EX-10.2 5 dex102.txt CORPORATE EXECUTIVE BONUS PLAN Exhibit 10.2 Household International Corporate Executive Bonus Plan Summary The Household International Executive Bonus Plan is a short-term, annual incentive plan. The purpose of the annual bonus is to place a significant part of pay at risk and reward executives for the achievements of individual, business unit and corporate financial and operational goals. Performance goals and award opportunities will be communicated to plan participants at the beginning of each calendar year. Participation Participation in the Plan will be restricted to key line and staff executives. For purposes of the Plan, participants will be divided into groups. (See attached list). Any changes in the group of executives participating in the Plan will be made by the Chief Executive Officer, subject to the approval of the Compensation Committee in the case of any participant whose base salary must be determined by the Committee. Level of Awards The corporate measurement of performance will include a combination of key measures such as, but not limited to: expense growth, earnings per share, efficiency ratio, return on equity, core receivables growth, revenue growth, equity to managed assets ratio and products per customer ratio. Household's performance will be measured against pre-established minimum, target and maximum levels. Individual performance is also measured and the percentage attributed to any particular performance objective varies by executive and may change from year-to-year as circumstances warrant. Management may reduce bonus awards in light of overall business conditions or other exceptional circumstances. Target/Maximum Awards Target awards will be paid for fully satisfactory financial and individual performance in a given year. The target award percentage for each group will approximate the guideline percentage shown below of the executive's base salary at the end of the plan year. Guideline % of Annual Base Salary Determined by Group Target Bonus Maximum Bonus ----------------------------------------------------------------------- A 100% 200% B 85% 150% C 75% 150% D $62,500 $125,000 E 60% 120% F 60% 90% G 55% 100% H 50% 150% I 50% 125% J 50% 100% K 50% 80% L 40% 80% M $40,000 $80,000 N 40% 60% O $37,500 $93,750 P 30% 60% Q 30% 50% R 25% 50% S 20% 50% T 20% 40% U 20% 30% Detailed information relating to the assignment and weighing of goals is available by individual and is maintained by the business unit and/or corporate. Determination of Awards ----------------------- A. Financial Performance Awards A portion of each executive's annual bonus will be determined by meeting specific financial performance objectives. An award will be paid out if achieved results are at the pre-established minimum, target or maximum financial results levels. 2 B. Individual Performance Awards Early in each plan year, goals for individual performance for that year will be established for each participant. The goals should require the level of performance that is expected of a fully satisfactory incumbent and must be agreed to by the immediate superior. The Compensation Committee of the Board of Directors must approve the goals for those executives whose salaries are determined by the Committee. These goals will be the primary criteria for measuring individual performance and determining the individual performance portion of the bonus for that year. The Chief Executive Officer will recommend the awards for participants whose salaries are determined by the Compensation Committee of the Board of Directors. The Compensation Committee will then determine the awards for all such participants. The Chief Executive Officer will determine the awards for all participants whose salaries are not determined by the Compensation Committee. The CEO's direct reports, in consultation with their appropriate subordinates, will recommend to the Chief Executive Officer the awards for all other participants. Payment of Awards Awards will be paid as soon as practical at the end of the plan period, subject to all required tax withholdings. Awards may be paid in cash, shares of Household common stock, or some combination thereof. Neither eligible participation in the plan, nor award payments thereunder shall guarantee an employee, any right to continued employment. The plan does not give any employee right or claim to an award under the program. Management reserves the right to change or discontinue the plan at any time. Administrative Matters A. Promotions/New Plan Participants Normally awards will be pro-rated according to the portion of the plan year that an incumbent is eligible for the bonus. B. Effect on Benefits Payments made under this plan shall be included in an employee's income for purposes of determining pension benefits, life insurance, long-term disability, and participation in the TRIP plan. 3 C. Termination of Employment Normally awards will be pro-rated in the case of death, permanent and total disability, or retirement under one of the Corporation's pension plans during a plan year. If a participant terminates employment for any other reason prior to the last working day of a plan year, he will normally forfeit any right to an award for the plan year. The Goal Setting Process Before the beginning of the plan year, the manager and subordinate will meet in a goal setting session. The purpose of the session is to discuss areas where goals will be established and agree on their priority and establish the number of points that will be earned based upon various levels of achievement during the plan period. Preparation for the Goal Setting Meeting To prepare for the goal setting session with the bonus eligible subordinate, the manager should have a clear idea of function or department goals and objectives for the plan year, priorities for the subordinate's unit or area, and three or four possible objectives to suggest as appropriate. During the session, the manager's role will be to direct the discussion and ensure that its results are jointly understood. The subordinate will prepare for the session by establishing a list of priorities for the unit or area during the plan year, and developing four to eight potential goals for discussion. The subordinate's role during the session will be to actively discuss goals and expected levels of achievement with the manager. This is to ensure that the final agreement is realistic and achievable and that there is a clear understanding of expected performance and the amount of bonus associated with various levels of achievement. Guidelines for Setting Goals For the purpose of establishing goals for the plan year, the following criteria should apply: . Goals should be consistent and supportive of goals reflected in the Company's strategic business plans. . Goals should be primarily job or task oriented. They must be realistic and achievable yet challenging with built in "stretch" to test individual capabilities. They should clearly specify action, tasks or results to be accomplished as well as a clear understanding of how the accomplishment will be evaluated. . Goals must be understood and agreed to by both the manager and the subordinate. 4 Setting goals for staff positions is somewhat more difficult than for line-type positions because staff performance is usually not measured numerically and rarely lends itself to quantitative measurement. Staff responsibilities tend to be contributory, interpretive and are more easily measured qualitatively. Frequently, the goals may include completion of specific projects. Non-quantitative goals should clearly state the criteria that will be used for evaluating successful achievement. The results of the goal setting process will be documented in the format of the Executive Bonus Plan Goal Setting Form and approved by the appropriate level of management. 5 Group A - 100% / 200% --------------------- Director Personal Banking Group Director Business Development Group Director Strategic Acquisitions Managing Director CEO HAF Managing Director Consumer Finance Sales Managing Director HFS Regional General Manager Vice President National Sales Director Group B - 85% / 150% -------------------- Managing Director-CEO-Canada Group C - 75% / 150% -------------------- Director Consumer & Dealer Business Development Managing Director Operations Group D - $62,500 / $125,000 ---------------------------- Director Recovery Services-Backend Vice President Collections Vice President Consumer Collections (Tampa) Group E - 60% / 120% -------------------- Group Diector Business Development & Marketing Group Director New Business & Client Relations Group F - 60% / 90% ------------------- Director of Operations UK Group G - 55% / 100% -------------------- Vice President Affiliated Sales Group H - 50% / 150% -------------------- National Director Business Development & Client Relations Group I - 50% / 125% -------------------- Managing Director National Sales Director Group J - 50% / 100% -------------------- Chief Credit Policy Officer Chief Operating Officer Director Branch Operations Director Sales HH Direct Director Strategic Partnership Division General Manager Group Director Sales Managing Director Equipment Finance Managing Director Operations National Director Sales Finance President - Decision One Regional Director Sales Senior Vice President Finance Senior Vice President Loan Production Senior Vice President Operations 6 Senior Vice President Portfolio Marketing Senior Vice President Real Estate Asset Management Senior Vice President Secondary Marketing Vice President Applications Systems Vice President Marketing Vice President Portfolio Acquisitions & Secondary Marketing Vice President Strategic Sales Group K - 50% / 80% ------------------- Deputy Managing Director-COO (HRS) Group L - 40% / 80% ------------------- Chief Financial Officer Canada Director HFC Wholesale Sales Director of Operations, IRES Director Wholesale Acquisitions & Servicing Group Director Sales & Telemarketing Managing Director-Controller HI Vice President Business Development Vice President Corporate Finance Vice President Default Services Vice President Flow Volume & Special Customer Relations Vice President Taxes Vice President Treasurer Vice President Wholesale Servicing Group M - $40,000 / $80,000 --------------------------- Director Collections Director Collections Affiliates Vice President External Collections-HRSC Group N - 40% / 60% ------------------- Assistant General Counsel-Litigation Chief Financial & Credit Policy Officer Chief Financial Officer Director Marketing & Risk Director Portfolio Management Director RE Lending Director Strategic Initiatives Group Director Asset Management Group Director Collections Group Director Credit Operations & Loan Servicing Group Director Customer Service Group Director Marketing Group Director Operation Group Director Risk Control Group Director Risk Management Group General Counsel Managing Director/Chief Financial Officer Managing Director Commercial Finance Managing Director Credit Policy & Risk Control Managing Director Insurance Managing Director Networked Systems Managing Director of Marketing (HCS) 7 Managing Director Strategic Initiatives & Partnership Alliances National Director e-Commerce & Enhancement Services National Director Financial Control National Director Marketing Vice President Applications Systems Vice President Chief Financial Officer-HTS Vice President Compensation & HR Administration Vice President Corporate Communications Vice President Corporate Law & Assistant Secretary Vice President Credit Policy Vice President Data Center Operations Vice President Government Relations Vice President Human Resources Vice President Money & Capital Markets Vice President Portfolio Analysis & Customer Management Group O - $37,500 / $93,750 --------------------------- Vice President Credit Services Group P - 30% / 60% ------------------- Assistant Controller Chief Financial Officer Director Retail Sales National Director Customer Service Group Q - 30% / 50% ------------------- Assistant Controller-Accounting Policy Assistant General Counsel Employee Relations Chief Financial Officer/Director Financial Control Chief Financial Officer-UK Director Asset Backed Financing Director Asset Recovery Director e-Commerce Director Fraud Operations Director Processing Services Director Processing Services-Canada Director Retail & Affinity-UK Director Sales Support/MIS Director/Special Project Consultant Director Strategic Partnerships HHD General Counsel Group Director Business Analysis Group Director Customer Relations Management Group Director e-Business Group Director e-Business Operations Group Director Financial Strategy & Analysis Group Director HCS Marketing Group Director Information Management Group Director Profitability National Director Credit Policy, Pricing, Profitability National Director Customer Relations Vice President Audit Vice President Corporate Property Management Vice President Finance & Administration Vice President Items Processing 8 Vice President Portfolio Management Vice President Specialty Finance Group R - 25% / 50% ------------------- Director Credit Policy (#1) Director Project Control Group Director ARM Group S - F20% / 50% -------------------- Director Credit Policy Administration Director Customer Care Director REN Risk Control Group T - 20% / 40% ------------------- Controller Controller-HCS Director ALM Director Commercial Operations Director Corporate Investigations Management Director Corporate Security Management Director Credit Operations Director Credit Policy (#2) Director Dealer Operations Director Insurance Taxation & Counsel Director Portfolio Acquisitions Director Product Development Director Strategy & Development Director Tax Planning & Tax Counsel General Counsel Group Director Business Performance Group Director Human Resources Group Director Marketing Group Director Marketing Strategy Group Director Operations/COO Vice President Benefits Administration & Policy Vice President Consumer Lending Practices Vice President Data Architecture & System Vice President Distributed Systems Vice President HFC Operation Support Vice President Networked Systems Vice President Records Administration Vice President T&D and Communications Group U - 20% / 30% ------------------- Actuarial Director Assistant to the Chief Information Officer Channel Architect Controller Controller-HRS USA Director Business Planning CWT Director Business Strategies & Analysis Director Business Systems Director Business Treasury Director Business Unit Accounting Director Cash Operations 9 Director Channel Technology Integration Director Communication & Distributed Services Director Compliance Administration Director Consumer Services Director Corporate & Treasury Accounting Director Corporate Purchasing Director CPA Director Credit Risk Director Customer Information Director Customer Service Director Data Center Operations Director e-Commerce Strategy Director e-House Controller Director Federal & State Tax Compliance Director Federal Tax Audit Director Financial Business Analysis Director Government Relations Director Government. Relation. & Regulation. Issues Director HFC Policy & Compliance Support Director HR Data Management & Call Center Director Human Resources Director Information & Decision Analysis Director Intercorporate Risk & Compliance Director Investor Relations Director Item Processing Director Law & Compliance Director Management Reporting & Analysis Director Marketing Director Marketing Communication Director Operational Services Director Operations Support Director Product Development & Marketing Director Reconciliation & Financial Information Systems Director Sales Support & MIS Director Servicing Director Special Project Consultant Director Strategic Alliance Director Technology & Planning Group Director Credit Operations Group Director Customer Service Group Director Human Resources National Quality Assurance Manager Special Project Consultant B Treasurer Vice President Facilities Vice President Financial Control Vice President Government Relations & Public Affairs Vice President Insurance & Risk Finance Vice President Technical Services 10