EXHIBIT 10(j)
LINDSAY MANUFACTURING CO.
MANAGEMENT INCENTIVE PLAN (MIP)
2005 PLAN YEAR
1. 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.
2. 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.
3. EFFECTIVE DATE
The Plan shall be effective as of September 1, 2004 and will be in effect
for the 2005 bonus year. The 2005 bonus year is defined as September 1,
2004 through August 31, 2005.
4. 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.
5. 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 2005 are not eligible to participate
in the 2005 Plan.
6. 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.
7. 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 2005, 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.
8. 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.
9. 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
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Full Year Participation
- - September 1 - August 31
- - Target award opportunity: 15%
- - Actual base salary received: $75,000
- - Plan target award calculation: $75,000 * 15% = $ 11,250
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