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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 Company’s 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 Company’s 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
Company’s warrants liability, impairment charges, gains or
losses on assets sales, non-cash stock compensation expense
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and minority interest. For named executive officers who oversee
one of the Company’s divisional operations, in addition to
the corporate goals of Adjusted EPS and Adjusted EBITDA, their
performance measures will also include the division’s
Adjusted EBITDA and the division’s Return on Working
Capital (“Division ROWC”), which is defined as
the division’s 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
division’s 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 Company’s
consolidated corporate results and the named executive
officer’s 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
Company’s 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.
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