EXHIBIT 10.8(b)
2004 10-K
PLEXUS CORP.
2005 VARIABLE INCENTIVE COMPENSATION PLAN
EXECUTIVE LEADERSHIP TEAM
PLAN OBJECTIVES
The primary objectives of the 2005 Variable Incentive Compensation Plan (Plan)
are to reward results delivered by plan participants that enhance shareholder
value and to assist Plexus Corp. (Plexus) to attract, retain and motivate highly
qualified and talented executives. The Plan provides annual variable incentive
compensation opportunities to participants for the achievement of specified
financial performance and other significant results that contribute to the
overall success of Plexus. Increasing revenues, improving financial returns on
capital employed, and achieving specific personal objectives are the three
performance elements of this Plan.
PLAN YEAR
The Plan Year is effective October 1, 2004 and continues through October 1,
2005.
ELIGIBILITY FOR PLAN PARTICIPATION
Participation in this Plan is limited to the members of the Plexus Executive
Leadership Team.
INCENTIVE PLAN COMPENSATION
Plan awards are to be calculated based upon the Plan Year base salary (salary
excluding bonuses, paid commissions, reimbursed relocation expenses, or any
other special pay, but including amounts deferred) of each participant adjusted
for pro-rations as applicable (See Award Payment Timing and Eligibility, below).
Incentive awards are calculated for each position (job) a participant holds
through the plan year and are pro-rated accordingly based on calendar weeks in
each position (FY 2005 = 52 weeks).
INCENTIVE PLAN PERFORMANCE MEASURES
The incentive performance measures, each of which stands independently of the
others with regard to award opportunities, are:
- REVENUES: Total Fiscal Year 2005 Net Sales of Plexus Corp.
- RETURN ON AVERAGE CAPITAL EMPLOYED (ROCE): Annual Operating Income for
Fiscal Year 2005 divided by Average Capital Employed. Where,
- OPERATING INCOME: As reported in the company's audited income
statement for Fiscal Year 2005 adjusted, if necessary, to
eliminate non-recurring or unusual charges.
- AVERAGE CAPITAL EMPLOYED: The 5 point average of the year-end
Fiscal Year 2004 and the quarterly Fiscal Year 2005 Capital
Employed balances.
- CAPITAL EMPLOYED: Total Assets (minus Cash) less
non-interest bearing Current and Non-current Liabilities.
- OBJECTIVES: Individual participant objectives that relate to
measurable personal or site/location/department goals for the plan
year; typically the number of goals should be limited to 3 to 5, which
have been developed with, reviewed by and approved by the
participant's supervisor.
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INCENTIVE PLAN PERFORMANCE AND REWARD OPPORTUNITIES
Incentive compensation is paid based on the following achievement levels:
COMPONENT THRESHOLD PAYOUT TARGET PAYOUT MAXIMUM PAYOUT
- ---------------------------------------- -------------- -------- --------------- ---------- --------------- ---------
REVENUE $ * 0% $ * 40% $ * 40%
ROCE *% 0% *% 40% *% 140%
PERSONAL OBJECTIVES 0% 20% 20%
TOTAL INCENTIVE = 0% 100% 200%
REVENUES + ROCE + PERSONAL OBJECTIVES
* Specific threshold, target and maximum amounts, and percentages
allocated to each component, are the same for each participant and
determined with the approval of the Compensation and Leadership
Development Committee; that information shall be communicated to
eligible participants. If it is decided to continue the Plan beyond
fiscal 2005, all year references herein will be deemed to refer to the
appropriate future year and numbers in this matrix will be re-set for
such years.]
- THRESHOLD: At or below Revenue and/or ROCE Thresholds, only personal
objectives awards can be earned. Revenue and ROCE measures begin
producing incentive awards for above Threshold achievement.
- TARGET: Targets for the Revenue and ROCE measures relate to the FY
2005 financial plan. Personal objectives relate to individual
participant performance and may reflect personal, location, site,
department, or other measurable objectives. Awards will be pro-rated
on a straight-line basis for performance that falls between Threshold
and Target achievement.
- MAXIMUM: The maximum performance levels reflect the maximum award for
each component. Awards will be pro-rated on a straight-line basis for
performance that falls between Target and Maximum achievement.
Note: No award will be paid for any component if the company incurs a net loss
for the fiscal year (excluding non-recurring or unusual charges).
AWARD PAYMENT TIMING AND ELIGIBILITY
Eligible participants will receive earned incentive awards no later than
December 15, 2005 (payment date). Adjustments occur under the following
circumstances:
- PARTICIPANT TRANSFER: Awards will be pro-rated for participants who
transfer between company organizations (sites, locations, departments,
SBU's, etc.) based upon time spent in each job.
- PARTICIPANT STATUS CHANGE: Participants changing status (to/from
eligible/ineligible position) are to be pro-rated by eligible weeks on
the company payroll divided by the number of weeks of the plan year
(FY 2005 = 52 weeks).
- EMPLOYMENT/RE-EMPLOYMENT: New or rehired employees who enter the Plan
after the start of the Plan Year will receive a pro-rated award based
on the time actually in the Plan.
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- EMPLOYMENT TERMINATION: Plan participants who leave the employ of
Plexus (whether voluntarily or involuntarily) prior to the payout date
(December 15, 2005), except in the case of retirement, disability,
death or approval by the CEO, forfeit all rights to incentive awards
accrued during the Plan Year.
- RETIREMENT, DISABILITY, OR DEATH: "Retirement" means eligible for
retirement under Plexus Corp.'s retirement guidelines. Disability
means eligible for disability benefits and unable to continue in the
employ of the company due to such disability. In the event of death,
any payable award will be paid to the participant's beneficiary(ies),
or to the estate in the event that no beneficiary is named, following
the end of the Plan Year. Awards for participants who leave due to
retirement, disability or death will be pro-rated by eligible weeks on
the company payroll divided by the number of weeks of the plan year
(FY 2005 = 52 weeks).
- NON-PERFORMING EMPLOYEES: If at any time during the plan year an
individual's performance is not satisfactory and the participant is on
a formal written performance improvement plan, such participant may be
removed from this Plan, and either no award or a reduced award will be
paid to the individual. Approval of such action will be made by the
CEO subject to the final approval of the Compensation and Leadership
Development Committee of the Board.
- LEAVES OF ABSENCE: Awards for participants who are on an unpaid Leave
of Absence will be pro-rated for the ROCE and Revenue components based
upon eligible calendar weeks on the company payroll divided by the
number of weeks of the plan year. (FY 2005 = 52 weeks)
COMMUNICATION
Each participant will receive a copy of this plan document and a Participant
Award Opportunity Summary. To ensure understanding of the status of plan awards,
Management will communicate periodic performance trends and results to
participants.
ADMINISTRATION
Overall policy direction shall be provided by the Board of Directors. Plan
administration shall be the responsibility of the CEO with support and guidance
from the Compensation and Leadership Development Committee of the Board of
Directors.
EXCEPTIONS AND REVISIONS
It is conceivable that there may be particular situations which are not properly
accommodated by the regular criteria and boundaries of the prevailing incentive
program, (e.g. the effect that an acquisition, a secondary stock offering, or
the like may have on Plexus' financial performance). Should such situation(s)
occur, the CEO will recommend appropriate adjustments to the Compensation and
Leadership Development Committee of the Board of Directors. If adjustments are
made, the reason for such adjustments will be set forth in the Committee's
Minutes and communicated to Plan participants. Nothing in this plan document or
associated communications in any way promises or guarantees the compensation or
employment of any participant with Plexus Corp. or any successor or related
company(ies).
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