Exhibit 10(m)
CLARK EQUIPMENT COMPANY
INCENTIVE COMPENSATION PLAN
FOR BUSINESS UNIT MANAGEMENT
(AMENDED AND RESTATED EFFECTIVE 1 JANUARY 1994)
This Plan was adopted the 18th day of February 1992, and on 14 February
1994 was amended and restated by the Human Effectiveness Committee of the
Board of Directors of Clark Equipment Company ("Clark"), effective as of
1 January 1994, as set forth below.
1. Statement of Purpose
1.1 For many years Clark has maintained a program providing an incentive
for executives and managers in the Business Units of the Company
through a means for them to participate in the success of their
Business Units. This Plan provides an incentive for such employees by
rewarding performance on the basis of the achievement of planned
income and return on capital, and other goals.
2. Definitions
Unless the context provides a different meaning, whenever used in this
Plan the following terms shall have the following meanings:
2.1 "Actual Net Income" means the Net Income actually achieved by the Unit
for the Year.
2.2 "Actual Return on Capital" means the Return on Capital actually
achieved by the Unit for the Year.
2.3 "Average Capital" means, with respect to each Business Unit for any
Year, the average of the Capital of the Unit for the last five
quarterly reports of the Unit ending with the report as of December 31
of such Year.
2.4 "Board" means the Board of Directors of Clark Equipment Company.
2.5 "Business Unit" or "Unit" means a subsidiary or other business unit of
the Company that is determined by the Committee to be eligible to
participate in the Plan.
2.6 "Capital" means total assets reflected on the Business Unit's
financial statements, net of all valuation reserves such as
accumulated depreciation, bad debt reserves, LIFO reserves and the
like, less all non-interest bearing liabilities, deferred credits,
pension liabilities and any management incentive compensation
liability. Intercompany balances with the Corporate Office are
excluded from assets or non-interest liabilities. This should result
in Capital being equal to Business Unit equity plus debt and plus or
minus any intercompany balances with the Corporate Office.
2.7 "Committee" means the Human Effectiveness Committee of the Board or
such other Committee to which the Board has delegated the
responsibility for administering the Plan.
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2.8 "Company" means Clark Equipment Company.
2.9 "Compensation Year" or "Year" means a calendar year for which
incentive compensation is determined pursuant to the Plan, beginning
with the Year 1994.
2.10 "Corporate Office" means the corporate office of the Company.
2.11 "Hay Average Incentive Compensation" or "HAIC" means, with respect to
each Participant, the difference between average total compensation
and average base salary for his salary grade. This HAIC amount shall
be determined for the Year in accordance with the Hay Compensation
Report for Industrial Management at the average salary level of
surveyed companies.
2.12 "Incentive Compensation" means the incentive amount payable to a
Participant as determined pursuant to Section 3 of the Plan.
2.13 "Net Income" means, with respect to each Business Unit for any Year,
Unit income before tax determined under U. S. Generally Accepted
Accounting Principles and the Company's policies and less provision
for income taxes. Income taxes are to be provided for by tax
jurisdiction in accordance with generally accepted accounting
principals, Company policy and tax law of the jurisdiction.
2.14 "Participant" means an employee of the Business Unit who (a) is in
salary grade 61 or higher, or (b) is in salary grade 59 or 60, and
whose inclusion in the Plan has been recommended by the Business Unit
Planning Board and approved by the Chief Executive Officer of the
Company.
2.15 "Plan" means the Clark Equipment Company Incentive Compensation Plan
for Business Unit Management, as set forth herein.
2.16 "Planned Net Income" means the amount of Net Income contained in the
Business Unit's plan for the Year, as submitted to the Board for the
Year. The determination of Planned Net Income may be revised, for
purposes of this Plan, at the discretion of the Committee, during the
Year to reflect any change in capitalization, or a transaction such as
any acquisition, divestiture, merger, consolidation, separation,
(including a spin-off or other distribution of stock or property), any
reorganization, any partial or complete liquidation, or other major
changes in the business which were not reflected in the plan.
2.17 "Planned Return on Capital" means the percentage Return on Capital
contained in the Business Unit's plan for the Year, as submitted to
the Board for the Year. The determination of Planned Return on
Capital may be revised, for purposes of this Plan, at the discretion
of the Committee, during the Year to reflect any change in
capitalization, or a transaction such as any acquisition, divestiture,
merger, consolidation, separation, (including a spin-off or other
distribution of stock or property), any reorganization, any partial or
complete liquidation, or other major changes in the business which
were not reflected in the plan.
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2.18 "Return on Capital" or "ROC" means, with respect to each Unit for any
Year, the Net Income of the Unit for the Year as a percentage of
Average Capital of the Unit for such Year.
3. Incentive Compensation
3.1 The Incentive Compensation for each Participant in a Unit for each
Year will be a percentage of Hay Average Incentive Compensation for
such Year equal to the sum of the HAIC percentages determined under
Sections 3.2, 3.3 and 3.4, subject to the limitations of Section 3.5.
3.2 (a) The HAIC percentage under this Section is based on the financial
performance of the Business Unit for the Year as determined from
the following matrix of Return on Capital and Net Income:
Actual Return on Capital
Compared to Planned Return on Capital
No Less
Than +5%
-5% -2.5% +2.5% or More
Points Points Equal Points Points
Actual 120% 60% 65% 70% 75% 80%
Net or more
Income 110% 50% 55% 60% 65% 70%
as a
Per-
centage 100% 40% 45% 50% 55% 60%
of
Planned 90% 30%* 35% 40% 45% 50%
Net at least
Income 80% -- 25%* 30% 35% 40%
Percentages within the box are percentages of HAIC
If Planned Net Income is a loss, then the 110% line shall mean a
10% improvement, etc.
(b) Intermediate values within the above matrix will be determined by
interpolation, except that there will be no interpolation below
the two HAIC percentages marked with an asterisk (*), nor will
there be any Incentive Compensation payable below these HAIC
percentages.
(c) If either Planned Return on Capital or Planned Net Income is less
than an amount equal to six percent Return on Capital, then:
(i) if either Actual Return on Capital or Actual Net Income
is less than an absolute dollar amount equivalent to six percent
Return on Capital, the maximum percentage of HAIC under this
Section is 50%; or
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(ii) if both Actual Return on Capital and Actual Net Income
are at least equal to an absolute dollar amount equivalent to six
percent Return on Capital, the actual HAIC percentage shall be
determined from the above matrix except that, for measurement
purposes, Planned Return on Capital shall be deemed to be six
percent and Planned Net Income shall be deemed to be the amount
of Net Income equal to six percent Return on Capital.
3.3 The HAIC percentage under this Section is based on the achievement of
one or more operating goals established by the Chief Executive Officer
of the Company for the Business Unit for the Year.
The percentage of HAIC payable for performance of these goals will be
stated separately for each Business Unit but, in general, will be
stated as follows:
Percentage of
Performance Percentage
of Goal(s) of HAIC
120% or more 40%
110% 35%
100% 25%
90% 20%
at least 80% 15%
Intermediate values will be determined by interpolation.
3.4 The HAIC percentage under this Section will be determined for each
Unit, or for each Participant in the Unit, for the Year by the Chief
Executive Officer of the Company upon the recommendation of the
Business Unit President and of the Corporate Office Planning Board and
with the approval of the Committee. Normally, the incentive
compensation awarded by the Chief Executive Officer under this Section
for good performance will be 25% of HAIC, but may vary from 0 to 50%
of HAIC.
3.5 Except as provided in this Section, no Incentive Compensation will be
earned in any Year for which Actual Net Income is negative. At the
discretion of the Committee, after a second consecutive Year in which
Actual Net Income is positive following a Year in which Actual Net
Income is negative, an evaluation may be made by the Committee of
performance during the Year of negative Actual Net Income immediately
preceding the first of such Years of positive Actual Net Income.
Performance for such Year shall be measured in the same manner as is
done for a profitable Year as provided in Sections 3.2, 3.3 and 3.4,
except that the HAIC percentage for such Year shall not, in the
aggregate, exceed 50%, and at the discretion of the Committee such
HAIC percentage may be reduced to zero. The resulting percentage of
HAIC, if any, will, at the discretion of the Committee, be paid, in
addition to the amounts earned for performance in such second
consecutive Year in which Actual Net Income is positive, to the
Participants who were Participants in the Plan during the relevant
Year of negative Actual Net Income.
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Notwithstanding the preceding paragraph of this Section 3.5, in the
event that the Year 1995 is the second consecutive Year in which
Actual Net Income is positive following one or more Years in which
Actual Net Income is negative, Incentive Compensation will be paid
with respect to such Year(s) of negative Actual Net Income if and to
the extent that it would have been payable under this Plan as in
effect on December 31, 1993.
4. Adjustments
4.1 At the discretion of the Committee, the Incentive Compensation payable
to any Participant or for any Unit for any Year may be adjusted either
upward or downward to reflect extraordinary events or circumstances.
5. Payment of Incentive Compensation
5.1 The Incentive Compensation payable pursuant to this Plan shall be paid
as soon as practicable following the end of the Year and the
determination and approval of the amounts payable, except as provided
in Section 3.5.
6. Termination of Participation
6.1 If a Participant in the Plan ceases to be a Participant for any
reason, he shall have no right to any incentive payments under the
Plan. However, at the sole discretion of the Committee, he may be
granted a pro rata payment for the Year in which he ceased to be a
Participant.
7. No Creation of Employment Rights
7.1 Nothing contained herein shall provide any employee of any Business
Unit with any right to continued employment or in any way abridge the
rights of the Business Unit to determine the terms and conditions of
employment, and whether to terminate the employment, of any employee.
8. Authority
8.1 Except as otherwise expressly provided herein, full power and
authority to interpret and administer this Plan shall be vested in the
Committee. The Committee may, in their sole discretion, adopt, amend,
modify, suspend or terminate such rules and policies as they may
determine in connection with the performance of their responsibilities
under the Plan. The Committee may also, with respect to any Business
Unit, make such adjustments in the Incentive Compensation formulae of
Sections 3.2 and 3.3 as they determine to be appropriate for such Unit
and may, from time to time, establish different performance
measurements and goals for any Unit and an appropriate incentive
structure to reflect such goals. It is intended that any such
adjustments will, to the extent practicable, be made before or early
in the applicable Year and communicated to Business Unit management so
that they can be considered in the making and execution of business
plans.
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9. Effective Date
9.1 This Plan, as amended and restated herein, shall be effective
beginning as of 1 January 1994.
10. Amendment and Termination
10.1 This Plan may be amended or terminated at any time at the sole
discretion of the Committee.
10 February 1994
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