            

          

        

      

      

      
        	
                OBJECTIVE

              	
                To
      maximize Economic Profit Improvement.

                 

              
	
                LTIP
      DESIGN

              	
                It
      is essential for the management team to focus on common goals and
      objectives and to work towards the organization’s long-term
      success.  One vehicle to help facilitate this is a Long-Term
      Incentive Plan (LTIP).  Tennant’s LTIP has been designed to
      reward:

                 

                1.  Achievement
      of long-term financial objectives

                2.  Improvement
      in Tennant stock price

                 

              
	
                ECONOMIC
      PROFIT (EP)

                 

              	
                For
      the 2008 LTIP, Tennant will be
      utilizing Economic Profit (EP) improvement as the primary driver of our
      business.  As a result, objectives are tied directly to EP
      improvement over the three-year performance period (2008-2010).

                 

                 The
      primary elements of EP are:

                ·      Sales

                ·      Operating
      Expenses

                --       Cost
      of Sales

                --       Selling
      and Administration Expenses

                ·      Tax
      Rates

                ·      Capital
      Charge on net assets, including:

                --       Inventories

                --       Receivables

                --       Property,
      Plant and Equipment

                 

                Payout
      under the EP element is a function of how well the Company performs vs.
      target performance (i.e., actual three-year aggregate EP improvement vs.
      target EP improvement as shown in Attachment A).

                 

              
	
                 

                LTIP
      Payout Formula

              	
                 

                LTIP
      Payout Formula =

                 

                Base
      Salary X LTIP Award
      % = Target Award

                 

                The
      target award is then converted into a target stock award (70% of the
      target award) and a target cash award (30% of the target
      award).  Actual Awards will be based on actual EP change over
      the three-year performance period vs. target change over the three-year
      performance period with a maximum payout of 2X the target cash and
      shares.  For performance and corresponding award percentages,
      please refer to attachment A.

                 

                 

                Example  —

              

      

      

      
        
          
            2008
Tennant LTIP 

          

           

        

        
           

          
            

          

        

        
           

          
            
              Tennant
Company Long Term Incentive Plan 

            

            
              
                

              

            

          

        

      

      

      
        	 
      	
                An
      LTIP participant has a base salary of $125,000 and a target award of 15%
      of base.  The fair market value of
      the common stock on the date of grant
      of the LTIP award is $40 and
      on the date the Compensation Committee
      certifies performance of the EP objectives after the measurement
      period is $50.

                 

                Target
      Incentive:  $125,000 X 15% =
      $18,750

                 

                Stock
      Target Award:  ($18,750 X 70%)/$40 = 328 shares

                Cash
      Target Award:  ($18,750 X 30%) = $5,625

                 

                The
      Company achieves a 110% factor based on achievement in excess of targeted
      EP and the schedule outlined in Attachment A.

                110%
      X 328 Shares = 361 shares (rounded to nearest share)

                110%
      X $5,625 = $6,187

                 

                Total
      Award Value (paid in shares and cash):

                 

                Share
      Award:  361 shares X $50 share price: $18,047

                Cash
      Award:   $6,187

                Total
      Award Value:  $24,234

                 

                Taxes:
      The cash portion of the award will be used to cover
      taxes.  However, in instances where there has been significant
      stock price appreciation over the performance period, the cash portion of
      the award may be insufficient to cover the entire tax withholding
      obligation.  In such instances shares issueable under the award
      will be withheld to cover any additional tax
  withholding.

              
	
                 

                LTIP
      Administration

              	
                 

                The
      Management Committee will determine the final amounts of LTIP Awards to
      participants, except with respect to Senior Management Team (SMT) members
      whose awards will be determined by the Board Compensation Committee. The
      Board Compensation Committee may exercise negative discretion to reduce
      the amount of, or eliminate, an LTIP Award that otherwise would be
      payable. Such
      determinations, except in the case of the LTIP Award for the Chief
      Executive Officer, shall be made after considering the recommendations of
      the Chief Executive Officer. 

                 

                The
      Management Committee may impose additional performance measures or modify
      performance measures applicable to participants (other than SMT members,
      whose performance measures may be modified by the Board Compensation
      Committee), except in the case where the action would result in the loss
      of an otherwise available exemption under Section 162(m), if the Committee
      determines that the performance measures have become unsuitable as a
      result of certain events.

              

      

      
        
          
            2008
Tennant LTIP 

          

           

        

        
           

          
            

          

        

        
           

          
            
              Tennant
Company Long Term Incentive Plan

            

          

        

      

      DEFINITIONS

      
        	
                BASE
      SALARY

              	
                The
      total base salary of an individual on March 31st
      of the first year of the LTI plan performance period.

              
	 
      	 
      
	
                OBJECTIVES

              	
                Company
      goals will be developed, approved, and communicated prior to the first
      quarter of the Plan Performance Period.

              
	 
      	 
      
	
                MANAGEMENT  COMMITTEE

              	
                The Management Committee will
      consist of Tennant's CEO, VP of HR/Administration and CFO.  This
      Committee has the responsibility for administration of the Plan, including
      without limitation adding or modifying performance measures applicable to
      participants and resolving any issues around Plan interpretation, provided
      that the Board Compensation Committee must approve any such actions that
      affect the members of the Company's Senior Management
      Team.

              
	 
      	 
      
	
                PERFORMANCE
      PERIOD

              	
                The
      Performance Period is the three-year period over which the Actual and Goal
      EP Growth are measured.

              
	 
      	 
      
	
                MATERIAL

                CHANGES

              	
                In
      those instances where there are material changes in the business (e.g.,
      mergers, acquisitions, restructurings, divestitures), the Management
      Committee reserves the right, without limitation, to make corresponding
      adjustments to any or all aspects of the Plan (i.e., funding
      schedules, individual objectives, etc.).  The Board Executive
      Compensation Committee must approve changes that affect the Senior
      Management Team.

              
	 
      	 
      
	
                AWARD
      DISTRIBUTION

              	
                Normally,
      payouts will occur near mid-March, following the end of the performance
      period.

                 

              
	 
      	 
      
	
                TERMINATION

              	
                Should
      a participant’s employment terminate prior to the end of the Plan
      Performance Period for any reason other than retirement, death, or
      disability (as defined by the 2007
      Stock Plan), the participant will not be entitled to an incentive
      payment.

                 

                If
      a participant’s employment with the Company terminates by reason of
      retirement, death, or disability, a prorated payment will be made within
      90 days following the end of the performance period, based upon the time
      the participant served during the performance period.  The final
      award will be based on the performance over the entire performance
      period.

              

      

      

      
        	
                CHANGE
      IN JOB WITHIN THE COMPANY

              	
                A
      participant who changes jobs but is not eligible for this Plan in the
      future retains the right to payment under this Plan for any performance
      periods that have already
begun.

              

      

      
        
          
            2008
Tennant LTIP 

          

           

        

        
           

          
            

          

        

        
           

          
            
              Tennant
Company Long Term Incentive Plan 

            

            

          

        

      

      

      

      DEFINITIONS
(Cont’d)

      

      
        	 
      	 
      
	
                EMPLOYMENT

                AT
      WILL

              	
                Participation
      in the Incentive Plan does not constitute a guarantee of continued
      employment to individuals in the Plan.  Employment with the
      Company remains “at will,” which means that all aspects of the job,
      including employment by the Company, may be changed or terminated by the
      Company at any time with or without cause.  Likewise, the
      individual may terminate employment with Tennant.

              
	 
      	 
      
	
                PLAN
      INTERPRETATION

                AND

                IMPLEMENTATION

              	
                The
      Company reserves the right, without limitation, to interpret and implement
      this Plan in accordance with the 2007
      Stock Incentive Plan.  Interpretations of this Plan are
      generally made by the Management
Committee.

              

      

      

      

      
 

      
        
          	
                  Participant
      Signature

                	 
      	 
      	 
      
	 
      	 
      	 
      	
                  Date

                
	
                  Manager
      Signature

                	 
      	 
      	 
      
	 
      	 
      	 
      	
                  Date

                
	
                  SLT
      Member Signature

                	 
      	 
      	 
      
	 
      	 
      	 
      	
                  Date

                

        

        
          
            
              2008
Tennant LTIPexhibit_10-3.htm

    

      Exhibit
10.3

      

      

      TENNANT’S

      SHORT-TERM

      INCENTIVE

      PLAN

      (STIP)

      

      2008

      

      

      

      

      

      

      

      

      
        
          
             

          

           

        

        
           

          
            

          

        

        
           

          
            
              Tennant
Company Incentive Plan 

            

            
              
                

              

            

          

        

      

      

      
        	
                OBJECTIVE

              	
                To
      maximize Economic Profit Improvement.

                 

              
	
                STIP
      DESIGN

              	
                It
      is essential for the management team to focus on common goals and
      objectives and to work towards the organization’s long-term
      success.  One vehicle to help facilitate this is a Short-Term
      Incentive Plan (STIP).  Through the STIP, Tennant can reinforce
      the following:

                 

                ·making decisions
      based on the overall organization’s long-term success;

                ·leveraging capital
      investments;

                ·tying incentives to
      the business performance.

                 

                Given
      the above, Tennant’s STIP has been designed to include four basic
      elements:

                 

                1.  maximize
      returns on investment;

                2.  recognize
      unit performance;

                3.  reward
      teamwork across the organization; and

                4.  recognize
      individual contributions.

                 

              
	
                ECONOMIC
      PROFIT (EP)

                 

              	
                As
      an organization, Tennant will be utilizing Economic Profit (EP)
      improvement as the primary driver of our business.  As a result,
      objectives at two levels (Corporate and Business Unit) are tied directly
      to EP improvement.

                 

                Corporate
      EP — At the Corporate/TCON level, our EP improvement target is set
      forth on Attachment A.  Each STIP participant will have a
      minimum of 50% (SMT
      minimum of 70%) of his/her STIP award tied to the TCON EP
      improvement target.  The primary elements of EP
are:

                 

                ·      Sales

                ·      Operating
      Expenses

                --       Cost
      of Sales

                --       Selling
      and Administration Expenses

                 

                ·      Tax
      Rates

                ·      Capital
      Charge on net assets, including:

                --       Inventories

                --       Receivables

                --       Property,
      Plant and Equipment

                 

                Payout
      under the TCON EP element is a function of how well the Company performs
      (i.e., actual EP improvement, year over year vs. target
      improvement).

                 

              

      

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      
        	 	
                Business
      Unit EP — Unit EP improvement has the same characteristics as TCON
      EP, except it is computed at the business unit
      level.   Each of the business units will have an EP
      improvement target based on the TCON EP plan (see Attachment
      A).

                 

              
	 
      	
                Individual
      Contribution — The focus here is on meeting individual
      objectives.  Each STIP participant will have annual objectives
      set prior to the start of the calendar year (see Attachment
      B).  These objectives will typically be critical to helping
      Tennant achieve its immediate profit and/or long-term strategic
      goals.

                 

                At
      the end of the year, managers will submit their individual factor
      recommendations to the Management Committee, who will review performance
      against individual objectives to ensure there is a consistent calibration
      across departments.

                 

                A
      factor will then be determined based on the individual’s performance (see
      Attachment C for clarification).

                 

                Many
      individual factors will have some inherent level of
      subjectivity.  To help drive a level of rating consistency
      across the organization, a recommended distribution of individual scores
      is provided (see Attachment C).

                 

                The
      Management Committee (CEO, VP of HR/Admin, CFO, and respective SMT member)
      will be responsible for reviewing and approving year-end performance and
      corresponding STIP payout awards.

                 

              

      

      
        
          
            2008
Tennant STIP 

          

           

        

        
           

          
            

          

        

        
           

          
            
              Tennant Company Incentive Plan 

                

              

            

          

        

      

      
        	
                STIP
      Payout Formula

              	
                 

                · STIP
      Payout Formula =

                 

                · Base
      Salary X STIP Award
      % = Target Award

                 

                        
      · Actual Payout = [(Target Award
      X Corp. EP Weighting
      X Corp. EP
      Factor)

                +

                (Target
      Award X Unit EP
      Weighting X Unit EP
      Factor)]

                X

                Individual
      Factor

                 

                Example
      1 —
      A STIP participant has a base salary of $90,000 and a target award of 10%
      of base.  His STIP award is based 100% on TCON
      EP.  The Company achieves 110% of targeted EP and the individual
      meets 90% of his STIP objectives.

                 

                Target
      Incentive:  $90,000 X 10% =
$9,000

                 

                (Target
      Award X Corp. EP
      Weighting X Corp. EP
      Factor)

                X

                Individual
      EP Factor

                 

                TCON:  $9,000
      X 100% X 110% =
      $9,900

                Indiv.
      Factor = 90% achievement = 90%

                 

                $9,900
      X 90.0% = $8,910.00

                 

                Example
      2 —
      A STIP participant has a base salary of $100,000 and a target award of 15%
      of base.  Her STIP award is based 50% on TCON EP and 50% on
      North American EP.  The Company achieves 100% of targeted TCON
      EP, 150% of targeted North America EP, and the individual meets 105% of
      her STIP objectives.

                 

                Target
      Incentive:  $100,000 X 15% =
      $15,000

                 

                (Target Award X Corp. EP Weighting X Corp. EP Factor)
      +

                (Target
      Award X
      NA  EP Weighting X Corp. EP Factor)
      X

                Individual
      EP Factor

                 

                TCON:  $15,000
      X 50% X 100% =
      $7,500

                North
      America:  $15,000 X 50% X 150% =
      $11,250

                 Individ.
      Factor = 105% Achievement = 105%

                 

                ($7,500
      + $11,250) X 105% =
      $19,687

                 

              

      

      
        
          
            2008
Tennant STIP 

          

           

        

        
           

          
            

          

        

        
           

          
            
              Tennant
Company Incentive Plan

                

              

            

          

        

      

      DEFINITIONS

      

      
        	
                BASE
      SALARY

              	
                The
      W-2  base pay of an individual for the calendar year of the plan
      year.

              
	 
      	 
      
	
                OBJECTIVES

              	
                Company
      and individual objectives should be developed prior to the beginning of
      the Plan year (see Attachment B for respective
      format).  Individual objectives will be approved by the
      respective SMT member.  Quarterly review and evaluation of each
      participant’s objectives will be the responsibility of the STIP
      participant and his/her manager.

              
	 
      	 
      
	
                MANAGEMENT  COMMITTEE

              	
                This
      Committee has the responsibility for administration of the Plan, reviewing
      annual objectives, approving any changes in objectives, and resolving any
      issues around Plan interpretations.  The Management Committee
      will consist of Tennant’s CEO, VP of HR/Admin, CFO, and the respective SMT
      member.

              
	 
      	 
      
	
                MATERIAL

                CHANGES

              	
                In
      those instances where there are material changes or strategic investments
      in the business (e.g., mergers, acquisitions, divestitures, restructures,
      certain designated significant capital investments or gains), the
      Management Committee reserves the right, without limitation, to make
      corresponding adjustments to any or all aspects of the Plan
      (i.e., funding schedules, individual objectives,
      etc.).  For changes that affect the SMT, the Compensation
      Committee of the Board must approve respective changes.

              
	 
      	 
      
	
                OBJECTIVES

                UPDATE

              	
                In
      those instances where organizational objectives or priorities supersede a
      participant’s objectives, appropriate adjustments to the participant’s
      objectives must be reviewed and approved by the participants’ SMT member
      and may require Management Committee approval as well.

              
	 
      	 
      
	
                ANNUAL
      PAYOUT

              	
                Annual
      incentives will be distributed within two and a half months after the
      year-end (i.e, by March 15). 

                 

                Except
      as set forth below, payouts in excess of 200% of target will be made in
      restricted stock with a vesting schedule of 50% per year over the
      following two years.  If the participant announces his or her
      retirement after any such restricted stock is issued, the restrictions on
      such shares shall lapse.  Notwithstanding the foregoing, if the
      participant’s employment terminates by reason of retirement during the
      plan year, payout in excess of 200% of target will be made in
      cash.

              
	 
      	 
      
	
                TERMINATION

              	
                Should
      a participant’s employment terminate prior to the end of the Plan year for
      any reason other than retirement, death, or disability, the participant
      will not be entitled to an incentive payment for the Plan
      year.

                 

                If
      a participant’s employment with the Company terminates by
  

              

      

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      
        	 	reason
      of retirement, death, or disability, a prorated payment will be made
      within 2-1/2 months following the end of the performance period, based
      upon the time the participant served during the performance
      period.  The final award will be based on the performance over
      the entire performance period.  In the event of termination of
      the participant’s employment by reason of retirement, death or disability,
      any election to receive payout in the form of Deferred Stock Units (DSUs)
      shall be null and void.
	
                CHANGE
      IN JOB 

                WITHIN
      THE COMPANY

              	
                A
      participant who is promoted or demoted from a STIP-eligible job to another
      STIP-eligible job with a different STIP Target Award Percent will have a
      prorated payment based upon the time served in each job during the Plan
      year, provided at least three months was served in each job.  If
      a participant is in an eligible job for less than three months during the
      Plan year, the payment is based on the target award percent of the job
      served in the longest.

                 

                A
      participant who changes jobs but is not eligible for this Plan retains the
      right to a prorated payment under this Plan based on the length of time in
      the eligible job provided at least three months was served in the
      STIP-eligible job.

              
	 
      	 
      
	
                EMPLOYMENT

                AT
      WILL

              	
                Participation
      in the Incentive Plan does not constitute a guarantee of continued
      employment to individuals in the Plan.  Employment with the
      Company remains “at will,” which means that all aspects of the job,
      including employment by the Company, may be changed or terminated by the
      Company at any time with or without cause.  Likewise, the
      individual may terminate employment with Tennant.

              
	 
      	 
      
	
                PLAN
      INTERRUPTION

                AND

                IMPLEMENTATION

              	
                The
      Company reserves the right, without limitation, to interpret and implement
      this Plan in accordance with the 2007 Stock Incentive
      Plan.  Interpretations of this Plan are generally made by the
      Compensation Committee of the
Board.

              

      

      

      
        
          
            2008
Tennant STIP

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