EXHIBIT 10(xx)
NACCO INDUSTRIES, INC.
2003 ANNUAL INCENTIVE COMPENSATION PLAN
1. Purpose of the Plan
The purpose of the NACCO Industries, Inc. 2003 Annual Incentive
Compensation Plan (the "Plan") is to further the profits and growth of NACCO
Industries, Inc. (the "Company") by enabling the Company to attract and retain
key employees of the Company by offering annual incentive compensation to those
key employees who will be in a position to help the Company to meet its
financial and business objectives.
2. Definitions
(a) "Award" means cash paid to a Participant under the Plan for the
Award Term in an amount determined in accordance with Section 4. A Participant's
Award shall be equal to the sum of his 40% Award and his 60% Award, as further
described in Section 4.
(b) "Award Term" means the period from January 1, 2003 through December
31, 2003.
(c) "60% Base Amount" means for any Participant a dollar amount, which
shall be equal to the salary midpoint for the Salary Points assigned to the
Participant by the Committee for the Award Term multiplied by 60% of the
short-term incentive compensation target percent for those Salary Points.
Attached hereto as Exhibit A is a schedule listing the 60% Base Amount for each
Participant for the Award Term.
(d) "40% Base Amount" means for any Participant a dollar amount, which
shall be equal to the salary midpoint for the Salary Points assigned to the
Participant by the Committee for the Award Term multiplied by 40% of the
short-term incentive compensation target percent for those Salary Points.
Attached hereto as Exhibit B is a schedule listing the 40% Base Amount for each
Participant for the Award Term.. Where applicable, the 40% Base Amount and the
60% Base Amount shall be referred to herein collectively as the "Base
Amount(s)."
(e) "Committee" means 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, so long as any such committee consists of not less than two directors
of the Company and so long as each member of the Committee is not an employee of
the Company or any of its subsidiaries.
(f) "Participant" means any salaried employee of the Company who in the
judgment of the Committee occupies a key position in which his efforts may
significantly contribute to the profits or growth of the Company; provided,
however, that the Committee may select any employee who is expected to
contribute, or who has contributed, significantly to the Company's profitability
to participate in the Plan and receive an Award hereunder; and further provided,
however, that following the end of the Award Term the Committee may make one or
more discretionary Awards to employees of the Company who are not Participants.
Directors of the Company who are also employees of the Company are eligible to
participate in the Plan. Employees of the Company's subsidiaries shall not be
eligible to participate in the Plan. The Committee shall have the power to add
Participants at any later date in the Award Term if individuals subsequently
become eligible to participate in the Plan. Each Participant shall be notified
that he is eligible to receive a 60% Award and or a 40% Award for such Term and
the amount of his Base Amounts. If a Participant receives a change in Salary
Points, salary midpoint and/or short-term incentive compensation target percent,
such change and any resulting change in his Base Amount(s) will be reflected on
an amended Exhibit A or Exhibit B, as applicable. Unless otherwise determined by
the Committee, a Participant must be both employed by the Company and a
Participant on December 31 of the Award Term, and the amount of any Award to a
Participant who was not also employed by the Company and a Participant on the
first day of the Award Term shall be not more than the pro-rated amount based
upon the number of days actually employed by the Company in the Award Term.
Attached hereto as Exhibit A is a schedule listing the Participants eligible for
a 60% Award for the Award Term and attached hereto as Exhibit B is a schedule
listing the Participants eligible for a 40% Award for the Award Term.
(g) "Salary Points" means the salary points assigned to a Participant
by the Committee pursuant to the Hay salary point system, or any successor
salary point system adopted by the Committee.
(h) "Supplemental Plan" means the NACCO Industries, Inc. Supplemental
Annual Incentive Compensation Plan.
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 or
paid under this Plan, to adopt, amend and rescind general and special rules and
regulations for its administration, 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. Awards
The Committee may, from time to time and upon such conditions as it may
determine, authorize Awards for Participants, which Awards shall be not
inconsistent with, and shall be subject to all of the requirements of, the
following provisions:
(a) Performance Targets. The Committee shall determine performance
target descriptions, weightings and targets for the Award Term. The targets
applicable to the 60% Awards shall be attached hereto as Exhibit C and the
targets for the 40% Awards shall be attached hereto as Exhibit D. The Committee
shall have the power to add, delete and amend target descriptions, weightings
and targets during or after the Award Term, which shall be reflected on an
amended Exhibit C or Exhibit D, as applicable. No performance targets used in
this Plan which are applicable to a Participant hereunder shall be used in the
Supplemental Plan in the same year for such Participant.
(b) 60% Awards. Following the end of the Award Term, the Committee
shall compare the actual performance against the performance targets for each of
the performance target descriptions in Exhibit C which are applicable to the 60%
Awards. Based thereupon, the Committee shall determine the total payout
percentage under the Plan for the 60% Awards (the "60% Payout Percentage"). The
Committee shall then determine the 60% Award for each Participant, which shall
be equal to the Participant's 60% Base Amount, multiplied by the 60% Payout
Percentage, and further adjusted by such other factors, including an individual
performance factor for each Participant, as the Committee shall determine are
appropriate; provided, however, that no 60% Award may be made to any Participant
which exceeds 200% of his 60% Base Amount.
(c) 40% Awards. The amount of the 40% Awards shall be determined in
accordance with the provisions of Exhibit D hereto.
(d) Payment Provisions. Promptly following the approval of the final
Awards, the Company shall pay the amount of such Awards to the Participants in
cash, subject to all withholdings and
deductions pursuant to Section 5; provided, however, that no Award shall be
payable to a Participant except as determined by the Committee.
5. Withholding Taxes
Any Award paid to a Participant under this Plan, shall be subject to
standard federal, state and local income tax, social security and other standard
withholdings and deductions.
6. Amendment and Termination
The Committee may alter or amend this Plan (including the Exhibits
hereto) from time to time or terminate it in its entirety; provided, however,
that no such action shall, without the consent of a Participant, affect the
rights in an outstanding Award of such Participant.
7. 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 Delaware.
(c) 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.
8. Effective Date
This Plan shall become effective as of January 1, 2003.