Document:

exv10w2

 

Exhibit 10.2

HARMAN INTERNATIONAL

MANAGEMENT INCENTIVE COMPENSATION PLAN

FOR GROUP EXECUTIVE AND KEY OPERATING MANAGERS

This Management Incentive Compensation Plan (“Plan”) of Harman International Industries,
Incorporated (“Company”) is designed to reward key managers for achieving or exceeding objectives
set forth in the Company’s business plan for the applicable fiscal year (“Plan Objectives”).

TARGET BONUS PERCENTAGE:

Each Plan participant is assigned a target bonus expressed as a percentage of base salary based on
his/her position in the Company. Hence, a Plan participant with an annual salary of $100,000 and a
target bonus percentage of 20% would be entitled to a target bonus of $20,000 if the applicable
organizational unit(s) for which he/she works achieves its Plan Objectives with respect to the
performance parameters described below and if the Plan participant achieves his/her personal
objectives.

The Chief Executive Officer of the Company shall establish target bonus percentages for all Plan
participants, other than executive officers, during the first quarter beginning of each fiscal
year. The Compensation and Option Committee shall establish target bonus percentages for all Plan
participants who are executive officers during the first quarter of each fiscal year.

PLAN PARTICIPANTS:

The Plan is designed to reward key employees whose actions have a direct and significant impact on
the results of the Company. Plan participants will be designated by the Chief Executive Officer of
the Company, and in the case of executive officers confirmed by the Compensation and Option
Committee, during the first quarter of each fiscal year and should be limited to key employees of
the Company. Sales personnel are typically not included in this Plan because they are covered by a
sales incentive plan.

PAYOUT PERCENTAGE:

The payout percentage is determined by a Plan participant’s organizational unit’s or units’
performance against the Plan Objectives with respect to the performance parameters described below.
The payout percentage can range from 50% to 150%. If a Plan participant’s organizational unit(s)
achieves its Plan Objectives for each of the performance parameters, the payout percentage is 100%.
Hence, a Plan participant with an annual base salary of $100,000 and a target bonus percentage of
20% would receive the following bonus if his/her organizational unit(s) achieves its Plan
Objectives with respect to each of the performance parameters described below.

			
	 	 	 
	 	 	 
	 
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Base Salary x Target Bonus x Payout Percentage = Bonus Amount

$100,000 x 20% x 100% = $20,000

For executive officers, the Compensation and Option Committee, in its sole discretion, will approve
a minimum and maximum point for each performance parameter during the first quarter of each fiscal
year.

For all other Plan participants, the Executive Committee, in its sole discretion, will set a
minimum and maximum point for each performance parameter during the first quarter of each fiscal
year. At the minimum point, the payout percentage is 50%. At the maximum point, the payout
percentage is 150%. If an organizational unit does not reach a combined payout percentage of 50%,
no bonus is earned.

The payout percentage is determined using a linear interpolation between the minimum point and Plan
Objective or Plan Objective and the maximum point, as applicable.

PERFORMANCE PARAMETERS:

The parameters on which the payout percentage is based typically include Revenue Growth, with a
weight of 20%, Operating Income, with a weight of 30%, Free Cash Flow with a weight of 30% and
Global Footprint Index with a weight of 20%. Other parameters and other weightings may be used
occasionally, as circumstances require and as approved by the Compensation and Option Committee
with respect to executive officers and by the Chief Executive Officer of the Company with respect
to all other Plan participants.

Free cash flow is calculated as operating income plus depreciation and amortization plus change in
working capital (net accounts receivable from third parties, net inventories, less trade accounts
payable to third parties).

The Global Footprint Index has three components:

	 	•	 	Capital expenditures in low-cost countries as a percentage of the total budget.
	 
	 	•	 	Full-time equivalent employees in low-cost countries as a percentage of the total
budget.
	 
	 	•	 	Material purchases in low-cost countries as a percentage of the total budget.

All intercompany accounts are excluded.

			
	 	 	 
	 	 	 
	 
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ACCRUAL:

Earnings used in any bonus calculation must include the accrual for the bonuses being contemplated.
Otherwise, earnings will be adjusted in the determination of the bonus amount.

INDIVIDUAL PERFORMANCE:

Once the bonus amount for a Plan participant has been determined under the calculations described
above, that amount is multiplied by a factor reflecting the Plan participant’s performance against
his/her personal objectives. The multiplier can range from zero to 120%. A Plan participant who
does not meet his/her personal objectives could receive no bonus even if his/her organizational
unit achieved its Plan Objectives.

A Plan participant’s performance rating is determined by the Chief Executive Officer for direct
reports (subject to approval by the Compensation and Option Committee for executive officers) and
division presidents for all other Plan participants.

MAXIMUM BONUS

The maximum bonus payable to any Plan participant is 150% of his/her target bonus. Hence, the
maximum bonus payable to a Plan participant with a target bonus of 20% is 30% of his/her base
salary. In no event, may any Plan participant’s bonus exceed 100% of his/her annual base salary.

PAYMENT:

The bonus amount will be paid to each Plan participant on the 70th day after the end of the
Company’s fiscal year.

INTERNAL REVENUE CODE SECTION 409A:

It is intended that the provisions of this Plan comply with Section 409A of the Internal Revenue
Code of 1986. All provisions of the Plan shall be construed and interpreted in a manner consistent
with the requirements for avoiding taxes or penalties under Section 409A.

If, at the time of a Plan participant’s separation from service (within the meaning of Section
409A), (i) the Plan participant is a specified employee (within the meaning of Section 409A and
using the identification methodology selected by the Company from time to time) and (ii) the
Company makes a good faith determination that an amount payable hereunder constitutes deferred
compensation (within the meaning of Section 409A) the payment of which is required to be delayed
pursuant to the six-month delay rule set forth in Section

			
	 	 	 
	 	 	 
	 
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409A in order to avoid taxes or penalties under Section 409A, then the Company shall not pay such
amount on the otherwise scheduled payment date but shall instead pay it, without interest, on the
first business day after such six-month period expires.

Notwithstanding any provision of this Plan to the contrary, in light of the uncertainty with
respect to the proper application of Section 409A, the Company reserves the right to make such
amendments to this Plan as the Company deems necessary or desirable to avoid the imposition of
taxes or penalties under Section 409A. In any case, Plan participants shall be solely responsible
and liable for the satisfaction of all taxes and penalties that may be imposed on them in
connection with this Plan (including any taxes and penalties under Section 409A), and neither the
Company nor any of its affiliates shall have any obligation to indemnify or otherwise hold any Plan
participant harmless from any or all of such taxes or penalties.

ELIGIBILITY:

An employee must be on the active payroll for at least six months of the fiscal year and be on the
active payroll at the time of the distribution of the bonus in order to be eligible for a bonus
award. Employees with at least six months of service in a fiscal year are eligible for a prorated
bonus. Employees with less than six months of service are not eligible for a bonus in that fiscal
year.

ACTUAL RESULTS:

Actual results may be adjusted at the sole discretion of Company management, and in the case of
executive officers confirmed by the Compensation and Option Committee, to reflect extraordinary
circumstances, windfall profits or force majeure.

			
	 	 	 
	 	 	 
	 
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EXHIBIT 10.21

FIRST AMENDMENT TO

EXECUTIVE EMPLOYMENT AGREEMENT

THIS FIRST AMENDMENT TO EXECUTIVE EMPLOYMENT AGREEMENT (“Agreement”) is effective March 9, 2007, by
and between George B. Sundby (“Executive”) and ABM Industries Incorporated (“ABM”) for itself and
on behalf of its subsidiary corporations as applicable herein.

WHEREAS, Executive is serving as ABM’s Executive Vice President & Chief Financial Officer; and

WHEREAS, ABM plans to move its corporate headquarters to metropolitan New York City in 2008 and
Executive has chosen not to relocate; and

WHEREAS, Executive and ABM desire to enter into an agreement under which Executive will continue to
serve as Executive Vice President & Chief Financial Officer through the end of 2007 and assist in
the training of the successor to his position; and

WHEREAS, ABM desires to change Executive’s compensation structure to provide him with additional
incentives to continue to serve as its Chief Financial Officer during this period;

NOW THEREFORE, Executive and ABM agree to the following amendments to the Executive Employment
Agreement between Executive and ABM dated July 12, 2005 (the “2005 Agreement”):

	1.	 	Paragraph 3W shall be amended in its entirety to read as follows:

	 	W.	 	Target Bonus shall mean 50% of Base Salary.

	2.	 	Section 3 shall be amended by adding the following Paragraphs:

	 	AA.	 	“Health Insurance Contribution” means ABM’s contribution to provide group
health insurance for Executive and excludes any payment by Executive for such coverage.
	 
	 	BB.	 	“Severance Payment” means $540,000.

	 	 	Other capitalized terms used in this Amendment without definition shall have the meanings
set forth in the 2005 Agreement.
	 
	3.	 	Paragraph 4 of the 2005 Agreement is amended in its entirety to read as follows:
	 
	 	 	DUTIES & RESPONSIBILITIES. Executive shall perform the duties and responsibilities
Executive Vice President & Chief Financial Officer and serve as the

 

 

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	 	 	Principal Financial Officer as defined by the Securities and Exchange Commission. Executive
shall report to the Chief Executive Officer and shall supervise and direct the Corporate
Controller, Internal Audit and Safety Departments.
	 
	4.	 	Paragraph 5 of the 2005 Agreement is amended in its entirety to read as follows:
	 
	 	 	TERM OF AGREEMENT. This agreement shall end on December 31, 2007, unless sooner terminated
pursuant to Paragraph 16.
	 
	5.	 	Paragraph 7A of the 2005 Agreement is amended in its entirety to read as follows:

	 	A.	 	SALARY. A salary paid in equal installments no less frequently than semi-monthly at the
annual rate of $360,000.

	6.	 	Paragraph 7B of the 2005 Agreement is amended in its entirety to read as follows:

	 	B.	 	BONUS. Executive shall receive the following Bonus payments for Fiscal Year
2007:

	 	i.	 	Executive shall be entitled to receive a Bonus for the 2007
Fiscal Year equal to his Target Bonus.
	 
	 	ii.	 	In the event of the timely filing of the Company’s Annual
Report on Form 10-K and the continuing improvements in the Company’s control
environment evidenced by an unqualified opinion by the Company’s independent
auditors on management’s assessment of, and the effective operation of,
internal control over financial reporting in such Annual Report, ABM shall pay
executive an additional Bonus of $100,000.
	 
	 	iii.	 	ABM shall pay Executive the Bonuses under Paragraphs 7.B.i and
7.B.ii, following completion of the audit of ABM’s financial statements for
such Fiscal Year, and, in the event that such audit is completed in a timely
manner, no later than January 15, 2008.
	 
	 	iv.	 	In the event of Executive’s death or a termination of
employment hereunder other than a termination by the Company under Paragraph
16B, ABM shall pay Executive, within 75 days thereafter, a prorated portion of
the Bonuses payable under Paragraphs 7Bi and 7Bii (without any requirement that
the Annual Report on Form 10-K have been filed), based on the portion of the
Fiscal Year that has been completed prior to the date of death or termination.
	 
	 	v.	 	Executives will not be eligible for a Bonus for that portion of
Fiscal Year 2008 that he is employed under this Agreement.

	7.	 	Paragraph 7D of the 2005 Agreement is amended in its entirety to read as follows:

 

 

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	 	D.	 	SEVERANCE PAYMENT AND OTHER POST SEVERANCE OBLIGATIONS. Following the
termination of Executive’s employment pursuant to paragraph 16A, and subject to
Executive’s having executed a full release of all claims against ABM, Executive shall
receive the Severance Payment within 31 days. In addition, ABM will reimburse
Executive for the Health Insurance Contribution portion for COBRA and California COBRA
premiums for continuation of healthcare benefits for Executive and his eligible
dependents during any period for which he is eligible for such COBRA and California
COBRA continuation coverage. Executive will be responsible for all other costs such as
the employee contribution amounts, co-payments and deductibles.

	8.	 	Paragraph 9B is amended in its entirety to read as follows:

	 	B.	 	BEST EFFORTS. During all full-time employment hereunder, Executive shall
devote full working time and attention to ABM. ABM acknowledges that Executive will be
exploring other employment opportunities during the term of this Agreement.

	9.	 	Paragraph 13E is amended in its entirety to read as follows:

	 	E.	 	CONSULTATION AND COOPERATION. Upon termination of employment hereunder,
Executive if not working on a full-time basis for another employer shall be available,
at ABM’s request, to provide consulting services. In the event such assistance is
requested, ABM will provide parking, office space, and administrative support as well
as the reimbursement of expenses. Executive shall also cooperate with Company in its
defense or prosecution of any current or future matter in any forum, including but not
limited to lawsuits, federal, state or local agency claims, audits and investigations,
and internal and external investigations concerning any matter in which he was involved
during his employment with ABM or about which he has or should have knowledge and
information. Executive’s cooperation shall include, but is not limited to, meeting
with ABM’s in-house and/or outside attorneys, communicating his knowledge of relevant
facts to ABM’s attorneys, experts, consultants, investigators, executives, management
and human resources employees and other representatives, reviewing and commenting on
any relevant documents, preparing any requested documentation and testifying at
depositions, hearings, arbitrations, trials and any other forum at which Executive’s
participation and testimony is requested by ABM. In his performing services under this
Paragraph 13E, Executive shall be bound by the covenants of good faith and veracity set
forth in Paragraph 9 of this Agreement and as outlined in ABM’s Code of Business
Conduct and Ethics and shall be compensated for his time at an hourly rate of $300 per
hour.

	10.	 	Paragraph 14 is deleted in its entirety.
	 
	11.	 	Paragraph 15 is deleted in its entirety.
	 
	12.	 	Paragraph 16 is amended in its entirety to read as follows:

 

 

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	 	16.	 	TERMINATION OF EMPLOYMENT.
	 
	 	A.	 	TERMINATION UPON EXPIRATION OF TERM. Executive’s employment shall
terminate, with or without cause, at the expiration of the the earlier of the term set
forth in Paragraph 5 of the Agreement as amended or the date that another person is
appointed as Chief Financial Officer by the ABM Industries Board of Directors and
begins serving in that position.
	 
	 	B.	 	TERMINATION FOR CAUSE. ABM may terminate Executive’s employment
hereunder at any time during the term of this Agreement, without notice subject only to
a good faith determination by a majority of the Board of Just Cause.
	 
	 	C.	 	VOLUNTARY TERMINATION BY EXECUTIVE. At any time during the
term of this Agreement and with or without cause, Executive may terminate employment
hereunder by giving ABM 30 days prior written notice; provided however, that Executive
will not receive any Severance Payment under Paragraph 7D.
	 
	 	D.	 	DISABILITY. Employment hereunder shall automatically terminate upon Total
Disability.
	 
	 	E.	 	ACTIONS UPON TERMINATION. Upon termination of employment hereunder, Executive
shall immediately resign as an officer and/or director of ABM and of any ABM
subsidiaries or affiliates, as applicable. Executive shall promptly return and release
all Company property in Executive’s possession to Company, including but not limited
to, any motor vehicles, equipment, supplies, passwords and documents set forth in
Paragraph 11 of this Agreement. ABM shall pay Executive when due any and all
previously earned, but as yet unpaid, salary, Bonus, other contingent compensation,
reimbursement of business expenses and fringe benefits.

	13.	 	ENTIRE AMENDMENT. Unless otherwise specified herein, the 2005 Agreement as amended by this
Amendment sets forth every contract, understanding and arrangement as to the employment
relationship between Executive and ABM other than the Severance

 

 

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	 	 	Agreement between Executive and ABM dated as of December 13, 2005, and may only be changed
by a written amendment signed by both Executive and ABM.

IN WITNESS WHEREOF, Executive and the Chief Executive Officer have executed this Agreement as of
the date set forth above.

	 	 	 	 	 
	     Executive: George B. Sundby
	 
	 	 	 	 
	 

	 	Signature:
	 	/s/ George B. Sundby
	 

	 	Date:
	 	March 9, 2007
	 
	 	 	 	 
	     ABM: ABM Industries Incorporated
	 
	 	 	 	 
	 

	 	Signature:
	 	/s/ Henrik C. Slipsager
	 

	 	 	 	Henrik C. Slipsager
	 

	 	Title:
	 	Chief Executive Officer
	 

	 	Date:
	 	March 8, 2007

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