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EXHIBIT 10(C)
EXECUTIVE COMPENSATION PROGRAM
I. ELIGIBILITY AND PARTICIPATION
Individuals eligible to participate are the following:
. Chief Executive Officer
. Operating Company Presidents
. Designated Corporate Staff Members
The basis of participation for individuals who are permitted to enter
the Program during the year will be determined at time of entry by the
Chief Executive Officer.
II. PROGRAM DESIGN
A. GROUP 1 - CEO AND OPERATING COMPANY PRESIDENTS
The Program is designed to pay a bonus that ranges up to 60% of base
salary. The amount of the bonus award will be based on three factors:
. Operating Profit Objective Attainment
. Specific Objective Achievement
. Corporate Target Result Attainment
1. Corporate Profit Objective Attainment
The Chief Executive Officer and Operating Company
Presidents can earn bonuses ranging up to 30% of base salary,
based on the relationship between reported operating income and
the operating income objectives established by the Board's
Compensation Committee. Operating income objectives will be set
for the 3%, 15% and 30% payment levels; (percentage achievement
for operating income levels between the objectives established
for the 3% and 15% levels, and the 15% and 30% levels, will be
interpolated to the nearest percent). Reported operating income
will, in all cases, be computed (1) before interest expense,
(2) before provisions for Federal and State Income Taxes, (3)
after provisions for payment of bonuses to the operating
company president payable under this Program and to other
operating company employees under any bonus program in effect
for such operating company covering employees not covered by
this Program, and (4) will be adjusted to reflect any variances
for the year between actual and budgeted interest expense (both
intercompany interest and outside interest expense). In the
case of the Chief Executive Officer, and Senior Executives of
the corporation, profit objectives will be based on net income
per share, as reported in the Consolidated Audited Financial
Statements for each fiscal year, and will be after appropriate
provisions for payment of bonuses under this Program.
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In determining the extent to which an individual has
met his profit objectives, the Chief Executive Officer will
have the discretion to reduce reported operating profit
appropriately, for purposes of this Program, where reported
profits were achieved by actions significantly at variance with
planned profit achievement and which actions did not receive
prior review and approval of the Chief Executive Officer.
In addition, at the discretion of the Chief Executive
Officer, reported operating profit for the performance year
will be increased or decreased by an amount equal to 20% of
the difference between the assets employed in the business at
the beginning and end of the current performance year.
2. Specific Objective Achievement
Up to 20% of base salary will be paid for the
achievement of specific objectives. Operating profit levels
will be established for each participant below which no bonus
will be paid for specific objective achievement.
The specific objectives will be developed between the
participant and his immediate superior, and approved by the
Chief Executive Officer. Objectives shall not be more than five
(preferably four) specific items; these items will have a
weighted value approved by the Chief Executive Officer and
recorded with the Program Administrator.
Within two weeks following the close of the year, each
participant, in conjunction with the Program Administrator, is
to submit a written summary of his degree of accomplishment of
his specific objectives. This statement together with a
recommended award shall then be submitted to the Chief
Executive Officer.
During the year, revisions to objectives, where
appropriate, are to be submitted and approved by the Chief
Executive Officer.
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B. GROUP 2 - CORPORATE STAFF EXECUTIVES
The Program is designed to pay a bonus that ranges up to a maximum of
48% of base salary. The amount of the bonus award will be based on
corporate profit objective attainment, specific objective achievement,
and corporate target result attainment.
1. Corporate Profit Objective Attainment
Participants can earn bonuses ranging up to 20% of
base salary, based on the relationship between reported profit
and the profit objectives established by the Chief Executive
Officer. Profit objectives will be set for the 3%, 10% and 20%
payment levels; (percentage achievement for profits between the
objectives established for the 3% and 10% levels, and the 10%
and 20% levels, will be interpolated to the nearest percent).
Reported profits will, in all cases, be computed after
provisions for payments of bonuses under this Program and under
any other bonus program in effect for Corporate staff
employees.
For purposes of this Paragraph IIB (1), provisions will
be made for payment of bonuses (other than to the Chief
Executive Officer) pursuant to Paragraph IIA(1) and (2), before
determining the extent to which the Corporate Target Result has
been attained.
2. Specific Objective Achievement
Up to 20% of base salary will be paid for the
achievement of specific objectives (see Paragraph IIA(2)
regarding establishment of specific objectives). Any bonus
payable under this Paragraph is also subject to the following
limitations: (1) if less than 75% of the Corporate Target
Result is achieved, any bonus otherwise earned is reduced by
50%; (2) the Chief Executive Officer will establish a profit
objective level for the Corporate Staff below which no bonus
will be paid.
C. CORPORATE TARGET RESULT ATTAINMENT
When the Corporate Target Result is achieved, any bonus otherwise
earned pursuant to IIA and IIB above shall be increased by 20%. The
Corporate Target Result will be computed after provision for bonus
payments under this Program.
At the beginning of each year, the Chief Executive Officer determines
the Corporate Target Result, subject to the approval of the Compensation
Committee of the Board of Directors. The Corporate Target Result will be
recorded with the Admimstrator along with the profit objectives and
specific objectives of each participant.
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III. GENERAL PROGRAM CONTROLS
1. No awards will be paid with respect to achievement of specific
objectives in a year when dividends (cash or stock in lieu of cash) on
the Company's Common Stock are not paid. If a dividend is paid for a
portion of the year, any specific objective achievement bonus otherwise
earned will be pro-rated.
2. Any bonus otherwise payable under this Program to the Chief Executive
Officer or any Corporate Staff Member will be reduced proportionately to
the extent necessary, if any, to prevent the Corporation from
reporting a loss for the fiscal year in question.
3. Anything herein to the contrary notwithstanding, no bonus will be paid
to any individual whose overall performance during the year, in the
judgment and discretion of his supervisor and the CEO, was
unsatisfactory.
4. In the event that profit targets are not attained, the Chief Executive
Officer will have the discretion to recommend the payment of a
reasonable and appropriate bonus for performance that was otherwise
outstanding.
IV. ADMINISTRATION
1. Individual awards will be computed on base salary as of February 1 of the
current fiscal year.
2. The Program must be approved by the Compensation Committee of the Board
of Directors. The CEO's objectives and the Corporate Target Result must
also be approved by the Compensation Committee.
3. The Chief Executive Officer and the Vice President/Treasurer will be the
Administrators of the Program. They will prepare a report for the
Compensation Committee by the end of February of each year, documenting
last year's results and listing the year's:
a. Program Participants
b. Corporate Profit Objectives
c. Specific Objectives for Each Participant
d. Corporate Target Result
e. Bonus Possibilities for Each Participant
4. The Chief Executive Officer will have full and final discretion to
determine the amount of bonus, if any, to be paid to any Participant who
dies or retires during the year, or whose responsibilities are changed
during the year, subject to the approval of the Board of Directors.
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In the event there is any dispute as to the amount of any bonus payable
under this Program, the Board of Directors will have full and final
discretion to resolve the matter as it deems equitable and appropriate.
5. Any bonuses payable under this Program will be payable within a reasonable
time after audited financial statements for the current fiscal year are
available. All bonuses are subject to applicable payroll taxes.
6. Any bonus payable under this Program may, at the Company's discretion, be
paid in General Host's common stock in lieu of cash, which stock may be
subject to certain restrictions in accordance with Federal Securities
laws. In such event, the Company will consider the tax effects and either
provide low cost tax loans or a cash payment to cover Participant's
additional tax liability.