EXHIBIT 10.10
NASHUA CORPORATION
MANAGEMENT INCENTIVE PLAN
1. PURPOSE
The purposes of the Management Incentive Plan ("MIP" or the "Plan") for
Nashua Corporation (the "Company") are as follows:
(a) to attract and retain the best possible management talent;
(b) to permit management of the Company to share in its profits;
(c) to promote the success of the Company; and
(d) to link management rewards closely to individual and Company
performance.
2. DEFINITIONS
(a) "Code" means the Internal Revenue Code of 1986, as amended.
(b) "Committee" means the Leadership and Compensation Committee of the
Company's Board of Directors.
(c) "Company" means Nashua Corporation.
(d) "Division Operating Performance" means the financial performance of
each division of Nashua Corporation as reported by the Company in
its public filings.
(e) "Minimum Threshold" means 70% of the budgeted pretax income of the
Company.
(f) "MIP" means the Management Incentive Plan of the Company.
(g) "MPO" means management performance objectives which are specific
performance objectives approved by the appropriate Division
President and/or Corporate Leadership staff who directly or
indirectly supervises the Participant. Up to fifty percent of the
Participant's management incentive payment may be based upon
successful achievement of the specific Performance Objectives.
(h) "Participant" means any employee of the Company or any of its
subsidiaries who has been designated as a Participant in the Plan in
accordance with Article 3.
(i) "Performance Objectives" means one or more pre-established
performance objectives, including PTIP and MPO.
(j) "Plan" means the Management Incentive Plan for Nashua Corporation.
MANAGEMENT INCENTIVE PLAN
(k) "Plan Year" means the fiscal year of the Company.
(l) "PTIP" means pretax incremental profit from the Company or Division
Operating Performance for the Company's fiscal year as calculated
according to generally accepted accounting practices (GAAP).
(m) "Target Bonus" means with respect to a Participant for any Plan Year
the bonus opportunity for the Participant in such Plan Year on
account of services rendered to the Company during the immediately
preceding Plan Year. The Target Bonus is expressed as a percentage
of the Participant's base salary in effect at the beginning of the
Plan Year.
(n) "Total Company Operating Performance" means the financial
performance of all of Nashua Corporation and its divisions during
the Company's fiscal year.
3. PARTICIPATION
Participation in the Plan is limited to key managers of the Company who
have been recommended as Participants by the Officers of the Company.
Participants may include, but are not limited to: Corporate Staff and
Division Officers of the Company, non-officer General Managers and key
functional Directors and Managers. The recommendation list is reviewed and
approved by the Committee at the beginning of each Plan Year. Any changes
to the list of Participants during any Plan Year will be recommended by
the Chief Executive Officer and approved by the Committee.
4. ANNUAL BONUS OPPORTUNITY
Participants may have the opportunity to earn an annual variable bonus.
(a) Target Bonus
The Target Bonus for each Participant is established each Plan Year
and may be up to 50% of base salary. Bonuses will be capped based on
award level.
(b) Bonus Payout
(i) A Participant's annual bonus payout is based on the Company's
and where appropriate, business unit performance versus
pre-established Performance Objectives.
(ii) Within the first 90 days of the beginning of each Plan Year,
Performance Objectives for Participants will be established.
Specific Performance Objectives will vary based on the specific
business strategy of the Company and the business unit, and may
include such measures as: PTIP, MPO.
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MANAGEMENT INCENTIVE PLAN
(iii) Bonus payouts will be determined based on the following
schedule:
- BONUS AT TARGET. The bonus award of an individual will
meet the "target" level of 10-50% of base salary, if the
budgeted pretax income is achieved for his/her division
and/or if corporate budgeted pretax income is achieved.
In the case of an individual at the 10% award level, up
to 50% of the award will be MPO based.
- BONUS BELOW TARGET. In the event of below budget
performance, the recommended threshold for a payout is
70% of budgeted pretax income. In the event that
corporate performance is 69% or lower than budgeted
pretax income, no employee of either the corporate
office or of any division will receive a bonus. For
pretax income performance between 70% and 100%, bonuses
will be paid at 50% and 100%, respectively, with
interpolation in between.
- BONUS ABOVE TARGET. In the event of above budgeted
performance, a higher percentage of incremental pretax
income will fund the bonus award pool based on award
level.
(iv) Bonus payouts will be determined based on the formula used to
measure the Company's or the respective business unit(s) (as
applicable) results for each Participant, and calculated in
accordance with the Performance Objectives approved by the
Committee.
(v) The Committee may, in its sole discretion, increase or
decrease bonus amounts which would otherwise be payable under
the Plan.
(vi) No bonuses for a Plan Year shall be paid to Participant unless
the Minimum Threshold for such Plan Year is met.
(c) Bonus Determination in Cases of Leave of Absence
(i) If a Participant is on a Company approved leave of absence
(including, without limitation, leaves of absence covered by
the Family and Medical Leave Act) for less than three months
during the Plan Year, then the employee will continue to
participate in this Plan for that Plan Year; provided that the
Chief Executive Officer may, in his sole discretion, decrease
the potential bonus under this Plan on a prorated basis.
(ii) If a Participant is on a non-Company approved leave of absence
or is on a Company approved leave of absence for more than
three months, then the Participant is not eligible to receive
awards under this Plan, unless approved by the Chief Executive
Officer.
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MANAGEMENT INCENTIVE PLAN
(d) Bonus Determination in Cases of Termination
(i) Participants whose employment terminated prior to the end of
the Plan Year for any reasons other than death, disability, or
retirement are not eligible to receive awards under this Plan,
unless approved by the Chief Executive Officer.
(ii) Participants who terminate after the end of the Plan Year, but
before payment of the award, are eligible to receive the
awards under this Plan.
5. TIMING OF PAYMENT OF BONUSES
(a) Current Payment
Except as provided in Section 5(b), the bonus allocated by the
Committee for each Participant shall be paid in cash and in full as
soon as may be conveniently possible after such allocation by the
Board and certification by the Committee of the Company's
achievement of the relevant Performance Objectives, but not later
than two and one-half months from the last day of the Plan Year to
which such bonus relates.
(b) Deferral of Bonus
Any Participant may elect to defer receipt of all or part of such
bonus in accordance with any deferred compensation plans which may
be offered by the Company in the future.
6. PLAN ADMINISTRATION
(a) General Administration
The Committee will administer the Plan, and will interpret the
provisions of the Plan. The interpretation and application of these
terms by the Committee shall be binding and conclusive. The
Committee's authority will include, but is not limited to:
(i) Selecting of Participants
(ii) Establishing and modifying Performance Objectives, and
weighting Performance Objectives.
(iii) The determination of performance results and bonus awards.
(iv) Exceptions to the provisions of the Plan made in good faith
and for the benefit of the Company.
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MANAGEMENT INCENTIVE PLAN
(b) Adjustments for Extraordinary Events
If an event occurs during a Plan Year that materially influences the
performance measures of the Company and is deemed by the Committee
to be extraordinary and out of the control of management, the
Committee may, in its sole discretion, increase or decrease the
Performance Objectives used to determine the annual bonus payout.
Events warranting such action may include, but are not limited to,
changes in accounting, tax or regulatory rulings and significant
changes in economic conditions resulting in windfall gains or
losses.
(c) Amendment, Suspension, or Termination of the Plan
The Committee may amend, suspend or terminate the Plan, in whole or
in part, at any time, if, in the sole judgment of the Committee,
such action is in the best interests of the Company. Notwithstanding
the above, any such amendment, suspension or termination must be
prospective in that it may not deprive Participants of that which
they otherwise would have received under the Plan for the Plan Year
had the Plan not been amended, suspended or terminated. The Company
reserves the right to amend, modify, or repeal the Plan at any time
without prior written notice to Participants.
7. MISCELLANEOUS PROVISIONS
(a) Effective Date
The effective date of the Plan is January 1, 2003.
(b) Titles
Section and Article titles are provided herein for convenience only
and are not to serve as a basis for interpretation or construction
of the Plan.
(c) Employment Not Guaranteed
Nothing contained in the Plan nor any action taken in the
administration of the Plan shall be construed as a contract of
employment or as giving a Participant any right to be retained in
the service of the Company.
(d) Validity
In the event that any provision of the Plan is held to be invalid,
void or unenforceable, the same shall not effect, in any respect
whatsoever, the validity of any other provision of the Plan.
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MANAGEMENT INCENTIVE PLAN
(e) Withholding Tax
The Company shall withhold from all benefits due under the Plan an
amount sufficient to satisfy any federal, state and local tax
withholding requirements.
(f) Applicable Law
The Plan shall be governed in accordance with the laws of the State
of New Hampshire.
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