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Exhibit 10.5(b)
LONG TERM INCENTIVE GUIDELINES
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The following Long Term Incentive Guidelines have been established to reward
The Timberland Company's (the "Company") senior management team members through
the award of stock options pursuant to the Company's 1987 Stock Option Plan.
- Employees eligible to receive stock options pursuant to these Guidelines will
include (i) the Chief Executive Officer and the 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 Compensation Committee may designate from time to time
(collectively, (i) - (iv) are "Eligible Employees").
- Management will recommend, for adoption by the Compensation Committee at its
September 9, 1994 meeting, a cumulative earnings per share target ("EPS
Target") for the four year period covering the years 1994 through 1997.
- Management will recommend that the Compensation Committee award stock
options to Eligible Employees on the following terms.
- The number of stock options recommended to be awarded will be based on
individual performance and a specified grade level. (Eligible employees
will be assigned a grade level (1 through 4) according to their level of
responsibility (1 being the highest level).) The grade level and individual
performance ratings of the Eligible Employees will be determined by the
Company's management, in its sole discretion, subject to the approval of the
Compensation Committee.
- The table below indicates the number of stock options which are recommended
to be awarded based on individual performance rating at the respective grade
levels.
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Did Not Meet Meeting Some Meeting All Exceeding All
Level Expectations Expectations Expectations Expectations
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1 0 20,000 30,000 45,000
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2 0 10,000 15,000 20,000
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3 0 6,000 9,000 12,000
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4 0 2,500 4,000 5,500
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- Stock options awarded in accordance with these Guidelines would vest in four
equal annual installments of 25% each, beginning with the first anniversary
date of the grant (100% vesting would occur after four years). In the event
the cumulative EPS Target is attained (as determined by the Compensation
Committee in its sole discretion) prior to the end of the four year vesting
period: (i) full vesting will occur upon the attainment of such EPS Target
as so determined and (ii) the Compensation Committee will consider the grant
of additional stock options to Eligible Employees (see explanation below).
EXAMPLE:
A stock option to purchase 4,000 shares is awarded on September 9, 1994 with a
4 year cumulative EPS Target of $10.
The EPS Target is met ($10) on December 31, 1996, 2 years after the date of
award.
RESULT:
The 4,000 option shares are 100% vested on December 31, 1996 (after 2 years)
when the cumulative EPS Target is met. (1,000 shares would have vested at
September 9, 1995, 1,000 would have vested on September 9, 1996 and the balance
(2,000) vested early because the cumulative EPS Target was met prior to the end
of the four year vesting period.)
The Compensation Committee will consider awarding additional stock options
according to these Guidelines.
- The Compensation Committee, in its sole discretion, may establish new
cumulative EPS Targets for stock options awarded after September 9, 1994.
- All stock options will be awarded in accordance with all the terms and
conditions of the Company's 1987 Stock Option Plan.