As amended
April 30, 1999
EMS Technologies, INC.
Executive Annual Incentive Compensation Plan
1. PURPOSE
The purpose of this Plan is to attract and retain in the
employ of the Company executives of outstanding experience and
ability, and to incentivize them to superior performance. Under
this Plan, annual incentive compensation (or "bonuses") will be
based upon performance against financial and non-financial
objectives that are consistent with the objectives of the Company
and its shareholders. Thus, the Plan provides a means of
rewarding those who contribute through their individual
performance to the objectives of the Company.
2. DEFINITIONS
Unless the context otherwise requires, the words which
follow shall have the following meaning:
(a) Plan - This Annual Incentive Compensation Plan for
executives.
(b) Business Unit - A principal subsidiary, business
division or group of the Company as identified for the purposes
of the Plan by the Committee.
(c) Board - The Board of Directors of the Company.
(d) Company - EMS Technologies, Inc.
(e) Committee - The Compensation Committee of the Board,
which has the exclusive authority to interpret and make awards
under the Plan.
(f) Plan Year - A fiscal year of the Company.
(g) Base Compensation - A Participant's annual salary
compensation, before reduction for Cafeteria Plan, Savings
Incentive Plan, Stock Purchase Plan or other elective reductions
or deductions, and before deduction of any taxes.
(h) Participant - A person selected in accordance with
Section 4 to be eligible to receive a bonus in accordance with
this Plan.
(i) Target Incentive - The bonus payable under the Plan in
the event 100% of financial objectives are met and the
Participant's normalized Performance Score is 100%.
3. ADMINISTRATION AND INTERPRETATION OF THE PLAN
The Committee shall have the power to (i) approve eligible
Participants, (ii) approve payments under the Plan, (iii)
interpret the Plan, (iv) adopt, amend and rescind rules and
regulations relating to the Plan, and (v) make all other
determinations and take all other actions necessary or desirable
for the Plan's administration.
The decision of the Committee on any question concerning the
interpretation and administration of the Plan shall be final and
conclusive. The Committee's determinations may differ in the
Committee's sole discretion between different Participants,
irrespective of whether they are similarly situated. Subject to
Section 7, nothing in the Plan shall give any employee or his or
her legal representative or assigns any right to a bonus or
otherwise to participate in the Plan except as the Committee may
determine.
4. ELIGIBLE PARTICIPANTS
Participants will be those executives who are designated by
the Chief Executive Officer as being in a position to have a
significant impact on profits and Company performance and are
approved by the Committee to receive a bonus under the Plan.
However, if a Change in Control (as defined in Section 7) occurs
prior to the time Participants are determined for the Plan Year
in which the Change in Control occurs, all persons who were
Participants in the prior Plan Year and who are active employees
of the Company as of the date of the Change in Control shall be
Participants for such Plan Year.
Except as the Committee may otherwise determine or as
provided in Section 7, each Participant for any Plan Year must
serve during that Year as an executive of the Company and be an
active employee of the Company when the Committee approves
bonuses after the end of the Plan Year.
The Committee may decide to award a pro-rated bonus to a
Participant who is newly promoted or hired during a Plan Year.
Pro-rated bonuses may also be awarded to Participants who retire
with the Company's approval during a Plan Year and to the estates
of Participants who die during a Plan Year.
5. DETERMINATION OF INCENTIVE COMPENSATION AWARDS
Incentive compensation awards shall be determined as set
forth in this Section 5.
(a) Determination of Targets.
During the first calendar quarter of each Plan Year, the Target
Incentive for each Participant shall be determined by the
Committee. The Target Incentive shall equal the Participant's
Base Compensation multiplied by a percentage that is based on the
Committee's evaluation of the individual Participant's level of
responsibility and potential to affect Company profits and
performance. The Committee shall also specify the portions of
each individual's Target that are dependent on the Company's
and/or relevant Business Unit's financial performance during the
Year.
(b) Determination of Company and Business Unit Financial
Targets.
During the first calendar quarter of each Plan Year, the
Committee shall set for the Company and for each Business Unit
the target financial parameters against which actual financial
performance will be elevated. At a minimum, these parameters
will include Profit Before Taxes (PBT). The Committee shall also
determine a formula outlining how the Target Incentives in 5(a)
will be affected if actual performance for PBT is not at the 100%
level, and may establish such formulas for other specified
financial performance parameters.
(c) Determination of Participant Performance Scores.
At the end of the year, the CEO shall prepare an overall
assessment of each Participant's contributions. The Committee
will use these assessments, together with its own assessments
(particularly of the CEO), and together with each Participant's
success in achieving any specific performance objectives
established for the year, to establish an overall Performance
Score for each Participant.
The Performance Score guidelines will be:
< 80% for Needs Improvement
90% for Generally Meets Expectation (3.0 Performance)
100% for Nominal Performance (Meets Expectations)
125% for Outstanding Performance
For the purposes of this Plan:
Any excess over 100% will be doubled - for example, a
raw score of 108% will be increased to 116%.
Any deficit below 90% will be increased by a factor of
9, such that at 80% the Performance Score becomes 0 and
the Participant is ineligible for an Incentive Award -
for example, a raw score of 85% will be reduced to 45%
(90-5*9 = 45).
In the event the average of all Performance Ratings of all
Participants, as determined based on the foregoing guidelines and
rules, exceeds 100%, the Score of all Participants shall be
normalized by proportionate reduction such that the average shall
equal 100% (the rules appearing immediately before this sentence
shall not be further applied after or as a result of such
normalization).
(d) Determination of Award Based on Financial Objectives.
Following the close of each Plan Year, the Chief Financial
Officer shall prepare a report setting forth the extent to which
the Company and/or relevant Business Unit achieved the various
financial objectives described in Section 5(b). The Target
Incentive for each Participant shall first be adjusted for the
weighting and actual performance against Company and relevant
Business Unit targets as described in 5(a) and 5(b). The
Committee shall then determine, based on an assessment of other
financial parameters believed relevant in light of the Company's
financial performance during the year, whether the calculated
Target Incentive (as adjusted pursuant to the preceding sentence)
shall be further adjusted.
(e) Preliminary Determination of Each Participants Award. A
preliminary determination of each Participant's award shall be
made by multiplying his or her adjusted Target Incentive, as
determined in paragraph (d), by his or her normalized individual
Performance Score.
(f) Final Approval.
All awards shall be subject to final approval by the Committee,
which shall have the authority in its judgment to adjust awards
based on non-financial objectives, as well as, in unusual
circumstances as determined by the Committee, to adjust the
awards based on financial objectives.
6. PAYMENT OF INCENTIVE COMPENSATION AWARDS
Except as provided in Section 7, bonuses awarded under this
Plan will be fully paid in cash and/or shares of the Company's
common stock (which may be subject to restrictions specified by
the Committee), as determined by the Committee, within 90 days
after the end of the Plan Year.
Any amounts paid under this Plan shall be considered as
compensation to the Participant for the purpose of disability and
life insurance programs, unless and to the extent such
compensation is expressly excluded by the provisions of such
programs, but such amounts shall not be considered as
compensation for purposes of any other incentive plan or other
benefit unless such other plan or benefit expressly includes
compensation paid under this Plan.
7. CHANGE IN CONTROL OF THE COMPANY
(a) Contrary Provisions. The provisions of this Section 7
shall govern and supersede any inconsistent terms or provisions
of the Plan.
(b) Change in Control. For purposes of the Plan, "Change in
Control" shall mean any of the following events:
(1) The acquisition in one or more transactions by any
person or group (as such terms are defined in Section 13(d)(3) of
the Securities Exchange Act of 1934, as amended (the "1934
Act")), of "Beneficial Ownership" (within the meaning of Rule
13d-3 under 1934 Act) of 50% or more of the combined voting power
of the Company's then-outstanding voting securities; or
(2) The individuals who are members of the Incumbent
Board (as defined below), cease for any reason to constitute at
least two-thirds of the Board. The "Incumbent Board" consists of
the individuals who as of January 23, 1997, are members of he
Board and any individual becoming a director subsequent to
January 23, 1997, whose election, or nomination for election by
the Company's shareholders, was approved by a vote of at least
two-thirds of the directors then composing the Incumbent Board;
provided, however, that any individual who is not a member of the
Incumbent Board at the time he or she becomes a member of the
Board shall become a member of the Incumbent Board upon the
completion of two full years as a member of the Board, except
that no individual shall be considered a member of the Incumbent
Board if such individual initially assumed office (i) as a result
of either an actual or threatened "election contest" (within the
meaning of Rule 14a-11 under the 1934 Act) or other actual or
threatened solicitation of proxies or consents by or on behalf of
a person other than the Board (a "Proxy Contest"), or (ii) with
the approval of the other Board members, but by reason of any
agreement intended to avoid or settle a Proxy Contest; or
(3) Approval by shareholders of the Company of (i) a
merger or consolidation involving the Company if such
shareholders do not, immediately following such merger or
consolidation, own, directly or indirectly, more than 50% of the
combined voting power of the outstanding voting securities of the
corporation resulting from such merger or consolidation in
substantially the same proportion as their ownership of the
Company's voting securities immediately before such merger or
consolidation, or (ii) a complete liquidation or dissolution of
the Company or an agreement for the sale or other disposition of
all or substantially all of the assets of the Company.
If a Participant's employment is terminated prior to a
Change in Control and the Participant reasonably demonstrates
that such termination (i) was at the request of a third party who
has indicated an intention or taken steps reasonably calculated
to effect a Change in Control and who thereafter effects a Change
in Control, or (ii) otherwise occurred in connection with or in
anticipation of a Change in Control which actually occurs, then
for all purposes of this Plan the date of a Change in Control in
respect of such Participant shall mean the date immediately prior
to the date of termination of such Participant's employment.
(c) Payment Upon a Change in Control. Upon a Change
in Control, the bonus for a Plan Year ending prior to the date of
the Change in Control for which payment has not previously been
made shall be unconditionally payable to each Participant. The
portion based on financial objectives shall be determined as
specified in paragraph 5(c), and the portion based on non-
financial objectives shall be at not less than the Target level
related to such objectives.
If a Change in Control occurs with prior approval of
the Board, bonuses for the Plan Year during which the Change in
Control occurs shall be unconditionally payable to each
Participant, such bonuses to be at the Target level or at such
higher percentage of Base Compensation as may be approved by the
Committee.
If a Change in Control occurs without prior approval
of the Board, bonuses for the Plan Year during which the Change
in Control occurs shall be unconditionally payable to each
Participant, such bonuses to be equal to the Target level. If
such a Change in Control occurs before Targets shall have been
established for a Plan Year, the Targets for such Plan Year shall
be no less favorable to each of the Participants than the Targets
for the prior Plan Year.
Bonuses payable in accordance with this paragraph 7(c)
shall be paid in cash on or before the fifth day following the
date of the Change of Control.
(d) Amendment or Termination.
(i) This Section 7 shall not be amended or terminated
as to any Participant who has not given his or her written
consent.
(ii) Any amendment or termination of the Plan prior to
a Change in Control which (1) was at the request of a third
party who has indicated an intention or taken steps reasonably
calculated to effect a Change in Control, or (2) otherwise arose
in connection with or in anticipation of a Change in Control,
shall be null and void as to any Participant who has not given
his or her written consent.
(e) Trust Arrangement. All benefits under the Plan
shall be paid by the Company. The Plan shall be unfunded and the
benefits hereunder shall be paid only from the general assets of
the Company. However, in the discretion of the Committee the
Company may establish a trust or other arrangement for the
purpose of funding the benefits payable under the Plan.
8. NON-ASSIGNABILITY
No bonus or other right or benefit under this Plan shall be
subject to anticipation, alienation, sale, assignment, pledge,
encumbrance or charge, and any attempt to anticipate, alienate,
sell, assign, pledge, encumber or charge the same shall be void
and shall not be recognized or given effect by the Company.
9. NO RIGHT TO EMPLOYMENT
Nothing in this Plan or in any notice of award pursuant
hereto shall confer any right to continue in the employment of
the Company nor affect the Company's right to terminate the
employment of any Participant.
10. AMENDMENT OR TERMINATION
The Board may amend or terminate the Plan, without the
consent of any Participant, at any time prior to the end of the
first calendar quarter of the Plan Year for which such amendment
or termination becomes effective.
gc\execinc.pla