This excerpt taken from the XIDE DEF 14A filed Jul 24, 2009.
Fiscal 2010 Short-Term Cash Incentive Plan
As part of its annual review of the Companys short-term cash incentive plan, and with the assistance of Watson Wyatt, the Committee developed a fiscal 2010 short-term cash incentive plan. On March 25, 2009, the Committee approved the fiscal 2010 short-term cash incentive plan (the FY10 AIP) for employees and named executive officers. On March 26, 2009, the Board approved the FY10 AIP for the CEO.
The FY10 AIP provides for annual incentives based on the following performance measures for non-divisional named executive officers: Adjusted Earnings Per Share (Adjusted EPS), which is defined as net income plus or minus after-tax restructuring charges, one-time tax items (including non-cash valuation allowances), reorganization expenses related to post-bankruptcy claims administration, after tax currency remeasurement gains or losses, and non-cash gains or losses from the revaluation of the Companys warrants liability; and Consolidated Corporate Adjusted EBITDA (Consolidated EBITDA). Adjusted EBITDA is defined as earnings before interest, taxes, depreciation, amortization and restructuring charges, as well as non-cash currency remeasurement gains or losses, non-cash gains or losses from the revaluation of the Companys warrants liability, impairment charges, gains or losses on assets sales, non-cash stock compensation expense
and minority interest. For named executive officers who oversee one of the Companys divisional operations, in addition to the corporate goals of Adjusted EPS and Adjusted EBITDA, their performance measures will also include the divisions Adjusted EBITDA and the divisions Return on Working Capital (Division ROWC), which is defined as the divisions Adjusted EBITDA divided by the sum of inventories and receivables minus the sum of accounts payable and accrued liabilities.
For each named executive officer serving as a division president, awards are weighted 50% based on achievement of the divisions Adjusted EBITDA, 25% based on Division ROWC, 15% based on Adjusted EPS and 10% based on Consolidated EBITDA. For corporate named executive officers, awards are weighted 70% based on Adjusted EPS and 30% on Consolidated EBITDA.
The Committee also established threshold Adjusted Net Income, which is defined as net income subject to the same adjustments discussed above regarding Adjusted EPS, below which no employee or named executive officer may receive any FY10 AIP award otherwise earned.
Each named executive officer will achieve an award of 100% of his or her targeted bonus level if the Companys consolidated corporate results and the named executive officers respective division results achieve target levels. Performance above or below the target will result in a proportional payment above or below the target payout. Named executive officers receive 50% of their division and/or corporate target award upon achievement of 80% of the performance target; and up to 200% of their target award based on achievement of 120% of the performance targets. Awards are capped at the achievement of 200% of target award.
The threshold and target 2010 AIP Plan payouts to the Companys named executive officers are as follows:
The Committee believes the targets established for the named executive officers under the fiscal 2010 short-term cash incentive plan require significant performance at the division and corporate level, particularly in light of the current global economic downturn and uncertainty regarding the timing of any corresponding economic recovery.