Exhibit 10.1
THE INTERLAKE CORPORATION
1994 Executive Incentive Compensation Plan
Section 1. Establishment and Purpose
1.1 Purpose The purpose of this Executive Incentive
Compensation Plan ("Plan") is to provide meaningful incentives
for the achievement of annually specified Company goals.
Section 2. Definitions
2.1 Definitions The following terms shall have the
meanings set forth below, unless specifically defined otherwise.
When the defined meaning is intended, the term is capitalized.
(a)"Average Controllable Working Capital to Sales
Ratio" "ACWC/S") shall mean the ratio of the twelve-month average
of Controllable Working Capital (FIFO based) to the total annual
net sales of the Organizational Unit, except that Corporate
Average Controllable Working Capital to Sales Ratio is the ratio
of the twelve-month average Controllable Working Capital (FIFO
based) of all Organizational Units (other than Corporate) to the
total annual net sales of all such Organizational Units.
(b)"Award" shall mean the amount of incentive
compensation earned by a Participant.
(c)"Base Salary" shall mean the higher of 1) the total
of the regular monthly base salary earned for each calendar month
during the Year or 2) the annualized base salary rate prescribed
by the 25th percentile of competitive practice in the Hay Survey
of Industrial Companies.
(d)"Board" shall mean the Board of Directors or the
Executive Committee of The Interlake Corporation.
(e)"Company" shall mean The Interlake Corporation, a
Delaware corporation, and any of its Organizational Units that
are designated by the Board from time to time to participate
under this Plan. Initially, the Organizational Units are as
defined in Section 3.2.
(f)"Compensation Committee" shall mean the
Compensation Committee of the Board of Directors of The Interlake
Corporation.
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(g)"Controllable Working Capital (FIFO based)" shall
be the net of each Organizational Unit's current assets and
current liabilities (other than cash, interest-bearing and
intercompany items and income tax related accounts) invested in
each such Organizational Unit, at the end of each four or
five-week period in each Year. It includes accounts receivable,
inventories (before any reserves for LIFO), prepayments and other
current assets, minus accounts payable, accrued liabilities,
accrued salaries and wages, and taxes other than income. Each of
such current assets and current liabilities is subject to
adjustment to eliminate items which, in the opinion of the Board,
are unusual in nature, amount or both. Corporate Controllable
Working Capital is the sum of the Controllable Working Capital of
all Organizational Units other than Corporate.
(h)"Earnings Before Interest and Taxes" or "EBIT"
shall mean net sales of continuing operations of each
Organizational Unit less cost of products sold, less selling and
administrative expenses (which shall not include any items of
expenses classified by the Corporation's Chief Financial Officer
as Corporate expenses, including provisions made for goodwill
associated with the acquisition of Dexion Group plc,
Chem-tronics, Inc., Power Industries, Ltd. and InterPower
Packaging Corporation, nor any revenue or expense from
intercompany transactions) adjusted so as to exclude items of
revenue and expenses which, in the opinion of the Board, are
unusual in nature, amount or both.
(i)"EBIT Minimum" shall mean the minimum level of
Earnings Before Interest and Taxes that must be achieved before
an Award for ACWC/S performance measurement can be earned.
(j)"Employee" shall mean a regular, active, full-time
salaried Employee of the Company who is in a position meeting the
defined eligibility criteria for participation in the Plan.
(k)"Incentive Group" shall mean any number of
designated Participant groupings approved by the Board, for which
a maximum incentive Award opportunity is specified.
(l)"Market Value Per Share" shall mean, the average of
the high and the low price of the Stock on the last trading date
of the calendar year (or, if there are no sales on that date, the
last preceding date on which there was a sale) on the New York
Stock Exchange Composite Transactions as reported by The Wall
Street Journal, corrected for reporting errors.
(m)"Participant" shall mean an Employee who is
approved by the Board to participate in the Plan.
(n)"Stock" shall mean common stock of The Interlake
Corporation.
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(o)"Year" shall mean the 1994 fiscal year of The
Interlake Corporation.
Section 3. Eligibility and Participation
3.1 Eligibility Eligibility for participation in this
Incentive Plan shall be limited to those key Employees who, by
the nature and scope of their positions, regularly and directly
contribute to the achievement of financial objectives which
impact the overall results or success of the Company.
3.2 Participation Participation in the Plan shall be
determined based upon the recommendation of the Chief Executive
Officer, the Compensation Committee of the Board of Directors and
the approval of the Board. Participants will be assigned to one
of the following Incentive Groups within an Organizational Unit
which specifies the maximum Award (as a percent of Base Salary)
that may be earned:
Incentive Maximum Award
Group As A % of Base Salary
CEO 100.0%
A 70.0%
B 60.0%
C 50.0%
D 40.0%
E 30.0%
F 20.0%
The Board approves the participation of a Participant in one of
the following Organizational Units:
Chem-tronics, Inc.
Dexion Group (HQ)
Hoeganaes Corporation
The Interlake Companies, Inc.
Material Handling Division (a)
Material Hdlg Division-North American Operations (b)
The Interlake Corporation (General Mgmt & Corporate) (c)
Interlake Packaging Corporation (d)
(a)Includes both the domestic operations of the Material
Handling Division of The Interlake Companies, Inc., the Redirack
Interlake Storage Products Division of Acme Strapping, Inc., and
all subsidiaries of The Interlake Corporation under the
operational control of the Material Handling Division of The
Interlake Companies, Inc.
(b)Includes both the U.S domestic operations of the Material
Handling Division of The Interlake Companies, Inc., and the
Redirack Interlake Storage Products Division of Acme Strapping,
Inc.
(c)Includes all subsidiaries.
(d)Includes all subsidiaries of The Interlake Corporation
which are under the operational control of Interlake Packaging
Corporation.
Employees approved for participation shall be notified of their
Incentive Group and Organizational Unit designation as soon after
approval as is practicable.
3.3 New Participants The Board or the Chief Executive
Officer may designate an Employee a Participant as a result of
promotion, reassignment or contemporaneously with becoming an
Employee.
3.4 Changes In Participation During Year
Contemporaneously with the promotion, demotion or reassignment of
a Participant, the Board or the Chief Executive Officer may make
one or more of the following changes:
(a) Change the Incentive Group or Organizational Unit to
which the Participant had heretofore been assigned. A
Participant who is redesignated from one Incentive Group to
another (e.g., Group C to Group B), or from one Organizational
Unit to another, during a performance period, will receive an
Award based on the Participant's Base Salary during the periods
of participation in each applicable Incentive Group and/or
Organizational Unit during the performance periods.
(b) Terminate a Participant's participation in this
Incentive Plan for the remainder of the Year without otherwise
affecting the employment status of such Employee. The Employee
shall be notified of such termination as soon as practicable
following such action. Said Participant's Award for the Year
shall be based upon the Participant's Base Salary during that
portion of the Year during which he was a Participant, adjusted
for personal performance.
3.5 No Right to Participate No Participant or other
Employee at any time shall have a right to be selected for
participation in this Plan for this Year, despite having been
approved for participation in some other year, nor any right to
be selected for participation in any plan for any other year,
despite having been selected for participation in this Plan for
this Year.
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Section 4. Award Determination
4.1 Establishing Participation Levels The initial
Participants for this Plan for this Year are set forth in
Schedule B.
4.2 Performance Criteria for Corporate and Organizational
Units Performance under the Plan shall be evaluated in terms of
Earnings Before Interest and Taxes and Average Controllable
Working Capital to Sales Ratio relative to Plan for the Year.
The performance measurements are defined in Section 2.1.
4.3 Thresholds An Award for ACWC/S performance shall not
be earned by an Organizational Unit Participant if the EBIT
Minimum (See Section 2.1[i]) for his Organizational Unit is not
achieved.
An Award for ACWC/S performance shall not be earned by a
Corporate Participant if the Corporate EBIT Minimum is not
achieved. Corporate EBIT minimum is 89.39% of the Corporate EBIT
Plan. The 1994 Corporate EBIT Plan is the sum of the Plan EBITs
for the organizational units (other than Corporate), less
Corporate expense. An Award shall not be earned by any
elected officers of The Interlake Corporation, other than
assistant officers, if The Interlake Corporation shall, during
the Year, default in the payment of principal or interest when
due under any note, debenture or other instrument evidencing
borrowed money.
4.4 Performance Measurement Objectives Provided that the
Organizational Unit to which a participant is assigned meets or
exceeds the applicable threshold described in the preceding
subparagraph as it applies to ACWC/S performance, a Participant's
Award for the Year, before adjustment for personal performance,
will have two components: one based upon EBIT performance for
his Organizational Unit and the other based upon the Average
Controllable Working Capital to Sales Ratio ("ACWC/S")
performance for his Organizational Unit, expressed as a
percentage. For each performance measurement, the Award
percentage earned for a given level of performance shall be
adjusted for the weight of the performance measurement.
4.5 Performance Measurement Weighting The EBIT weighting
percentage under the Plan shall be seventy (70) and the ACWC/S
weighting percentage shall be thirty (30).
4.6 Award Calculation An Award shall be calculated as
follows: The bonus factor (percentage of maximum Award earned)
for each performance measurement's actual achievement shall be
multiplied by that performance measurement's weighting factor.
The sum of the individual products shall be the total bonus
factor. The total bonus factor shall be multiplied by a
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participant's maximum Award opportunity. That product shall be
multiplied by the participant's Base Salary to determine the
amount of the Award.
EXAMPLE
EBIT ACWC/S
($ in 000s)
1994 Plan Objective $50,341 14.65%
Actual Performance $52,273 (103.84%) 14.50% (98.99%)
Percentage of Maximum
Award Earned 60.0 70.0
Performance Measurement
Weight .7 .3
Adjusted Percentage of
Maximum Award Earned 42.0 21.0
Total Award Earned As A
Percentage Of Maximum
Award 42.0 + 21.0 = 63.0
Participant's Award = % of Maximum Award Earned X
Participant's Maximum Award Percentage X Participant's Base
Salary.
Note: This example assumes the EBIT Minimum was achieved.
4.7 Maximum Awards No Award, prior to adjustment for
personal performance, may exceed the Participant's maximum Award
opportunity. However, any Award may be adjusted based on
personal performance (See Section 4.9).
4.8 1994 Performance Objectives The Plan objectives for
each Organizational Unit, defined in Section 3.2, are contained
in Attachment I to this Plan.
4.9 Individual Performance Ratings Adjustments to the
Participant's incentive Award may be made based upon the
Participant's individual performance during the Plan Year as
follows:
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(a) CEO Incentive Classification The Award of the CEO is
subject to adjustment based on the discretion of the Board of
Directors.
(b) Incentive Group A, B, C, D, E and F Participants'
performance is evaluated each year by management on a scale of 1
to 3.
- 1 Rating results in a Participant's Award being
reduced by 15%. This means that the Participant is either very
new in his position or did not meet expectations or objectives
satisfactorily.
- 2 Rating results in a Participant receiving 100%
of his/her Award. This means that a Participant has met
expectations and objectives satisfactorily.
- 3 Rating results in a Participant's Award being
increased by 25%. This means that a Participant has exceeded the
expectations and objectives for his position, or has completed a
particular assignment or objective in an unusual or exemplary
manner.
All ratings of "1" or "3" will be substantiated in writing with
an explanation by the executive recommending the determination.
Ratings will then be subject to the review and approval of the
Chief Executive Officer and approval of the Board.
4.10 Award Determinations Following the end of the Plan
Year, Awards shall be computed (See Section 4.1) for each
Participant based upon performance of his Organizational Unit
(including Corporate) and adjusted for personal performance. The
Board may adjust Awards payable to Participants in any
Organizational Unit if it determines that changes in business
conditions or other circumstances have materially and unduly
influenced such Organizational Unit's ability to meet the
performance goals. All Awards, when approved by the Board, shall
be conclusive for all purposes.
Section 5. Payment of Awards
5.1 Form and Timing of Payment Payment of Awards shall
be made in cash or cash and Stock, net of applicable withholding
taxes, as soon as practicable following the end of the Year as
the Board may determine. The maximum amount of an Award payable
in Stock shall be fifty percent (50%) of the Award.
5.2 Payment in the Event of Death In the event of
death, a Participant's designated Award shall be paid to the
Participant's estate.
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Section 6. Termination of Employment
6.1 Termination of Employment Due to Death, Disability, or
Retirement In the event a Participant's employment is
terminated by reason of death, total and permanent disability (as
determined by the Board), or retirement, the Award shall be
determined by multiplying the Participant's Base Salary, prior to
termination, by the appropriate final Award percentage, adjusted
for personal performance.
6.2 Voluntary Termination or Termination for Cause In
the event a Participant voluntarily terminates employment, or is
terminated for cause (of which the Board shall be the sole
judge), all rights to an Award for the Plan Year shall be
forfeited.
6.3 Other Termination In the event a Participant's
employment is terminated for reasons other than those described
in Sections 6.1 and 6.2, an Award shall be paid. Such Award
shall be based on the Participant's Base Salary, prior to
termination, multiplied by the appropriate final Award
percentage, adjusted for personal performance.
Section 7. Rights of Participants
7.1 Employment Nothing in this Plan shall interfere
with or limit in any way the right of the Company to terminate
any Participant's employment at any time, nor confer upon any
Participant any right to continue in the employ of the Company.
7.2 Nontransferability No right or interest of any
Participant in this Plan shall be assignable or transferable, or
subject to any lien, directly, by operation of law, or otherwise,
including execution, levy, garnishment, attachment, pledge, and
bankruptcy.
7.3 Board Member Participants No member of the Board
who also is a Participant shall vote as to any action taken by
the Board with respect to Awards to be made to him under the Plan
or with respect to his designation as a Participant.
Section 8. Administration
8.1 Administration This Plan shall be administered by
the Vice President-Human Resources of The Interlake Corporation
in accordance with its terms and such rules, if any, as may be
established from time to time by the Board for the administration
of this Plan.
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8.2 Disputes The determination of the Board as to any
disputed question arising under this Plan, including questions of
construction and interpretation, shall be final, binding, and
conclusive upon all persons.
Section 9. Amendments
9.1 Amendments The Board, in its absolute discretion,
without notice, at any time and from time to time, may modify or
amend, in whole or in part, any or all of the provisions of this
Plan, or suspend or terminate it entirely; provided, that no such
modification, amendment, suspension, or termination, may without
the consent of a Participant reduce the right of a Participant
(or his Beneficiary as the case may be) to a payment or
distribution hereunder to which he has otherwise become entitled
with respect to the Plan Year.
Section 10. General
10.1 Governing Law The Plan shall be construed in
accordance with and governed by the laws of the State of
Illinois.
10.2 Withholding Taxes The Company shall have the right
to deduct from all payments under this Plan any Federal, state or
local taxes required by the law to be withheld with respect to
such payments.
10.3 Supersession of Prior Plan This Plan is intended to
be operative for the 1994 Plan Year. Accordingly, this Plan
shall supersede in its entirety the 1993 Executive Incentive
Compensation Plan of The Interlake Corporation, as heretofore
restated, except as to Executive Incentive Compensation Awards
and related matters in respect of periods prior to the 1994 Plan
Year.