EXHIBIT 10.16
REEBOK INTERNATIONAL LTD.
EXECUTIVE PERFORMANCE INCENTIVE PLAN
1. Purpose
The purpose of the Reebok International Ltd. Executive
Performance Incentive Plan (the "Plan") is to provide an
incentive for corporate officers and other key employees who are
in a position to contribute materially to the success of the
Company and its Subsidiaries and to recognize and reward those
officers and employees who make such contributions.
2. Definitions
The following terms will have the following meaning for
purposes of the Plan:
(a) "Award" means a cash and/or stock bonus paid in
accordance with Section 4.
(b) "Board" means the Board of Directors of the Company.
(c) "Code" means the Internal Revenue Code of 1986, as
amended.
(d) "Committee" means the Compensation Committee of the
Board.
(e) "Company" means Reebok International Ltd.
(f) "Participant" means a corporate officer or other key
employee of the Company or a Subsidiary selected by the Committee
to participate in the Plan.
(g) "Performance Criteria" means the following measures of
performance:
- net income (before or after taxes);
- operating income;
- revenue;
- advance orders or bookings;
- expenses;
- return on sales;
- gross or net margin;
- cash flow;
- earnings per share;
- return on assets;
- return on equity;
- total shareholder return;
- market share;
- inventory turnover; and
- stock price.
A Performance Criterion may be applied by the Committee as a
measure of the performance of any, all, or any combination
of the following: the Company, a Subsidiary, a division,
group or other unit of the Company or a Subsidiary, or a
particular product category or categories of the Company or
a Subsidiary.
(h) "Performance Goal(s)" means the goal or goals
established for a Participant by the Committee in accordance with
Section 4(a).
(i) "Subsidiary" means any corporation in which the
Company, directly or indirectly, controls 50 percent or more of
the total combined voting power of all classes of stock.
(j) "Target Award" means the amount of the target award
established for each Participant by the Committee in accordance
with Section 4(a).
3. Term
The Plan shall be effective as of January 1, 1996, subject
to shareholder approval, and shall continue until December 31,
2000 unless reapproved by the Company's shareholders or unless
amended or terminated pursuant to Section 9 hereof.
4. Awards
(a) Within 90 days after the beginning of each fiscal year
of the Company (a "year"), the Committee will select Participants
for the year and establish in writing (i) objective Performance
Goal or Goals for each Participant for that year based on one or
more of the Performance Criteria, (ii) the specific Award amounts
that will be paid to each Participant if the Performance Goal or
Goals are achieved (the "Target Award") and (iii) the method by
which such amounts will be calculated. At the Committee's
option, the Committee may determine that all or any part of any
Award may be paid in shares of Common Stock of the Company having
an equivalent value to the amount of the Award to be paid in
stock, which shares shall be subject to such restrictions as the
Committee may determine. If the Committee determines that any
part of the Award shall be paid in stock, it shall also determine
the basis on which the Award will be converted into stock.
(b) The maximum Award that may be paid to any Participant
under the Plan for any year will be the lesser of 300% of such
Participant's annual base salary in effect during such year or $3
million.
(c) The Committee may reduce or eliminate, but may not
increase, any Award calculated under the methodology established
in accordance with paragraph (a) in order to reflect additional
considerations relating to performance.
(d) As soon as practicable following each year while the
Plan is in effect, the Committee shall determine and certify, for
each Participant, the extent to which the Performance Goal or
Goals have been met and the amount of the Award, if any, to be
made. Awards will be paid to the Participants in cash and/or
stock, as applicable, following such certification by the
Committee and no later than ninety (90) days following the close
of the year with respect to which the Awards are made.
(e) The Company shall withhold from any Award made
hereunder any amount required to be withheld for taxes.
5. Termination of Employment
A Participant shall have no right to an Award under the Plan
for any year in which the Participant is not actively employed by
the Company or its Subsidiaries on December 31 of such year. In
establishing Target Awards, the Committee may also provide that
in the event a Participant is not employed by the Company or its
Subsidiaries on the date on which the Award is paid, Participants
may forfeit his or her right to the Award paid under the Plan.
6. Administration
The Plan will be administered by the Committee. The
Committee will have the authority to interpret the Plan, to
prescribe rules relating to the Plan and to make all
determinations necessary or advisable in administering the Plan.
Decisions of the Committee with respect to the Plan will be final
and conclusive.
7. Unfunded Plan
Awards under the Plan will be paid from the general assets
of the Company, and the rights of Participants under the Plan
will be only those of general unsecured creditors of the Company.
8. Code Section 162(m)
It is the intent of the Company that all Awards under the
Plan qualify as performance-based compensation for purposes of
Code Section 162(m)(4)(C) so that the Company's tax deduction for
such Awards is not disallowed in whole or in part under Code
Section 162(m). The Plan is to be applied and interpreted
accordingly.
9. Amendment or Termination of the Plan
The Committee may from time to time suspend, revise, amend
or terminate the Plan; provided, that any such amendment or
revision which requires approval of the Company's shareholders in
order to maintain the qualification of Awards as performance-
based compensation pursuant to Code Section 162(m)(4)(C) shall
not be made without such approval.
10. Applicable Law
The Plan will be governed by the laws of The Commonwealth of
Massachusetts.
11. No Rights to Employment
Nothing contained in the Plan shall give any person the
right to be retained in the employment of the Company or any of
its Subsidiaries. The Company reserves the right to terminate
any Participant at any time for any reason notwithstanding the
existence of the Plan.
12. No Assignment
Except as otherwise required by applicable law, any
interest, benefit, payment, claim or right of any Participant
under the Plan shall not be sold, transferred, assigned, pledged,
encumbered or hypothecated by any Participant and shall not be
subject in any manner to any claims of any creditor of any
Participant or beneficiary, and any attempt to take any such
action shall be null and void. During the lifetime of any
Participant, payment of an Award shall only be made to such
Participant. Notwithstanding the foregoing, the Committee may
establish such procedures as it deems necessary for a Participant
to designate a beneficiary to whom any amounts would be payable
in the event of any Participant's death.
13. Stockholder Approval
This Plan shall be subject to approval by a vote of the
stockholders of the Company at the 1996 Annual Meeting, and such
stockholder approval shall be a condition to the right of any
Participant to receive any benefits hereunder.