EX-10.4 6 dex104.htm SHORT-TERM INCENTIVE PLAN OF ANDREW S. HEYMAN Short-Term Incentive Plan of Andrew S. Heyman

Exhibit 10.4

2007 STI Plan COO Andy Heyman

NOTE: All figures below are in US dollars unless otherwise indicated. For individuals based outside the U.S. and paid in local currency, bonus potential is based on percentage of base salary in local currency.

Objectives & Principles

This document summarizes the Short Term Incentive (“STI”) Plan for individuals in an Industry President role. The objectives of this STI Plan are aligned with overall company compensation program objectives:

Provide total potential compensation equal to or greater than market for the role

Incent healthy cross-functional behavior and reward results that are aligned with company business objectives and our shareholders

Keep the plan simple

Some key principles of our STI plan include:

Self funding – STI payout is funded via financial metrics (team profitability), based on the 12-month financial plan.

Annual payout except for sales-oriented roles. With base salary ranges at market, STI reinforces the pay-for-performance culture.

Payout triggered on financial milestones aligned with Budget and Target (see Section VI for definitions of Budget and Target). Partial payout of STI occurs at Budget with linear payout of remaining STI up to Target. There is opportunity for upside for above Target performance.

ROI to shareholders – our STI plans reflect a philosophy to provide an acceptable return to shareholders before rewarding management or employees for delivering results.

If you have questions or feedback on our compensation program or this STI Plan, please contact the Compensation Manager.

Effective Date

January 1 – December 31, 2007. All STI plans are reviewed annually during Q4 for the upcoming fiscal year, to ensure that these compensation plans are aligned with the company’s financial and operational objectives.

Target STI

Target STI potential for individuals in this role is 100% of base wages, with opportunity to earn upside for above Target performance.

Focus of Role

Profitability – measured via Industry Group Contribution Margin (“CM”). Assigned Industry Groups – All Industry Groups

STI Plan Structure

Base Salary – individuals are eligible for base salary increase during the annual salary review cycle.

STI – structured and paid as follows.

Contribution Margin (“CM”) – STI will be paid as follows based on CM for assigned Industry Groups.

Budget – 67% ($217,750) of annual STI is associated with Budget level performance. See Section VI for definition of Budget.

Quarterly – 20% ($65,000) of annual STI will be paid quarterly (5% each quarter) based on cumulative quarterly CM Budget, since it is important for the Executives to be focused on helping the company achieve its quarterly financial objectives throughout the year. There is no “catch up” — if the cumulative quarterly Budget is not met for a particular quarter, then the quarterly payout is forfeited. No additional STI will be paid out on a quarterly basis.

Annual – 47% ($152,750) of annual STI will be paid at year-end if annual CM Budget is met.

Target – the remaining 33% ($107,250) of annual STI will be paid at year-end in a linear fashion between annual Budget and annual Target. See Section VI for definition of Target.

Upside – The COO will earn 5% upside at year-end on every dollar above annual Target for all industry groups.

Example 1: Andy’s 2007 annual STI potential is $325,000. Assume for this example that the combined CM for all Industry groups has a Budget of $52 million, CM Target is $56 million, and Actual CM is $55 million. Assume also that cumulative quarterly Budget for CM is achieved 3 of the 4 quarters for the combined industry groups.

20% of annual STI ($65,000, or $16,250 per quarter) is associated with quarterly Budget performance. $16,250 per quarter would be paid out in each of the 3 quarters that cumulative quarterly Budget for CM was achieved, or $48,750 total.

47% of annual STI ($152,750) is associated with annual Budget performance. The full $152,750 would be paid out since the annual Budget was achieved.

The remaining 33% of annual STI ($107,250) is associated with Target level performance and is earned ratably between Budget and Target. 2.68125% of each dollar between Budget and Target is earned as STI ($107,250 STI divided by $4,000,000 difference between Budget and Target = 2.68125%). Therefore, $80,438 would be earned (2.68125% x $3,000,000 difference between Actual and Budget = $80,438).

Total STI earned = $281,938 ($48,750 on quarterly Budget performance + $152,750 on annual Budget performance + $80,438 on annual performance between Budget and Target).

Example 2: Assume same as above, except Actual CM was $57 million instead of $55 million. $48,750 would be paid for achieving 3 of the 4 quarters’ Budget performance.


$48,750 would be paid for achieving Budget performance 3 out of 4 quarters.

$152,750 would be paid for achieving annual Budget performance.

$107,250 would be paid for achieving annual Target the combined Industry groups.

Upside of $50,000 would be paid to the COO (5% of $1,000,000 excess over annual Target).

Total STI earned by COO = $358,750 ($48,750 + $152,750 + $107,250 + $50,000).

Definitions and Calculations

CM = Contribution Margin per the published financial reports.

Budget = formerly known as Threshold. Minimum performance level where a partial payout of STI occurs. Budget assumes moderate revenue and profit growth year over year and will vary from Industry Group to Industry Group based on growth assumptions in each Industry’s financial plan.

Target = formerly known as Plan. Performance level where full payout of STI occurs.

Eligibility and Other Details

This STI plan applies to the individuals in a COO role, unless otherwise specified and approved by the CEO, Division President and VP-HR.

The individual must be employed at year-end to earn STI for that year. If an individual’s employment is terminated, all future STI is forfeited.

Transfers must be in the new group for a full quarter to be eligible for pro-rata payout in the new group. Therefore, payouts for transfers will be calculated as follows:

Q1 transfer — 1 quarter in old group, 3 quarters in new group

Q2 transfer — 2 quarters in old group, 2 quarters in new group

Q3 transfer — 3 quarters in old group, 1 quarter in new group

Q4 transfer — 4 quarters in old group, next year in new group

Annual payouts are based on annual results, prorated according to the above schedule.

If the individual is on a reduced work load, part-time schedule, or on leave of absence, the STI calculation will be adjusted based on base wages earned that year per Payroll.

Accounting owns the calculation and approval process. HR owns plan documentation. BU leadership owns communication.

STI is calculated and processed after year-end earnings are released and internal financial reports are published, approximately eight weeks after year-end. Approvals are required from BU leadership, VP-HR, CFO, and CEO. Projected timing of Q4 07 earnings release is February 21, 2008, and projected timing for annual STI payout for 2007 is March 28, 2008.

There are certain exceptions to annual STI payout. For those exceptions, STI will be calculated and processed after quarterly earnings are released and internal financial reports are published, approximately eight weeks after quarter-end. Approvals are required from BU leadership, VP-HR, CFO and CEO. Projected timing for payout of 2006 quarterly STI/commissions is as follows:

 

     Q1 07    Q2 07    Q3 07    Q4 07

earnings release

   26-Apr-07    26-Jul-07    25-Oct-07    21-Feb-08

in paychecks-U.S.

   25-May-07    31-Aug-07    23-Nov-07    28-Mar-08

in paychecks-Geelong & Prague

   31-May-07    31-Aug-07    30-Nov-07    31-Mar-08

Once approved, STI will be submitted to Payroll for processing. All STI will be paid out net of applicable taxes.

If you have questions about this STI plan or a specific STI calculation, please contact your manager. S/he will involve others from Accounting, BU leadership, and HR as appropriate.

The CEO, Division President and VP-HR must approve any exceptions to this STI plan in advance.

Individual Targets/Quotas

2007 CM for Industry Groups CM is as follows. These figures must be achieved after any STI is paid.

 

     Q1 07     Q2 07     Q3 07     Q4 07     Annual  

Budget

   [xxxxxx ]*   [xxxxxx ]*   [xxxxxx ]*   [xxxxxx ]*   [xxxxxx ]*

Budget - cumulative qtrly

   [xxxxxx ]*   [xxxxxx ]*   [xxxxxx ]*   [xxxxxx ]*  

Target - Annual only

   —       —       —       —       [xxxxxx ]*

Sign-off

I understand and accept the terms and targets/quotas reflected in this STI plan.

 

Employee signature       Date
Manager signature       Date

 

* Filed under an application for confidential treatment.