1
EXHIBIT 10(c)
GENERAL HOST CORPORATION
EXECUTIVE COMPENSATION PROGRAM
1. 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 upon 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.
- Page 1 -
2
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 24% 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.
- Page 2 -
3
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 Paragraphs IIA (1) and (2), before determining the
extent to which the Corporate Target Result has been attained.
2. Specific Objective Achievement
Up to 24% 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 Profit Objective 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 Administrator along with the profit objectives and
specific objectives of each participant.
- Page 3 -
4
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 at the 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, Human
Resources 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.
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.
- Page 4 -
5
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.
- Page 5 -