EXHIBIT 10(j)
LINDSAY MANUFACTURING CO.
MANAGEMENT INCENTIVE PLAN (MIP)
2004 Plan Year
Purpose
The purpose of the Management Incentive Plan (the "Plan") is to:
- Encourage performance consistent with the Company's
business strategy
- Focus on near-term performance results as well as
progress toward the achievement of long-term
objectives
- Strengthen the link between performance and pay by
delivering awards based on measurable corporate and
individual goals.
Definitions
The terms used in this Plan have the meanings set forth below.
A. "Company" shall mean Lindsay Manufacturing Co.
B. "Compensation Committee" shall mean the Compensation Committee
of the Company's Board of Directors.
C. "Financial Performance Component" shall mean the portion of a
Participant's Plan award that is based on the Company's and
specific Market financial performance as defined in Section
7B.
D. "Individual Performance Component" shall mean the portion of a
Participant's Plan award that is based on a Participant's
performance relative to individual objectives established in
accordance with Section 7C.
E. "Named Executive Officers" shall mean the executives of the
Company listed in the Executive Compensation section of the
Company's Proxy Statement.
F. "Participant" shall mean a key employee eligible for awards
under the terms outlined in Section 4 of this Plan.
G. "Plan" shall mean Lindsay Manufacturing Co. Management
Incentive Plan.
Effective Date
The Plan shall be effective as of September 1, 2003 and will be in
effect for the 2004 bonus year. The 2004 bonus year is defined as
September 1, 2003 through August 31, 2004.
Eligibility for Participation
A. Participation in the Plan is limited to individuals in
positions which have significant responsibility for and impact
on the Company's corporate performance.
B. Only the Chief Executive Officer and those employees in grades
E through G are eligible to be considered for participation in
the Plan.
C. Participation in the Plan does not guarantee or entitle any
employee to participate in any bonus plan enacted in the
future. Participation in the Plan at any target bonus level
does not guarantee or entitle any employee to be eligible to
participate at any similar target bonus level in any bonus
plan which may be enacted in the future.
Enrollment in the Plan
A. Initial Enrollment
At the beginning of the Plan year, each Participant must be
enrolled in the Plan subject to the approvals and eligibility
criteria set forth in Sections 4 and 6. The enrollment process
is as follows:
i. Plan Participants will participate in the Plan at the
standard target percent per grade level as listed in
Section 6.
ii. The Company's Chief Executive Officer will review the
participant list and projected bonus costs of
enrolled employees with the Compensation Committee.
The Compensation Committee provides final approval on
the aggregate potential cost of the Plan.
B. Mid-year Enrollment
When hiring or promoting employees during the Plan year who
may be eligible for participation in the Plan, the
following procedures must be followed:
i. Prior to the commencement of the recruiting or
promotion process, the hiring manager consults with
Human Resources to determine the position's
eligibility for participation in the Plan and the
recommended target bonus amount.
ii. Offer letters indicating bonus Plan participation and
target bonus award opportunities to new hires and/or
promoted employees must be reviewed by the CEO or, in
the case of a Named Executive Officer, by the
Compensation Committee. Target bonus recommendations
must be approved before communication to a
prospective Participant. Generally, employees hired
or promoted during the fourth quarter 2004 are not
eligible to participate in the 2004 Plan.
Determination of Target Payout Levels
A. Incentive awards will be calculated as a percentage of the
Participant's actual base salary received during the Plan
year. While award amounts will vary based on the range of
award opportunity and an assessment of individual performance
results, the target award opportunities for each grade level
are shown below:
GRADE TARGET % OF SALARY
CEO 60%
G 35%
F 25%
E 15%
i. Actual participation is subject to approval by the
CEO, or in the case of a Named Executive Officer, by
the Compensation Committee. Actual participation is
based on an assessment of the individual's position
impact on the organization.
ii. Standard target percents per grade level should be
followed for all Plan Participants.
B. If a Participant's Plan target award opportunity (Target % of
Salary as set forth above) changes due to promotion into a
grade level with a higher target bonus, the Participant's
bonus will be calculated based on his or her actual
salary during the Plan year and a weighted average bonus
percentage. The weighted average bonus percentage will reflect
the portion of the Plan year spent in each grade level (e.g.,
seven months at 15% and five months at 25%). In evaluating the
performance of Participants who change positions during the
Plan year, consideration will be given to the length of time
and results in each position. Actual award decisions will be
made by the CEO or, in the case of a Named Executive Officer,
by the Compensation Committee. Generally, fourth quarter
promotions will not result in an increase in a Participant's
target award opportunity.
C. Examples of various award calculations are included with this
Plan document as Attachment A.
D. The CEO will review and approve award recommendations for all
employees other than Named Executive Officers prior to payout.
Final approval authority for all payments (except for award
payments to the Named Executive Officers) rests with the CEO.
Individual award payments for all Participants (except the
Named Executive Officers) may be adjusted at any time and for
any reason at the discretion of the CEO.
E. The Compensation Committee will determine the award payments
to the Named Executive Officers.
F. Award payments will be calculated on an annual basis and paid
in accordance with the Company's normal payroll cycle.
Payments will be made during the first quarter following the
Plan year. The payment date may be changed at any time and for
any reason at the discretion of the CEO, or in the case of a
Named Executive Officer, with approval of the Compensation
Committee.
Basis of Awards
A. Measurable performance objectives for each Plan Participant
will be established at the beginning of the Plan year (or at
mid-year for mid-year hires or newly eligible employees). In
2004, consideration will be given to:
i. Financial Performance Component: Company and Market
financial performance vs. Plan performance objectives
in accordance with Section 7B.
ii. Individual Performance Component: Participant's
performance relative to individual goals established
in accordance with Section 7C.
iii. Individual and Financial Performance Components will
be added to reach a Participant's total bonus. The
relative weighting will vary by grade in accordance
with the following schedule:
Financial Individual
Grade Performance Performance
CEO 80% 20%
G 80% 20%
F 65% 35%
E 50% 50%
B. At the beginning of the Plan year, the objectives for the
Financial Performance Component are identified and approved by
the Compensation Committee.
i. Recommended award amounts may range from 0 - 200% of
the Financial Performance Component of the
Participant's target award, based on performance.
ii. Percentages between the threshold, target, and
maximum award will be interpolated.
iii. In the event of an acquisition, revenue and operating
income resulting from the acquisition will be
excluded from award payout calculations, unless
(a) the CEO or Compensation Committee suggests a
modification to the objectives under the
Financial Performance Component that would
incorporate revenue and income generated as a
result of the acquisition, and
(b) The Compensation Committee approves the
modification.
C. The Individual Performance Component will be based on written
objectives set annually for Participants by their supervisors
and approved by the CEO or, in the case of a Named Executive
Officer, by the Compensation Committee. Objectives will be
based on the Participant's position and may be financial,
operational or strategic.
i. Objectives under the Individual Performance Component
may be linked to team-based goals, if appropriate
ii. Examples of appropriate objectives under the
Individual Performance Component include:
- Safety
- Customer Service
- Market Share
- On-time Delivery
- Cost Reduction
- Product Development
iii. Recommended award amounts may range from 0% - 200% of
the target amount under the Individual Performance
Component. Recommended award amounts will be based on
an assessment of the individual's performance
relative to objectives established under the
Individual Performance Component, in accordance with
the following guidelines:
PAYOUT
INDIVIDUAL (AS % OF TARGET INDIVIDUAL
PERFORMANCE PERFORMANCE COMPONENT)
Does not meet objectives 0%
Meets some objectives 50%
Meets most objectives 75%
Meets all objectives 100%
Exceeds objectives 150%
Significantly exceeds objectives 200%
iv. The "Payout (as % of Target Individual Performance
Component)" represents the payout relative to target
award for the Individual Performance Component of the
Plan.
Changes in Employment Status
A. Under most circumstances, Participants who cease to be
employees of the Company during the Plan year or after the
Plan year but prior to the date of actual payment will receive
no award. Only active employees on the date that the bonus is
paid will be eligible to receive an award. Any exceptions will
require the approval of the CEO, or in the case of a Named
Executive Officer, the Compensation Committee.
B. In the event that a Participant transfers out of an eligible
position into an ineligible position within the Company, the
employee may be eligible for a prorated bonus award based upon
the approval of the CEO, or in the case of a Named Executive
Officer, the Compensation Committee.
C. In all cases awards will be calculated and paid according to
the provisions in Sections 6 and 7 of this Plan document.
Administration
A. General authority for Plan administration and responsibility
for ongoing Plan administration will rest with the
Compensation Committee of the Company's Board of Directors.
The Compensation Committee has sole authority for decisions
regarding interpretation of the terms of this Plan.
B. The Company reserves the right to amend or change the Plan in
whole or in part at any time during the Plan year. Amendments
to the Plan require the approval of the Compensation
Committee.
C. Participation in the Plan does not constitute a contract of
employment nor a contractual agreement of payment. It shall
not affect the right of the Company to discharge, transfer, or
change the position of a Participant. The Plan shall not be
construed to limit or prevent the Company from adopting or
changing, from time to time, any rules, standards or
procedures affecting the Participant's employment with the
Company or any Company affiliate, including those which affect
bonus payouts.
D. If any provision of this Plan is found to be illegal, invalid
or unenforceable under present or future laws, that provision
shall be severed from the Plan. If such a provision is
severed, this Plan shall be construed and enforced as if the
severed provision had never been part of it and the remaining
provisions of this Plan shall remain in full force and effect
and shall not be affected by the severed provisions or by its
severance from this Plan. In place of any severed provision
there shall be added automatically as part of this Plan a
provision as similar in terms to the severed provision as may
be possible and be legal, valid and enforceable.
E. This is not an ERISA plan. This is a bonus program.
ATTACHMENT A
AWARD CALCULATION GUIDELINES
The following examples are to be used as guidelines in calculating bonus awards
at the end of the 2004 Plan year. Managers should use their discretion in
calculating actual bonus awards and may consider exceptions to the calculations
below when necessary. Any such exceptions must be fully documented and are
subject to review and approval by the Chief Executive Officer, or in the case of
a Named Executive Officer, the Compensation Committee.
Target
Award
-------
Full Year Participation
- - September 1 - August 31 15%
- - Target award opportunity: $75,000
- - Actual base salary received: $75,000 * 15% = $11,250
- - Plan target award calculation:
Partial Year Participation
- - February 15 - August 31
- - Target award opportunity: 25%
- - Actual base salary received
(for partial year employment): $61,250
- - Plan target award calculation: $61,250 * 25% = $15,312
Mid-year Promotion
- - March 1 promotion
- - Actual base salary received: $94,000
- - Target award opportunity at beginning of year: 15%
- - Target award opportunity upon promotion: 25%
- - Months from September 1 - March 1: 6 months
- - Months from March 1 - August 31: 6 months
- - Weighted average target award calculation: ((15% * 6 months) + (25% * 6
months)) / 12 months = 20.0%
- - Plan target award calculation: $94,000 * 20.0% $18,800