EXHIBIT 10.24
MSX INTERNATIONAL, INC.
EXECUTIVE INCENTIVE COMPENSATION PLAN
1. PURPOSE.
One of the objectives of MSX International, Inc.'s ("MSXI" or the "Company")
Corporate Mission is to grow the earnings and cash flow of its business at least
30% per year. The Executive Incentive Compensation Plan (the "EICP") provides
financial rewards to certain key employees in business units which have plans
and results that help the Company satisfy this objective. Additionally,
sustaining growth in earnings is an increasing expectation of shareholders as a
key measure of company performance. The EICP rewards members of business groups
that can achieve year-over-year growth in EBIT.
2. DEFINITIONS.
(a) AWARD OR INCENTIVE AWARD - The monetary payment that goes to plan
participants. Award amounts are tied to success in meeting specific
business financial objectives.
(b) BUSINESS PLAN - The financial and operating plan of a business unit
for the fiscal year, as approved by the Company's Board of
Directors, which establishes the unit's commitment to income and
assets employed.
(c) BUSINESS UNIT - Typically, a sizeable unit of the organization for
which profit and loss is measured. Most often a group or major
sub-group.
(d) DSO - Average accounts receivable days sales outstanding. The
average of DSO each month in the fiscal year. DSO is calculated by
dividing the month end accounts receivable balances (billed and
unbilled) less customer deposits by the prior month(s) sales to
determine the number of days sales represented by the balance.
(e) EBIT - "Earnings Before Interest and Taxes," earnings relate to an
individual business unit target after deduction for regional and
local allocations for shared support services as determined by MSXI
policy. Any accounting adjustments for facility, computer or other
asset utilization must be approved by the Chief Financial Officer in
writing in advance. Taxes in this instance refer to federal or state
income taxes, Michigan single business tax and Italian IRAP. All
other taxes are deducted from earnings to determine EBIT.
(f) INCENTIVE CHART - The matrix used to equate business unit
performance with individual incentive earnings.
(g) INCENTIVE TARGET - The amount of an Award if performance is exactly
equal to the target set forth in the Incentive Chart. The Incentive
Target is expressed as a percent of base salary and varies depending
upon position level.
(h) PLAN YEAR - The Plan Year shall be the same as the MSXI corporate
fiscal year.
3. PARTICIPATION.
(a) Participants shall be such key employees of the business units as are
selected by the Company's Chief Executive Officer or his designee and
approved in advance by the Compensation Committee of the Company's
Board of Directors (the "Compensation Committee"). Incentive Targets,
expressed as a percent of base salary, are established according to
job responsibilities and competitive total compensation.
(b) Participation during a given Plan Year does not mean that
participation is assured for subsequent years. Participation in any
one year may also be conditioned upon other specific terms and
conditions of employment.
(c) Participants approved prior to January 1 of the Plan Year will be
eligible for the Plan Year unless they transfer, change jobs, or their
employment with MSXI is terminated. Additionally, management may,
subject to approval by the Compensation Committee, deem a Participant
ineligible during the course of the Plan Year based on unsatisfactory
job performance.
(d) Transfers between eligible positions having different Incentive
Targets will result in Incentive Awards prorated to months served in
each position. A Participant transferred from an eligible to a
non-eligible position may receive a prorated Incentive Award if in the
eligible position for at least three full-months.
(e) A Participant must be an employee of MSXI at the time of payout to
receive the Incentive Award.
(f) Participants in the EICP are not eligible to participate in any other
MSXI incentive compensation programs or commission programs.
4. ADMINISTRATION. The EICP shall be administered by the Compensation
Committee which shall have exclusive right to construe and interpret the
provisions of the EICP.
5. CALCULATION OF INCENTIVE AWARDS.
(a) The Incentive Award is determined by two financial measures: (i)
Business Unit achievement of planned average accounts receivable days
sales outstanding (DSO) and (ii) Earnings Before Interest and Taxes
(EBIT).
(b) The Incentive Chart correlates those two measures in a matrix format.
The values contained within the Incentive Chart are percentages of a
Participant's Incentive Target. For example, at the intersection of
100% attainment of planned DSO and 100% achievement of planned EBIT,
the Participant receives a full (100%) of his/her Incentive Target.
(c) Incentive Awards shall be calculated based on each Participant's
Individual Incentive Chart. If the actual EBIT and/or DSO falls
between two values indicated on the Incentive Chart, then the ratio
between the two points will be applied to the corresponding bonus
cells to determine the actual Incentive Award.
(d) The maximum Incentive Award payable under the EICP is 200% of
Incentive Target.
(e) No Incentive Award is earned by the Participant if the Participant's
business unit actual EBIT is less than 80% of plan, or if DSO is
higher than the limit set forth in a Participant's Individual
Incentive Chart.
(f) No Incentive Awards will be paid out to any participants if MSXI
corporate consolidated EBIT is less than 80% of the budged EBIT ($33.4
million in fiscal year 2004).
6. PAYMENT OF INCENTIVE AWARDS.
(a) Incentive Awards are paid by payroll check or direct deposit in or
around March of the year following the Plan Period.
(b) Incentive Award payouts are subject to year-end audit and board
approval.
(c) In the United States, Internal Revenue Service regulations require
that a Federal Tax withholding of 25% be taken from incentive
payments. In addition, normal withholdings for state and local taxes
and 401(k) contributions are deducted from the Incentive Award
payment. Plan participants may request that a higher federal or state
withholding be taken from the incentive payment. In the case of
payments being made in other countries, all applicable country and
taxing authority laws, rules and regulations will be applied. All
withholding elections must be made no later than February 15 preceding
the payment.
(d) The payment of the Incentive Award shall be made from the general
assets of the Company, and a participant under the EICP shall have no
greater rights to payment than other general creditors of the Company.
There shall be no separate trust for the payment of Incentive Awards.
(e) A participant must be an employee of the Company at the time of payout
to receive the Incentive Award. A participant whose employment with
the Company terminates prior to the payout date forfeits all rights to
payment. If a participant dies or terminates employment due to
disability (as defined under Section 22(e) of the Internal Revenue
Code of 1986, the participant (or the participant's heirs by will or
under the laws of descent and distribution as applicable) shall be
entitled to any earned but unpaid Incentive Award.
(f) An Incentive Award or the right to payment from an Incentive Award
under the EICP shall not be assignable or transferable by a
participant except by will or the laws of descent and distribution.
During the lifetime of the participant, only the participant may
receive payment of the Incentive Award. No transfer of the Incentive
Award shall be effective to bind the Company unless the Company shall
have been furnished with written notice thereof and a copy of the will
or such evidence as the Company may deem necessary to establish the
validity of the transfer.
7. AMENDMENT AND TERMINATION. The EICP may be amended or terminated by
the Company at any time.
8. EMPLOYER AND EMPLOYEE RIGHTS.
(a) The language used in this EICP is not intended to create, nor is it to
be construed as, a contract of employment between the Company and any
EICP participant. The Company retains all of its rights to change the
terms and conditions of employees' employment and to discipline or
discharge employees who participate in the EICP.
(b) The language used in this EICP does not create any right with respect
to shares of common stock of the Company.
(c) The language used in this EICP does not create any entitlement to
participation in any other Company incentive compensation program or
commission plan.
(d) Employees who participate in the EICP retain their right to terminate
employment at any time and for any reason, and the Company retains a
reciprocal right.
9. GOVERNING LAW. The EICP is not intended to constitute a qualified
retirement plan under Section 401(a) of the Internal Revenue Code of 1986,
as amended, nor is it intended to constitute a plan that is subject to the
Employee Retirement Income Security Act of 1974, as amended. The EICP
shall be construed in accordance with the laws of the State of Michigan.
IN WITNESS HEREOF, this Executive Incentive Compensation Plan has
been executed on April 22, 2004.
MSX INTERNATIONAL, INC.
By: /s/ Frederick K. Minturn
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Its: EVP
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