EXHIBIT 10.16
THE TIMBERLAND COMPANY
2006 SMARTWOOL INTEGRATION BONUS PROGRAM
(effective 1/1/06)
THE TIMBERLAND COMPANY
2006 SMARTWOOL INTEGRATION BONUS PROGRAM
This instrument sets forth the terms of The Timberland Company 2006
SmartWool Integration Bonus Program. The Program is established under The
Timberland Company 1997 Incentive Plan, and amounts paid under the Program are
intended to qualify as performance-based compensation under Section 162(m) of
the Internal Revenue Code.
1. Purpose. The purpose of the Program is (a) to attract, retain and
motivate key employees of outstanding ability; and (b) to provide competitive
incentive pay paid in cash only to certain key employees in exchange for their
attainment of specified Performance Goals.
2. Definitions. The following terms shall have the following meanings
unless the context indicates otherwise.
(a) "Affiliate" shall mean any corporation or other entity owning,
directly or indirectly, 50% or more of the outstanding Stock of the
Company, or in which the Company or any such corporation or other entity
owns, directly or indirectly, 50% or more of the outstanding capital stock
(determined by aggregate voting rights) or other voting interests.
(b) "Award" shall mean an opportunity to earn incentive pay, in the
form of cash, based on performance, as described in Section 5.
(c) "Award Period" shall mean the calendar year period commencing
January 1, 2006, and shall be the measurement period during which Goal
attainment shall be determined.
(d) "Board" shall mean the Board of Directors of The Timberland
Company.
(e) "Code" shall mean the Internal Revenue Code of 1986, as from
time to time amended.
(f) "Committee" shall mean the Management Development and
Compensation Committee of the Board.
(g) "Company" shall mean The Timberland Company.
(h) "Participant" shall mean an employee of the Company or an
Affiliate in salary grade twelve (12) or above who is designated by the
Committee to receive an Award.
(i) "Performance Goal" or "Goal" shall mean the financial objective
that must be met to earn incentive pay.
(j) "Performance Measure" shall mean SmartWool Operating
Contribution.
(k) "Plan" shall mean The Timberland Company 1997 Incentive Plan, as
amended.
(l) "Program" shall mean The Timberland Company 2006 SmartWool
Integration Bonus Program.
(m) "Section 162(m) Participant" shall mean the chief executive
officer (CEO) or one of the four highest paid officers of the Company
(other than the CEO) on the last day of the taxable year, for purposes of
the executive compensation disclosure rules under the Securities Exchange
Act of 1934.
(n) "SmartWool Operating Contribution" shall mean revenue, less cost
of goods sold and less operating expenses directly attributable to the
SmartWool business, as stated in the accounting records of the Company.
(o) "Stock" shall mean Class A Common Stock of the Company, par
value $.01 per share.
3. Administration. The Program shall be administered by the Committee,
in accordance with the terms of the Plan. The Committee shall have sole and
complete discretion with respect to the exercise of all permissive powers and
authority granted to the administrator under the Plan; provided, however, the
Committee may not exercise its discretion to increase the amount of incentive
pay that would be otherwise due a Section 162(m) Participant upon attainment of
a Performance Goal. All actions, determinations, and decisions of the Committee
shall be final, conclusive, and binding on all parties.
4. Participation. The Committee shall designate in writing the
employees who shall participate during the Award Period as soon as practicable
and not later than 90 days after the start of the Award Period. The Participants
(Schedule A attached) were designated by the Committee at its meeting on March
1, 2006.
5. Awards. An Award shall be established in writing by the Committee
for each Participant as soon as practicable and not later than 90 days after the
beginning of each Award Period. The Awards will be expressed as an opportunity
to receive a cash bonus; may vary according to a Participant's salary grade or
position; and will be based on the attainment of a specific Performance Goal
described in Section 6. The Award for a Section 162(m) Participant shall not be
changed or modified during the Award Period to increase the amount of incentive
pay that would otherwise become payable. The Award level for each Participant
was established by the Committee at its meeting on March 1, 2006. (Schedule B
attached shows the Awards for the Award Period.)
6. Performance Measures and Goals.
(a) The Committee shall establish in writing the Performance Measure
(or Performance Measures) and the Goals as soon as practicable and not
later than 90 days after the beginning of each Award Period. Performance
Goals for a Section 162(m) Participant shall not be changed or modified
during an Award Period to increase the amount of incentive pay that would
otherwise become payable. The Performance Measure and Goal were
established by the Committee at its meeting on March 1, 2006 (Schedule C
attached sets forth the Performance Measure and Goal for the Award
Period).
(b) The SmartWool Operating Contribution will be adjusted to exclude
the cumulative effect of changes in Generally Accepted Accounting
Principles, extraordinary items of loss or expense and any other unusual
or nonrecurring items of loss or expense. Any such adjustment shall be
made only to the extent the item is separately identified on the
Consolidated Statement of Earnings in the Corporation's Annual Report; the
Notes to the Consolidated Financial Statements; or in the Management
Discussion & Analysis section of the Corporation's Annual Report and is
objectively quantifiable in the Company's accounting records as reviewed
by the Company's independent auditors.
7. Award Payout Calculation.
(a) Award payouts shall be conditioned on attainment of the
Performance Goal. No payouts shall be made unless the Goal is attained,
and a payout shall not be increased to the extent the Goal is surpassed.
(b) The Company's independent public accountants shall audit the
Company's Award calculations following the close of the Award Period.
(c) The Committee shall promptly approve or disapprove Award payouts
for all Participants following completion of the independent audit. The
Committee retains discretion to reduce or eliminate any Award payout that
may be due upon attainment of the Performance Goal.
8. Award Payment.
The Award payout shall be made in the form of cash as soon as
practicable and not later than March 31 following the close of the Award
Period, subject to the independent audit. To be eligible to receive a
payout, a Participant must be employed by the Company or an Affiliate on
the payment date.
9. Employment
Receiving an Award or Award payout shall not give any Participant
the right to be retained in the employment of the Company or an Affiliate,
or affect the right of the Company or an Affiliate to discharge or
discipline a Participant.
IN WITNESS WHEREOF, The Timberland Company has caused this document to be
executed by its duly authorized officer on this 9th day of March, 2006.
THE TIMBERLAND COMPANY
By: /s/ Bruce A. Johnson
Its Senior Vice President-Human
Resources
THE TIMBERLAND COMPANY
2006 SMARTWOOL INTEGRATION BONUS PROGRAM
Schedule A - Participants
PARTICIPANTS
Jeffrey B. Swartz: President and Chief Executive Officer
Kenneth P. Pucker: Executive Vice President and Chief Operating Officer
Brian P. McKeon: Chief Financial Officer and Executive Vice President,
Finance and Administration
Michael J. Harrison: Senior Vice President, Worldwide Sales and Marketing
Gary S. Smith: Senior Vice President, Supply Chain Management
Marc Schneider: Senior Vice President, Global Product Management
Bruce A. Johnson: Senior Vice President, Human Resources
THE TIMBERLAND COMPANY
2006 SMARTWOOL INTEGRATION BONUS PROGRAM
Schedule B - Awards
PAYMENT YEAR CASH BONUS VALUE (000)
- ------------ ----------------------
Jeffrey B. Swartz $60
Kenneth P. Pucker $40
Brian P. McKeon $30
Michael J. Harrison $25
Gary S. Smith $25
Marc Schneider $20
Bruce A. Johnson $20
THE TIMBERLAND COMPANY
2006 SMARTWOOL INTEGRATION BONUS PROGRAM
Schedule C - Performance Measure and Goal
PERFORMANCE PERFORMANCE
AWARD PERIOD MEASURE WEIGHTING GOAL
------------- ------------ --------- -----------
1/1/06 - 12/31/06 SmartWool 100% $_____
Operating
Contribution