CARBO CERAMICS INC.
INCENTIVE COMPENSATION PLAN
Job Grade Level 4 and Above
Purpose: The CARBO Ceramics Inc. Incentive Compensation Plan (the
"Plan") is being adopted by the Compensation Committee of
the Company's Board of Directors (the "Compensation
Committee") to:
1. provide competitive levels of compensation to
enable the Company to attract and retain high
quality personnel to manage the business, and;
2. provide a financial incentive for managers and
key employees that can directly influence the
results of the business to achieve corporate
and individual goals.
Duration: The Plan is effective January 1, 2004, and unless earlier
terminated or revoked by the Compensation Committee, it
will terminate on December 31, 2006.
Participants: All salaried positions at grade level 4 and above are
eligible to participate in the Plan. The President and
Chief Executive Officer of the Company shall not be
eligible to receive any payments pursuant to this Plan.
Administration: The form of the Plan will be approved by the Compensation
Committee of the Company. Upon approval of the form of the
Plan, the Plan will be administered by the Company's
President and Chief Executive Officer.
Payments: Incentive Payment Targets will be established by the
President & CEO for each eligible position on an annual
basis and shall be submitted to the Compensation Committee
for approval each year. Annual Incentive Payment Targets
will be determined based on a review of (i) comparable
practices at companies with which the Company competes for
labor and; (ii) the level of responsibility for achieving
corporate objectives of each eligible position as
determined by the President & CEO.
The President & CEO will also establish and present to the
Compensation Committee for review each year a target level
of NIBT ("Target NIBT") at which participants will be
eligible to receive incentive payments at 100% of target
levels.
Plan participants' actual incentive payments will be based
on an equal weighting of the Incentive Payment Target for
both individual performance relative to individual goals
and objectives established for each calendar year and the
corporation's performance relative to Target NIBT. Actual
payments shall be made to plan participants as soon as
practical following the completion of the audit of the
Company's annual financial statements subject to deferral
of certain amounts as described below. In order to be
eligible to receive a payment under this plan, a
participant must be employed by the company at the close
of the calendar year for which the award is being made.
Individual Performance Portion
The portion of a plan participants' actual incentive
payment that is based on his/her individual performance
will be determined by the participant's annual performance
appraisal rating and will be adjusted according to the
following schedule:
Performance Appraisal Rating Incentive Payment Adjustment
---------------------------- ----------------------------
5 120% of Target Incentive
4 100% of Target Incentive
3 80% of Target Incentive
below 3 not eligible for incentive
Any participant receiving a performance appraisal rating
of below 3 will not be eligible for any incentive payment
(either individual or corporate performance portion). The
portion of the incentive payment that is based on
individual performance will be paid regardless of the
level of NIBT achieved by the Company.
Corporate Performance Portion
For plan participants in job grade levels 4 and above, the
portion of the Incentive Payment Target attributable to
corporate performance will be paid based on the following
schedule:
-------------------------- ----------------------------
% of NIBT Percent of Target Paid
-------------------------- ----------------------------
< 70% 0%
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70% 30%
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80% 60%
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90% 90%
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100% 100%
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110% 125%
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120% 150%
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130% 175%
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140% or above 200%
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Deferral: For all plan participants at grade level 4 and above, the
payment of 50% of any annual incentive award will be
deferred and paid in three equal annual installments
beginning in the January immediately following the year in
which the participant is informed of the award (e.g., 2004
deferred amounts would be announced in January, 2005, and
paid in equal installments in January of 2006, 2007 and
2008). A plan participant shall forfeit all rights to
receive any unpaid portion of deferred amounts if such
participant's employment with the Company terminates for
any reasons other than normal retirement, death, or
permanent disability. In the event of normal retirement,
death, or permanent disability, the unpaid portion of any
deferred amounts can be either paid out in lump sum or per
the terms of the original Plan, at the discretion of the
Company.
Revocability: The Compensation Committee shall have the absolute right
to interpret the Plan and to modify or terminate the Plan
if there shall be a material change in the nature of the
business of the Company, in the ownership or control of
the Company, or if the Compensation Committee in its
judgment determines that continuation of the Plan would
not be in the Company's best interests as a result of a
material change in circumstances.
Example Incentive Payment Calculation:
Incentive Payment Target (as a % of base salary) 20%
Individual performance portion (50% of total)
Performance appraisal rating - 4
Incentive payment for individual performance - 100% of Target
(100% x 50% x 20%) 10%
Corporate performance portion (50% of total) Corporate NIBT as a percent of
Target NIBT - 100% Incentive payment for individual performance - 100%
of Target
(100% x 50% x 20%) 10%
Total incentive payment as a percentage of base salary 20%