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EXHIBIT 10.6
DEP CORPORATION EXECUTIVE BONUS PLAN
FISCAL YEAR ENDED JULY 31, 1997
I. BONUSES ARE EARNED ON THE FOLLOWING PERFORMANCE OBJECTIVES:
Performance Objectives
----------------------
Category Category Description Business Personal
-------- -------------------- -------- --------
I President and CEO 100% --
II Chief Financial Officer 100% --
III Senior V.P. and V.P. 100% --
II. CORPORATE/DIVISION BUSINESS OBJECTIVES:
To foster each executive's commitment to teamwork and share in the
Company's overall success, targeted Business Objectives for participants should
include Corporate/Division performance factors as below:
Percentage of Total Business Objectives
Participant's Reporting ---------------------------------------
Level Corporate Division
----------------------- --------- --------
President and CEO 100% n/a
Vice President, Sales 50% 50%
Vice President, Marketing 50% 50%
Senior Vice President, International 50% 50%
Vice President, Operations 80% 20%
Vice President, R&D and Contract Packaging 80% 20%
All Other Vice Presidents 100% n/a
Except for the President and CEO who is covered by a separate plan,
Corporate Business Objectives for Operational and Administrative Executives are
set forth in Schedule A; Corporate Business Objectives for Sales and Marketing
Executives are set forth in Schedule B; Division Business Objectives are set
forth in Schedule C.
Exhibit 10.6
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SCHEDULE A
CORPORATE BUSINESS OBJECTIVES
OPERATIONAL AND ADMINISTRATIVE
Corporate Business Objectives are the attainment of planned levels of
Operating Income covering a three year period, as follows:
Fiscal Years Ending July 31,
-----------------------------------
1997 1998 1999
---------- ---------- -----------
Threshold Level $ $ $
Target Level $ $ $
The annual Performance Awards payable for the achievement of each of the
above levels, are as follows:
A. CASH COMPENSATION:
Fiscal Years Ending July 31,
------------------------------
1997 1998 1999
-------- -------- --------
Threshold Bonus 15% 15% 15%
and
Target Bonus 25% 35% 45%
TOTAL POTENTIAL 40% 50% 60%
B. DEFERRED COMPENSATION BASED ON STOCK OPTION APPRECIATION RIGHTS. Payout is
equal to the difference of the market price on the third anniversary of the
grant less a per share price of $1.625 multiplied by the number of shares
granted. The grant date is October 1 after the end of each fiscal year if profit
levels are achieved. The shares subject to grant are as follows:
Threshold Shares 2,500 2,500 2,500
and
Target Shares 5,000 5,000 5,000
TOTAL POTENTIAL 7,500 7,500 7,500
If actual performance falls between the Threshold and Target levels, the
percentage of the Performance Award earned, cash and stock options, will be at
the discretion of: (1) the Compensation Committee of the Board of Directors, in
the case of Category I and (2) the Chief Executive Officer, in the case of
Category II and III, in each case based upon the individual executives personal
performance.
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SCHEDULE B
CORPORATE BUSINESS OBJECTIVES
SALES AND MARKETING
Corporate Business Objectives are the attainment of planned levels of
Operating Income covering a three year period, as follows:
Fiscal Years Ending July 31,
-----------------------------------
1997 1998 1999
---------- ---------- -----------
Threshold Level $ $ $
Target Level $ $ $
The annual Performance Awards payable for the achievement of each of the
above levels, are as follows:
A. CASH COMPENSATION:
Fiscal Years Ending July 31,
----------------------------
1997 1998 1999
------ ------ ------
Threshold Bonus 20% 20% 20%
and
Target Bonus 25% 40% 50%
TOTAL POTENTIAL 45% 60% 70%
B. DEFERRED COMPENSATION BASED ON STOCK APPRECIATION. Payout is equal to the
difference of the market price on the third anniversary of the grant less a per
share price of $1.625 multiplied by the number of shares granted. The grant date
is October 1 after the end of each fiscal year if profit levels are achieved.
The shares subject to grant are as follows:
Threshold Shares 2,500 2,500 2,500
and
Target Shares 5,000 5,000 5,000
TOTAL POTENTIAL 7,500 7,500 7,500
If actual performance falls between the Threshold and Target levels, the
percentage of the Performance Award earned, cash and stock options, will be at
the discretion of the Chief Executive Officer based upon the individual
executives personal performance.
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SCHEDULE C
DIVISION BUSINESS OBJECTIVES
FISCAL YEAR ENDING JULY 31, 1997
Annually the sales and marketing divisions develop their respective
internal plan goals which are the basis for the Company's profit plan. It is
very important that the internal plans reflect achievable results for sales and
profit growth. Although it is recognized that sales represent a vital element in
order to meet our profit goals, Division Business Objectives ("DBO's") are based
on the attainment of specified levels of the internal plan's Profit Before
General and Administrative Expenses (PBG&A). This one factor is utilized for DBO
determination for ease of understanding and recognizes that in order to meet the
PBG&A, commensurate sales levels must also be achieved. The internal plan's
DBO's and achievement levels for bonus determination are as follows:
Percentage of Plan For
Participant's Reporting Internal Plan ------------------------
Level PBG&A Threshold Target
------------------------ ------------- --------- ------
Vice President, Sales $ 90% 105%
Vice President, Marketing $ 90% 105%
Senior Vice President, International $ 90% 105%
Vice President, Operations $ 90% 105%
Vice President, R&D and Contract Pkg $ 90% 105%
Determination of Cash Compensation:
If the specified percentage level of the internal plan's PBG&A is achieved, then
the executive shall be entitled to receive the corresponding bonus level
pursuant to Schedule B. The dollar bonus would be determined by: (1) multiplying
the executives base salary times the applicable Cash Compensation Bonus
percentage (Schedule B); and (2) the result of (1) times the appropriate Divison
Percentage of Total Business Objectives (under Section II Corporate/ Division
Business Objectives). For example, if the sales/marketing executive achieved the
Target Level and base salary was $100,000 per year with satisfactory personal
performance, his/her cash compensation relative to DBO's would be: $100,000 X
45% = $45,000 X 50% = $22,500.
Determination of Stock Appreciation Rights:
If the specified percentage level of the internal plan's PBG&A is achieved, then
the executive shall be entitled to receive the corresponding bonus level
pursuant to Schedule B. The number of stock rights would be determined by
multiplying the executives earned Stock Appreciation Shares, Threshold and/or
Target (Schedule B), by the appropriate Divison Percentage of Total Business
Objectives (under Section II Corporate/ Division Business Objectives). For
example, if the sales/marketing executive achieved the Target Level with
satisfactory personal performance, the earned Stock Appreciation Shares relative
to DBO's would be: 7,500 X 50% or 3,750.
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SCHEDULE D
PERSONAL PERFORMANCE OBJECTIVES
Personal Performance Objectives means the objectives established by the
Company's President, which may be described in terms of either Company-wide
objectives, divisional, departmental, or functional objectives and relate to a
given fiscal year. The President may adjust the Personal Performance Objectives
and any minimum acceptable level of achievement with respect to any Personal
Performance Objective if, in the sole judgment of the President, events or
transactions have occurred which are unrelated to the performance of the
Participant and result in a distortion of the Personal Performance Objectives or
such minimum acceptable level of achievement.