EXHIBIT 10(c)
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Snap-on Incorporated
2003 Executive Qualitative Incentive Program
Administrative Guidelines
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Snap-on Incorporated
2003 Executive Qualitative Incentive Program
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The Snap-on Incorporated 2003 Executive Qualitative Incentive Program
("Executive QIP") focuses Participants on key qualitative initiatives, providing
Participants with the incentive to deliver results by providing the opportunity
to receive monetary payments based on achievement of qualitative objectives.
ADMINISTRATION
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Executive QIP awards are granted under the 2001 Incentive Stock and Awards Plan
("Plan"). The Executive QIP will be administered under the provisions of the
Plan and as further specified under the guidelines contained in this document.
All capitalized terms contained within this document shall have the definitions
given in Section 14 of the Plan, with the addition of the terms defined at the
end of this document.
PARTICIPATION
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Participants for the Executive QIP will be named by the Committee for each
Program Year. Participants for the Executive QIP will be the Chief Executive
Officer and other executive officers of Snap-on Incorporated designated by the
Committee as to whom the Committee determines that incentive compensation
payable to the executive officer would otherwise be subject to the limitations
set forth in Section 162(m) of the Code. It is the intent of the Committee that
the Executive QIP awards will not be considered performance-based compensation
under Section 162(m) of the Code. Further, the Committee will determine whether
an amount is payable under an Executive QIP award without regard to whether an
amount is payable to the Participant under any award to the Participant intended
to constitute performance-based compensation under Section 162(m) of the Code or
the amount payable under such performance-based award.
PROGRAM ELEMENTS
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Executive QIP awards will be based on performance on key qualitative initiatives
at the Company, group and/or business unit level. Qualitative performance goals
for each Participant will be determined based on each Participant's scope and
role within the Company.
Specific objectives for each Participant will be determined by the Committee
and, in the case of the Chief Executive Officer, by the Board of Directors, and
communicated to each Participant through a separate communication document.
AWARD OPPORTUNITIES
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A target Executive QIP award opportunity (expressed as a percentage of Base
Salary) will be established for each Participant. The dollar value calculated as
the target percentage multiplied by the Participant's Base Salary for the
Program Year will be deemed the Participant's target Executive QIP award
opportunity value.
Opportunity levels will also be established for each Participant as follows:
(1) Ineffective - 0% of the target opportunity
(2) Partially Effective - 50% of the target opportunity
(3) Effective - 100% of the opportunity established at the beginning of
the Program Year
(4) Highly Effective - 200% of the target opportunity
The payout will be 0% of the target opportunity for performance below Partially
Effective.
The Committee and, in the case of the Chief Executive Officer, the Board of
Directors, will approve target Executive QIP award opportunities for each
Participant as outlined above. Each Program Year, actual Executive QIP awards
will be
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based on results relative to the objectives approved by the Committee and, in
the case of the Chief Executive Officer, by the Board of Directors. Actual
Executive QIP awards will be interpolated for performance between opportunity
levels.
PERFORMANCE OBJECTIVES
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All qualitative performance objectives for each Program Year will be approved by
the Committee and, in the case of the Chief Executive Officer, by the Board of
Directors. The objectives will be based on factors determined by the Committee
and, in the case of the Chief Executive Officer, by the Board of Directors. The
Committee and, in the case of the Chief Executive Officer, the Board of
Directors, will approve any changes to these objectives during the Program Year.
Four levels of performance will be defined for qualitative goals as follows:
1 = Ineffective - failed to meet performance expectations
2 = Partially Effective - Performance partially met expectations
3 = Effective - Performance met or at times exceeded performance
expectations
4 = Highly Effective - Substantially exceeded performance expectations
Each qualitative goal will be evaluated at the end of the year based on the
above four levels. To determine the overall qualitative rating, the individual
ratings will be weighted equally and averaged to get an overall rating which
determines the payout percentage. If the overall rating falls between two
ratings on the scale, the percentage will be interpolated.
CALCULATION OF AWARDS
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Executive QIP award opportunity levels will be determined by the Committee and,
in the case of the Chief Executive Officer, by the Board of Directors, based on
performance relative to the qualitative objectives approved by the Committee for
each Participant and, in the case of the Chief Executive Officer, by the Board
of Directors.
DISTRIBUTION OF AWARDS
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The Executive QIP award earned for the Program Year will be distributed by April
30 following the end of the Program Year. All Executive QIP awards will be
distributed in cash, although participants in the Snap-on Incorporated Deferred
Compensation Plan who have made a timely election under that plan to defer
receipt of all or a portion of their earned Executive QIP award will have the
payment of same deferred amount in accordance with their prior election.
FORFEITURE OF AWARDS
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Nothing in the Executive QIP will affect the Chief Executive Officer's rights
under the Employment Agreement between the Chief Executive Officer and Snap-on
Incorporated, dated as of April 27, 2001, as such agreement may be amended from
time to time (the "Employment Agreement") as it relates to his rights upon
termination of employment. In addition, nothing in the Executive MIP will affect
the Chief Executive Officer's right to receive the Severance Payments, as
defined in Section 5(a)(ii) of the Employment Agreement.
Forfeiture of a Participant's unearned Executive QIP award may or may not occur
upon termination of employment as follows:
Forfeiture will not occur as a result of death or termination due to disability
or retirement, or any other termination of employment that would entitle the
Chief Executive Officer to the Accrued Obligations (as the Employment Agreement
defines any such terms). In any such event, a Participant's Executive QIP award
will be payable based on actual performance relative to objectives over the full
Program Year, pro-rated for the number of whole months of the Program Year that
elapsed before the termination of the Participant's employment.
Forfeiture will occur as a result of any other termination of employment without
regard to the reason unless the Committee decides otherwise in its discretion in
special circumstances. Absence of a Participant on approved leave will not be
considered a termination of employment during the period of such leave.
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Whether or not a divestiture of a subsidiary, division or other business unit
(including through the formation of a joint venture) results in termination of
employment with the Company and its subsidiaries will be at the discretion of
Committee, which discretion the Committee may exercise on a case by case basis.
NEW HIRE/CHANGE OF RESPONSIBILITY/LEAVE OF ABSENCE
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At their discretion, the Committee may apply the foregoing terms, including
without limitation the qualitative goals, to Executive QIP awards to persons
such as new employees or those undergoing a change of responsibility during a
Program Year.
For new employees, target Executive QIP award opportunity will be based on the
Participant's Base Salary, pro-rated based on the number of whole months of the
Program Year during which the employee was a Participant.
If a Participant is employed in multiple positions during a Program Year (i.e.
change of responsibility), the Participant's Executive QIP award will be
pro-rated as of the first of the month in which the event occurs in accordance
with actual time and performance results in each position.
Participants who incur a paid or unpaid leave of absence during the Program Year
will not receive credit for Executive QIP award purposes for the time
representing the leave. Exceptions, if any, must be approved by the Committee.
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2003 Executive QIP Definitions
All capitalized terms contained within this document shall have the definitions
give in Section 14 of the 2001 Incentive Stock and Awards Plan, with the
addition of the following terms not contained therein:
(1) Base Salary - a Participant's regular wages earned before deferrals for the
Program Year
(2) Program Year - the fiscal year of Snap-on Incorporated.
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