Exhibit 10.11
COMMSCOPE, INC.
ANNUAL INCENTIVE PLAN
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(as amended through June 9, 1999)
1. Purpose
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The purpose of the Annual Incentive Plan is to enhance CommScope,
Inc.'s ability to attract, motivate, reward and retain employees, to
strengthen their commitment to the success of the Company and to align
their interests with those of the Company's stockholders by providing
additional compensation to designated employees of the Company based on the
achievement of performance objectives. To this end, the Annual Incentive
Plan provides a means of annually rewarding participants primarily based on
the performance of the Company and its Operating Units and secondarily
based on the achievement of personal performance objectives. The adoption
of this Plan as it relates to the CEO is subject to the approval of the
stockholders of the Company.
2. Definitions
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(a) "Award" shall mean the incentive award earned by a
Participant under the Plan for any Performance Period.
(b) "Base Salary" shall mean the Participant's annual base salary
actually paid by the Company and received by the Participant during the
applicable Performance Period. Annual base salary does not include (i)
Awards under the Plan, (ii) long-term incentive awards, (iii) signing
bonuses or any similar bonuses, (iv) cash payments received pursuant to the
Company's Profit Sharing and Savings Plan, (v) imputed income from such
programs as executive life insurance, or (vi) nonrecurring earnings such as
moving expenses, and is based on salary earnings before reductions for such
items as contributions under Section 401(k) of the Internal Revenue Code of
1986, as amended.
(c) "Beneficial Owner", "Beneficially Owned" and "Beneficially
Owning" shall have the meanings applicable under Rule 13d-3 promulgated
under the 1934 Act.
(d) "Board" shall mean the Board of Directors of the Company.
(e) "CEO" shall mean the Chief Executive Officer of the Company.
(f) "Change of Control" shall mean any of the following:
(i) the acquisition by any Person of Beneficial Ownership of
Voting Securities which, when added to the Voting Securities then
Beneficially Owned by such Person, would result in such Person Beneficially
Owning 33% or more of the combined Voting Power of the Company's then
outstanding Voting Securities; provided, however, that for purposes of this
paragraph (i), a Person shall not be deemed to have made an acquisition of
Voting Securities if such Person: (1) acquires Voting Securities as a
result of a stock split, stock dividend or other corporate restructuring in
which all stockholders of the class of such Voting Securities are treated
on a pro rata basis; (2) acquires the Voting Securities directly from the
Company; (3) becomes the Beneficial Owner of 33% or more of the combined
Voting Power of the Company's then outstanding Voting Securities solely as
a result of the acquisition of Voting Securities by the Company or any
Subsidiary which, by reducing the number of Voting Securities outstanding,
increases the proportional number of shares Beneficially Owned by such
Person, provided that if (x) a Person would own at least such percentage as
a result of the acquisition by the Company or any Subsidiary and (y) after
such acquisition by the Company or any Subsidiary, such Person acquires
Voting Securities, then an acquisition of Voting Securities shall have
occurred; (4) is the Company or any corporation or other Person of which a
majority of its voting power or its equity securities or equity interest is
owned directly or indirectly by the Company (a "Controlled Entity"); or (5)
acquires Voting Securities in connection with a "Non-Control Transaction"
(as defined in paragraph (iii) below); or
(ii) the individuals who, as of the Effective Date, are
members of the Board (the "Incumbent Board") cease for any reason to
constitute at least two-thirds of the Board; provided, however, that if
either the election of any new director or the nomination for election of
any new director by the Company's stockholders was approved by a vote of at
least two-thirds of the Incumbent Board prior to such election or
nomination, such new director shall be considered as a member of the
Incumbent Board; provided further, however, that no individual shall be
considered a member of the Incumbent Board if such individual initially
assumed office as a result of either an actual or threatened "Election
Contest" (as described in Rule l4a-11 promulgated under the 1934 Act) or
other actual or threatened solicitation of proxies or consents by or on
behalf of a Person other than the Board (a "Proxy Contest") including by
reason of any agreement intended to avoid or settle any Election Contest or
Proxy Contest; or
(iii) approval by stockholders of the Company of:
(A) a merger, consolidation or reorganization involving
the Company (a "Business Combination"), unless
(1) the stockholders of the Company, immediately
before the Business Combination, own, directly or indirectly immediately
following the Business Combination, at least a majority of the combined
voting power of the outstanding voting securities of the corporation
resulting from the Business Combination (the "Surviving Corporation") in
substantially the same proportion as their ownership of the Voting
Securities immediately before the Business Combination, and
(2) the individuals who were members of the
Incumbent Board immediately prior to the execution of the agreement
providing for the Business Combination constitute at least a majority of
the members of the Board of Directors of the Surviving Corporation, and
(3) no Person (other than the Company or any
Controlled Entity, a trustee or other fiduciary holding securities under
one or more employee benefit plans or arrangements (or any trust forming a
part thereof) maintained by the Company, the Surviving Corporation or any
Controlled Entity, or any Person who, immediately prior to the Business
Combination, had Beneficial Ownership of 33% or more of the then
outstanding Voting Securities) has Beneficial Ownership of 33% or more of
the combined voting power of the Surviving Corporation's then outstanding
voting securities (a Business Combination satisfying the conditions of
clauses (1), (2) and (3) of this subparagraph (A) shall be referred to as a
"Non-Control Transaction");
(B) a complete liquidation or dissolution of the
Company; or
(C) the sale or other disposition of all or
substantially all of the assets of the Company (other than a transfer to a
Controlled Entity).
Notwithstanding the foregoing, a Change of Control shall not be
deemed to occur solely because 33% or more of the then outstanding Voting
Securities is Beneficially Owned by (x) a trustee or other fiduciary
holding securities under one or more employee benefit plans or arrangements
(or any trust forming a part thereof) maintained by the Company or any
Controlled Entity or (y) any corporation which, immediately prior to its
acquisition of such interest, is owned directly or indirectly by the
stockholders of the Company in the same proportion as their ownership of
stock in the Company immediately prior to such acquisition.
(g) "Code" shall mean the Internal Revenue Code of 1986, as
amended.
(h) "Committee" shall mean the Compensation Committee of the
Board.
(i) "Company" shall mean CommScope, Inc., its successors and
assigns.
(j) "Disability" shall mean permanent disability, as provided in
the Company's long-term disability plan.
(k) "Effective Date" shall mean the date that the Plan is adopted
by the Board.
(l) "Employee" shall mean any person (including an officer)
employed by the Company or any of its subsidiaries on a full-time salaried
basis.
(m) "Financial Target", for any Performance Period, shall mean
the one or more of the financial performance goals of the Company, or an
Operating Unit, if applicable, as determined in accordance with Section 5.
Financial Targets may be expressed in terms of (i) earnings per share, (ii)
operating income, (iii) return on equity or assets, (iv) cash flow, (v)
EBITDA or (vi) any combination of the foregoing. Financial Targets may be
expressed as a combination of Company and/or Operating Unit performance
goals and may be absolute or relative (to prior performance or to the
performance of one or more other entities or external indices) and may be
expressed in terms of a progression within a specified range.
(n) "Financial Target Award Earned", for any Performance Period,
shall mean the percentage of Target Awards earned based on the Company's
and/or, if applicable, an Operating Unit's achievement of Financial
Target(s) for that Performance Period.
(o) "1934 Act" shall mean the Securities Exchange Act of 1934, as
amended.
(p) "Operating Unit", for any Performance Period, shall mean a
division, Subsidiary, group, product line or product line grouping for
which an income statement reflecting sales and operating income is
produced.
(q) "Participant", for any Performance Period, shall mean an
Employee selected to participate in the Plan for such Performance Period.
(r) "Performance-Based Compensation" shall mean any Award that is
intended to constitute "performance based compensation" within the meaning
of Section 162(m)(4)(C) of the Code and the regulations promulgated
thereunder.
(s) "Performance Period" shall mean the fiscal year of the
Company.
(t) "Person" shall mean a person within the meaning of Sections
13(d) and 14(d) of the 1934 Act.
(u) "Personal Performance Percentage", with respect to
Participants (other than the CEO) for any Performance Period, shall mean
the percentage based on the Participant's personal performance, as
determined in accordance with Section 5(e) of the Plan.
(v) "Plan" shall mean this CommScope, Inc. Annual Incentive Plan,
as from time to time amended and in effect.
(w) "Retirement" shall mean retirement at or after age 65 or
early retirement with the prior written approval of the Company.
(x) "Schedules" for any Performance Period, shall mean the
schedules described in Section 5(a) of the Plan.
(y) "Subsidiary" shall mean a corporation as defined in Section
424(f) of the Internal Revenue Code of 1986, as amended, with the Company
being treated as the employer corporation for purposes of this definition.
(z) "Target Award", for any Participant with respect to any
Performance Period, shall mean the Participant's Base Salary multiplied by
his or her Target Award Percentage.
(aa) "Target Award Percentage" for any Participant with respect
to any Performance Period, shall mean the percentage of the Participant's
Base Salary that the Participant would earn as an Award for that
Performance Period if each of the Financial Target Award Earned and
Personal Performance Percentage (if applicable) for that Performance Period
is 100%, and shall be determined by the Committee with respect to
Participants who are officers and the CEO with respect to all other
Participants, based on the Participant's responsibility level or the
position or positions held during the Performance Period; provided,
however, that if any Participant held more than one position during the
Performance Period, then the Committee or CEO, as applicable, may designate
different Target Award Percentages with respect to each position and the
Award will be pro-rated to reflect the number of days during which such
Participant had each Target Award Percentage.
(bb) "Voting Power" shall mean the combined voting power of the
then outstanding Voting Securities.
(cc) "Voting Securities" shall mean, with respect to the Company
or any Subsidiary, any securities issued by the Company or such Subsidiary,
respectively, which generally entitle the holder thereof to vote for the
election of directors of the Company or such Subsidiary, respectively.
3. Eligibility
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Generally, all Employees are eligible to participate in the Plan
for any Performance Period. However, participation may be limited to those
Employees who, because of their significant impact on the current and
future success of the Company, the Committee or CEO selects, in accordance
with Section 5 of this Plan, to participate in the Plan for that
Performance Period. Notwithstanding the foregoing, the CEO shall
participate in the Plan in every Performance Period.
To be eligible to participate in the Plan in any Performance
Period an Employee shall have had at least three months active tenure
during such Performance Period and be actively employed by the Company on
the Award payment date. The CEO may approve, for Participants other than
the CEO and in accordance with Sections 7 and 8 of this Plan, exceptions
for special circumstances.
If an Employee becomes a Participant during a Performance Period,
such Participant's Award will be pro-rated based on the number of days that
he or she is a Participant, unless, with respect to Employees other than
the CEO, the Committee otherwise determines.
4. Administration
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The administration of the Plan shall be consistent with the
purpose and the terms of the Plan. The Plan shall be administered by the
Committee with respect to Participants who are officers and by the CEO with
respect to all other Participants. Each member of the Committee shall be an
"outside director" within the meaning of Treasury Regulations promulgated
under Section 162(m) of the Code. The Committee and the CEO, as the case
may be, shall have full authority to establish the rules and regulations
relating to the Plan, to interpret the Plan and those rules and
regulations, to select Participants in the Plan, to determine the Company's
and, if applicable, each Operating Unit's Financial Target(s) and each
Participant's Target Award Percentage for each Performance Period, to
approve all the Awards, to decide the facts in any case arising under the
Plan and to make all other determinations and to take all other actions
necessary or appropriate for the proper administration of the Plan,
including the delegation of such authority or power, where appropriate;
provided, however, that the Committee shall not be authorized to increase
the amount of the Award payable to the CEO that would otherwise be payable
pursuant to the terms of the Plan but may in its sole discretion decrease
the amount of an Award that would otherwise be payable to the CEO pursuant
to the terms of the Plan, and provided, further, that the Committee shall
only exercise such discretion over the Plan and the Awards granted
thereunder, to the extent permitted under Section 162(m) of the Code and
the regulations thereunder without adversely affecting the treatment of the
CEO's Award as Performance-Based Compensation.
The Committee's and the CEO's administration of the Plan,
including all such rules and regulations, interpretations, selections,
determinations, approvals, decisions, delegations, amendments, terminations
and other actions, shall be final and binding on the Company, the
Subsidiaries, their respective stockholders and all employees of the
Company and the Subsidiaries, including the Participants and their
respective beneficiaries.
5. Determination of Awards
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(a) Prior to, or as soon as practicable following, the
commencement of each Performance Period, the Committee with respect to
officers and the CEO with respect to all other Employees shall determine
the Employees who shall be Participants during that Performance Period and
determine each Participant's Target Award Percentage. The Committee shall
also establish the Financial Target(s) for that Performance Period (which
shall be established in writing by the earlier of (1) the date on which
one-quarter of the Performance Period has elapsed or (2) the date which is
90 days after the commencement of the Performance Period, and in any event
while the performance relating to the Financial Target(s) remains
substantially uncertain). The Participants, each Participant's Target Award
Percentage and the Financial Targets for each Performance Period shall be
set forth on a Schedule. The Company shall notify each Participant of his
or her Target Award Percentage and the applicable Financial Targets for the
Performance Period.
(b) Generally, a Participant earns an Award for a Performance
Period based on the Company's and/or his or her Operating Unit's
achievement of applicable Financial Target(s). In addition, the Award for
any Participant (other than the CEO) may be adjusted based on the
Participant's Personal Performance Percentage. The Committee may determine
that different Financial Targets are applicable to different Participants,
groups of Participants, Operating Units or groups of Operating Units with
respect to a specific Performance Period. The Committee may also establish
minimum threshold of Company or Operating Unit performance which must be
achieved in order for any portion of an Award to be earned for that
Performance Period, provided such threshold is established by the earlier
of (1) the date on which one-quarter of the Performance Period has elapsed
or (2) the date which is 90 days after the commencement of the Performance
Period, and in any event while the performance relating to the Financial
Target(s) remains substantially uncertain. Notwithstanding the foregoing,
if in any Performance Period a minimum threshold of Company and/or
Operating Unit performance is established and the Company's and/or any
Operating Unit's actual performance as measured against that minimum
threshold would otherwise preclude the earning of Awards for that
Performance Period, the Committee may upon consideration of the events of
the Performance Period, determine that Awards may be earned by Participants
(other than the CEO) for that Performance Period.
(c) The maximum Award any Participant (other than the CEO) may
receive for any Performance Period is 150% of the Participant's Target
Award for that Performance Period. The maximum award the CEO may receive
for any Performance Period is $1.5 million.
(d) Awards shall be earned by Participants in accordance with the
following formula:
Personal
Performance
Target Financial Percentage
Award x Base x Target x (other
Percentage Salary Award Earned than the CEO)
Where:
o Target Award Percentage is as defined in Section 2(aa) of
the Plan.
o Base Salary is as defined in Section 2(b) of the Plan.
o Financial Target Award Earned is as defined in Section 2(n)
of the Plan and is determined based on the Company's and/or,
if applicable an Operating Unit's performance as measured
against the applicable Financial Target(s).
o Personal Performance Percentage ranges from 0 to 120 percent
and is determined, in accordance with subsection (e) below.
(e) Personal Performance Percentage. The CEO is not eligible
for an adjustment based on personal performance. Each other Participant's
performance shall be evaluated and a Personal Performance Percentage for
such Participant shall be recommended for approval by the CEO. The Personal
Performance Percentage may range from 0 to 120 percent to reflect the
Participant's personal performance during the Performance Period; provided,
however, that the application of this Section 5(f) shall not result in (i)
the Participant's Award exceeding 150% of his or her or Target Award for
the Performance Period; or (ii) an increase in the aggregate dollar amount
of all Awards earned by all Participants for that Performance Period.
6. Changes to the Target Award Percentage
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The Committee, with respect to Participants who are officers, and
the CEO, with respect to all other Participants, may at any time prior to
the final determination of Awards change the Target Award Percentage of any
Participant (other than the CEO) or assign a different Target Award
Percentage to a Participant (other than the CEO) to reflect any change in
the Participant's responsibility level or position during the course of the
Performance Period.
The Committee, with respect to Participants who are officers, and
the CEO, with respect to all other Participants, may at the time Financial
Target(s) are determined for a Performance Period, or at any time prior to
the final determination of Awards in respect of that Performance Period to
the extent permitted under Section 162(m) of the Code and the regulations
promulgated thereunder without adversely affecting the treatment of the
Award as Performance-Based Compensation, provide for the manner in which
performance will be measured against the Financial Target(s) (or to the
extent permitted under Section 162(m) of the Code and the regulations
promulgated thereunder without adversely affecting the treatment of an
Award as Performance-Based Compensation, may adjust the Financial
Target(s)) to reflect the impact of specified corporate transactions (such
as a stock-split or stock dividend), special charges, foreign currency
effects, accounting or tax law changes and other extraordinary or
nonrecurring events.
7. Payment of Awards
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As soon as practicable after the close of a Performance Period
and prior to the payment of any Award that is intended to constitute
Performance-Based Compensation, the Committee, with respect to Participants
who are officers, and the CEO, with respect to all other Participants,
shall review each Participant's Award and certify in writing that the
applicable Financial Targets have been satisfied. Subject to the provisions
of Section 8 of the Plan, each Award to the extent earned shall be paid in
a single lump sum cash payment, as soon as practicable following the
Performance Period, but in no event later than 120 days following the
Performance Period. The Committee shall certify in writing the amount of
the CEO's Award prior to payment thereof.
If a Change of Control occurs, the Company shall, within 60 days
thereafter, pay to each Participant in the Plan immediately prior to the
Change of Control (regardless of whether the Participant remains employed
after the Change of Control) an Award which is calculated assuming that all
performance percentages are 100 percent, and such Award shall be prorated
to the date of the Change of Control based on the number of days that have
elapsed during the Performance Period through the date of the Change of
Control.
8. Limitations on Rights to Payment of Awards
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No Participant shall have any right to receive payment of an
Award under the Plan for a Performance Period unless the Participant
remains in the employ of the Company through the payment date of the Award
for such Performance Period, except as provided in the last paragraph of
Section 7 of the Plan. However, if the Participant has active service with
the Company or the Subsidiary for at least three months during any
Performance Period, but, prior to payment of the Award for such Performance
Period, a Participant's employment with the Company terminates due to the
Participant's death, Disability or, except in the case of the CEO,
Retirement or such other special circumstances as determined by the CEO on
a case by case basis, the Participant (or, in the event of the
Participant's death, the Participant's estate, beneficiary or beneficiaries
as determined under Section 9 of the Plan) shall remain eligible to receive
a prorated portion of any earned Award, based on the number of days that
the Participant was actively employed and performed services during such
Performance Period.
9. Designation of Beneficiary
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A Participant may designate a beneficiary or beneficiaries who,
in the event of the Participant's death prior to full payment of any Award
hereunder, shall receive payment of any Award due under the Plan. Such
designation shall be made by the Participant on a form prescribed by the
Committee. The Participant may, at any time, change or revoke such
designation. A beneficiary designation, or revocation of a prior
beneficiary designation, will be effective only if it is made in writing on
a form provided by the Company, signed by the Participant and received by
the Secretary of the Company. If the Participant does not designate a
beneficiary or the beneficiary dies prior to receiving any payment of an
Award, Awards payable under the Plan shall be paid to the Participant's
estate.
10. Amendments
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The Committee may at any time amend (in whole or in part) this
Plan. No such amendment which adversely affects any Participant's rights to
or interest in an Award earned prior to the date of the amendment shall be
effective unless the Participant shall have agreed thereto.
11. Termination
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The Committee may terminate this Plan (in whole or in part) at
any time. In the case of such termination of the Plan, the following
provisions of this Section 11 shall apply notwithstanding any other
provisions of the Plan to the contrary:
(i) The Committee shall promulgate administrative rules
applicable to Plan termination, pursuant to which each affected
Participant (other than the CEO) shall receive, with respect to
each Performance Period which has commenced on or prior to the
effective date of the Plan termination (the "Termination Date")
and for which the Award has not yet been paid, the amount
described in such rules and the CEO shall receive an amount equal
to the amount his Award would have been had the Plan not been
terminated (prorated for the Performance Period in which the
Termination Date occurred), subject to reduction in the
discretion of the Committee.
(ii) Each Award payable under this Section 11 shall be paid
as soon as practicable, but in no event later than 120 days after
the Termination Date.
12. Miscellaneous Provisions
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(a) This Plan is not a contract between the Company and the
Employees or the Participants. Neither the establishment of this Plan, nor
any action taken hereunder, shall be construed as giving any Employee or
any Participant any right to be retained in the employ of the Company or
any of its Subsidiaries. Neither, the Company nor any of its Subsidiaries
is under any obligation to continue the Plan.
(b) A Participant's right and interest under the Plan may not be
assigned or transferred, except as provided in Section 9 of the Plan, and
any attempted assignment or transfer shall be null and void and shall
extinguish, in the Company's sole discretion, the Company's obligation
under the Plan to pay Awards with respect to the Participant.
(c) The Plan shall be unfunded. The Company shall not be required
to establish any special or separate fund, or to make any other segregation
of assets, to assure payment of Awards.
(d) The Company shall have the right to deduct from Awards paid
and any interest thereon, any taxes or other amounts required by law to be
withheld.
(e) Nothing contained in the Plan shall limit or affect in any
manner or degree the normal and usual powers of management, exercised by
the officers and the Board of Directors or committees thereof, to change
the duties or the character of employment of any employee of the Company or
any of its Subsidiaries or to remove the individual from the employment of
the Company or any of its Subsidiaries at any time, all of which rights and
powers are expressly reserved.