DEL WEBB CORPORATION
MANAGEMENT INCENTIVE PLAN
FISCAL 2000 (JULY 1, 1999 - JUNE 30, 2000)
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 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 budget. Total incentives payable under the MIP will not
exceed 11% of pre-tax, pre-incentive earnings of the Company for the 2000
fiscal year.
4. The CEO, upon approval of the Human Resources Committee, may adjust
computed payouts upward or downward to reflect unusual situations or
events. In no case would exceptions or adjustments exceed 10% of Plan.
5. Bonuses are computed under the plan criteria for corporate earnings,
community earnings and cash flow 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.
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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 are approved
by the CEO, and
* who are assigned to an 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 for
meeting the Plan objectives. The Target Bonus will be expressed as a percentage
of actual base salary paid throughout the 1999/2000 fiscal year 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 bonus of 200% of Target Bonus
will be payable for attaining the maximum expected performance.
In view of the challenging financial and cash flow objectives for fiscal year
2000, a one-time provision is added to the FY00 plan. At any community where
both the financial AND cash flow targets for the year are met , including
specifically the cash flow targets for each of the first two quarters (100% or
greater achievement on BOTH targets), all participants will have an automatic 5%
increase in their bonus targets for purposes of payout calculations.
BONUS OBJECTIVES
Bonus objectives will be comprised of the financial and cash flow objectives
relating to the participant's area of responsibility for participants in
operating entities and Corporate, and on project milestone achievements 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 after-tax
earnings, budgeted Group or Project operating earnings before interest and
cash discounts and/or operations 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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* 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.
REVENUE-GENERATING CORPORATE AFTER OPERATING CASH
COMMUNITIES & CRG PARTICIPANTS TAX EARNINGS EARNINGS(1) FLOW(2)
- ------------------------------ ------------ ----------- -------
Corporate Officers 75% -- 25%
Community/Operations Officers 20% 55% 25%
CRG Participants (non-Corp. officers) 75% -- 25%
Community Participants (non officers) 20% 55% 25%
CORPORATE AFTER PROJECT MILESTONE CASH
START UP COMMUNITIES TAX EARNINGS OBJECTIVES FLOW
- -------------------- ------------ ---------- ----
General Managers and Officers 20% 55% 25%
Community Participants (non officers) 20% 55% 25%
- ----------
1 Operating earnings are the pre-tax, pre-interest, pre-cash discounts
earnings achieved at the operation where the individual is assigned.
2 Cash Flow is the achievement of quarterly objectives at the operation where
the individual is assigned.
CRG - defined as the Available Borrowing Capital each quarter, actual
vs. budget performance
Communities - defined as the Cash Flow dollar amount to be used or
generated, actual vs. budget performance.
Performance under this component will be weighted as follows, and
determined if the actual performance did or did not meet the quarter's stated
goal:
Achievement of 1st quarter goal: 50%
Achievement of 2nd quarter goal: 25%
Achievement of 1st half year goal: 25%
Achievement of 3rd quarter goal: 25%
Achievement of 4th quarter goal: 25%
Achievement of 2nd half year goal: 25%
Achievement of full-year goal: 25%
---
Maximum achievement: 200%
FINANCIAL 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 net after-tax earnings and operating
income schedules.)
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CASH FLOW COMPONENT
Quarterly goals will be established for each location and results will be
measured against those goals. The cumulative achievement of the four quarters
will determine the final achievement percent for this component. The ultimate
recommendation of cash flow component awards will be made by the Chief Executive
Officer with input from the Corporate Chief Financial Officer and Corporate
Controller. The cash flow element of the Plan works independently of all other
Plan components, including the earnings component. Plan participants can earn up
to 200% of target based upon overall cash management.
PROJECT MILESTONE PERFORMANCE OBJECTIVES
Non-financial performance objectives will be established at the beginning of the
fiscal year for each 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 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 - 75 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 in significant
contribution to the Company or business unit. This rating
incorporates superior reaction to crisis and superior
exploitation of unanticipated opportunities.
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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.
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% of his/her direct reports, a 25% reduction will
be made to the participant's total calculated bonus. This 25% reduction will be
made notwithstanding achievement of any or all other financial measures.
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