EXHIBIT 10(cxxxi)
HAMILTON BEACH/PROCTOR-SILEX, INC.
SENIOR EXECUTIVE LONG-TERM INCENTIVE COMPENSATION PLAN
(EFFECTIVE AS OF JANUARY 1, 2003)
1. Purpose of the Plan
The purpose of this January 1, 2003 Senior Executive Long Term
Incentive Compensation Plan (the "Plan") is to further the long-term profits and
growth of Hamilton Beach/Proctor-Silex, Inc. (the "Company") by enabling the
Company to attract and retain key executive employees by offering long-term
incentive compensation to those key executive employees who will be in a
position to make significant contributions to such profits and growth. This
incentive is in addition to annual compensation and is intended to reflect
growth in the value of the Company's stockholders' equity.
2. Definitions
(a) "Award" shall mean an award of Book Value Units granted to a
Participant under this Plan for an Award Term in an amount determined pursuant
to a formula which is established by the Committee not later than the 90th
calendar day of the Award Term. Notwithstanding the foregoing, for the Award
Term beginning on January 1, 2003, such formula shall be established by the
Committee prior to or as soon as practicable following the adoption of the Plan.
(b) "Award Units" shall mean Book Value Units which are issued
pursuant to, and with such restrictions as are imposed by, the terms of this
Plan.
(c) "Award Unit Price" as to any Book Value Unit shall mean the
Book Value on the Quarter Date coincident with or immediately preceding the
Grant Date of the Award.
(d) "Award Term" shall mean the period of one or more years on
which an Award is based.
(e) "Beneficiary" shall mean the person(s) designated in writing
(on a form acceptable to the Committee) to receive the payment of all or part of
an Award hereunder in the event of the death of a Participant. In the absence of
such a designation and at anytime when there is no existing Beneficiary
hereunder, a Participant's Beneficiary shall be his surviving Spouse or, if
none, his estate.
(f) "Book Value" as to any Book Value Unit shall mean an amount
determined by the Committee or, if no amount is set by the Committee, as of any
date (i) the stockholders' equity (as determined in accordance with generally
accepted accounting principles, applied on a consistent basis) allocable to the
Common Stock of the Company, as set forth on the balance sheet of the Company as
of the Quarter Date coincident with or immediately preceding such date, divided
by (ii) the number of Notional Shares existing as of such Quarter Date;
provided, however, that Book Value and/or the number of Notional Shares may be
adjusted to such an extent as may be determined by the Committee to preserve the
benefit of the arrangement for holders of Book Value Units and the Company, if
in the opinion of the Committee, after consultation with the Company's
independent public accountants, changes in the Company's accounting policies,
acquisitions or other unusual or extraordinary items have materially affected
the stockholders' equity allocable to the Notional Shares.
(g) "Book Value Unit" or "Unit" shall mean a right granted
pursuant to the terms and conditions set forth in Section 5.
(h) "Committee" shall mean the Nominating, Organization and
Compensation Committee of the Company's Board of Directors or any other
committee appointed by the Company's Board of Directors to administer this Plan
in accordance with Section 3.
(i) "Grant Date" shall mean the effective date of an Award, as
determined under Section 5(b)(ii) of the Plan.
(j) "Guidelines" shall mean the guidelines that are approved by
the Committee for each Award Term for the administration of the Awards granted
under the Plan. To the extent that there is any inconsistency between the
Guidelines and the Plan, the Guidelines shall control.
(k) "Hay Salary Grade" shall mean the salary grade or points
assigned to a Participant by the Company pursuant to the Hay Salary System, or
any successor salary system subsequently adopted by the Company; provided,
however, that for purposes of determining Target Awards for U.S. Participants,
the midpoints of the National Salary ranges shall be used.
(l) "Notional Shares" shall mean the number of assumed shares of
Common Stock of the Company as determined by the Committee from time to time in
order to implement the purposes of the Plan, and shall equal 15 million shares
on the effective date described in Section 10 hereof.
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(m) "Participant" shall mean any person who meets the eligibility
criteria set forth in Section 4 and who is granted an Award under the Plan.
(n) "Quarter Date" shall mean the last business day of each
calendar quarter.
(o) "Retirement" or "Retire" shall mean the termination of a
Participant's employment with the Company after the Participant has reached age
55 and completed at least 5 years of service.
(p) "Target Award" shall mean the dollar value of the Award to be
paid to a Participant under the Plan assuming that the performance targets are
met.
3. Administration
This Plan shall be administered by the Committee. The Committee shall
have complete authority to interpret all provisions of this Plan consistent with
law, to prescribe the form of any instrument evidencing any Award granted under
this Plan, to adopt, amend and rescind general and special rules and regulations
for its administration (including, without limitation, the Guidelines), and to
make all other determinations necessary or advisable for the administration of
this Plan. A majority of the Committee shall constitute a quorum, and the action
of members of the Committee present at any meeting at which a quorum is present,
or acts unanimously approved in writing, shall be the act of the Committee. All
acts and decisions of the Committee with respect to any questions arising in
connection with the administration and interpretation of this Plan, including
the severability of any or all of the provisions hereof, shall be conclusive,
final and binding upon the Company and all present and former Participants, all
other employees of the Company, and their respective descendants, successors and
assigns. No member of the Committee shall be liable for any such act or decision
made in good faith.
4. Eligibility
Any person who is classified by the Company as a salaried employee of
the Company generally at a Hay Salary Grade of 17 or above (or a compensation
level equivalent thereto), who in the judgment of the Committee occupies an
officer or other key executive position in which his efforts may significantly
contribute to the profits or growth of the Company, may be awarded Book Value
Units; provided, however, that (a) directors of the Company who are not
classified as salaried employees of the Company and (b) leased employees (as
such term is defined in Section 414 of the Internal Revenue Code (the "Code")
shall not be eligible to participate in the Plan. In addition, notwithstanding
the foregoing, salaried employees of the Company who are participants in the
Hamilton Beach/Proctor-Silex, Inc. Long
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Term Incentive Compensation Plan for a particular Award Term shall not be
eligible to participate in this Plan and receive an Award hereunder for the same
Award Term. A person who satisfies the requirements of this Section 4 shall
become a Participant in the Plan when granted an Award hereunder.
5. Granting of Awards
The Committee may, from time to time and upon such conditions as it may
determine, authorize the granting of Awards to Participants, which shall be not
inconsistent with, and shall be subject to all of the requirements of, the
following provisions:
(a) Not later than the ninetieth day of each calendar year (or as
soon as practicable after the date of the adoption of the Plan, if later), the
Committee shall approve (i) a Target Award to be granted to each Participant for
such year and (ii) a formula for determining the amount of each Award, which
formula is based upon the Company's return on total capital employed for the
applicable Award Term.
(b) Effective during April of the calendar year following the
Award Term, the Committee shall approve:
(i) a preliminary calculation of the amount of each Award
based upon the application of the formula (as in effect at the calculation date)
and actual performance to the Target Awards previously determined in accordance
with Section 5(a); and
(ii) a final calculation of the amount of each Award to be
granted to each Participant for the Award Term, which amount shall be not
greater than the amount determined in accordance with Section 5(b)(i) (the
"Grant Date" of such Award being January 1st of the calendar year following the
Award Term). The Committee shall have the power increase or decrease the amount
of any Award above or below the amount determined in accordance with Section
5(b)(i); provided, however, no Award, including any Award equal to the Target
Award, shall be payable under the Plan to any Participant except as determined
by the Committee.
(c) Calculations of Target Awards shall initially be based on a
Participant's Hay Salary Grade as of January 1 of the Award Term. However, (i)
if a Participant receives a change in Hay Salary Grade, salary midpoint and/or
long-term incentive compensation target percentage, such change will be
reflected in a pro-rata Target Award and (ii) employees hired into or promoted
to a position eligible to participate in the Plan (as specified in Section 4
above) during an Award Term will, if designated as a Plan Participant by the
Committee, be assigned a pro-rated Target Award based on their length of service
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during an Award Term.. In order to be eligible to receive an Award for an Award
Term, the Participant must be employed by the Company and must be a Participant
on December 31 of the last year of the Award Term; provided, however, that if a
Participant dies, becomes disabled or Retires during the Award Term, the
Participant shall be entitled to a pro-rata portion of the Award for such Award
Term., based on the number of days the Participant was actually employed by the
Company during the Award Term.
(d) Each Award shall be granted in the form of Book Value Units.
The number of Book Value Units to be issued to a Participant shall be determined
by dividing the amount of the Award by the Award Unit Price. Notwithstanding any
other provision of the Plan, the maximum cash value of the Awards granted to a
Participant under this Plan in a single year shall not exceed $2,250,000.
(e) Multiple Awards may be granted to a Participant; provided,
however, that no two Awards to a Participant may have identical performance
periods
6. Vesting; Payment of Awards
(a) Vesting. All Book Value Units granted pursuant to an Award
hereunder shall be immediately 100% vested as of the Grant Date.
(b) Payment Restrictions. Each Award shall provide that the Book
Value Units granted therein shall be subject to a payment restriction in the
manner and to the extent prescribed by the Committee for a period of five years
from the Grant Date, or such other shorter or longer period as may be determined
by the Committee from time to time. Notwithstanding the foregoing, such payment
restrictions shall automatically lapse upon a termination of employment by
reason of death, permanent disability or Retirement. In addition, in the case of
other special circumstances of a Participant who holds Award Units as to which
the payment restrictions have not lapsed, or in case of a termination of the
Plan pursuant to Section 8, the Committee may, in its sole discretion,
accelerate the time at which such payment restrictions will lapse.
(c) Payment Date/Value. Subject to Subsection 6(e) hereof, and
unless a Participant makes a deferral election under Subsection (d) of this
Section, as soon as practicable following the lapse of a payment restriction
applicable to an Award pursuant to Section 6(b), the Company shall deliver to
the Participant (or, if applicable, his Beneficiary), a check in full payment of
the Book Value Units granted pursuant to such Award. For participants who
terminated employment (for reasons other than death, permanent disability or
Retirement), the value of such Book Value Units shall be based on the Book
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Value as of the Quarter Date coincident with or immediately preceding the date
of termination. For Participants who terminated employment due to death,
permanent disability or Retirement, the value of such Book Value Units shall be
based on the Book Value as of the Quarter Date coincident with or immediately
preceding the date on which the payment restriction lapses. There shall be
deducted from each payment under the Plan the amount of any tax required by any
governmental authority to be withheld and paid over to such governmental
authority for the account of the person entitled to such payment.
(d) Deferral Option. Prior to the date described in Subsection
(c), to the extent determined by the Committee in its sole and absolute
discretion (and subject to the rules and procedures specified in the
Guidelines), a Participant who is a citizen or resident of the United States may
make an irrevocable election to defer receipt of any number of Award Units
granted to him for a particular Award Term for a period not to exceed ten (10)
years from the Grant Date of such Award. A separate deferral election may be
made with respect to each Award granted under the Plan. The Award Units which
are subject to such a deferral election shall continue to be subject to the
terms and conditions of this Plan and shall continue to be valued in accordance
with the terms of the Plan until the date of payment (or further deferral, as
described in the following sentence). In addition, a Participant who is a
citizen or resident of the United States and who has made an irrevocable
election to defer the receipt of part of an Award until exactly ten (10) years
from the Grant Date of such Award shall be permitted (subject to the Committee's
sole and absolute discretion and the rules and procedures contained in the
Guidelines) to make another irrevocable election to further defer the receipt of
any number of such deferred Award Units under and into the Hamilton
Beach/Proctor-Silex, Inc. Unfunded Benefit Plan (the "Unfunded Plan"). Deferred
Awards payable to an active employee under this Plan shall be paid to the
Participant as soon as practicable following the payment date previously elected
by the Participant and shall be based on the Book Value as of the Quarter Date
coincident with or immediately preceding such payment date. Deferred Awards
which are further deferred into the Unfunded Plan shall be credited to the
Unfunded Plan as soon as practicable following the 10th anniversary of the Grant
Date of such Award and shall be based on the Book Value as of the Quarter Date
coincident with or immediately preceding such anniversary date. Notwithstanding
the foregoing, any deferral election hereunder shall automatically terminate
(and shall be of no further effect) upon a Participant's termination of
employment with the Company for any reason (including death or disability) and
payment of all such deferred Awards shall be made as soon as practicable
following the date of the Participant's termination of employment, based on the
Book Value as of the Quarter Date coincident with or immediately preceding such
termination date; provided,
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however, that any Awards which are subject to a deferral election at the time of
a Participant's Retirement shall automatically be deferred under and into the
Unfunded Plan as of the date of the Participant's Retirement, with the value of
the Book Value Units being based on the Book Value as of the Quarter Date
coincident with or immediately preceding such Retirement date if (and only if)
the Participant has a currently-effective payment election relating to Awards
under the Unfunded Plan and is then eligible to participate in the Unfunded
Plan.
(e) Code Section 162(m) Payment Restriction. Notwithstanding any
provision of the Plan to the contrary, payment of all or any portion of an Award
will be deferred to the extent that the amount of such Award, when added to any
other compensation received or to be received by a Participant who is, or is
determined by the Committee to be likely to become, a "covered employee" (under
Section 162(m) of the Code), would not be deductible by the Company by reason of
Section 162(m) of the Code. The amount to be deferred will equal the amount that
otherwise would not be deductible by the Company by reason of Section 162(m) of
the Code, but in no event greater than the total amount payable hereunder. The
deferred amount shall become payable on December 31 of the first succeeding
calendar year in which such amount, when added to all other compensation
received or to be received by the Participant in such calendar year, would not
be non-deductible by the Company by reason of Section 162(m) of the Code. The
Committee, in its sole and absolute discretion, shall have the authority to
waive this payment restriction (in whole or in part) upon the written request of
a Participant.
7. Assignability
No Award granted to a Participant under this Plan shall be transferable
by him for any reason whatsoever; provided, however, that upon the death of a
Participant the right to the proceeds of an Award may be transferred to a
Beneficiary.
8. Amendment, Termination and Adjustments
(a) The Committee, in its sole and absolute discretion, may alter
or amend this Plan from time to time; provided, however, that no such amendment
shall, without the consent of a Participant, affect the amount of any
outstanding Award or any Award Units of such Participant.
(b) The Committee, in its sole and absolute discretion, may
terminate this Plan in its entirety at any time; provided that, except as
provided in this Subsection, no such termination shall, without the
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consent of a Participant, affect the amount of ANY outstanding Award or any
Award Units of such Participant. Except as otherwise provided in an amendment to
the Plan, all Target Awards and Awards granted prior to any termination of this
Plan shall continue to be subject to the terms of this Plan. Notwithstanding the
foregoing, upon a complete termination of the Plan, the Committee, in its sole
and absolute discretion, shall have the right to change the time of distribution
of Participants' Award Units under the Plan, including requiring that all such
Award Units be immediately distributed in the form of lump sum cash payments.
(c) Any amendment or termination of the Plan shall be in the form
of a written instrument executed by an officer of the Company on the order of
the Committee. Such amendment or termination shall become effective as of the
date specified in the instrument or, if no such date is specified, on the date
of its execution.
(d) The Committee may make or provide for an adjustment in the
total number of Award Units to be issued under this Plan as the Committee in its
sole discretion, exercised in good faith, may determine is equitably required to
reflect (i) any stock dividend, stock split, combination of shares,
recapitalization or any other change in the capital structure of the Company,
(ii) any merger, consolidation, spin-off, split-off, spin-out, split-up,
reorganization, partial or complete liquidation or other distribution of assets,
issuance of rights or warrants to purchase securities, or (iii) any other
corporate transaction or event having an effect similar to any of the foregoing.
9. General Provisions
(a) No Right of Employment. Neither the adoption or operation of
this Plan, nor any document describing or referring to this Plan, or any part
thereof, shall confer upon any employee any right to continue in the employ of
the Company, or shall in any way affect the right and power of the Company to
terminate the employment of any employee at any time with or without assigning a
reason therefor to the same extent as the Company might have done if this Plan
had not been adopted.
(b) Governing Law. The provisions of this Plan shall be governed
by and construed in accordance with the laws of the State of Virginia, except
when preempted by federal law.
(c) Liability for Payment/Expenses.
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(i) The Company shall be liable for the payment of any Award to or
on behalf of such Participant.
(ii) Expenses of administering the Plan shall be paid by the
Company.
(d) Limitation on Rights of Participants; No trust.
(i) No trust has been created by the Company for the payment of
Book Value Units granted under this Plan; nor have the grantees of Book Value
Units been granted any lien on any assets of the Company to secure payment of
such benefits. This Plan represents only an unfunded, unsecured promise to pay
by the Company, and the grantees hereunder are unsecured creditors of the
Company.
(ii) Notwithstanding any provision of the Plan to the contrary, the
Company shall not be required to make any payment hereunder to any Participant
or Beneficiary if the Company is "Insolvent" at the time such payment is due to
be made. For purposes of the Plan, the Company shall be considered Insolvent at
such time as it is unable to pay its debts as they mature or is subject to a
pending voluntary or involuntary proceeding as a debtor under the United States
Bankruptcy Code (or similar foreign law).
(e) Payment to Guardian. If an Award is payable to a minor, to a
person declared incompetent or to a person incapable of handling the disposition
of his property, the Committee may direct payment of such Award to the guardian,
legal representative or person having the care and custody of such minor,
incompetent or person. The Committee may require such proof of incompetency,
minority, incapacity or guardianship as it may deem appropriate prior to the
distribution of such Award. Such distribution shall completely discharge the
Company and the Subsidiaries from all liability with respect to such Award.
(f) Miscellaneous. Headings are given to the sections of this Plan
solely as a convenience to facilitate reference. Such headings, numbering and
paragraphing shall not in any case be deemed in any way material or relevant to
the construction of this Plan or any provisions thereof. The use of the
masculine gender shall also include within its meaning the feminine. The use of
the singular shall also include within its meaning the plural, and vice versa.
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10. Effective Date
The effective date of this Plan is as of January 1, 2003.
HAMILTON BEACH/PROCTOR-SILEX, INC.
By: /s/ Michael J. Morecroft
------------------------------------------------
Title: President and Chief Executive Officer
Date: March 20, 2003
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