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EXHIBIT 10(a)
COACHMEN INDUSTRIES, INC.
LONG TERM INCENTIVE
PERFORMANCE BASED RESTRICTED STOCK PLAN
o AUTHORITY: 2000 Omnibus Stock Incentive Plan, approved by Shareholders
May, 2000, authorizes 2 million shares for incentive compensation
purposes for Directors, Officers and Key employees. The Compensation
Committee has the authority to act in furtherance of these purposes,
pursuant to its charter and the authority granted to it by the Board of
Directors.
o PURPOSE:
o To further align the interests of Executives and Senior
Management with those of the Shareholders.
o To motivate and reward superior performance.
o To enhance recruitment and retention.
o To advance stock ownership by Senior Company Executives.
o ELIGIBILITY:
o The Compensation Committee of the Board of Directors may use its
discretionary powers to determine participating Executives and
Senior Managers as well as awards.
o Participants must be full time employees, in good standing, with
current Business Protection Agreements in effect, and be in
compliance with Coachmen's Code of Conduct.
o Eligible participants may include all Corporate and Subsidiary
senior executives and officers.
o TYPE: Restricted Stock, restrictions determined by the Compensation
Committee.
o PERFORMANCE MEASUREMENT: The financial performance measurement for the
restricted share award is consolidated Net Income.
o MEASUREMENT PERIODS: Financial performance of the Company will be
measured over three (3) calendar years. Each three-year period is
referred to as a Performance Measurement Period. Performance
Measurement Periods may overlap such that performance in one year may
contribute to the performance of multiple measurement periods.
o NUMBER OF RESTRICTED SHARES AVAILABLE FOR AWARD: A total of
approximately 100,000 restricted shares per Performance Measurement
Period for all participants, plus a reserve of 15% of the targeted
awards.
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o ISSUANCE OF SHARES: 100% of the target award of shares for each
individual participant will be issued in the name of the participant at
the beginning of the Performance Measurement Period. Certificates will
be held by the Company until the earlier of the end of the Performance
Measurement Period or a Change in Control.
o THRESHOLD AND MAXIMUM AWARD LEVELS: In order to earn any award for
any Performance Measurement Period, at least 85% (threshold level) of
the financial performance measurement target must be achieved for that
Performance Measurement Period. In any Performance Measurement Period
the maximum level that can be awarded is 115% of the target performance
measurement.
o Subject to the threshold and maximum award levels, each percentage
point change in performance will result in a corresponding
percentage point change in payout. (84% performance = 0% payout),
(85% performance = 85% payout), (90% performance = 90% payout),
(110% performance = 110% payout), (125% performance = 115% payout)
o VESTING: Shares earned during a Performance Measurement Period vest
on the earlier of the first day of the year following the end of the
Performance Measurement Period (subject to completion of the final
accounting and audit of the financial statements of the 3rd year of the
Performance Measurement Period) or the date of termination of
employment due to death, disability or retirement at age 65 or older
or, at the discretion of the Compensation Committee, upon early
retirement ("Vesting Date"), provided that, except in the case of
death, disability or retirement (including, at the discretion of the
Committee, early retirement), no award is earned and no distribution
will be made unless a participant has been a full time employee of the
Company or its subsidiaries for at least three years by the Vesting
Date; further provided that, in the event of a Change in Control (as
defined in the Company's Change in Control Agreements with its key
executives), all shares in the in the program vest immediately at the
115% level, and will be immediately delivered to the participants,
without restrictions, regardless of performance or length of
employment.
o AWARD DISTRIBUTION: The amount of the participant's long term incentive
award is determined at the end of each Performance Measurement Period.
The amount of the award earned by a participant shall be equal to the
amount calculated by multiplying (i) the participant's target award for
the Performance Measurement Period by (ii) the percentage obtained by
dividing the Company's actual consolidated Net Income during the
Performance Measurement Period by the Consolidated Net Income target
established for the Performance Measurement Period, rounded to the
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nearest whole number subject in each case to the Threshold and Maximum
limitations described above. Fractional shares shall not be issued; any
fraction of share will be rounded to the nearest whole share. As
needed, issued certificates may be cancelled or reissued to adjust for
the actual amount of shares earned. Unused shares will be returned to
the Omnibus Plan pool. Awards will be distributed within thirty (30)
days after the filing of the Company's 10-K with the Securities
Exchange Commission. o For example: if the performance measurement is
met for the 2003, 2004 and 2005 Performance Measurement Period, the
restricted shares would vest January 1, 2006. The actual number of
shares to be awarded, if any, will be determined when the final
financial statements for 2005 are available and the audit is complete.
o The award targets for each participant for each year in the
Performance Measurement Period and the financial performance
measurement target are determined by the Compensation Committee within
the first 90 days after the commencement of the three-year Performance
Measurement Period. o Under this plan, no distributions will occur
until the end of the third year of each Performance Measurement Period,
when the Restricted Stock awards may vest based on employment and the
achievement of performance goals, except in the event of a Change in
Control.
o RESTRICTION PERIOD: The Performance Measurement Period, or until a
Change in Control.
o RESTRICTIONS: The participant cannot sell, transfer, pledge or use
shares as collateral, during the Restriction Period. Restrictions lapse
at the end of each Performance Measurement Period or upon a Change in
Control.
o VOTING RIGHTS: The participant may vote shares during the Restriction
Period.
o DIVIDEND RIGHTS: Dividends will be paid to an interest bearing account
and held for the participant subject to the same vesting requirements.
Dividends plus interest attributable to the dividends on the shares
ultimately earned will be paid to participants when the certificates
are delivered and will not be available for participation in any
dividend reinvestment plan.
o TERMINATION PROVISIONS:
o If the participants' employment is terminated for any reason other
than death, disability or retirement at age 65 or older during the
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Performance Measurement Period, then all unvested shares are
forfeited except at the discretion of the Compensation Committee
if employment is terminated at the request of the Company without
cause or fault of the participant, or the participant retires
early in accordance with the policies and procedures of the
Company.
o In the event of termination due to death or disability: The
Restricted Shares will be prorated based on the date of death or
disability and the number of months the participant was actively
employed during the year of death or disability. The final award
determination and payouts are made with the rest of the group at
the end of the Performance Measurement Period.
o In the event of retirement: The Restricted Shares will be prorated
based on the date of retirement and the number of months the
participant was actively employed during the year. The final award
determination and payouts are made with the rest of the group at
the end of the Performance Measurement Period.
o REVISIONS FOR SIGNIFICANT EVENTS:
o When circumstances occur (including, but not limited to, unusual
or nonrecurring events, changes in tax laws or accounting
principles or practices or changed business or economic
conditions), that cause any performance goal, payout schedule
and/or level of performance or distribution to be inappropriate in
the judgment of the Compensation Committee, the Committee may make
such changes to this plan, and/or the performance targets for a
Performance Measurement Period as it deems reasonable.
o COMPANY TAX CONSEQUENCES:
o At time of grant - no tax deduction can be taken.
o When stock is issued and restrictions lapse - Company receives tax
deduction equal to the participant's ordinary income.
o When the participant sells the shares - no tax deduction can be
taken by the Company.
o Dividends are deductible by the Company when paid to the
Executive.
o EARNINGS PER SHARE CONSEQUENCES:
o Immediate dilution of EPS for total shares granted.
o EARNINGS CONSEQUENCES:
o The fair market value at the time of the grant is charged to
earnings over the restriction period.
O OVERHANG AND RUN RATES:
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o Overhang is unaffected by the granting of Restricted Stock awards.
The annual run rate will increase with the granting of Restricted
Stock, and decrease if the awards are not earned.
O TAX IMPACT ON THE PARTICIPANT:
o No tax - at time of grant.
o When restrictions lapse, the current market value of vested shares
are taxed as ordinary income subject to maximum tax rate. The
Company will notify the participant of the amount due to satisfy
the tax withholding requirements with respect to the stock. The
participant shall pay the amount due to satisfy the tax
withholding requirements in cash; provided, however, that the
participant may elect to meet the tax withholding requirement by
requesting the Company, in writing, to withhold from such award
the appropriate number of shares of Common Stock, rounded up to
the next whole number, which would result in proceeds equal to the
tax withholding requirement. Any election by a participant to have
shares withheld under this Section shall be subject to such terms
and conditions as the Committee may specify, which may include
that the election shall be irrevocable. If the cash required
(whether paid directly or indirectly through the sale of stock
election described above) is not received by the Company within
sixty (60) days of notification by the Company of the tax
withholding due, the Committee shall have the right to take
whatever action it deems appropriate, including voiding the award.
The Company shall not deliver or pay the award (net of the tax
withholding) until the tax-withholding obligation is satisfied.
o Dividends are taxed as ordinary income subject to maximum tax rate
o Participant has the opportunity to make a tax-advantaged IRC
Section 83(b) election at time of grant. Under this election, the
participant pays ordinary income and FICA taxes on the value of
the grant at the time of granting. Upon subsequent sale, any gain
over the grant value is taxed at the long-term capital gains rate
(assuming holding period requirements are met.) If an 83(b)
election had been made, the participant forfeits the taxes paid,
even if the participant never receives the stock.
o At Sale - assuming the stock is held for 12 months after vesting,
the gain on sale over the market value at the time of vesting of
the restricted shares, receives long-term capital gains treatment.