EXHIBIT 10.9
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Exhibit 10.9
PERFORMANCE-BASED EXECUTIVE COMPENSATION PLAN:
SUMMARY PLAN SPECIFICATIONS
CONNER PERIPHERALS, INC.
OBJECTIVES
The Plan is designed to meet these key objectives:
. Provide an objective structure and process for setting goals, evaluating
performance, and making pay decisions.
. Provide a leveraged financial incentive to meet corporate goals, business
unit goals, individual goals, and to help attract and retain key employees.
. Enhance alignment between employees, Company success, and shareholder
interests.
ADMINISTRATION
The Compensation Committee of the Board of Directors (herein referred to as the
Committee) will be responsible for administering the Plan and will delegate
specific administrative tasks to corporate staff, as appropriate.
ELIGIBILITY
All Vice Presidents and above are eligible to participate in the Plan. The CEO/
Chairman recommends participants and their participation levels at the start of
the performance period to the Committee for approval. Sales commission-eligible
positions will not participate in the Plan.
AWARD OPPORTUNITY
Annual award opportunity (target as percent of base salary) is based on an
executive's assigned participation level. The proposed target award opportunity
ranges from 50 percent to 100 percent. Actual awards will vary above or below
target levels depending upon performance against objectives and may range as
high as 280 percent of target awards.
The incentive award opportunity will be determined based on corporate and
individual performance for non-OBRA participants. OBRA participants' incentive
award opportunity will be determined based on corporate performance.
(Refer to the matrices in attachment.)
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AWARD DETERMINATION/PERFORMANCE MEASURES
The Committee will assess performance based on measures that reflect the
Company's annual business plan. At the corporate and business unit levels,
measures relate directly to value creation, focusing on profitability, growth,
and asset utilization. At the individual level, line-of-sight measures to
support these overall corporate and business unit goals will be used.
. Corporate Level
- Operating Income (pretax - from normal ongoing operations)
- Net Sales
At the corporate level, net sales and pretax operating income from normal
ongoing operations are the primary performance measures and will be
evaluated "interdependently" on a performance matrix. Asset utilization
measures, such as return on assets, asset turns, and inventory turns, may
be used as a modifier in determining award levels in future years.
. Individual Level (examples of individual goals)
- Expense Control/Asset Management
- Quality/Reliability
- Service/Quality
- Time-to-Market/Technology
- Value/Cost
At the individual level, individual goals will be set as part of a
performance management system. Goals include both quantitative and
qualitative criteria.
PERFORMANCE PERIOD AND AWARD FREQUENCY
Awards will be earned and paid based on the following schedule:
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QUARTERLY SEMIANNUAL
PERFORMANCE PERFORMANCE ANNUAL PERFORMANCE
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Executive Officers -- Up to 40% of 100% of annual
annual target target award
award (net of
(OBRA participants) 6-month award)
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Other Participants 20% of annual -- 20% of annual
target award target award
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PLAN FUNDING
Aggregate awards under the Plan will be equal to the "sum of required payments"
to individual participants according to the performance/award schedule
recommended by the CEO/Chairman and approved by the Committee at the beginning
of each year.
THRESHOLD PERFORMANCE
Minimum performance levels (e.g., 75 percent of the Company's annual business
plan), as approved by the Committee, must be achieved before awards will be
earned.
Participants are not entitled to any award under the Plan if minimum corporate
and business unit performance objectives are not achieved. However, the
Committee, in its sole discretion and pursuant to circumstances it deems
relevant, may reward outstanding individual performers for their contribution to
the organization for the Plan year.
TIMING AND FORM OF AWARD PAYMENT
Payment of awards will occur as soon as practical following the relevant
performance period, generally within sixty (60) days following the end of the
Plan year and thirty (30) days following the end of each quarter or semiannual
performance period.
One hundred percent of awards will be paid in cash. The payment of awards is
subject to normal tax withholding requirements.
OUTSTANDING ACHIEVEMENT AWARDS
As a separate component to the Plan, a special bonus fund will be available,
subject to Committee approval, to reward a small number of outstanding
performers (eligible or noneligible Plan participants) for their contribution to
the organization for the year. This fund will be equal to 15 percent of the
total (target) incentive pool established for the Plan year. The discretionary
bonus pool will be accrued for as a G&A expense. The CEO/ Chairman will
recommend special awards to the Committee for approval. Decisions relative to
the distribution of this fund will be made following the fiscal year at the same
time other year-end awards are determined. If appropriate, the CEO/Chairman and
Committee may elect not to disburse any of the discretionary bonus pool.
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ATTACHMENT 1
ANNUAL AND MAXIMUM INCENTIVE OPPORTUNITY: NON OBRA PARTICIPANTS
(EXPRESSED AS A PERCENT OF ANNUAL BASE SALARY BY LEVEL)
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TOTAL ANNUAL TARGET AWARDS TOTAL ANNUAL MAXIMUM AWARDS
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LEVEL TOTAL CORPORATE INDIVIDUAL TOTAL CORPORATE INDIVIDUAL
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I 100% 80% 20% 255% 225% 30%
II 90% 70% 20% 225% 195% 30%
III 80% 60% 20% 200% 170% 30%
IV 70% 50% 20% 170% 140% 30%
V 65% 45% 20% 155% 125% 30%
VI 55% 35% 20% 130% 100% 30%
VII 50% 30% 20% 115% 85% 30%
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AWARD RANGE
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CORPORATE INDIVIDUAL
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0%-280% of target 0%-150% of target
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ANNUAL AND MAXIMUM INCENTIVE OPPORTUNITY: OBRA PARTICIPANTS*
(EXPRESSED AS A PERCENT OF ANNUAL BASE SALARY BY LEVEL)
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TOTAL ANNUAL TARGET AWARDS TOTAL ANNUAL MAXIMUM AWARD
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LEVEL CORPORATE CORPORATE
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I 100% 280%
II 90% 250%
III 80% 225%
IV 70% 195%
V 65% 180%
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* OBRA executives will be identified at the beginning of each year.
AWARD RANGE
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CORPORATE
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0%-280% of target
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The maximum amount that any Plan participant is eligible to receive under the
Plan is $2,500,000 in a Plan year.
ATTACHMENT 2
1995 CORPORATE PERFORMANCE/AWARD SCHEDULE (ANNUAL)
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125% $___M 200% 220% 240% 260% 280%
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$___M 150% 160% 170% 180% 200%
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OPERATING 100% $___M 100% 100% 100% 100% 100%
INCOME
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$___M 80% 85% 95% 95% 95%
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75% $___M 75% 80% 85% 855 85%
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$___B $___B $___B $___B $___B
75% 100% 115%
NET SALES
DISCRETIONARY EXECUTIVE COMPENSATION
FOR OBRA PARTICIPANTS
CONNER PERIPHERALS, INC.
ADMINISTRATION
The Compensation Committee of the Board of Directors (herein referred to as the
Committee) may, at its sole discretion, grant awards to OBRA participants for
individual performance and will delegate specific administrative tasks to
corporate staff, as appropriate.
The administration of this award is intended to operate independent of the
Performance-Based Executive Compensation Plan and will not meet the requirements
for performance-based pay under Internal Revenue Code (IRC) Section 162(m) which
limits the tax deduction for non-performance-based compensation paid to certain
executives.
ELIGIBILITY
Executives who may be classified as "covered employees" under IRC Section 162(m)
for the performance year will be eligible to receive supplemental awards.
Eligible executives (OBRA participants) will be designated at the beginning of
each year.
AWARD DETERMINATION
The Committee, in its sole discretion and pursuant to circumstances it deems
relevant, may award a discretionary amount to individuals for their contribution
to the organization. The CEO/Chairman will recommend individual awards to the
Committee for approval.
It is the Company's intention that executive compensation be administered in a
manner that is sensitive to the deductibility of compensation for the Company
under IRC Section 162(m) while preserving the Company's overall compensation
philosophy. If in any year, an executive's non-performance-based pay would
exceed the IRC Section 162(m) limit, the Committee, in its sole discretion, may:
. Limit the award to an amount which is deductible,
. Defer the payment of the award to a year in which the executive's non-
performance based pay does not exceed the limit, or
. Pay the entire award and lose the Company's tax deduction on the amount
exceeding the limit.
TIMING AND FORM OF AWARD
Payment of awards will be made as soon as practical following the applicable
performance period. One hundred percent of awards will be paid in cash. The
award payment is subject to normal tax withholding requirements.