EXHIBIT 10.15
AS AMENDED
APRIL 30, 1999
EMS TECHNOLOGIES, INC.
EXECUTIVE ANNUAL INCENTIVE COMPENSATION PLAN
1. PURPOSE
The purpose of this Plan is to attract and retain in the employ of the
Company executives of outstanding experience and ability, and to incentivize
them to superior performance. Under this Plan, annual incentive compensation (or
"bonuses") will be based upon performance against financial and non-financial
objectives that are consistent with the objectives of the Company and its
shareholders. Thus, the Plan provides a means of rewarding those who contribute
through their individual performance to the objectives of the Company.
2. DEFINITIONS
Unless the context otherwise requires, the words which follow shall have
the following meaning:
(a) Plan - This Annual Incentive Compensation Plan for executives.
(b) Business Unit - A principal subsidiary, business division or group
of the Company as identified for the purposes of the Plan by the
Committee.
(c) Board - The Board of Directors of the Company.
(d) Company - EMS Technologies, Inc.
(e) Committee - The Compensation Committee of the Board, which has the
exclusive authority to interpret and make awards under the Plan.
(f) Plan Year - A fiscal year of the Company.
(g) Base Compensation - A Participant's annual salary compensation,
before reduction for Cafeteria Plan, Savings Incentive Plan, Stock
Purchase Plan or other elective reductions or deductions, and before
deduction of any taxes.
(h) Participant - A person selected in accordance with Section 4 to be
eligible to receive a bonus in accordance with this Plan.
(i) Target Incentive - The bonus payable under the Plan in the event
100% of financial objectives are met and the Participant's
normalized Performance Score is 100%.
3. ADMINISTRATION AND INTERPRETATION OF THE PLAN
The Committee shall have the power to (i) approve eligible Participants,
(ii) approve payments under the Plan, (iii) interpret the Plan, (iv) adopt,
amend and rescind rules and regulations relating to the Plan, and (v) make all
other determinations and take all other actions necessary or desirable for the
Plan's administration.
The decision of the Committee on any question concerning the
interpretation and administration of the Plan shall be final and conclusive. The
Committee's determinations may differ in the Committee's sole discretion between
different Participants, irrespective of whether they are similarly situated.
Subject to Section 7, nothing in the Plan shall give any employee or his or her
legal representative or assigns any right to a bonus or otherwise to participate
in the Plan except as the Committee may determine.
4. ELIGIBLE PARTICIPANTS
Participants will be those executives who are designated by the Chief
Executive Officer as being in a position to have a significant impact on profits
and Company performance and are approved by the Committee to receive a bonus
under the Plan. However, if a Change in Control (as defined in Section 7) occurs
prior to the time Participants are determined for the Plan Year in which the
Change in Control occurs, all persons who were Participants in the prior Plan
Year and who are active employees of the Company as of the date of the Change in
Control shall be Participants for such Plan Year.
Except as the Committee may otherwise determine or as provided in Section
7, each Participant for any Plan Year must serve during that Year as an
executive of the Company and be an active employee of the Company when the
Committee approves bonuses after the end of the Plan Year.
The Committee may decide to award a pro-rated bonus to a Participant who
is newly promoted or hired during a Plan Year. Pro-rated bonuses may also be
awarded to Participants who retire with the Company's approval during a Plan
Year and to the estates of Participants who die during a Plan Year.
5. DETERMINATION OF INCENTIVE COMPENSATION AWARDS
Incentive compensation awards shall be determined as set forth in this
Section 5.
(a) DETERMINATION OF TARGETS. During the first calendar quarter of each
Plan Year, the Target Incentive for each Participant shall be determined
by the Committee. The Target Incentive shall equal the Participant's Base
Compensation multiplied by a percentage that is based on the Committee's
evaluation of the individual Participant's level of responsibility and
potential to affect Company profits and performance. The Committee shall
also specify the portions of each individual's Target that are dependent
on the Company's and/or relevant Business Unit's financial performance
during the Year.
(b) DETERMINATION OF COMPANY AND BUSINESS UNIT FINANCIAL TARGETS. During
the first calendar quarter of each Plan Year, the Committee shall set for
the Company and for each Business Unit the target financial parameters
against which actual financial performance will be elevated. At a minimum,
these parameters will include Profit Before Taxes (PBT). The Committee
shall also determine a formula outlining how the Target Incentives in 5(a)
will be
affected if actual performance for PBT is not at the 100% level, and may
establish such formulas for other specified financial performance
parameters.
(c) DETERMINATION OF PARTICIPANT PERFORMANCE SCORES. At the end of the
year, the CEO shall prepare an overall assessment of each Participant's
contributions. The Committee will use these assessments, together with its
own assessments (particularly of the CEO), and together with each
Participant's success in achieving any specific performance objectives
established for the year, to establish an overall Performance Score for
each Participant.
The Performance Score guidelines will be:
< 80% for Needs Improvement
90% for Generally Meets Expectation (3.0 Performance)
100% for Nominal Performance (Meets Expectations)
125% for Outstanding Performance
For the purposes of this Plan:
Any excess over 100% will be doubled - for example, a raw score of
108% will be increased to 116%.
Any deficit below 90% will be increased by a factor of 9, such that
at 80% the Performance Score becomes 0 and the Participant is
ineligible for an Incentive Award -- for example, a raw score of 85%
will be reduced to 45% (90-5*9 = 45).
In the event the average of all Performance Ratings of all Participants,
as determined based on the foregoing guidelines and rules, exceeds 100%,
the Score of all Participants shall be normalized by proportionate
reduction such that the average shall equal 100% (the rules appearing
immediately before this sentence shall not be further applied after or as
a result of such normalization).
(d) DETERMINATION OF AWARD BASED ON FINANCIAL OBJECTIVES. Following the
close of each Plan Year, the Chief Financial Officer shall prepare a
report setting forth the extent to which the Company and/or relevant
Business Unit achieved the various financial objectives described in
Section 5(b). The Target Incentive for each Participant shall first be
adjusted for the weighting and actual performance against Company and
relevant Business Unit targets as described in 5(a) and 5(b). The
Committee shall then determine, based on an assessment of other financial
parameters believed relevant in light of the Company's financial
performance during the year, whether the calculated Target Incentive (as
adjusted pursuant to the preceding sentence) shall be further adjusted.
(e) PRELIMINARY DETERMINATION OF EACH PARTICIPANTS AWARD. A preliminary
determination of each Participant's award shall be made by multiplying his
or her adjusted Target Incentive, as determined in paragraph (d), by his
or her normalized individual Performance Score.
(f) FINAL APPROVAL. All awards shall be subject to final approval by the
Committee, which shall have the authority in its judgment to adjust awards
based on non-financial objectives, as
well as, in unusual circumstances as determined by the Committee, to
adjust the awards based on financial objectives.
6. PAYMENT OF INCENTIVE COMPENSATION AWARDS
Except as provided in Section 7, bonuses awarded under this Plan will be
fully paid in cash and/or shares of the Company's common stock (which may be
subject to restrictions specified by the Committee), as determined by the
Committee, within 90 days after the end of the Plan Year.
Any amounts paid under this Plan shall be considered as compensation to
the Participant for the purpose of disability and life insurance programs,
unless and to the extent such compensation is expressly excluded by the
provisions of such programs, but such amounts shall not be considered as
compensation for purposes of any other incentive plan or other benefit unless
such other plan or benefit expressly includes compensation paid under this Plan.
7. CHANGE IN CONTROL OF THE COMPANY
(a) CONTRARY PROVISIONS. The provisions of this Section 7 shall
govern and supersede any inconsistent terms or provisions of the
Plan.
(b) CHANGE IN CONTROL. For purposes of the Plan, "Change in Control"
shall mean any of the following events:
(1) The acquisition in one or more transactions by any
person or group (as such terms are defined in Section 13(d)(3)
of the Securities Exchange Act of 1934, as amended (the "1934
Act")), of "Beneficial Ownership" (within the meaning of Rule
13d-3 under 1934 Act) of 50% or more of the combined voting
power of the Company's then-outstanding voting securities; or
(2) The individuals who are members of the Incumbent
Board (as defined below), cease for any reason to constitute
at least two-thirds of the Board. The "Incumbent Board"
consists of the individuals who as of January 23, 1997, are
members of he Board and any individual becoming a director
subsequent to January 23, 1997, whose election, or nomination
for election by the Company's shareholders, was approved by a
vote of at least two-thirds of the directors then composing
the Incumbent Board; provided, however, that any individual
who is not a member of the Incumbent Board at the time he or
she becomes a member of the Board shall become a member of the
Incumbent Board upon the completion of two full years as a
member of the Board, except that no individual shall be
considered a member of the Incumbent Board if such individual
initially assumed office (i) as a result of either an actual
or threatened "election contest" (within the meaning of Rule
14a-11 under the 1934 Act) or other actual or threatened
solicitation of proxies or consents by or on behalf of a
person other than the Board (a "Proxy Contest"), or (ii) with
the approval of the other Board members, but by reason of any
agreement intended to avoid or settle a Proxy Contest; or
(3) Approval by shareholders of the Company of (i) a
merger or consolidation involving the Company if such
shareholders do not, immediately following such merger or
consolidation, own, directly or indirectly, more than 50% of
the combined voting power of the outstanding voting securities
of the corporation resulting from such merger or consolidation
in substantially the same proportion as their ownership of the
Company's voting securities immediately before such merger or
consolidation, or (ii) a complete liquidation or dissolution
of the Company or an agreement for the sale or other
disposition of all or substantially all of the assets of the
Company.
If a Participant's employment is terminated prior to a Change
in Control and the Participant reasonably demonstrates that
such termination (i) was at the request of a third party who
has indicated an intention or taken steps reasonably
calculated to effect a Change in Control and who thereafter
effects a Change in Control, or (ii) otherwise occurred in
connection with or in anticipation of a Change in Control
which actually occurs, then for all purposes of this Plan the
date of a Change in Control in respect of such Participant
shall mean the date immediately prior to the date of
termination of such Participant's employment.
(c) PAYMENT UPON A CHANGE IN CONTROL. Upon a Change in Control, the
bonus for a Plan Year ending prior to the date of the Change in
Control for which payment has not previously been made shall be
unconditionally payable to each Participant. The portion based on
financial objectives shall be determined as specified in paragraph
5(c), and the portion based on non-financial objectives shall be at
not less than the Target level related to such objectives.
If a Change in Control occurs with prior approval of the Board,
bonuses for the Plan Year during which the Change in Control occurs
shall be unconditionally payable to each Participant, such bonuses
to be at the Target level or at such higher percentage of Base
Compensation as may be approved by the Committee.
If a Change in Control occurs without prior approval of the Board,
bonuses for the Plan Year during which the Change in Control occurs
shall be unconditionally payable to each Participant, such bonuses
to be equal to the Target level. If such a Change in Control occurs
before Targets shall have been established for a Plan Year, the
Targets for such Plan Year shall be no less favorable to each of the
Participants than the Targets for the prior Plan Year.
Bonuses payable in accordance with this paragraph 7(c) shall be paid
in cash on or before the fifth day following the date of the Change
of Control.
(d) AMENDMENT OR TERMINATION.
(i) This Section 7 shall not be amended or terminated as to any
Participant who has not given his or her written consent.
(ii) Any amendment or termination of the Plan prior to a Change in
Control which (1) was at the request of a third party who has
indicated an intention or taken steps
reasonably calculated to effect a Change in Control, or (2)
otherwise arose in connection with or in anticipation of a Change in
Control, shall be null and void as to any Participant who has not
given his or her written consent.
(e) TRUST ARRANGEMENT. All benefits under the Plan shall be paid by
the Company. The Plan shall be unfunded and the benefits hereunder
shall be paid only from the general assets of the Company. However,
in the discretion of the Committee the Company may establish a trust
or other arrangement for the purpose of funding the benefits payable
under the Plan.
8. NON-ASSIGNABILITY
No bonus or other right or benefit under this Plan shall be subject to
anticipation, alienation, sale, assignment, pledge, encumbrance or charge, and
any attempt to anticipate, alienate, sell, assign, pledge, encumber or charge
the same shall be void and shall not be recognized or given effect by the
Company.
9. NO RIGHT TO EMPLOYMENT
Nothing in this Plan or in any notice of award pursuant hereto shall
confer any right to continue in the employment of the Company nor affect the
Company's right to terminate the employment of any Participant.
10. AMENDMENT OR TERMINATION
The Board may amend or terminate the Plan, without the consent of any
Participant, at any time prior to the end of the first calendar quarter of the
Plan Year for which such amendment or termination becomes effective.
(ALTERNATE APPROACH TO 6(d) -- IN LIEU OF LAST SENTENCE):
IF ACTUAL PERFORMANCE IS LESS THAN ANY OBJECTIVE, BUT NOT LESS THAN 80% OF
THE OBJECTIVE, THE PORTION OF THE TARGET RELATED TO THAT OBJECTIVE SHALL
BE REDUCED BY APPLYING TO THAT PORTION THE PERCENTAGE THAT THE ACTUAL
PERFORMANCE BEARS TO THE OBJECTIVE; IF THE ACTUAL PERFORMANCE ON ANY
OBJECTIVE IS LESS THAN 80% OF THE OBJECTIVE, THEN THE PORTION OF THE
TARGET DEPENDENT ON THAT OBJECTIVE SHALL NOT BE AWARDED. IF ACTUAL
PERFORMANCE EXCEEDS THE OBJECTIVE FOR ANY OBJECTIVE, THE PORTION OF THE
TARGET DEPENDENT ON THAT OBJECTIVE SHALL BE INCREASED BY DOUBLE THE
PERCENTAGE THAT ACTUAL PERFORMANCE EXCEEDS THE OBJECTIVE, TO A MAXIMUM
INCREASE OF 50%. FOR EXAMPLE, IF FOR A PARTICULAR PARTICIPANT THE
FINANCIAL OBJECTIVES PERTAIN TO (I) EARNINGS PER SHARE, (II) RETURN ON
INVESTMENT FOR A PARTICULAR BUSINESS UNIT, AND (III) BEFORE-TAX EARNINGS
FOR A PARTICULAR BUSINESS UNIT, WEIGHTED 4:2:1, AND ACTUAL EPS IS 90% OF
OBJECTIVE, AND ACTUAL BUSINESS UNIT ROI AND BEFORE-TAX EARNINGS ARE 75%
AND 105% OF THE OBJECTIVES, THE PARTICIPANT'S AWARD BASED ON FINANCIAL
OBJECTIVE IS (.85 X 40%) + (0 X 20%) + (1.1 X 10%) = 34% +0% + 11% = 45%
OF TARGET.