ROGERS CORPORATION
ANNUAL INCENTIVE COMPENSATION PLAN
(The "Plan")
Plan Year: 1.1 Fiscal year of Rogers Corporation
Participants: 2.1 Those managers and professionals who
directly affect the profitability of the
Company are eligible for nomination as
Participants in this Plan. Participants
for each Plan Year must be approved by
the President. Sales Engineers, Regional
Sales Managers, and any other employees
who are eligible for commissions or
similar incentive compensation plans are
excluded from this Plan.
Target Award 3.1 Upon achievement of targeted financial goals,
Opportunity: Participants will be eligible for a specified
Target Award. Target Awards by Participant
group are as follows:
Target Award
As a Percent of
Position Salary
----------------------------------------------------
CEO 50%
Group Heads, Corporate 30% - 40%
Vice Presidents
Division Heads, Equivalent 20% - 30%
Corporate Executives
Participating Division 10% - 20%
and Corporate Reports
Basic Award 4.1 Each Plan Year, a set percentage of the
Determinant: Participant's Target award will be determined
by Corporate performance and another set
percentage will be determined by
Division/Group performance. In general, those
Participants whose actions affect the entire
Company will have a higher Corporate
performance weighting while those whose
actions have a greater impact on an individual
Division/Group will have a higher
Division/Group performance weighting.
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4.2 Performance weights by Participant group are
as follows:
Corporate Division/Group
Position Performance Performance
----------------------------------------------------
CEO/Corp. 100% 0%
Officers, Steer-
ing Comm. Members
who are not Group
Heads
Corporate Reports 50% 50% <F1>
Group Heads/
Division Heads 40%-70% 60%-30%
Division Reports 30% 70%
A. Corporate Performance
4.3 The Corporate portion of a Participant's
annual incentive award is based on Return on
Equity and After Tax Profit excluding bonuses
earned under this Plan. Performance goals
will be established at the beginning of each
Plan Year and expressed in an award schedule
that prescribes the percentage of Corporate
Target Award paid out at each level of
performance achievement. (See Matrix "A")
B. Division/Group Performance
4.4 The Divisional (or, where applicable, Group)
portion of a Participant's annual incentive
award is based on a combination of the
Division's or Group's Operating Profit <F2>
<F1> The 50% Division/Group Performance portion for each Corporate Report
will be determined by multiplying 50% of his or her Target Award by
the ratio obtained by dividing all bonus dollars related to Divisional
Performance paid to all Division Heads and Division Reports by the
bonus dollars related to Divisional Performance that would have been
paid to all Division Heads and Division Reports if every Division had
achieved the Operating Profit and RONA contained in its plan for the
year.
<F2> For purposes of this Plan, Operating Profit exludes corporate charges.
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and Return on Net Assets (RONA) <F3>, excluding
bonuses earned under this Plan. Performance
goals will be established at the beginning of
each Plan Year and expressed in an award
schedule that prescribes the percentage of the
Division/Group Target Award paid out at each
level of performance achievement. (See Matrix
"B")
4.5 Calculations of the actual percentage of
Corporate and Division Target Awards will be
made by interpolating between points on the
Performance Measurement Schedule Matrices.
C. Establishment of Award Schedule
4.6 Each Division will prepare an annual plan.
After approval or revision by the President,
the annual plan will indicate the Division's
goals relative to its Plan performance factors
-- Operating Profit and RONA.<F4> By February
15th of the Plan Year each Division will
obtain the President's agreement on the 1 to 3
most important non-financial objectives
(quantified to the degree practicable) for the
Division to accomplish during that Plan Year.
4.7 Soon after the end of the Plan Year, the
President will evaluate how well each Division
accomplished its key non-financial
objective(s) and recommend a number, 1 to 3,
where 3 represents significant over-
achievement, 2 represents reasonable
achievement, and 1 represents significant
failure. If this rating on achievement of key
objectives is a 3 or 1, the awards for that
Division will be increased or decreased by 25%,
respectively. The rating for a Group will be
the average, rounded to the nearest whole number,
of the ratings assigned to the Divisions comprising
that Group.
D. Profit Improvement Adjustment
<F3> For Divisions with a planned loss, budgeted, rather than actual Plan
Year, year-end assets will be used to calculate RONA.
<F4> See Footnotes 2 and 3 above.
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4.8 After the bonus pool is initially calculated,
it will be adjusted as follows.
4.8.1 If a Division, whose prior year's
performance is less than $1 million
of controllable profit <F5>, does not
exceed the prior year's controllable
profit by at least $200,000, that
Division's bonus pool for the
current Plan Year will be reduced by
20%.
4.8.2 If a Division, whose prior year's
performance is $1 million or more of
controllable profit <F6>, does not
exceed the prior year's controllable
profit by at least $200,000 or 10%,
whichever is higher, that Division's
bonus pool for the current Plan Year
will be reduced by 20%.
4.8.3 If the Corporation's net income is
less than 10% above the previous
year, the Corporate portion of the
bonus pool for the current Plan Year
will be reduced by 20%.
Personal 5.1 After the award is initially calculated, a
Performance further adjustment can be made based on
Multiplier: individual performance. This adjustment is a
multiplier with a minimum of .5 and a maximum
of 1.5, which is applied to the initially
calculated award. When the award for a unit is
less than 50% of that unit's Target Award,
individual awards can be adjusted by the
individuals listed below without regard for the
.5/1.5 range.
5.2 Annual incentive plan multipliers will be
determined as follows:
The President will determine the Group
and Corporate Heads' multipliers.
The Group Head and the President will
determine the Division Managers'
multipliers.
<F5> The President will determine the controllable profit suitable
for comparison between the two years.
<F6> See Footnote 5 above.
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The Corporate Head and President will
determine the Corporate Reports'
multipliers.
The Division Manager and the Group Head
will determine all other individual bonus
multipliers.
5.3 For the Corporation as a whole, the average
multiplier may not exceed 1.0.
5.4 Managers are encouraged to develop a clear and
well-communicated set of individual objectives
and job responsibilities for the purpose of
determining this individual performance
adjustment. These include but are not limited
to:
Achievement of key individual objectives,
Administrative cost control,
Adherence to TQC principles.
Minimum 6.1 The President has the right to eliminate the
Personal total annual incentive award for any
Performance Participant whose performance level is deemed
to be unsatisfactory, regardless of the
organization's financial performance.
Presidential 7.1 A special award pool will be established
Performance by assigning to it an additional amount
Award equal to 3% of the amount generated for
Participants. This pool may be used at the
discretion of the President for special
individual awards to employees, whether
Participants or not, who have achieved
extraordinary performance during the Plan Year.
Award 8.1 The annual bonus award for any
Limitation : Participant will be limited to 200% of
the Target Award.
8.2 Except as noted below, the maximum incentive
bonus pool including the Presidential
Performance Award and payments made to non-
Participants under this Plan will be limited
to 13% of pre-tax income, excluding bonuses
earned under this Plan, up to the budgeted
profit for the company. If the calculation of
awards indicates that these limits will be
exceeded, awards will be reduced
proportionally to conform to the limit.
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8.3 If any Division would have received 100% or
more of the Division portion of their Target
Awards and the above 13% limit causes a
reduction in earned awards, the following
shall apply.
8.3.1 The reductions of those Divisions'
portions of the Target Awards will
be restored and Corporate Reports'
awards increased accordingly. (This
does not apply to any Steering
Committee members.)
8.3.2 The total of such restored and
increased amounts shall not exceed
$250,000. If necessary, reductions
will be made proportionally.
Input of Extra- 9.1 In comparing actual performance against
ordinary and Non- the performance goals, management may exclude
recurring Items: from such comparison any extraordinary or
nonrecurring gains, losses, charges, or
credits which appear on the Company's books
and records as it deems appropriate.
9.2 An extraordinary or nonrecurring item may
include, without limiting the generality of
the foregoing, an item in the Company's
financial statements reflecting a change in an
accounting rule or methodology, tax law, or
actuarial assumption, not taken into
consideration in the establishment of
performance goals. This type of adjustment
must be approved by the Compensation and
Organization Committee of the Board of
Directors.
Less Than 10.1 An individual who is made a Participant in
Full-Year Plan the Plan after the beginning of the Plan
Participation: Year, but before October 1st of that
year,may receive a pro-rated award based
on the number of full weeks of
eligibility during the Plan Year.
10.2 If a Participant's employment is terminated
during a Plan Year because of death,
disability, or normal retirement, a tentative
award will be determined based on performance
as of the end of the Plan Year. The final
award will be prorated by multiplying the
tentative award by the number of full weeks of
employment divided by fifty-two.
10.3 If a Participant's employment is terminated
involuntarily, not for cause, "at the pleasure
of the Company," the Participant will be paid
a prorated bonus.
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Form and Timing 11.1 All awards will be paid in
Of Payment cash, less withholding requirements,as
soon as possible following the end of the
Plan Year. However, the President may
request authorization from the Board of
Directors to pay a portion of the earned
awards before the end of the Plan Year.
11.2 A Participant may irrevocably elect to defer
all or part of an eventual award that may be
earned during the Plan Year. The total amount
or any percentage thereof may be deferred
until the time of death, disability,
retirement, or voluntary or involuntary
termination of Rogers' employment.
Administration: 12.1 A management incentive compensation
committee, named by the President, will
review all elements and goals of the Plan
each year. Plan changes will be
presented to the Compensation and
Organization Committee of the Board for
approval.
Bonus Opportunity 13.1 For each Division or Corporate Department
Non-Participants: that earns an award under this Plan, a
pool will be created for distribution to
non-Participants in that Division or
Corporate Department only. Such pool will
be equal to 1.0% of the aggregate, annual
salaries of the non-Participants, exempt
from the payment of overtime, in that
Division or Corporate Department at the
end of the Plan Year, adjusted up or down
proportionally to the award earned divided
by the Target Award in that Division or
Corporate Department. The Division
Manager and Group Head or the Corporate
Department Vice-President will determine
the recipients and amounts of such bonuses
subject to the approval of the President.
These bonuses are intended for non-
Participants who have made significant
contributions to the success of the
Division or Corporate Department during
the Plan Year; this bonus pool is not
intended for distribution to all non-
Participants in the unit. Any
undistributed funds from this pool will be
returned to the Company and may not be
distributed to other units.
Approved by the Compensation and Organization Committee of the
Board of Directors
February 24, 1994.
aicp.rev
2-16-94
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