Exhibit 10.12
DEL WEBB CORPORATION
MANAGEMENT INCENTIVE PLAN
Fiscal 1996 (July 1, 1995 - June 30, 1996)
Plan Objectives
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o To motivate key management personnel to achieve or exceed Corporate
financial goals and to contribute to the short and longer term interest
of shareholders.
o To provide a competitive bonus program necessary to attract, retain and
motivate high quality management.
Administration
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1. Bonuses may be paid in cash or in stock, less applicable 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 Chairman/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 profit plan.
4. Bonuses are recommended by the participant's immediate superior,
reviewed by the CEO and the Human Resources Department, and presented
to the Human Resources Committee of the Board for final approval.
5. 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.
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Eligibility
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Key Management personnel:
o whose duties and responsibilities can materially affect the
growth, development and profitability of the Corporation and,
o who are nominated by a Company officer and are approved by the
CEO, and
o who are assigned to an eligible position on or before July 1st
unless otherwise approved by the CEO.
Bonus Opportunity Levels
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Each participant will have a Target Bonus which will be the amount earned for
meeting the Plan objectives. The Target Bonus will be expressed as a percentage
of actual base salary earned throughout the 1995/96 fiscal year and will be
established by the CEO and the Human Resources Department based on competitive
compensation data and internal equity.
Target Bonuses
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Target bonus levels will range from 10% to 60% 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 bonus of 200% of Target Bonus
will be payable for attaining the maximum expected performance.
Bonus Objectives
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Bonus objectives will be comprised of the financial objectives relating the
participants' area of responsibility and/or non-financial performance objectives
as specified in the annual performance appraisal.
o Depending upon the community or the division of the company involved,
financial objectives for a participant may be based on Corporate net
after-tax earnings, budgeted Group or Project operating earnings before
interest and cash discounts and/or community/project cash flow. 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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Non-Financial performance objectives are the most significant non-financial
goals which the individual participant is expected to accomplish during the Plan
year.
Corporate Project Project Non-Financial
After Tax Operating Cash Performance
Earnings Earnings(1) Flow Objectives
-------- ----------- ------- ----------
I. Target Bonus
35% and above
(Corporate officers,
Coventry Division Managers
Associate GMS & Fairmount
Operations VP)
A. Headquarters 100% 0 0 0
B. Operating Sun City Communities 25% 60% 15% 0
Coventry/Coventry Tucson
So. CA Conventional
Terravita
II. Target Bonus below 35%
A. Headquarters 80% 0 0 20%
B. Operating Sun City Communities 20% 50% 15% 15%
Coventry
Coventry Tucson/Las Vegas
Terravita
So. CA Conventional
C. Foothills(2) 30% 0 50% 20%
D. Coventry Verde Valley 20% 20% 60%
(1) Before interest and cash discounts
(2) 35% of Foothills cash flow total is related to generation of budgeted cash
flow. 15% of Foothills cash flow total is related to monitoring and
communication of cash flow.
Non-financial performance objectives will be included in the annual performance
appraisal conducted near the beginning of the fiscal year and will be submitted
to the CEO for final approval. Objectives must be specific, realistic,
quantifiable and time-limited before they will be approved. The objectives will
be designed to improve short- and long-term performance and will be mutually
agreed to by the participant and management.
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In the event circumstances or directions change, affecting any participant's
pre-established performance objectives, the manager is responsible for revising
them or establishing new objectives during the year.
Financial Objectives
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A minimum bonus will be paid upon a community/project achieving the threshold
community/project earnings forecast. 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 community/project earnings and the achievement
of the other formula targets. (See attached for net after-tax earnings and
operating income schedules.)
Non-Financial Performance Objectives
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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 50 - 75 75 - 125 125 - 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 community/project
financial earnings is paramount in the bonus computation formula; non-financial
performance objectives are reviewed and evaluated only if minimum earnings
objectives have been met or if specifically approved by the Human Resources
Committee.
Rating Definitions
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Maximum A "superior" rating is achieved if the participant
------- accomplishes highly challenging objectives resulting
in 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
manner 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 "good" 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.
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