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RECOMMENDATIONS
FISCAL YEAR 1996
EXECUTIVE COMPENSATION
SALARY
-No salary increases are proposed at this time for the Senior Management
team.
ANNUAL INCENTIVE COMPENSATION
-Recognizing the extraordinary operating circumstances as we enter FY'96, we
wish to adopt a Plan which will encourage and reward focus on financial
performance.
-No payments will be made until budget is exceeded so that, in comparison to
budget, payments will be self-funded. Once budget is achieved, it is
proposed that the first $250,000 of profit dollars above budget be paid out
as incentive. Thereafter, a portion of additional earnings would be paid
out on a declining scale: 50% of the first $200,000 additional earnings;
40% of the next $200,000; 30% of the next $300,000, and; 25% of additional
earnings. The attachment charts this framework, showing total bonus awards
at various performance levels.
-As in past years, actual results will be adjusted for significant
unbudgeted items such as gains or losses associated with the disposition of
assets (such as the sale of HTBB Stock). The Compensation Committee will
review transactions and make recommendations for adjustments to the Board.
-In the event of the disposition of a part of the Company, financial targets
would be adjusted accordingly.
-Provide for partial year awards based on fiscal year-to-date results versus
budget in the event of the disposition of the Company prior to fiscal year
end. Partial year payments, if any, will be pro-rated based on partial year
salary.
EXECUTIVE LONG TERM STOCK AWARD PLAN
-This shareholder approved Plan makes available a total of 100,000 shares
for award. No shares are proposed to be made available for award at this
time.
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INCENTIVE VERSUS RESULTS COMPARISON
INCENTIVE
EARNINGS BEFORE -------------------- EARNINGS AFTER
INCENTIVE $'S % INCENTIVE
--------- --- - ---------
($1,052,508) Plan $0 -- ($1,052,508)
(802,508) 250,000 100% (1,052,508)
(602,000) 350,000 50% (952,000)
(402,000) 430,000 40% (832,000)
($102,000) $520,000 30% ($622,000)
25% of all additional $'s
FY'95 RESULTS
($5,632,654) $0 ($5,632,654)
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POSITIONS COVERED BY ANNUAL INCENTIVE PLAN
NO. OF ANNUAL MAX. % MAX. 35% OF
EMPLOYEES SALARIES OF SALARY INCENTIVE MAX.
--------- -------- --------- --------- ------
Senior Executives 7 $ 846,000 (1)% 332,025 116,209
Vice Presidents 2 135,500 25% 33,875 11,856
Directors 15 754,000 20% 150,800 52,780
Home Office Staff 12 397,000 10% 39,700 13,895
---------- ------- -------
Annual Totals $2,132,500 556,400 194,740
(1) 50% for President and CFO, 35% for all Senior Executives except the Senior
Vice President of Operations, who is at 40%.