1
Exhibit 10.n
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HUFFY
CORPORATION
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SUBJECT: PERFORMANCE INCENTIVE PLAN - 1999 - COMPLETELY REVISED
POLICY
- ------
CERTAIN EXEMPT EMPLOYEES OF THE CORPORATION AND ITS SUBSIDIARIES SHALL BE GIVEN
CONSIDERATION FOR PAYMENT UNDER THE CORPORATION'S PERFORMANCE INCENTIVE PLAN.
PAYMENTS WILL GENERALLY BE CONSIDERED ON THE BASIS OF CORPORATE AND HUFFY
COMPANY FINANCIAL RESULTS AND, FOR SOME POSITIONS, INDIVIDUAL PERFORMANCE
AGAINST OBJECTIVES.
THE SCHEDULES SET FORTH BELOW ARE GUIDELINES ONLY AND PAYMENTS MAY BE MODIFIED
OR OMITTED BY MANAGEMENT, OR BY THE COMPENSATION COMMITTEE OF THE BOARD OF
DIRECTORS, IN THEIR SOLE DISCRETION.
PAYMENTS SHALL BE MADE ONLY TO EMPLOYEES WHOSE PERFORMANCE IS ACCEPTABLE, AS
DETERMINED AT THE SOLE DISCRETION OF HUFFY CORPORATION.
FINANCIAL INCENTIVE
- -------------------
I. Basis and Level of Awards Incentive Oportunity as a % of
------------------------- ACTUAL BASE SALARY
------------------
THRESH. TARGET MAX.
------ ------ ---
A. Chairman
--------
Corporate E.P.S. vs. PP 5.5% 22.0% 44.0%
Corporate RONA vs. PP 5.5% 22.0% 44.0%
----- ----- -----
11.0% 44.0% 88.0%
B. Other Corporate Officers
------------------------
Corporate E.P.S. vs. PP 3.0% 12.0% 24.0%
Corporate RONA vs. PP 3.0% 12.0% 24.0%
----- ----- -----
6.0% 24.0% 48.0%
C. Huffy Company Presidents
------------------------
1. HSC, HSF and WIS
Huffy Company RONA vs. PP 6.0% 12.0% 24.0%
Huffy Company EBIT vs. PP 6.0% 12.0% 24.0%
----- ----- -----
12.0% 24.0% 48.0%
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HUFFY
CORPORATION
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SUBJECT: PERFORMANCE INCENTIVE PLAN - 1999 - COMPLETELY REVISED
2. HBC
Huffy Company RONA vs. PP 4.0% 8.0% 16.0%
Huffy Company EBIT vs. PP 4.0% 8.0% 16.0%
Huffy Company Cash Flow vs. PP 4.0% 8.0% 16.0%
------ ------ -------
12.0% 24.0% 48.0%
D. Huffy Company Staffs
--------------------
1. HSC and WIS
Huffy Company RONA vs. PP 5.0% 10.0% 20.0%
Huffy Company EBIT vs. PP 5.0% 10.0% 20.0%
------ ------ -------
10.0% 20.0% 40.0%
2. HBC
Huffy Company RONA vs. PP 3-1/3% 6-2/3% 13-1/3%
Huffy Company EBIT vs. PP 3-1/3% 6-2/3% 13-1/3%
Huffy Company Cash Flow vs. PP 3-1/3% 6-2/3% 13-1/3%
------ ------ -------
10.0% 20.0% 40.0%
3. HSF VP/GM - In-Home*
In-Home EBIT vs. PP 3.75% 7.5% 15.0%
HSF EBIT vs. PP 1.25% 2.5% 5.0%
HSF RONA vs. PP 5.00% 10.0% 20.0%
------ ------ -------
10.00% 20.0% 40.0%
4. HSF VP - In-Store*
In-Store EBIT vs. PP 3.75% 7.5% 15.0%
HSF EBIT vs. PP 1.25% 2.5% 5.0%
HSF RONA vs. PP 5.00% 10.0% 20.0%
------ ------ -------
10.00% 20.0% 40.0%
5. VP/GM - Merchandising*
Merchandising EBIT vs. PP 3.75% 7.5% 15.0%
HSF EBIT vs. PP 1.25% 2.5% 5.0%
HSF RONA vs. PP 5.00% 10.0% 20.0%
------ ------ -------
10.00% 20.0% 40.0%
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HUFFY
CORPORATION
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SUBJECT: PERFORMANCE INCENTIVE PLAN - 1999 - COMPLETELY REVISED
6. Other HSF Staff Level*
In-Store EBIT vs. PP 2.50% 5.0% 10.0%
Merchandising EBIT vs. PP 1.25% 2.5% 5.0%
In-Home EBIT vs. PP 1.25% 2.5% 5.0%
HSF RONA vs. PP 5.00% 10.0% 20.0%
------ ----- -----
10.00% 20.0% 40.0%
*Note: For 1999, only HSF staff positions will be eligible for the award
generated under the criteria noted in #3 through #6, or #1,
whichever is greater.
E. Corporate Exempt
----------------
1. Staff Level Positions
Corporate E.P.S. vs. PP 2.5% 10.0% 20.0%
Corporate RONA vs. PP 2.5% 10.0% 20.0%
------ ----- -----
5.0% 20.0% 40.0%
2. Other Corporate Exempt
Corporate E.P.S. vs. PP 1.0% 4.0% 8.0%
Corporate RONA vs. PP 1.0% 4.0% 8.0%
------ ----- -----
2.0% 8.0% 16.0%
F. Other Exempt
------------
1. Huffy Company Exempt, except
WIS Exempt, certain HSF
Sales Personnel, certain HSF
Exempt, and HSC Exempt
Huffy Company EBIT vs. PP 2.5% 5.0% 10.0%
Huffy Company RONA vs. PP 2.5% 5.0% 10.0%
------ ----- -----
5.0% 10.0% 20.0%
2. HBC Exempt
Huffy Company RONA vs. PP 1-2/3% 3-1/3% 6-2/3%
Huffy Company EBIT vs. PP 1-2/3% 3-1/3% 6-2/3%
Huffy Company Cash Flow vs. PP 1-2/3% 3-1/3% 6-2/3%
------ ------ ------
5% 10% 20%
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HUFFY
CORPORATION
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SUBJECT: PERFORMANCE INCENTIVE PLAN - 1999 - COMPLETELY REVISED
3. HSF In-Home Ops Manager, HSF
Market Manager, HSF Customer
Service Manager and HSF In-
Home Area Manager
HSF In-Home EBIT vs. PP 1.875% 3.75% 7.5%
HSF EBIT vs. PP 0.625% 1.25% 2.5%
HSF RONA vs. PP 2.500% 5.00% 10.0%
------ ------ -----
5.000% 10.0% 20.0%
4. HSF Regional Managers
HSF In-Store EBIT vs. PP 1.875% 3.75% 7.5%
HSF EBIT vs. PP 0.625% 1.25% 2.5%
HSF RONA vs. PP 2.500% 5.00% 10.0%
------ ------ -----
5.000% 10.0% 20.0%
5. HSF Merch. Ops. Manager and HSF
Manager Program Management
Merchandising EBIT vs. PP 1.875% 3.75% 7.5%
HSF EBIT vs. PP 0.625% 1.25% 2.5%
HSF RONA vs. PP 2.500% 5.00% 10.0%
------ ------ -----
5.000% 10.00% 20.0%
6. HSF District Managers
District Gross Field Profit % vs. PP 0.625% 2.5% 5.0%
District Gross Field Profit $ vs. PP 0.625% 2.5% 5.0%
HSF EBIT vs. PP 1.25% 2.5% 5.0%
HSF RONA vs. PP 1.25% 2.5% 5.0%
------ ------ -----
3.75% 10.0% 20.0%
7. HSF Area Managers- Assembly & In-Home
Area Gross Field Margin % vs. PP 0.625% 2.5% 5.0%
Area Gross Field Margin $ vs. PP 0.625% 2.5% 5.0%
HSF EBIT vs. PP 1.25% 2.5% 5.0%
HSF RONA vs. PP 1.25% 2.5% 5.0%
------ ------ -----
3.75% 10.0% 20.0%
8. Zone Merchandising Managers
Zone AGMM*% vs. PP% 2.50% 5.0% 10.0%
(*Adjusted Gross Merchandising Margin)
HSF EBIT vs. PP 1.25% 2.5% 5.0%
HSF RONA vs. PP 1.25% 2.5% 5.0%
------ ------ -----
5.00% 10.0% 20.0%
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HUFFY
CORPORATION
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SUBJECT: PERFORMANCE INCENTIVE PLAN - 1999 - COMPLETELY REVISED
9. All WIS exempt positions with Manager or
Director titles (excluding WIS National Sales
Manager and WIS Field Management Personnel)
Huffy Company EBIT vs. PP 2.5% 5.0% 10.0%
Huffy Company RONA vs. PP 2.5% 5.0% 10.0%
----- ----- -----
5.0% 10.0% 20.0%
10. Other WIS Exempt and WIS Service
Managers, and WIS Managers in
Training (excluding WIS Field
Management and WIS National Sales
Manager
Huffy Company EBIT vs. PP 1.25% 2.5% 5.0%
Huffy Company RONA vs. PP 1.25% 2.5% 5.0%
----- ----- -----
2.50% 5.0% 10.0%
II. Huffy Company Presidents, in lieu of bonus criteria otherwise specified for
bonus eligible personnel in this Policy 128 and related supplements, may
specify not more than two bonus measures totaling a maximum of 50% of any
individual's bonus opportunity. Such measures must be specific,
quantifiable criteria which are explicitly part of the Huffy Company's
profit plan. They must be documented, including award scales, and submitted
to the Director, Corporate Human Resources, and approved by the Vice
President Human Resources and Organization Development prior to the
beginning of the calendar year for which they are applicable.
III. Award Scales(1)
---------------
Huffy Company (excluding HSF) RONA vs. Plan
Huffy Company EBIT vs. Plan % of Targeted
and HBC Cash Flow Vs. Plan Award Earned(2)
-------------------------------- ---------------
Under 90% -0-
90% Threshold 50
95% 75
100% Target 100
105% 133 1/3
110% 166 2/3
115% 200
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HUFFY
CORPORATION
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SUBJECT: PERFORMANCE INCENTIVE PLAN - 1999 - COMPLETELY REVISED
Corporate RONA vs. Plan % of Targeted
Corporate EPS vs. Plan Award Earned(2)
---------------------- ---------------
Under 85% -0-
85% Threshold 25
90% 50
95% 75
100% Target 100
110% 150
120% Maximum 200
% of Target
HSF RONA vs. Plan Award Earned(2)
----------------- ---------------
Under 90% -0-
90% Threshold 50
95% 75
100% Target 100
105% 150
110% Maximum 200
HSF District Gross % of Targeted
Field Profit $ vs. PP Award Earned(2)
--------------------- ---------------
Under 90% -0-
90 25
100 100
110+ 200
HSF Area Gross Field % of Targeted
Margin $ vs. PP Award Earned
---------------- ------------
Under 90% -0-
90 25
100 100
110+ 200
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HUFFY
CORPORATION
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SUBJECT: PERFORMANCE INCENTIVE PLAN - 1999 - COMPLETELY REVISED
% of Targeted
HSF In-Store EBIT Award Earned
----------------- ------------
Under 90% -0-
90 Threshold 50
95 75
100 Target 100
105 133 1/3
110 166 2/3
115 Maximum 200
HSF Modified In-Store EBIT
--------------------------
Under 90% 0
90% Threshold 50
100% Target 100
102.2% Maximum 200
HSF In-Home EBIT
----------------
Under 109.6% 0
109.6% Threshold 50
100% Target 100
78.8% Maximum 200
HSF Merchandising EBIT
----------------------
Under 33.56% 0
33.56% Threshold 50
100% Target 100
261% Maximum 200
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HUFFY
CORPORATION
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SUBJECT: PERFORMANCE INCENTIVE PLAN - 1999 - COMPLETELY REVISED
HSF District Gross Field Profit % vs. PP % of Targeted
HSF Area Gross Field Margin % vs. PP Award Earned
------------------------------------ ------------
Greater than -1.00% below -0-
-1.00% Threshold 25
-0.67% 50
-0.33% 75
Profit Plan% Target 100
+0.5% 133
+1.0% 167
+1.5% Maximum 200
HSF Merchandising Actual Gross Field Profit Percent vs. PP%
-----------------------------------------------------------
Greater than 1.00% below 0
1.00 Threshold 25
0.67 50
0.33 75
Profit Plan % Target 100
+0.5 133
+1.0 167
+1.5 Maximum 200
Zone AGMM*% vs. PP%
-------------------
Greater than 1.00% below 0
-1.00 Threshold 25
-0.67 50
-0.33 75
Profit Plan % Target 100
+0.5 133
+1.0 167
+1.5 Maximum 200
1. The scales are sliding. When actual performance falls between the
points on the scale, it will be adjusted to the nearest 1/10th of 1%
and interpolated to determine the award level.
2. Percent of targeted award earned is used as a multiple of incentive
target which varies by level of employee. Refer to Section I.
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HUFFY
CORPORATION
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SUBJECT: PERFORMANCE INCENTIVE PLAN - 1999 - COMPLETELY REVISED
IV. Positions Covered
A. Corporate Officers and Huffy Company Presidents
Corporate Officers
------------------
Chairman, President and CEO
Vice President - Finance and CFO
Vice President - Controller
Vice President - General Counsel and Secretary
Vice President - Human Resources and Organization Development
B. Huffy Company Staff
- HBC
---
V.P. Marketing
V.P. & Controller
V.P. Procurement & Logistics
V.P. Human Resources
V.P. Sales
V.P. Engineering & Manufacturing
V.P. MIS
President Royce Union
- HSC
---
V.P. Sales
V.P. Controller
V.P. Materials Management
V.P. Global Operations
V.P. Marketing & Product Development
Director, Product Engineering & Technology
- HSF
---
V.P. Operations - In-Store
V.P. Finance
V.P. Sales/Marketing
V.P. Human Resources
V.P. Merchandising Services
V.P. In-Home
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HUFFY
CORPORATION
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SUBJECT: PERFORMANCE INCENTIVE PLAN - 1999 - COMPLETELY REVISED
- WIS
---
V.P. Operations
V.P. Finance and Controller
V.P. Technology & Information Systems
V.P. Sales and Account Management
V.P. Human Resources
V. Individual Personal Objectives
------------------------------
Incentive Opportunity as a % of
Actual Base Salary
------------------
Below
Position Threshold Threshold Maximum
-------- --------- --------- -------
A. Chairman, President & CEO 0% 11.0% 22.0%
-------------------------
B. Corporate Officers and
Huffy Company Presidents 0% 6.0% 12.0%
------------------------
C. Huffy Company Staff 0% 5.0% 10.0%
-------------------
D. Corporate Exempt
----------------
1. Staff Level 0% 5.0% 10.0%
2. Other Exempt 0% 2.0% 4.0%
For those individuals who have a portion of their incentive measured on
this basis, the following implementation procedure will be used:
1. Each individual will draw up objectives covering the calendar
year based on supporting the supervisor's objectives and his
own.
2. These objectives should have the following characteristics:
a) Not be associated with EBIT or RONA goals in the Profit
Plan. (Financial goals for such things as cost reduction
or similar projects are appropriate goals.)
b) Be as specific and as measurable as to successful
attainment as possible. (A project need not be completed
in the calendar year. The objective can be to obtain a
specific status in the project by calendar year end.)
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HUFFY
CORPORATION
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SUBJECT: PERFORMANCE INCENTIVE PLAN - 1999 - COMPLETELY REVISED
c) 1) Chairman shall develop no more than 7 to 8
objectives.
2) Other Corporate Officers and Huffy Company Presidents
shall each develop no more than 6 objectives.
3) Huffy Company Corporate Staff Level positions and
Other Corporate Exempt shall each develop no more
than 3 to 5 objectives.
d) A "degree of difficulty" should be assigned to each
objective.
3. The objectives and degrees of difficulty shall be reviewed
between the individual and his/her supervisor and agreement
reached on:
a) Completeness of list
b) State of objectives
c) Degree of difficulty
It is the supervisor's responsibility to ensure that there is
some consistency in the measurement of "degree of difficulty"
among all his/her subordinates.
4. The Personal objectives development and results schedules will be
annually set in the fall of each year.
5. The participant shall evaluate his/her own performance and then submit
the evaluation to his supervisor who shall review and approve the
evaluation. Final approval of results shall be made by the appropriate
Huffy Company President or Corporate Officer. (A MINIMUM one over one
approval is also required.)
6. Each individual shall be informed by his supervisor of his score, but
only AFTER all approvals have been secured.
7. Notwithstanding the foregoing, payments for personal objectives
performance are expressly conditioned upon and made subject to the
following base financial criteria:
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HUFFY
CORPORATION
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SUBJECT: PERFORMANCE INCENTIVE PLAN - 1999 - COMPLETELY REVISED
All Corporate Exempt
- --------------------
Corporate E.P.S. less than 75% of Target No bonus shall be paid for
E.P.S. for Corporate bonus purposes performance of personal
objectives
Corporate E.P.S. at least 75%, but less than 50% of calculated bonus for
90%, of Target E.P.S. for Corporate bonus performance of personal
purposes objectives shall be paid
Corporate E.P.S. 90% or greater of Target 100% of calculated bonus
for Corporate bonus purposes E.P.S. for performance of
personal objectives
Huffy Companies
- ---------------
Huffy Company EBIT less than 75% of No bonus shall be paid for
approved Huffy Company Profit Plan performance of personal
objectives
Huffy Company EBIT at least 75%, but less 50% of calculated bonus for
than 90%, of approved Huffy Company Profit performance of personal
Plan objectives shall be paid
Huffy Company EBIT 90% or greater of 100% of calculated bonus
approved Huffy Profit Plan for performance of personal
objectives shall be paid
VI. Implementation
--------------
1. Eligibility
-----------
All exempt employees on the payroll on or before the first
business day of the calendar year shall be eligible for
consideration for a full incentive opportunity.
New Hires: Employees starting AFTER the first business day of
the calendar year shall be eligible for the
percentage of annual incentive opportunity shown
below:
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HUFFY
CORPORATION
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SUBJECT: PERFORMANCE INCENTIVE PLAN - 1999 - COMPLETELY REVISED
Percentage of Annual
Hire Date Incentive Opportunity
--------- ---------------------
During 1st quarter 75%
During 2nd quarter 50%
During 3rd quarter 25%
During 4th quarter 0%
Transfers, Promotions or Demotions: Individuals transferred, promoted or
demoted during the calendar year shall have incentive opportunity as
follows:
Calculation Based On
--------------------
Old Actual New Actual
Base Salary Base Salary
Old. Opp. Level New Opp. Level
--------------- --------------
Transferred, Promoted or Demoted
During 1st Quarter 25% 75%
During 2nd Quarter 50% 50%
During 3rd Quarter 75% 25%
During 4th Quarter 100% 0%
Note: Non-exempt and/or hourly employees promoted to exempt positions are
eligible for incentive consideration as above but only for those
quarters in which they held exempt positions. Also, status changes
(including transfers, promotions and demotions, but excluding new hires)
for incentive eligible employees at WIS which are effective for the
first pay period beginning on or after the first day of the quarter
shall be treated for incentive purposes as if they were effective the
last day of the prior quarter.
Terminations:
To be eligible to receive the Performance Incentive Plan
payment for a calendar year, an employee must be on the active
payroll at the time payment for that calendar year is made
(date check is issued).
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HUFFY
CORPORATION
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SUBJECT: PERFORMANCE INCENTIVE PLAN - 1999 - COMPLETELY REVISED
Death or Retirement: Employees who retired or died during or after the calendar
year for which incentive is being calculated and who met
the requirement of being on the active payroll during the
year will be given consideration for an incentive payment
on basis of the following percentage of full incentive
opportunity: retired or died in 1st Qtr - 25%; 2nd Qtr -
50%; 3rd Qtr - 75%; 4th Qtr - 100%.
Payment for deceased employees shall be made to the
beneficiary designated under the Salaried Employees Group
Term Life Insurance Plan.
Active payroll is defined as receiving wages (recorded on the Federal W-2 form)
from the Corporation or one of the Huffy Companies. Except for those terminated
or retiring or deceased employees described above, employees absent for any
reason and not receiving wages (as defined above) are not considered on the
active payroll.
Exception to the eligibility requirements must be approved by the Vice President
Human Resources & Organization Development or CEO (in particular, requests for
exceptions involving transfers and new hires when approval for such transfer or
new hire has been obtained).
2. Payment Except as noted below, payment for Performance Incentive
------- shall be annual and shall occur in March of each year for
the prior calendar year's results.
3. Calculations All incentive calculations will be rounded up to the
------------ nearest $25.00 increment and the minimum incentive payment
to be paid will be $125.00 per employee, provided employee
is eligible for incentive and such incentive is approved.
4. Definitions
-----------
Consolidated RONA
-----------------
Profit after tax after cost of plan plus tax affected
interest expense divided by the twelve (12) month rolling
average of total assets less current liabilities excluding
all interest bearing debt.
E.P.S. Earnings per common share.
-----
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HUFFY
CORPORATION
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SUBJECT: PERFORMANCE INCENTIVE PLAN - 1999 - COMPLETELY REVISED
Huffy Company RONA Earnings before interest, taxes, and goodwill
------------------ amortization, tax affected at the current profit plan
tax rate, divided by the twelve (12) month rolling
average of total assets other than goodwill less
current liabilities excluding all interest bearing
debt.
EBIT Earnings before interest and taxes and goodwill amortization.
Cash Flow The free cash flow as approved by the Board of Directors in
--------- the profit plan for the bonus year in question, modified to
reflect the actual beginning of the year balance sheet
balances, as opposed to the projected balance sheet balances
used for profit planning purposes.
Actual Base Salary Employee's actual base salary as of the January 1 of
------------------ the calendar year for which bonus is calculated.
Promotion One or more salary grades up from current salary grade.
---------
Demotion One or more salary grades down from current salary grade.
--------
Transfer A change in position with substantially different duties and
-------- responsibilities which does not constitute a promotion or
demotion.
Distribution of This Policy
- ---------------------------
Restricted to Corporate Officers, Huffy Company Presidents, and Staff Level
positions, except for Policy 128-A, 128-B, 128-C, which is restricted to
Corporate Officers, Presidents and General Manager of WIS and General Manager of
WIS and General Manager of HSF.
INTERPRETATION AND EXCEPTIONS
- -----------------------------
Interpretation and exceptions to this policy will be the responsibility of the
Corporate Vice President Human Resources and Organization Development.
- ----------------------------------- ------------------------------------
Vice President, Human Resources and Chairman, President And Chief
Organization Development Executive Officer
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