Exhibit 10.1
THE INTERLAKE CORPORATION
1998 Senior Executive Incentive Program
Section 1. Purpose
l.l Purpose The purpose of the Senior Executive Incentive
Program ("the Program") is to promote improved performance in 1998 through
the provision of meaningful incentives for the achievement of specified
financial goals.
Section 2. Eligibility and Participation
2.l Eligibility Eligibility for participation in this Program
is limited to those Employees deemed to be, by virtue of the nature and scope
of their positions, most able to promote the achievement by the Company of
its financial objectives and its overall success.
2.2 Participation Participation in the Program will be
determined by the Board, based upon the recommendation of the Chief Executive
Officer and the Compensation Committee.
2.3 Award Opportunities. For each Participant, the Board will
designate, upon the recommendations of the Chief Executive Officer and the
Compensation Committee, the Threshold, Plan, Target and Stretch (for
operating unit participants only) goals for each relevant Performance
Measure, and the amount of Award payable to such Participant upon achievement
of such goals ("Award Opportunities").
2.4 Organizational Units. For each Participant the Board will
designate, upon the recommendations of the Chief Executive Officer and the
Compensation Committee, the Organizational Unit upon the performance of which
such Participant's Awards will be based (i.e., Corporate, Chem-tronics,
Inc., Hoeganaes Corporation or Interlake Material Handling, Inc.).
2.5 Changes In Participation During Year Contemporaneously with
the demotion or reassignment of a Participant, the Board or the Chief
Executive Officer may terminate a Participant's participation in this Program
without otherwise affecting the employment status of such Employee. The
Employee will be notified of such termination as soon as practicable
following such action. In the case of such a termination, any Award to which
the terminated Participant would have been entitled will be pro rated based
upon that portion of the Year during which he was a Participant, adjusted for
personal performance.
2.6 No Right to Participate No Participant or other Employee
at any time shall have a right to be selected for participation in this
Program, despite having been approved for participation in some other year,
nor any right to be selected for participation in any plan or program for any
other year, despite having been selected for participation in this Program.
Section 3. Award Determination
3.1 Performance Measures. Awards will be based on the
Performance Measures in the percentages indicated below.
Corporate Participants Weighting Factor
Corporate EBIT 70 %
Corporate ACWC/S 30 %
Total Corporate 100%
Participants in Organizational
Units Other Than Corporate Weighting Factor
Organizational Unit EBIT 56 %
Organizational Unit ACWC/S 24 %
Total Organizational Unit Portion 80%
Corporate EBIT 14 %
Corporate ACWC/S 6 %
Total Corporate Portion 20%
Total Organizational Unit 100%
3.2 Award Calculation. Each Participant's Award will equal the
sum of the amounts earned based on the Award Opportunities set for such
Participant in accordance with Section 2.3 for the relevant Performance
Measures set by the Board in accordance with Sections 2.3 and 3.1, with
interpolation between the Threshold, Plan, Target and Stretch goals in
determining the amount earned with respect to each Performance Measure. All
determinations of Awards by the Board will be conclusive, absent manifest
error.
3.3 EBIT Threshold. Notwithstanding any other provision of this
Section 3, a Participant may not, in the case of a Corporate Participant,
earn any Award, and in the case of any other Participant, earn any Award
based on the 80% Award Opportunity related to his or her Organizational Unit,
unless his or her Organizational Unit meets its EBIT Threshold. A
Participant in an Organizational Unit other than Corporate may not earn any
Award based on the 20% Award Opportunity related to Corporate performance
unless Corporate meets its EBIT Threshold.
3.4 Corporate Participants - No Default on Indebtedness. No
Corporate Participant may earn any Award if the Company shall, during the
course of the Year, default in the payment of principal or interest when due
under any note, debenture or other instrument evidencing borrowed money,
which default is not cured within the applicable cure period.
Section 4. Payment of Awards
4.1 Timing. Awards under the Plan will be paid as soon as
practicable following the end of the Year as the Board may determine.
4.2 Form of Payment. All Awards will be paid in cash.
4.3 Payment in the Event of Death. In the event of death, Awards
will be paid to the Participant's estate.
Section 5. Termination of Employment
5.l Voluntary Termination; Termination for Cause. In the event
a Participant voluntarily terminates employment, or is terminated for Cause,
all rights to Awards under this Program will be forfeited.
5.2 Other Terminations. In the event a Participant's employment
is terminated for any reason not covered by Section 5.1, including without
limitation by reason of death, total and permanent disability (as determined
by the Board of Directors) or retirement, or termination by the Company
other than for Cause, such Participant will be entitled to a pro rata portion
of any Award to which the Participant would have been entitled based upon
that portion of the Year during which he or she was a Participant.
Section 6. Rights of Participants
6.l Employment Nothing in this Program will 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.
6.2 Nontransferability No right or interest of any Participant
in this Program is assignable or transferable, nor may be made subject to any
lien, directly, by operation of law, or otherwise, including execution, levy,
garnishment, attachment, pledge, and bankruptcy.
6.3 Board Member Participants No member of the Board who also
is a Participant will vote as to any action taken by the Board with respect
to awards to be made to him under the Program or with respect to his
designation as a Participant.
Section 7. Administration
7.l Administration This Program will be administered 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 Program.
7.2 Disputes The determination of the Board as to any disputed
question arising under this Program, including questions of construction and
interpretation, will be final, binding, and conclusive upon all persons.
Section 8. Amendments
8.l 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 Program including final Awards;
provided, that no such modification or amendment may, without the consent of
a Participant, reduce the right of a Participant (or his successor as the
case may be) to a payment or distribution hereunder to which he would have
otherwise become entitled under this Program by more than 20%.
8.2 Discretion The Board may make such discretionary grants of
cash awards hereunder as it deems appropriate.
Section 9. General
9.l Governing Law The Program will be construed in accordance
with and governed by the laws of the State of Illinois.
9.2 Withholding Taxes The Company has the right to deduct from
all payments under this Program any Federal, state or local taxes required
by the law to be withheld with respect to such payments.
9.3 Supersession of Prior Program The Plan hereunder
supersedes in its entirety, the Annual Plan under the 1997 Senior Executive
Incentive Compensation Program of The Interlake Corporation, except as to
Annual Awards and related matters in respect of periods prior to 1998. The
Plan hereunder shall not be deemed to supersede the Long Term Plan under the
1996 Senior Executive Incentive Compensation Program.
Section 10. Definitions
10.l Definitions When capitalized and used in this Program, the
following terms have the following meanings:
(a) "Award" means the amount of incentive compensation earned by
a Participant under the Plan.
(b) "Plan" means the annual plan for the Year set forth as part
of this Program,.
(c) "Performance Measures" means for each Participant the
relevant performance measures under the Plan as set by the
Board in accordance with Sections 2.3 and 3.1.
(d) "Average Controllable Working Capital to Sales Ratio"
("ACWC/S") means 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.
(e) "Award Opportunities" has the meaning ascribed to it by
Section 2.3.
(f) "Board" means the Board of Directors of The Interlake
Corporation.
(g) "Cause" means "Cause" as defined in the Severance Pay
Agreements.
(h) "Company" means The Interlake Corporation.
(i) "Compensation Committee" means the Management Development
and Compensation Committee of the Board of Directors of The
Interlake Corporation.
(j) "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.
(k) "EBIT" for any Organizational Unit means such Organizational
Unit's earnings before interest, taxes, minority interest and
extraordinary items.
(l) "Employee" means a regular, active, full-time salaried
employee of the Company who is in a position meeting the
defined eligibility criteria for participation set forth in
Section 3.1.
(m) "Organizational Unit" means a Participant's Organizational
Unit as designated by the Board as contemplated by Section
2.4.
(n) "Participant" means an Employee who is approved by the Board
to participate in the Plan.
(o) "Performance Measures" means the performance measures adopted
by the Board as provided in Section 2.3, consistent with
Section 3.1.
(p) "Year" means the 1998 fiscal year of the Company.