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Exhibit 10(b)
THIRD AMENDMENT
KAMAN CORPORATION
CASH BONUS PLAN
(Amended and Restated as of January 1, 2002)
WHEREAS, Kaman Corporation (the "Corporation") has
previously adopted a Cash Bonus Plan (Amended and Restated as of
January 1, 2002), a First Amendment thereto dated February 12,
2002 and a Second Amendment thereto dated March 21, 2003
(collectively, the "Plan"); and
WHEREAS, the Board of Directors of the Corporation approved
a further amendment to the Plan on April 20, 2004 to provide that
the Plan formula applicable to corporate management utilize
additional criteria including performance against budget and a
greater emphasis on individual performance;
NOW THEREFORE, the Plan is amended as follows:
1. Section 7 of the Plan is hereby deleted and replaced in
its entirety by the following:
7. Performance Objectives for Corporate Participants.
a. Applicability. The provisions of this Section 7 shall
apply to Corporate Participants, i.e. Participants who are
employed by Kaman Corporation at its headquarters location.
Furthermore, the provisions of Section 6 hereof shall not apply
to Corporate Participants.
b. In General. The Modified Target Bonus Opportunity for
Corporate Participants shall be calculated solely based upon the
consolidated financial performance of the Company and individual
Participant performance using (i) growth in earnings per share
("EPS Growth"), (ii) return on total capital ("ROI"), (iii) pre-
tax profits measured against budget ("Budget Performance") and
individual Participant performance against stated goals
("Individual Performance") as the performance goals. EPS Growth
and ROI performance are determined by comparing the EPS Growth
and ROI performance of the Company for the applicable Award Year
with comparable numbers for the Russell 2000 index averaged over
the prior 5 year period. For example, for Award Year 2004, the
numbers for the Company for EPS Growth and ROI will be compared
index averaged for 1999 - 2003. Budget Performance is determined
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by comparing the Company's pre-tax profits for the applicable
Award Year with the Company's budgeted pre-tax profits for such
Award Year utilizing the Company's original budget for such Award
Year as approved by the Board, without regard to any
modifications of such budget following initial Board approval
(the "Original Budget"). Individual Performance is to be
determined in relation to goals for the applicable Award Year as
may be determined by the Personnel and Compensation Committee.
This Section 7 describes the approach to be followed in
determining the Modified Target Bonus Opportunity for Corporate
Participants. Without limiting the authority provided by Section
10(b), the Plan Administrators are authorized to prescribe
reasonable rules of operation and to resolve any ambiguities or
matters of interpretation, provided such rules and
interpretations are consistent with the approach provided herein.
Furthermore, the Personnel and Compensation Committee is
authorized to include or exclude special items in determining the
Company's EPS Growth, ROI performance, Budget Performance and/or
Individual Performance, provided that the approach taken is
followed consistently from year to year.
c. EPS Growth. The EPS Growth for the Company for the
Award Year will be calculated. Calculations of average EPS
Growth for the Russell 2000 for the prior five (5) years shall
also be made, and percentile rankings shall be developed. The
Personnel and Compensation Committee shall establish percentages
of initial target bonus opportunity earned for EPS Growth
corresponding to the various percentile rankings. The percent of
the Initial Target Bonus Opportunity earned for EPS Growth for an
Award Year shall be determined by the Plan Administrators based
upon the percentile ranking of the Company.
d. Return on Total Capital. The ROI for the Company for
the Award Year will be calculated. Calculations of average ROI
for the Russell 2000 for the prior five (5) years shall also be
made, and percentile rankings shall be developed. The Personnel
and Compensation Committee shall establish percentages of initial
target bonus opportunity earned for ROI corresponding to the
various percentile rankings. The percent of the Initial Target
Bonus Opportunity earned for ROI for an Award Year shall be
determined by the Plan Administrators based upon the percentile
ranking of the Company.
e. Budget Performance. The consolidated pre-tax profits of
the Company for the Award Year shall be compared with the
Original Budget. The Personnel and Compensation Committee shall
established percentages of Initial Target Bonus Opportunity
earned for achieving 100% or more or less of consolidated pre-tax
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profits in the Original Budget. The percent of the Initial
Target Bonus Opportunity earned for Budget Performance for an
Award Year shall be determined by the Plan Administrators.
f. Individual Performance. The Personnel and Compensation
Committee shall establish individual performance goals for the
applicable Award Year for all Corporate Participants and
establish percentages of Initial Target Bonus Opportunity earned
for achieving such individual goals. The Plan Administrators
shall determine the percent of Initial Target Bonus Opportunity
earned for Individual Performance for the Award Year with respect
to each Corporate Participant.
g. Percentile Calculations. The percentile ranking of the
Company must be at least 25th for EPS Growth in order to generate
a percentage of Initial Target Bonus Opportunity earned for EPS
Growth. The percentile ranking of the Company must be at least
25th for ROI in order to generate a percentage of Initial Target
Bonus Opportunity earned for ROI. If the Company is in at least
the 75th percentile for either category (EPS Growth or ROI), it
will generate the maximum award with respect to that category.
In making calculations hereunder for Budget Performance, no
percentage of Initial Target Bonus Opportunity shall be awarded
if pre-tax profits for the Award Year are less than 70% of the
Original Budget. The Personnel and Compensation Committee may,
but shall not be required to, extend the maximum award earned for
EPS Growth, ROI, or Budget Performance from 100% to a larger
percentage. In making calculations and determinations hereunder
for Budget Performance, in no event will the 25th percentile for
EPS Growth or ROI for the Russell 2000 5 year average be
considered to be less than zero.
h. Computation of Modified Target Bonus Opportunity. The
percentages of Initial Target Bonus Opportunity earned for EPS
Growth, ROI, Budget Performance and Individual Performance
determined in accordance with the foregoing, shall be added
together. This combined percentage may be greater than 100%.
This combined percentage, when multiplied by a Corporate
Participant's Initial Target Bonus Opportunity, shall equal the
Corporate Participant's Modified Target Bonus Opportunity.
i. Factor Weightings. Attachment B sets forth the factor
weightings established by the Personnel and Compensation
Committee for the 2004, 2005, 2006 and subsequent Award Years.
As set forth in Attachment B, the factor weightings for EPS
Growth, ROI and Budget Performance shall aggregate 100% and the
factor weighting for Individual Performance shall be an
additional 10%. Otherwise, Attachment B is subject to
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modification from time to time by the Personal and Compensation
Committee as the Committee carries out the provisions of this
Section 7.
2. Effective Date. This Amendment shall take effect
beginning with the 2004 Award Year.
3. Capitalized Terms. Capitalized terms not defined herein
shall have the meaning ascribed to them in the Plan.
4. Full Force and Effect. Except as modified and amended
by this document, the Plan remains in full force and effect.
IN WITNESS WHEREOF, Kaman Corporation has caused this Third
Amendment to be executed this 3rd day of August, 2004.
ATTEST: KAMAN CORPORATION
/s/ Candace A. Clark By: /s/ Robert M. Garneau
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Its: Executive Vice President and
Chief Financial Officer
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ATTACHMENT B
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CASH BONUS PLAN - CORPORATE PARTICIPANTS
FACTOR WEIGHTINGS
<table>
Minimum Target Maximum
% of % of % of
<s> <c> <c> <c> <c> <c> <c> <c> <c> <c>
Measure- Weight- Perform- Target Perform- Target Perform- Target
Factor ment ing ance Award ance Award ance Award
- -------------------------------------------------------------------------------
2004 Per- Per- 70% 70% 0 95-100% 70 135% 140
form- form- Perf. Perf. Perf.
ance ance on Vs. Vs. Vs.
Vs. a % of Budget Budget Budget
Budget Budget
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Growth Actual 15% 25th 0 50th 15 75th 30
in EPS Vs. Per- Per- Per-
Russell centile centile centile
2000
5-year
average
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Return Actual 15% 25th 0 50th 15 75th 30
on Vs. Per- Per- Per-
Capital Russell centile centile centile
2000 5-year
average
- -------------------------------------------------------------------------------
Other Developed 10% 0 10 10
Objec- Annually
tives
===============================================================================
2005 Per- Per- 50% 70% 0 95-100% 50 135% 100
form- form- Perf. Perf. Perf.
ance ance Vs. Vs. Vs.
Vs. on a % Budget Budget Budget
Budget of Budget
- -------------------------------------------------------------------------------
Growth Actual 25% 25th 0 50th 25 75th 50
in EPS Vs. Per- Per- Per-
Russell centile centile centile
2000
5-year
average
- -------------------------------------------------------------------------------
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Minimum Target Maximum
% of % of % of
<s> <c> <c> <c> <c> <c> <c> <c> <c> <c>
Measure- Weight- Perform- Target Perform- Target Perform- Target
Factor ment ing ance Award ance Award ance Award
- -------------------------------------------------------------------------------
Return Actual 25% 25th 0 50th 25 75th 50
on Vs. Per- Per- Per-
Capital Russell centile centile centile
2000
5-year
average
- -------------------------------------------------------------------------------
Other Developed 10% 0 10 10
Objec- Annually
tives
===============================================================================
2006 Per- Per- 34% 70% 0 95-100% 34 135% 68
form- form- Perf. Perf. Perf.
ance ance Vs. Vs. Vs.
Vs. on a % Budget Budget Budget
Budget of Budget
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Growth Actual 33% 25th 0 50th 33 75th 66
in EPS Vs. Per- Per- Per-
Russell centile centile centile
2000
5-year
average
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Return Actual 33% 25th 0 50th 33 75th 66
on Vs. Per- Per- Per-
Capital Russell centile centile centile
2000
5-year
average
- -------------------------------------------------------------------------------
Other Developed 10% 0 10 10
Objec- Annually
tives
- -------------------------------------------------------------------------------
</table>
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