HUGHES SUPPLY, INC.
SENIOR EXECUTIVES' LONG-TERM INCENTIVE BONUS PLAN
Adopted by the Board of Directors
March 15, 1995
Purpose. The Hughes Supply, Inc. Senior Executives' Long-Term Incentive
Bonus Plan (the "Long-Term Plan") was adopted by the Board of Directors on
March 15, 1995 as an on-going performance based incentive bonus plan to
permit the Board to provide for incentive compensation to reward key senior
executives for achieving specified Company performance goals adopted by the
Board.
Operation of the Plan. Under the Long-Term Plan the Board, in its sole
discretion, may establish separate performance plans for separate
performance periods, establish performance goals for such performance
periods, designate the participants to participate in such performance
plans, and establish the performance plan bonus payments to be made to such
participants if the required performance goals are achieved.
Performance Periods. The Board may establish a performance plan under
the Long-Term Plan for any performance period consisting of one or more
fiscal years of the Company. Any such performance plan shall be designated
by reference to the final Company fiscal year included in the applicable
performance period so that, for example, the performance plan for the
performance period including the Company's three fiscal years up to and
including the 1997 fiscal year is designated under the Long-Term Plan as
the "1997 Performance Plan."
Performance Goals. With respect to any performance plan adopted under the
Long-Term Plan, the Board shall determine Company performance goals which
must be met during the performance period of that performance plan to
entitle a participant in that performance plan to the payment of a
performance plan bonus payment. Such performance goals may be defined with
respect to earnings criteria, return on investment, or any other measure of
Company performance deemed by the Board to be relevant to the Board's long-
term goals for the overall operation of the Company.
Plan Participants. The Board shall designate the participants under each
performance plan from among the Company's senior executive management
employees which the it considers most instrumental in achieving the
required performance goals.
Bonus Payments. In establishing a performance plan the Board shall also
establish the amount of, or method for determining the amount of, and form
of payment of, any performance plan bonus payment which would become
payable to each participant under that performance plan if the required
performance goals are met.
Form of Bonus Payments. Under the Long-Term Plan, as approved by the
Board, the Board may specify that all or any portion of a performance plan
bonus payment may be in shares of common stock of the Company. The
provision of the Long-Term Plan that permits such payment in shares of
common stock (the "Stock Award Provision") is subject to the approval of
the shareholders at the 1995 Annual Meeting. In the event that the
shareholders do not approve the Stock Award Provision, the Long-Term Plan
will be deemed to be amended to permit the payment of a performance plan
bonus payment only in cash.
Bonus Payment Shares; Value. Subject to the requirement of shareholder
approval of the Stock Award Provision, the maximum aggregate number of
shares of common stock which may be paid to participants as performance
plan bonus payments under performance plans adopted under the Long-Term
Plan shall be 100,000 shares. For any payment of a performance plan bonus
payment in shares of common stock, such common stock shall be valued at
fair market value determined as the closing price of the common stock on
the New York Stock Exchange on the last trading day of the performance
period for the subject performance plan.
Anticipated Tax Treatment. Under federal income tax laws the payment of
any amount as a performance plan bonus payment will result in ordinary
employment earned income taxable to the recipient and deductible by the
Company. Prior to any such payment, the designation of a participant under
a performance plan will not be taxable to the recipient nor deductible to
the Company. During the performance period of any performance plan the
then contingent cost, if any, to the Company, determined from the
application of the performance criteria of the performance plan to the
Company's performance to date, is accrued as a liability of the Company.
Term of Plan. The term of the Long-Term Plan shall be deemed to have
commenced with its adoption by the Board on March 15, 1995 and shall end on
the final day of the Company's 2003 fiscal year unless terminated earlier
by action of the Board. No performance plan may be adopted under the Long-
Term Plan which shall extend beyond the stated term of the Long-Term Plan.
The Board may terminate the Long-Term Plan at any time provided that any
performance plan adopted prior to such termination shall continue in effect
until the end of the applicable performance period and the payment of any
performance plan bonus payment required thereunder.
Comparable Prior Plans; Incorporation. The Long-Term has been adopted by
the Board based, in large measure, upon its favorable experience with
similar ad hoc plans adopted in prior years. Because it is anticipated by
the Board, although not required, that additional performance plans adopted
under the Long-Term Plan will be comparable to these prior plans, the Board
hereby expressly incorporates herein the existing 1997 and 1998 Performance
Plans referred to below. By incorporating these existing plans into the
Long-Term Plan the Board it is the intention of the Board that approval by
the shareholders of the Stock Award Provision of the Long-Term Plan will
also constitute shareholders' approval of the stock award provisions of
these existing plans and that the aggregate limitation of 100,000 shares of
common stock for bonus payments under the Long-Term Plan shall include
bonus payments of shares under these existing plans.
1997 and 1998 Performance Plans On May 24, 1994 and March 15, 1995,
respectively, the Board established senior executives' long-term incentive
bonus plans for the three fiscal year performance period ending on the last
day of the fiscal year to be ended January 24, 1997 (the "1997 Performance
Plan") and for the three fiscal year performance period ending on the last
day of the fiscal year to be ended January 30, 1998 (the "1998 Performance
Plan") (collectively, the "existing plans"). Each of these existing plans
is incorporated into the Long-Term Plan.
Each of the existing plans has been established with performance goals
which require continuing growth in the Company's earnings per share during
the applicable performance period. The Board has designated the Chief
Executive Officer, the President, and the Chief Financial Officer as
participants under each of the existing plans.
Under each of the existing plans the plan participants would receive a
performance plan bonus payment, depending upon the Company's earnings for
the applicable performance period, of from 25% to 100% of base salary for
the final year of such performance period. Such performance plan bonus
payment, if any, would be paid 50% in cash and 50% in common stock
following the end of the final year of the performance period. The number
of shares of common stock applicable to such possible aggregate performance
plan bonus payments would be the number of shares, at the then current fair
market value, represented by 50% of the maximum estimated aggregate amount
of such performance plan bonus payments.
Registration of Plan Bonus Shares. Subject to approval by the shareholders
of the Stock Award Provisions of the Long-Term Plan, the shares for
issuance as bonus shares under the Long-Term Plan will be registered under
the Securities Act of 1933 if such registration is determined, in the
opinion of management of the Company and its legal counsel, to be required
or advisable. It is also the intention of the Company to register the
shares on the New York Stock Exchange.
Cash Plan in the Absence of Shareholder Approval. In the event the
shareholders do not approve the Stock Award Provision of the Long-Term
Plan, the Plan will be deemed to be amended to require that any bonus
payment under the existing performance plans or any future performance
plans adopted under the Long-Term Plan will be paid entirely in cash.