DEL WEBB CORPORATION
MANAGEMENT INCENTIVE PLAN
Fiscal 2001 (July 1, 2000 - June 30, 2001)
Plan Objectives
* To motivate key management personnel to achieve or exceed corporate
financial goals and to contribute to the short and longer term interest of
shareholders.
* To provide a competitive bonus program necessary to attract, retain and
motivate high quality management.
Administration
1. Bonuses may be paid in cash or in stock, less applicable tax deductions and
subject to prior deferral agreements as soon as practicable after the end
of the Fiscal Year.
2. In order to receive a bonus, the participant must be on the active payroll
at the time the bonus is paid unless approval for a pro rata bonus is
granted by the Chief Executive Officer (CEO).
3. At the discretion of the CEO and upon approval of the Human Resources
Committee, financial objectives may be adjusted upward or downward as a
result of significant windfalls or disasters beyond the control of
management. In addition, the Human Resources Committee can revise financial
objectives during the year if significant events occur that. were not
included in the budget Total incentives payable under the NIP will not
exceed 11 1/2% of pre-tax, pre-incentive earnings of the Company for the
Fiscal Year 2001.
4. A pool of 3/4 of 1% (0.75%) of net income will be set aside which can be
used, if deemed appropriate by the CEO, upon approval of the Human
Resources Committee, to recognize and reward individual contributions of an
exceptional nature.
5. Bonuses are computed under the plan criteria for corporate earnings,
community earnings, and improvement in return on invested capital at the
corporate and community level approved by the Human Resources Committee of
the Board. Bonus calculations are reviewed by the CEO and the Human
Resources Department, and presented to the Human Resources Committee of the
Board for final approval..
6. All terms and conditions of the Plan and its very existence are at the sole
discretion of the Human Resources Committee of the Board of Directors.
Eligibility
Key Management personnel:
* whose duties and responsibilities can materially affect the growth,
development and profitability of the Company and,
* who are nominated by a subsidiary or Company officer and ate approved
by the CEO, and
* who are assigned to as eligible position on or before July 1st unless
otherwise approved by the CEO.
Bonus Opportunity Levels
Each participant will have a Target Bonus which will be the amount earned four
meeting the Plan objectives. The Target Bonus will be expressed as a percentage
of actual base salary (base salary, vacation utilized is current year, sick,
bereavement, jury duty, holidays, and retroactive pay increases) paid throughout
the Fiscal Year 2001 while a participant in the plan and will be established by
the CEO and the Human Resources Department based on competitive compensation
data and internal equity.
Target Bonuses
Target bonus levels will range from 10% to 75% of salary based on the
participant's salary grade and organizational level and recommendation of the
CEO. No bonuses will be payable until the minimum acceptable threshold earnings
target is achieved unless specifically approved by the Human Resources Committee
of the Board of Directors. A bonus of 100% of the target bonus will be payable
for achieving 100% of Plan objectives. A maximum formula bonus of 200% of Target
Bonus will be payable for attaining the maximum expected performance.
Bonus Objectives
Bonus objectives will be comprised of the profit, improved return on invested
capital objectives relating to the participant's area of responsibility for
participants in operating entities and Corporate, and on project milestone
achieves for communities in start-up prior to initiation of sales and closings.
* Depending upon the business unit of the company involved, financial
objectives for a participant may be based on Corporate net income, Group or
Project operating earnings before interest and cash discounts, and/or
improvement in return on invested capital at either the corporate or group
or community level. The minimum acceptable threshold, target and maximum
expected earnings levels will be determined by the CEO based on the degree
of difficulty and the level of acceptability of the budget
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* Project milestone objectives are the most significant non-financial goals
which the individual participant or overall community is expected to
accomplish during the Plan year in conjunction with the project start-up
schedule.
Corporate Wide Community
Revenue-Generating Committee -------------------------------- -------------------------------------------
& CRG participants Net Income Improvement in ROIC Operating Earnings(1) Improvement in ROIC
---------- ------------------- --------------------- -------------------
Executive Management Committee -
CRG & Operations 65% 35% -- --
CRG Participants 75% 25% -- --
Community Participants 20% -- 55% 25%
START UP COMMUNITIES Net Income Project Milestone Objectives
---------- ----------------------------
Community Participants 10% 90%
MORTGAGE OPERATIONS Operating Earnings Capture Rate Customer Satisfaction
------------------ ------------ ---------------------
Fairmount Mortgage 50% 25% 25%
- ----------
(1) Operating earnings are the pre-tax, pre-interest, pre-cash discounts
earnings achieved at the operation where the individual is assigned.
Income/Profit Objectives
A minimum bonus will be paid upon the corporation or operation achieving the
threshold earnings forecast as shown on the income schedules included as part of
this Management Incentive Plan. For results between a threshold and maximum
expected earnings, the bonus percent will increase incrementally to a maximum of
200% of target bonus based upon operating earnings and the achievement of the
other formula targets. (See attached for applicable schedules).
Improvement 1n Return on Invested Capita Objective
A target bonus will be paid upon the corporation or operation achieving the
budgeted return as shown on the schedules included as part of this Management
Incentive Plan. For results between a threshold and maximum expected earnings,
the bonus percent will increase incrementally to a maximum of 200% of target
bonus based upon achievement of improvement. (See attached for applicable
schedules). In computing ROIC for Management Incentive Plan purposes, management
and the Human Resources Committee of the Board reserve the right to adjust the
computation of this measure to appropriately reflect unbudgeted business
investment decisions made subsequent to the start of the fiscal year.
Capture Rate
The number of Fairmount mortgages written compared with the total mortgages
written on homes sold within Del Webb locations.
Project Milestone a Performance Objectives
Non-financial performance objectives will be established at the beginning of the
fiscal year for tech participant whose primary responsibility is in a start-up
community. These objectives, which will be submitted to the CEO for final
approval, will reflect the project milestones which must be successfully
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met in order for the community to open for sales on time and on budget
Objectives must be specific, realistic, quantifiable and time-limited before
they will be approved and will be mutually agreed to by the participant and
management.
In the event circumstances or directions change, affecting any participant's
pre-established project milestone objectives, the senior vice president
overseeing the start-up project and the chief operating officer are responsible
for revising them or establishing new objectives during the year.
The achievement of performance objectives is measured by the participant's
immediate superior based upon documented evaluation of results. Accomplishments
will be evaluated using the following scale:
Threshold Target Maximum
Overall Rating Poor Good Excellent Superior
- -------------- ---- ---- --------- --------
Percent of Target 0 - 49 50- 7S 76 -125 126 - 200
Evaluation of results should take into account the difficulty the objective, the
timeliness of accomplishment, the effectiveness of results and the overall
impact on the individual's organizational unit Achievement of overall Corporate
operating earnings is paramount in the bonus computation formula; project
milestone objectives are reviewed and evaluated only if minimum earnings
objectives have been met or if specifically approved by the Human Resources
Committee.
Rating Definitions
Maximum A "superior" rating is achieved if the participant accomplishes
highly challenging objectives resulting is significant
contribution to the Company or business unit This rating
incorporates superior reaction to crisis and superior
exploitation of unanticipated opportunities.
Target An "excellent" rating is achieved if the participant accomplishes
all objectives in a timely and effective manager and overall
performance for the year is considered standard or, if the
participant accomplished most of a number of significant and
highly challenging objectives and overall performance is
considered above standard.
Threshold A (degree) good (degree) rating is achieved if the participant
accomplished most of the objectives in an acceptable manner or
all of a group of objectives that were minimally challenging.
Overall performance of the year is considered standard.
Performance Appraisals
In view of the importance of employees receiving feedback from management, all
Plan participants are expected to have completed, and on file with the human
resources department, annual performance appraisals on all of their direct
reports. If, by the end of the fiscal year, a participant has not completed
performance appraisals on 100(degree)l(degree) of his/her direct reports, a 25%
reduction will. be made to the participant's total calculated bonus. 'ibis 25%.
reduction will be made notwithstanding achievement of any or all other financial
measures.
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