Exhibit 10.3
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 Budgeted Performance" means the budgeted financial
performance of each division of Nashua Corporation as approved
by the Board of Directors.
(e) "MIP" means the Management Incentive Plan of the Company.
(f) "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.
(g) "Performance Objectives" means one or more pre-established
performance objectives.
(h) "Plan" means the Management Incentive Plan for Nashua
Corporation.
(i) "Plan Year" means the fiscal year of the Company.
(j) "Total Company Budgeted Performance" means the budgeted
financial performance of all of Nashua Corporation and its
divisions during the Company's fiscal year as approved by the
Board of Directors.
MANAGEMENT INCENTIVE PLAN
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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 and
approved by the Committee. 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. Bonuses will be capped based on award level at a maximum
of 190% of target bonus at 150% of annual pre-tax budgeted
income before Management Incentive Plan expense.
(b) Bonus Payout
(i) A Participant's annual bonus payout is based on the
overall Company's performance and the business unit
performance where appropriate.
(ii) Bonus payouts will be determined based on the following
schedule:
- BONUS AT TARGET. The bonus award of an individual
will meet the "target" level ranging from 30% to 50%
of base salary, if the Division Budget Performance is
achieved for his/her division and/or if Total Company
Budget Performance is achieved.
- BONUS BELOW TARGET. In the event of below budget
performance, the threshold for a payout is 80% of the
Total Company Budget Performance. In the event that
corporate performance is 79% or lower than budgeted
pretax income before management incentive plan
expense, no employee of either the corporate office
or of any division will receive an income based
bonus. For pretax income before Management Incentive
Plan expense performance between 80% and 100%,
bonuses will be paid at 50% and 100%, respectively,
with interpolation in between.
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- BONUS ABOVE TARGET. In the event of performance
above the Total Company Budgeted Performance or above
Divisional Budgeted Performance, a higher percentage
of incremental pretax income before Management
Incentive Plan expense will fund the bonus award pool
based on award level. Bonus will not exceed 190% of
the bonus at target and maximum bonus is achieved for
150% of budgeted pre-tax income.
(iii) The Committee may, in its sole discretion, make required
adjustments to the Plan.
(iv) No bonuses for a Plan Year shall be paid to Participant
unless the Minimum Thresholds set by the Committee 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 Committee may, in its 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 Committee.
(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 Committee.
(ii) Participants whose employment terminates after the end of
the Plan Year, but before payment of the award, are not
eligible to receive the awards under this Plan unless
approved by the Committee.
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.
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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.
(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.
(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, 2005.
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(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.
(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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