- --------------------------------------------------------------------------------
Exhibit 10.k
HUFFY SECTION: HUMAN RESOURCES
CORPORATION
POLICY NO.: 128 (RESTRICTED)
ISSUE DATE: 01/03/01
SUPERSEDES: 09/29/00
- --------------------------------------------------------------------------------
SUBJECT: PERFORMANCE INCENTIVE PLAN - 2001 - REVISED
POLICY
- ------
PERFORMANCE INCENTIVE PLANS ARE DEVELOPED AND ADMINISTERED TO PROVIDE
APPROPRIATE LEVELS OF INCENTIVE AND REWARD FOR IDENTIFIED PARTICIPANTS TO MEET
OR EXCEED ANNUAL PROFIT PLANS. PERFORMANCE INCENTIVES ARE A KEY ELEMENT IN
HUFFY'S TOTAL COMPENSATION PROGRAMS WHICH ARE ESSENTIAL TO ATTRACTING,
DEVELOPING AND RETAINING THE RIGHT TALENT FOR THE SUCCESS OF THE CORPORATION.
PAYMENTS WILL GENERALLY BE CONSIDERED ON THE BASIS OF CORPORATE AND HUFFY
COMPANY FINANCIAL RESULTS AND, FOR SOME POSITIONS, PERFORMANCE MEASURED AGAINST
INDIVIDUAL 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.
I. BASIS AND LEVEL OF FINANCIAL AWARDS
-----------------------------------
FINANCIAL INCENTIVE OPPORTUNITY
AS A % OF ACTUAL BASE SALARY
----------------------------
THRESH TARGET MAX
------ ------ ---
A. CHAIRMAN
Corporate E.P.S. vs. PP 4.59% 14.67% 29.34%
Corporate RONA vs. PP 4.58% 14.67% 29.33%
Free Cash Flow vs. PP 4.58% 14.66% 29.33%
----- ------ ------
13.75% 44.00% 88.00%
B. OTHER CORPORATE OFFICERS
Corporate E.P.S. vs. PP 2.00% 8.00% 16.00%
Corporate RONA vs. PP 2.00% 8.00% 16.00%
Free Cash Flow vs. PP 2.00% 8.00% 16.00%
----- ----- ------
6.00% 24.00% 48.00%
C. HUFFY COMPANY PRESIDENTS
Huffy Company RONA vs. PP 4.00% 8.00% 16.00%
Huffy Company EBIT vs. PP 4.00% 8.00% 16.00%
Huffy Company Cash Flow vs. PP 4.00% 8.00% 16.00%
----- ----- ------
12.00% 24.00% 48.00%
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Exhibit 10.k
HUFFY SECTION: HUMAN RESOURCES
CORPORATION
POLICY NO.: 128 (RESTRICTED)
ISSUE DATE: 01/03/01
SUPERSEDES: 09/29/00
- --------------------------------------------------------------------------------
SUBJECT: PERFORMANCE INCENTIVE PLAN - 2001 - REVISED
D. HUFFY COMPANY STAFFS
1. HBC, HSC, HSF
Huffy Company RONA vs. PP 3.33% 6.67% 13.33%
Huffy Company EBIT vs. PP 3.34% 6.67% 13.34%
Huffy Company Cash Flow vs. PP 3.33% 6.66% 13.33%
----- ----- ------
10.00% 20.00% 40.00%
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Exhibit 10.k
HUFFY SECTION: HUMAN RESOURCES
CORPORATION
POLICY NO.: 128 (RESTRICTED)
ISSUE DATE: 01/03/01
SUPERSEDES: 09/29/00
- --------------------------------------------------------------------------------
SUBJECT: PERFORMANCE INCENTIVE PLAN - 2001 - REVISED
THRESH TARGET MAX
------ ------ ------
2. Royce Union - President
HBC EBIT 1.00% 2.00% 4.00%
HBC RONA 1.00% 2.00% 4.00%
HBC Cash Flow 1.00% 2.00% 4.00%
RU EBIT 3.50% 7.00% 14.00%
RU Net Sales (G.M. greater than or equal to 90% PP to qualify
for this component 3.50% 7.00% 14.00%
----- ----- ------
10.00% 20.00% 40.00%
E. CORPORATE
1. Staff Positions
Corporate E.P.S. vs. PP 1.67% 6.67% 13.33%
Corporate RONA vs. PP 1.67% 6.67% 13.34%
Corporate Cash Flow vs. PP 1.66% 6.66% 13.33%
----- ----- ------
5.00% 20.00% 40.00%
2. Other Corporate Salaried
EXEMPT POSITIONS
----------------
Corporate E.P.S. vs. PP .67% 2.67% 5.34%
Corporate RONA vs. PP .67% 2.67% 5.33%
Free Cash Flow vs. PP .66% 2.66% 5.33%
---- ----- -----
2.00% 8.00% 16.00%
NON-EXEMPT POSITIONS
--------------------
Corporate E.P.S. vs. PP .84% 1.67% 3.34%
Corporate RONA vs. PP .83% 1.67% 3.33%
Free Cash Flow vs. PP .83% 1.66% 3.33%
---- ----- -----
2.50% 5.00% 10.00%
F. OTHER SALARIED
Note: Related incentive plans exist for certain additional personnel. The most
current version of which are detailed in Policy 128 - Supplement.
1. Huffy Company Exempt
Huffy Company EBIT vs. PP 1.67% 3.34% 6.67%
Huffy Company RONA vs. PP 1.67% 3.33% 6.67%
Huffy Company Cash Flow vs. PP 1.66% 3.33% 6.66%
----- ----- -----
5.00% 10.00% 20.00%
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Exhibit 10.k
HUFFY SECTION: HUMAN RESOURCES
CORPORATION
POLICY NO.: 128 (RESTRICTED)
ISSUE DATE: 01/03/01
SUPERSEDES: 09/29/00
- --------------------------------------------------------------------------------
SUBJECT: PERFORMANCE INCENTIVE PLAN - 2001 - REVISED
THRESH TARGET MAX
------ ------ ------
2. Royce Union
Executive Vice President and Vice President
-------------------------------------------
Sales and Administration
------------------------
HBC EBIT N/A 1.20% 2.40%
HBC RONA N/A 1.20% 2.40%
HBC Cash Flow N/A 1.20% 2.40%
RU EBIT 3.00% 4.20% 8.40%
RU Net Sales (G.M. greater than or equal to 90% PP) 3.00% 4.20% 8.40%
----- ----- -----
6.00% 12.00% 24.00%
Exempt
------
HBC EBIT N/A .80% 1.60%
HBC RONA N/A .80% 1.60%
HBC Cash Flow N/A .80% 1.60%
RU EBIT 2.00% 2.80% 5.60%
RU Net Sales (G.M. greater than or equal to 90% PP) 2.00% 2.80% 5.60%
----- ----- -----
4.00% 8.00% 16.00%
Non-exempt
----------
Discretionary, subject to approval of HBC President and General
Manager.
3. ASD
Exempt (Excluding President)
----------------------------
ASD EBIT vs. PP 5.00% 10.00% 20.00%
----- ------ ------
5.00% 10.00% 20.00%
Non-exempt
----------
ASD EBIT vs. PP 2.50% 5.00% 10.00%
----- ----- ------
2.50% 5.00% 10.00%
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Exhibit 10.k
HUFFY SECTION: HUMAN RESOURCES
CORPORATION
POLICY NO.: 128 (RESTRICTED)
ISSUE DATE: 01/03/01
SUPERSEDES: 09/29/00
- --------------------------------------------------------------------------------
SUBJECT: PERFORMANCE INCENTIVE PLAN - 2001 - REVISED
THRESH TARGET MAX
------ ------ ------
4. Huffy Company Non-Exempt
HBC
---
Huffy Company EBIT vs. PP .84% 1.67% 3.34%
Huffy Company RONA vs. PP .83% 1.67% 3.33%
HBC Cash Flow vs. PP .83% 1.66% 3.33%
---- ----- -----
2.50% 5.00% 10.00%
HSC
---
Huffy Company EBIT vs. PP .67% 1.34% 2.67%
Huffy Company RONA vs. PP .67% 1.33% 2.67%
HSC Cash Flow vs. PP .66% 1.33% 2.66%
---- ----- -----
2.00% 4.00% 8.00%
II. Huffy Company Presidents, in lieu of financial bonus criteria otherwise
specified for bonus eligible personnel in this Policy 128 and related
supplements, may specify not more than two other pre-approved documented
bonus measures totaling a maximum of 50% of any individual's financial
bonus opportunity. Such measures must be specific and quantifiable criteria
and be explicitly part of the Huffy Company's profit plan. They must be
documented, including award scales, and approved by Company President and
the Corporate Vice President Human Resources and Organization Development
prior to the beginning of the award year for which they are applicable.
III. AWARD SCALES(1)
---------------
For Huffy Company Participants,
------------------------------
Huffy Company RONA, EBIT
----------------------- % of Targeted
and Free 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% Maximum 200
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Exhibit 10.k
HUFFY SECTION: HUMAN RESOURCES
CORPORATION
POLICY NO.: 128 (RESTRICTED)
ISSUE DATE: 01/03/01
SUPERSEDES: 09/29/00
- --------------------------------------------------------------------------------
SUBJECT: PERFORMANCE INCENTIVE PLAN - 2001 - REVISED
For Corporate Office Participants
---------------------------------
Corporate RONA, EBIT and % of Targeted
------------------------ -------------
Free Cash Flow vs. Plan Award Earned(2)
----------------------- -------------
Under 85% -0-
85% Threshold 25
90% 50
95% 75
100% Target 100
110% 150
120% Maximum 200
(1) The scales are sliding. When actual performance falls between the
points on the scale, it will be interpolated to the nearest 1/10th of
1% to determine the award level.
(2) Percent of targeted award earned is used as a multiple of incentive
target which varies by employee group. Refer to Section I.
IV. POSITIONS COVERED
-----------------
A. CORPORATE OFFICERS
------------------
Chairman, President and CEO
Vice President - Finance, CFO and Treasurer
Vice President - Controller
Vice President - General Counsel and Secretary
Vice President - Human Resources and Organization Development
B. HUFFY COMPANY PRESIDENTS
------------------------
President and General Manager - HBC
President and General Manager - HSC
President and General Manager - HSF
C. HUFFY COMPANY STAFFS
--------------------
X HBC
---
V.P. & Controller
V.P. Operations
V.P. Human Resources & IT
V.P. Sales & Marketing
V.P. International Sales
President Royce Union
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Exhibit 10.k
HUFFY SECTION: HUMAN RESOURCES
CORPORATION
POLICY NO.: 128 (RESTRICTED)
ISSUE DATE: 01/03/01
SUPERSEDES: 09/29/00
- --------------------------------------------------------------------------------
SUBJECT: PERFORMANCE INCENTIVE PLAN - 2001 - REVISED
X HSC
---
V.P. Business Development
V.P. Finance and Administration
V.P. Materials Management
V.P. Global Operations
V.P. Sales & Marketing
V.P. Product Engineering & Technology
X HSF
---
V.P. Operations
V.P. Controller
V.P. Sales/Marketing
V.P./GM Merchandising
V.P. Business Development
D. HUFFY CORPORATE STAFF
---------------------
Vice President - Director of Finance
Director of Financial & Operational Analysis
Manager, Corporate Finance
E. EXEMPT SALARIED EMPLOYEES
-------------------------
Corporate
HBC
HSC
HSF
F. NON-EXEMPT SALARIED EMPLOYEES
-----------------------------
Corporate
HBC
HSC
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Exhibit 10.k
HUFFY SECTION: HUMAN RESOURCES
CORPORATION
POLICY NO.: 128 (RESTRICTED)
ISSUE DATE: 01/03/01
SUPERSEDES: 09/29/00
- --------------------------------------------------------------------------------
SUBJECT: PERFORMANCE INCENTIVE PLAN - 2001 - REVISED
V. INDIVIDUAL PERSONAL OBJECTIVES
------------------------------
*See F.6 below.
Incentive Opportunity as a % of
Actual Base Salary
------------------
Position Maximum Bonus
-------- -------------
A. CHAIRMAN, PRESIDENT & CEO 22.0%*
B. CORPORATE OFFICERS AND
HUFFY COMPANY PRESIDENTS 12.0%
C. HUFFY COMPANY STAFF 10.0%
D. ROYCE UNION
1. Executive Vice President and
Vice President Sales and Administration 6.0%
2. Other Exempt 4.0%
E. CORPORATE SALARIED
1. Staff Level 10.0%
2. Other Exempt 4.0%
3. Non-Exempt NA
F. For those individuals who have a portion of their incentive measured
on achievement of individual personal objectives, the following
implementation procedure will be used:
1. Each individual will develop calendar year objectives supporting
the business and supervisor's objectives.
2. These objectives should have the following characteristics:
a) Not be equivalent to financial goals. (Objectives related to
cost reduction or similar projects are appropriate.)
* For 2001, this opportunity will be based solely on 2001 Corporate EPS, RONA
and Free Cash Flow objectives.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Exhibit 10.k
HUFFY SECTION: HUMAN RESOURCES
CORPORATION
POLICY NO.: 128 (RESTRICTED)
ISSUE DATE: 01/03/01
SUPERSEDES: 09/29/00
- --------------------------------------------------------------------------------
SUBJECT: PERFORMANCE INCENTIVE PLAN - 2001 - REVISED
b) Objectives should be specific, measurable, meaningful,
agreed to, realistic and time planned. (A project need not
be completed in the calendar year if the objective defines
a specific status in the project by calendar year end.)
c) Process
1) The 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 and Corporate
Exempt colleagues shall each develop no more than 3
to 5 objectives.
d) A "degree of difficulty" is to be assigned to each
objective, in total equaling 100.
3. The personal objectives and degrees of difficulty shall be
jointly reviewed by the individual and his/her supervisor and
agreement reached on the parameters outlined above. It is the
supervisor's responsibility to ensure that there is
consistency in the objectives and "degree of difficulty" among
all his/her subordinates. (A MINIMUM one over one approval is
required.)
4. The personal objectives for each year will be developed by
December 31 of the previous year and the results will be
evaluated by January 15 of the following year. The participant
shall evaluate his/her own results and then submit the
evaluation to his/her 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 required.)
a) Objectives and results for all staff level employees
will be submitted by Company Presidents and Corporate
Officers to the Corporate Vice President - Human
Resources and Organization Development by the dates
indicated, for processing of approvals.
5. Each individual shall be informed by his supervisor of his
final results AFTER all above approvals have been secured.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Exhibit 10.k
HUFFY SECTION: HUMAN RESOURCES
CORPORATION
POLICY NO.: 128 (RESTRICTED)
ISSUE DATE: 01/03/01
SUPERSEDES: 09/29/00
- --------------------------------------------------------------------------------
SUBJECT: PERFORMANCE INCENTIVE PLAN - 2001 - REVISED
6. Payments for personal objectives results are conditioned
upon the following criteria:
Payment for Results of Personal
-------------------------------
Criteria Objectives
-------- ----------
a. CORPORATE
---------
Corporate E.P.S. less than 75% of Target None
E.P.S. for Corporate bonus purposes
Corporate E.P.S. at least 75%, but less Up to 50% of calculated maximum bonus
than 90%, of Target E.P.S. for Corporate
bonus purposes
Corporate E.P.S. 90% or greater of Up to 100% of calculated maximum
Target for Corporate bonus purposes bonus
b. HUFFY COMPANIES
---------------
Huffy Company EBIT less than 75% of approved Huffy None
Company Profit Plan
Huffy Company EBIT at least 75%, but Up to 50% of calculated maximum bonus
less than 90%, of approved Huffy
Company Profit Plan
Huffy Company EBIT 90% or greater of Up to 100% of calculated maximum
approved Huffy Profit Plan bonus
VI. IMPLEMENTATION
--------------
A. ELIGIBILITY
-----------
All covered salaried employees on the payroll on or before the
first business day of the calendar year shall be eligible for
consideration for full year incentive opportunity.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Exhibit 10.k
HUFFY SECTION: HUMAN RESOURCES
CORPORATION
POLICY NO.: 128 (RESTRICTED)
ISSUE DATE: 01/03/01
SUPERSEDES: 09/29/00
- --------------------------------------------------------------------------------
SUBJECT: PERFORMANCE INCENTIVE PLAN - 2001 - REVISED
1. 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:
Percentage of Annual
Hire Date Incentive Opportunity *
--------- -----------------------
During 1st Quarter 75%
During 2nd Quarter 50%
During 3rd Quarter 25%
During 4th Quarter 0%
*For eligible non-exempt salaried employees, incentive
opportunity will be based on actual base salary plus earned
overtime during their FULL quarter(s) of employment.
2. 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: An employee promoted from a position not eligible for
incentive opportunity to a position eligible for incentive
opportunity will be eligible only for those quarters in which
they held incentive eligible positions.
3. 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 (i.e., the date the checks are issued).
4. 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
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Exhibit 10.k
HUFFY SECTION: HUMAN RESOURCES
CORPORATION
POLICY NO.: 128 (RESTRICTED)
ISSUE DATE: 01/03/01
SUPERSEDES: 09/29/00
- --------------------------------------------------------------------------------
SUBJECT: PERFORMANCE INCENTIVE PLAN - 2001 - REVISED
payment on basis of the following percentage of full
incentive opportunity: retired or died during the calendar
year in 1st Qtr - 25%; 2nd Qtr - 50%; 3rd Qtr - 75%; during
or after 4th Qtr - 100%.
Payment for deceased employees shall be made to the
beneficiary designated under the Salaried Employees Group Term
Life Insurance Plan.
Exception to the eligibility requirements must be approved by the Vice President
Human Resources & Organization Development.
In the event of a major restructuring, Profit Plan goals will be modified to
reflect the impact of the restructure adjustments; Performance Incentive Plan
goals will NOT be modified, but will be measured on the pre-restructure Profit
Plan.
B. PAYMENT Except as otherwise specifically provided by this Policy 128
------- or its Supplement, payment for Performance Incentive shall
generally be annual, and shall generally occur in the first
quarter of each year for the prior calendar year's results.
NO payment under this Policy 128 may be made prior to the
Board Compensation Committee's approval of awards.
C. 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.
D. DEFINITIONS
-----------
ACTIVE PAYROLL is defined as receiving salary (excluding severance
payments), as 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 salary (excluding severance payments), as defined above,
are not considered on the active payroll.
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.
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
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Exhibit 10.k
HUFFY SECTION: HUMAN RESOURCES
CORPORATION
POLICY NO.: 128 (RESTRICTED)
ISSUE DATE: 01/03/01
SUPERSEDES: 09/29/00
- --------------------------------------------------------------------------------
SUBJECT: PERFORMANCE INCENTIVE PLAN - 2001 - REVISED
of total assets other than cash and goodwill less current liabilities
excluding all interest bearing debt.
EBIT - Earnings before interest and taxes and goodwill amortization.
FREE CASH FLOW - Net Cash Flow from operations plus capital
expenditures, as approved by the Board of Directors in their review of
the annual operating plan. After close of books for the prior year, Cash
Flow for the plan year will be adjusted to reflect the actual balance of
12/31 of that prior year.
ACTUAL BASE SALARY - Employee's actual base salary as of December 31 of
the calendar year for which incentive is calculated. For non-exempt
salaried participants, earned overtime will also be included.
PROMOTION - An increase of one or more salary grades from current salary
grade.
DEMOTION - A decrease of one or more salary grades from current salary
grade.
TRANSFER - A change in position with substantially different duties and
responsibilities which may not constitute a promotion or demotion.
DISTRIBUTION OF THIS POLICY 128
Restricted to Corporate Officers, Huffy Company Presidents, and Staff Level
positions.
INTERPRETATION AND EXCEPTIONS
Interpretation and exceptions to this policy will be the responsibility of the
Corporate Vice President Human Resources and Organization Development.
/s/ Stanley H. Davis /s/ Don R. Graber
- ----------------------------------- ------------------------------------
Vice President, Human Resources and Chairman, President and Chief
Organization Development Executive Officer
- --------------------------------------------------------------------------------