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Exhibit 10.5
THE TIMBERLAND COMPANY
LONG TERM INCENTIVE PLAN FOR SENIOR MANAGEMENT
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1. PURPOSE
The purpose of The Timberland Company Long Term Incentive Plan for
Senior Management (the "Plan") is to promote the long#term success of The
Timberland Company (the "Company") and its shareholders by providing annual
incentive compensation to senior management of the Company.
2. TERM
As more fully described below, award opportunities under the Plan will
be based solely on Company performance over periods consisting, in each case,
of three consecutive calendar years, with a new three#year period commencing
every year. The first such three#year period began January 1, 1991. The Plan
will remain in effect until terminated by the Company's Board of Directors (the
"BOARD").
3. PLAN ADMINISTRATION
The Plan is administered by the Compensation Committee of the Board
(the "COMMITTEE"). The Committee has full and exclusive power to interpret the
Plan and to adopt such rules, regulations and guidelines for carrying out the
Plan as it may deem necessary or proper.
ELIGIBILITY; DETERMINATION OF COMPANY TARGET AND PARTICIPANT AWARDS
The following will be participants ("PARTICIPANTS") in the Plan: (i)
the Chief Executive Officer and Chief Operating Officer of the Company; (ii)
those employees of the Company who hold the title Senior Vice President; (iii)
those employees of the Company who hold the title Vice President or who are
Vice President level executive officers (i.e., job grade 9), and (iv) such
other employees, if any, of the Company or its subsidiaries as the Committee
may designate from time to time.
Toward the beginning of each three-year performance period (a
"PERFORMANCE PERIOD" or "PERIOD"), the Committee will designate both a
cumulative financial target for the Company (the "TARGET") and, for each
Participant, an award opportunity (the "AWARD") expressed in terms of a
percentage, or range of percentages, of the Participant's salary during the
last year of such Performance Period. The Company Target will consist of an
earnings per share component. Beginning with the second year of the
Performance Period which began in 1992, and all new Performance Periods
beginning during or after 1993, an earnings
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per share component and a return on net assets component will be designated.
Each Award will also set forth the relationship between the payout percentages
specified in the Award and the extent, if any, to which cumulative financial
performance of the Company for the Period exceeds the Target. No amount will
be payable under an Award for a Performance Period if the Target is not met by
the end of that Period.
The Committee may at any time during a Performance Period or
thereafter, but prior to Award payment, make appropriate adjustments Target or
in the percentages determined with respect to any Participant under an Award to
avoid undue windfalls or hardships due to external conditions outside the
control of management, non-recurring or abnormal items, or other matters as the
Committee may, in its sole discretion, determine to be appropriate.
Except as otherwise determined by the Committee, an individual will not
be a Participant for any Performance Period unless he or she was hired by the
Company prior to July 1 of the first year of the Performance Period.
5. PAYMENT OF AWARDS
As soon as practicable after the end of a Performance Period, but no
later than the end of the first quarter immediately following the Performance
Period, the Committee will determine the amount of each Award and will pay such
amount, in cash to the Participant.
6. TERMINATION
Except as provided in this Section, an individual who, prior to the
date Award payments are made for a Performance Period, ceases (whether by
termination or employment or change of responsibilities) to be a Participant as
defined in the first paragraph of Section {ref eligibility|4.} above, will
forfeit all rights to any payment for that period. However, if an individual
ceases to be a Participant by reason of (a) death, (b) total and permanent
disability, or (c) retirement at or after age 65 (or earlier retirement after
age 55 with the consent of the Company) or (d) such other circumstances (if
any) as the Committee in its sole discretion may determine, then the Committee
in its sole discretion may direct that all or a portion of such individual's
Award be paid, taking into account the duration of participation during the
Performance Period and such other matters as the Committee may deem
appropriate.
7. Transferability
Awards under the Plan may not be assigned, alienated, sold or otherwise
transferred by the Participant other than by will or the laws of descent and
distribution.
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8. MERGERS, ETC.
In the event of a merger or consolidation with another company, or in
the event of a liquidation or reorganization of the Company, the Committee in
its sole discretion may determine whether to provide for adjustments and
settlements of Awards.
9. AMENDMENT AND MODIFICATION
The Committee may, from time to time, change the components used to
determine the Target for any year of a Performance Period. The Board may from
time to time amend, modify, or discontinue the Plan or any provision thereof in
its sole discretion.
10. WITHHOLDING TAXES
The Company will have the right to deduct withholding taxes from any
payments made pursuant to the Plan, or make such other provisions as it deems
necessary or appropriate to satisfy its obligations for withholding federal,
state, or local income or other taxes incurred by reason or payments pursuant
to the Plan.
11. FUTURE RIGHTS
No person will have any claim or rights to be granted an Award under
the Plan, and no Participant will have any rights under the Plan to be retained
in the employ of the Company. The loss of potential income with respect to any
award shall not constitute an element of damages in the event of a
Participant's termination of employment or change in status, even if such
termination or change is in violation of an obligation of the Company to the
Participant by contract or otherwise.
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