Exhibit 10.3
B/E AEROSPACE GROUP EXECUTIVE INCENTIVE PLAN
GROUP VICE PRESIDENTS - FY 2005
Purpose
The purpose of the plan is to encourage significant contributions to the success
of the respective Groups and Corporation.
Eligibility
The President and Chief Executive Officer, Sr. Vice President of Administration
and Chief Financial Officer, and the Company's Vice President of Human Resources
will determine participation in the Plan. It will include all Group Vice
Presidents and General Managers reporting to the President/CEO. The Company's
Vice President of Human Resources will ensure consistent eligibility
requirements and administration throughout the corporation.
Definitions
The Threshold is 90% of the planned metric (EBIT, operating cash flow, revenues
and gross margin). Each metric accounts for a percentage of your incentive
compensation as stated below and may be achieved independent of the other
metrics.
Your maximum incentive compensation is 80% of base salary split among the four
performance metrics as weighted below. The actual amount of incentive
compensation will be based upon achievement of the performance metrics and your
contribution to the stated objectives.
Performance Metrics
During 2005, we will use four operating performance measures which are weighted
as follows: 1) earnings before interest and taxes (EBIT)-30% of bonus, 2)
operating cash flow which is defined as EBITDA (earnings before interest, taxes,
depreciation and amortization) plus or minus the change in working capital
(exclusive of cash) less capital expenditures-40% of bonus, 3) revenues-10% of
bonus, and 4) gross margin-20% of bonus. Each performance measure will be
evaluated independent of the other metrics.
Allocation of Incentive Awards
Business goals and objectives will be established for the Corporation and the
Group/Business Units at the beginning of the fiscal year. These goals and
objectives will be reviewed and submitted for approval by the President and
Chief Executive Officer and Chairman to the Board of Directors' Compensation
Committee. The amount of the incentive award will be expressed as a percentage
of base salary as of the last day of the fiscal year.
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The participant's recommended award, if any, shall be directly correlated to the
participant's individual effect on the achievement of the business goals and
objectives specified in this plan. For example, individuals with outstanding
performance are eligible to receive the maximum award; those whose performance
is less than satisfactory may receive little or no award.
A kicker award of 20% (paid upon exceeding the corporate targets and metrics)
will increase the total potential award up to 100%.
Measurements
The goals and objectives are based upon achieving EBIT, operating cash flow,
revenues and gross margin targets at the Group level. Group awards are based on
Group performance independent of corporate performance. If the Group meets or
exceed its plans, the participants will be entitled to up to an additional 20%
of base salary. While the Board of Directors may make certain exceptions, in
order for an individual to receive any payout under this plan, the site must
exceed 90% of its planned EBIT, operating cash flow, revenues and gross margin
targets in order to receive a bonus. Awards will be expressed as a percentage of
base salary.
Measurement Perspective
Incentive compensation will be awarded on the following basis for each of the
four metrics. Each must be calculated separately. The total awarded is the sum
of the four metrics pursuant to the table below:
EBIT Percentage of base
---- -----------------------------
Percentage of plan realized Bonus
-------------------------------------- -----------------------------
90% 0%
91% 2.4%
92% 4.8%
93% 7.2%
94% 9.6%
95% 12.0%
96% 14.4%
97% 16.8%
98% 18.2%
99% 21.6%
100% 24.0%
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OPERATING CASH FLOW Percentage of base
------------------- -------------------------
Percentage of plan realized Bonus
----------------------------------------- -------------------------
90% 0%
91% 3.2%
92% 6.4%
93% 9.6%
94% 12.8%
95% 16.0%
96% 19.2%
97% 22.4%
98% 25.6%
99% 28.8%
100% 32.0%
REVENUES Percentage of base
-------- -------------------------
Percentage of plan realized Bonus
----------------------------------------------- -------------------------
90% 0%
91% .8%
92% 1.6%
93% 2.4%
94% 3.2%
95% 4.0%
96% 4.8%
97% 5.6%
98% 6.4%
99% 7.2%
100% 8.0%
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GROSS MARGIN Percentage of base
------------ -------------------------
Percentage of plan realized Bonus
---------------------------------- --------------------------
90% 0%
91% 1.6%
92% 3.2%
93% 4.8%
94% 6.4%
95% 8.0%
96% 9.6%
97% 11.2%
98% 12.8%
99% 14.4%
100% 16.0%
Administration of the Plan
The President and Chief Executive Officer and the Sr. Vice President of
Administration and Chief Financial Officer will review attainment of the
business plan goals and objectives at the close of the fiscal year.
Awards will be distributed as soon as practicable after the close of the fiscal
year.
Participants in the plan who enter after the start of the fiscal year may
receive a prorated award.
Exceptions and adjustments may be made at the discretion of the President and
Chief Executive Officer and Chairman to the Board of Directors' Compensation
Committee.
Employee Benefits, Taxes and Deductions
Awards paid under this plan are subject to applicable taxes, withholding as
required by law, 401(k) contributions and other payroll deductions.
Transfer or Change of Assignment
A participant transferring into or out of qualifying positions during the fiscal
year may receive a prorated award based on a share of time spent in the
qualifying assignment.
Eligibility requirements must be met.
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Termination of Employment
Any participant who resigns or is dismissed from employment with B/E Aerospace,
Inc., or who is not on the active payroll at the time of the award payments,
will not be eligible for an award.
Nothing in the plan will be construed to give any employee any right to continue
in the employment of the company or to continue on any assignment. Further,
nothing in this plan will interfere in any way with the right of the company or
the right of the responsible manager to terminate the employment of any employee
affected by this plan at any time.
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