EXHIBIT 10.i
SUBJECT: PERFORMANCE INCENTIVE PLAN - 2003 - 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.
SUBJECT TO THE AUTHORITY OF THE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS
AS TO DISCRETIONARY AWARDS AS MAY BE RECOMMENDED BY THE HUFFY CORPORATION
CHAIRMAN, PRESIDENT AND C.E.O., NO INCENTIVE PAYMENTS WILL BE MADE TO ANY PLAN
PARTICIPANTS UNLESS THE CORPORATION AS A WHOLE HAS INCOME FROM CONTINUING
OPERATIONS.
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
(SEE SECTION 1.H. FOR GEN-X SPORTS GROUP)
FINANCIAL INCENTIVE OPPORTUNITY
AS A % OF ACTUAL BASE SALARY
-------------------------------
THRESH TARGET MAX
------ ------ -----
A. CHAIRMAN
Corporate E.P.S. vs. PP 11.38% 45.50% 91.00%
Corporate Working Capital vs. PP 2.43% 9.75% 19.50%
Cash Flow vs. PP 2.44% 9.75% 19.50%
------ ------ ------
16.25% 65.00% 130.00%
B. OTHER CORPORATE OFFICERS, V.P. HUMAN
RESOURCES
Corporate E.P.S. vs. PP
Corporate Working Capital vs. PP 4.25% 17.00% 34.00%
Cash Flow vs. PP .87% 3.50% 7.00%
.88% 3.50% 7.00%
------ ------ ------
6.00% 24.00% 48.00%
Page 1 of 14
SUBJECT: PERFORMANCE INCENTIVE PLAN - 2003 - REVISED
THRESH TARGET MAX
------ ------ -----
C. GROUP PRESIDENT - HUFFY SPORTS GROUP
Group EBIT vs. PP 10.25% 20.50% 41.00%
Group Working Capital vs. PP 2.12% 4.25% 8.50%
Group Cash Flow vs. PP 2.13% 4.25% 8.50%
----- ----- -----
14.50% 29.00% 58.00%
D. HBC, HSF, HSC PRESIDENTS
Huffy Company EBIT vs. PP 8.50% 17.00% 34.00%
Huffy Company Working Capital vs. PP 1.75% 3.50% 7.00%
Huffy Company Cash Flow vs. PP 1.75% 3.50% 7.00%
----- ----- -----
12.00% 24.00% 48.00%
E. HBC, HSC, HSF (EXCLUDING CRS) STAFFS
Huffy Company EBIT vs. PP 7.00% 14.00% 28.00%
Huffy Company Working Capital vs. PP 1.50% 3.00% 6.00%
Huffy Company Cash Flow vs. PP 1.50% 3.00% 6.00%
----- ----- -----
10.00% 20.00% 40.00%
NOTE: (Includes HBC Director Finance)
(See Section IV.F, V.P. & Group Controller)
F. CORPORATE, HRC
1. Staff Positions
Corporate E.P.S. vs. PP 3.50% 14.00% 28.00%
Corporate Working Capital vs. PP .75% 3.00% 6.00%
Corporate Cash Flow vs. PP .75% 3.00% 6.00%
----- ----- -----
5.00% 20.00% 40.00%
NOTE: (See Section IV.F., V.P. &
Group Controller)
2. Other Corporate, HRC Salaried
EXEMPT POSITIONS
Corporate E.P.S. vs. PP 1.75% 7.00% 14.00%
Corporate Working Capital vs. PP .37% 1.50% 3.00%
Cash Flow vs. PP .38% 1.50% 3.00%
----- ----- -----
2.50% 10.00% 20.00%
NOTE: (See Section IV.H., HBC Employee Health &
Welfare Manager)
Page 2 of 14
SUBJECT: PERFORMANCE INCENTIVE PLAN - 2003 - REVISED
THRESH TARGET MAX
------ ------ -----
NON-EXEMPT POSITIONS
Corporate E.P.S. vs. PP .88% 3.50% 7.00%
Corporate Working Capital vs. PP .18% .75% 1.50%
Cash Flow vs. PP .19% .75% 1.50%
----- ----- -----
1.25% 5.00% 10.00%
3. Director Licensing - Huffy Corporation
Note: Objectives established per V.E, 1 - 4
Results approved by President Golf, Global
Licensing and Corporate Marketing; Chairman,
President and CEO. Incentive paid in
accordance with V.6.A
4. Company Specific Exempt
Huffy Company EBIT vs. PP 3.50% 7.00% 14.00%
Huffy Company Working Capital vs. PP .75% 1.50% 3.00%
Huffy Company Cash Flow vs. PP .75% 1.50% 3.00%
----- ----- -----
5.00% 10.00% 20.00%
5. Company Specific Non-Exempt
Huffy Company EBIT vs. PP 1.75% 3.50% 7.00%
Huffy Company Working Capital vs. PP .37% .75% 1.50%
Huffy Company Cash Flow vs. PP .38% .75% 1.50%
----- ----- -----
2.50% 5.00% 10.00%
G. OTHER SALARIED
NOTE: RELATED INCENTIVE PLANS (i.e. CRS, HSF SALES) EXIST FOR CERTAIN
ADDITIONAL PERSONNEL. THE MOST CURRENT VERSION IS ON FILE WITH VP HUMAN
RESOURCES, VP GENERAL COUNSEL & SECRETARY, VP FINANCE, CFO & TREASURER,
AND COMPANY PRESIDENTS
1. HBC, HSF (excluding CRS), HSC Exempt
Huffy Company EBIT vs. PP 3.50% 7.00% 14.00%
Huffy Company Working Capital vs. PP .75% 1.50% 3.00%
Huffy Company Cash Flow vs. PP .75% 1.50% 3.00%
----- ----- -----
5.00% 10.00% 20.00%
NOTE: (See Section IV.H., HBC Employee Health &
Welfare Manager)
Page 3 of 14
SUBJECT: PERFORMANCE INCENTIVE PLAN - 2003 - REVISED
THRESH TARGET MAX
------ ------ -----
2. Huffy Company Non-Exempt
HBC, HSF (excluding CRS)
Huffy Company EBIT vs. PP 1.75% 3.50% 7.00%
Huffy Company Working Capital vs. PP .37% .75% 1.50%
HBC Cash Flow vs. PP .38% .75% 1.50%
----- ----- -----
2.50% 5.00% 10.00%
HSC
Huffy Company EBIT vs. PP 1.40% 2.80% 5.60%
Huffy Company Working Capital vs. PP .30% .60% 1.20%
HSC Cash Flow vs. PP .30% .60% 1.20%
----- ----- -----
2.00% 4.00% 8.00%
H. GEN-X SPORTS, INC.
1. Group President - Gen-X Sports Group
Group EBIT vs. PP 8.75% 17.50% 35.00%
Group Working Capital vs. PP 2.87% 5.75% 11.50%
Group Cash Flow vs. PP 2.88% 5.75% 11.50%
----- ----- -----
14.50% 29.00% 58.00%
2. President Golf, Global Licensing & Corp Mktg
33% Divisional EBIT vs. PP 4.00% 8.00% 16.00%
21% Licensing EBIT vs. PP 2.50% 5.00% 10.00%
6% Gen-X EBIT vs. PP 0.70% 1.40% 2.80%
20% Gen-X Working Capital vs. PP 2.40% 4.80% 9.60%
20% Gen-X Cash Flow vs. PP 2.40% 4.80% 9.60%
----- ----- -----
12.00% 24.00% 48.00%
3. Gen-X Leadership Staff
60% Gen-X EBIT vs. PP 6.00% 12.00% 24.00%
20% Gen-X Working Capital vs. PP 2.00% 4.00% 8.00%
20% Gen-X Cash Flow vs. PP 2.00% 4.00% 8.00%
----- ----- -----
10.00% 20.00% 40.00%
4. Gen-X Leadership Staff - Division Specific
54% Division EBIT vs. PP 5.40% 10.80% 21.60%
6% Gen-X EBIT vs. PP .60% 1.20% 2.40%
20% Gen-X Working Capital vs. PP 2.00% 4.00% 8.00%
20% Gen-X Cash Flow vs. PP 2.00% 4.00% 8.00%
----- ----- -----
10.00% 20.00% 40.00%
Page 4 of 14
SUBJECT: PERFORMANCE INCENTIVE PLAN - 2003 - REVISED
THRESH TARGET MAX
------ ------ -----
5. Gen-X Management
60% Gen-X EBIT vs. PP 3.00% 6.00% 12.00%
20% Gen-X Working Capital vs. PP 1.00% 2.00% 4.00%
20% Gen-X Cash Flow vs. PP 1.00% 2.00% 4.00%
----- ----- -----
5.00% 10.00% 20.00%
6. Gen-X Management - Division Specific
54% Divisional EBIT vs. PP 2.70% 5.40% 10.80%
6% Gen-X EBIT vs. PP .30% .60% 1.20%
20% Gen-X Working Capital vs. PP 1.00% 2.00% 4.00%
20% Gen-X Cash Flow vs. PP 1.00% 2.00% 4.00%
----- ----- -----
5.00% 10.00% 20.00%
7. Gen-X Management Support
60% Gen-X EBIT vs. PP 1.50% 3.00% 6.00%
20% Gen-X Working Capital vs. PP .50% 1.00% 2.00%
20% Gen-X Cash Flow vs. PP .50% 1.00% 2.00%
----- ----- -----
2.50% 5.00% 10.00%
8. Gen-X Division and Corporate Support
60% Gen-X EBIT vs. PP .75% 1.50% 3.00%
20% Gen-X Working Capital vs. PP .25% .50% 1.00%
20% Gen-X Cash Flow vs. PP .25% .50% 1.00%
----- ----- -----
1.25% 2.50% 5.00%
9. Gen-X Operational, Administrative Support
60% Gen-X EBIT vs. PP .30% .60% 1.20%
20% Gen-X Working Capital vs. PP .10% .20% .40%
20% Gen-X Cash Flow vs. PP .10% .20% .40%
----- ----- -----
.50% 1.00% 2.00%
Page 5 of 14
SUBJECT: PERFORMANCE INCENTIVE PLAN - 2003 - REVISED
10. Other Guidelines
a. Employees in Sections 2, 4, and 6 above who are eligible for
Division Specific Incentive are subject to the following
Divisional EBIT Qualifier:
Criteria Divisional EBIT Eligibility
- -------------------------------------- ---------------------------------------
Gen-X EBIT less than 75% of approved None
Gen-X PP
Gen-X EBIT at least 75%, but less than 50% of Achieved Divisional EBIT Bonus
90% of approved Gen-X PP
Gen-X EBIT at least 90% or greater of 100% of achieved Divisional EBIT Bonus
approved Gen-X PP
b. Position assignment to the Performance Incentive tiers outlined
in Sections H. 1 - 9 above must be approved by Group President
Gen-X Sports Group, Huffy Corporation V.P. Human Resources and
Gen-X Senior V.P. Human Resources and Corporate Development.
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 Vice President Human Resources prior to the beginning of the award year
for which they are applicable.
III. AWARD SCALES(1)
For Huffy Company Participants,
Company Specific HRC Participants
Huffy Company Working Capital, % of Targeted
EBIT and 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
Page 6 of 14
SUBJECT: PERFORMANCE INCENTIVE PLAN - 2003 - REVISED
For Corporate and HRC Participants
Corporate Working Capital, EPS % of Targeted
and 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 (Non-Officer)
B. Group Presidents
Group President and General Manager - Huffy Sports Group
Group President and General Manager - Gen-X Sports Group
C. Huffy Company Presidents
President and General Manager - HBC
President and General Manager - HSC
President and General Manager - HSF
President, Golf, Global Licensing and Corporate Marketing
D. Corporate Staff Positions
Associate General Counsel
Assistant Treasurer and Manager of Investor Relations
Page 7 of 14
SUBJECT: PERFORMANCE INCENTIVE PLAN - 2003 - REVISED
E. Huffy Company Staffs
- HBC
V.P. Asset Management
V.P. Operations
V.P. Sales & Marketing
- HSC
V.P. Worldwide Sourcing
V.P. Operations
V.P. Sales & Marketing
V.P. Product Engineering & Quality Assurance
- HSF (excluding CRS)
V.P. Operations
V.P. Sales
V.P. Human Resources and Business Resource Planning
V.P. Administration and Senior Counsel
Note: See Vice President & Group Controller under Section F.
below
- Gen-X
CFO
Sr. V.P. OPP (Division Specific)
Sr. V.P. Golf (Division Specific)
Sr. V.P. Active Sports (Division Specific)
COO
V.P. Product (Division Specific)
V.P. HR and Corporate Development
Managing Director (International)
Sr. V.P. OPP & Volant (Division Specific)
V.P. Hockey (Division Specific)
F. HRC Staff Positions
Corporate Director Finance
Corporate Manager Credit
Vice President & Group Controller
Note: Vice President & Group Controller incentive opportunity split
50% HSF Staff, 50% HRC Staff due to I.T. responsibility.
Personal Objective eligibility split based on I.T.
(Corp.) vs. HSF objectives.
Page 8 of 14
SUBJECT: PERFORMANCE INCENTIVE PLAN - 2003 - REVISED
G. HRC Company Specific Participants
Director Finance at HBC, HSC
HSF Payroll and Billing Personnel
HSF Employee Benefits Personnel
HSF Employment Personnel
HSC Sussex-based Finance, IT and Human Resource Personnel Others as
Approved by Company Presidents, V.P. Human Resources
H. Exempt Salaried Employees (see IV.J. for Gen-X)
Corporate
HBC
HSC
HSF(excluding CRS)
HRC
Note: (HBC Employee Health and Welfare Manager Incentive opportunity
split 50% HBC exempt, 50% HRC exempt)
I. Non-Exempt Salaried Employees (see IV.J. for Gen-X)
Corporate
HBC
HSC
HSF(excluding CRS)
HRC
J. Gen-X Employees
Management
Management Support
Division and Corporate Support
Operational, Administrative Support
Page 9 of 14
SUBJECT: PERFORMANCE INCENTIVE PLAN - 2003 - REVISED
V. INDIVIDUAL PERSONAL OBJECTIVES
*See D.6 below.
Incentive Opportunity as a % of
Actual Base Salary
------------------
Position Maximum Bonus
- ----------------------------------------------- -------------------------------
A. Chairman, President & CEO N/A
B. Corporate Officers, Huffy
Company Presidents, Vice
President HR, Group Presidents 12.0%
C. Gen-X, HBC, HSC, HSF (excluding
CRS) Staff, HRC Staff, Corporate Staff 10.0%
(Note: Includes HBC Director Finance)
(Note: See Section IV.F. Vice President &
Group Controller)
D. 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) Objectives should be specific, measurable, meaningful,
agreed to, realistic and time phased. (A project need not be
completed in the calendar year if the objective defines a
specific status in the project by calendar year end.)
b) Participants shall develop 6 to 10 objectives.
c) 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. Objectives and
results for all staff level employees will be submitted by
Company Presidents and Corporate Officers to Chairman, Chief
Executive Officer and President by the dates indicated, for
approval.
Page 10 of 14
SUBJECT: PERFORMANCE INCENTIVE PLAN - 2003 - REVISED
5. Each individual shall be informed by his/her supervisor of
his/her final results after all above approvals have been
secured.
6. Payments for personal objectives results are conditioned upon the
following criteria:
Payment for Results of
Criteria Personal Objectives
- ----------------------------------------------------- --------------------------------------
a. Corporate, HRC
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 Company 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.
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:
Page 11 of 14
SUBJECT: PERFORMANCE INCENTIVE PLAN - 2003 - REVISED
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 Actual 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 have been on the active
payroll on December 31st of the calendar year for which the
Performance Incentive payment is made.
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 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
Chairman, Chief Executive Officer and President.
Page 12 of 14
SUBJECT: PERFORMANCE INCENTIVE PLAN - 2003 - REVISED
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
$1.00 increment, provided employee is eligible for incentive
and such incentive is approved.
D. Definitions
Eligible - Full-time employees only.
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.
Working Capital - Volume Adjusted Working Capital = Twelve month rolling
average Accounts Receivable (net) plus 12 month rolling average inventory
(net); Less 12 month rolling average Accounts Payable, divided by last 12
months net sales.
E.P.S. - Earnings per common share from continuing operations.
EBIT - Earnings before interest, taxes and corporate expense allocations.
Cash Flow - Cash Flow from operations, less capital expenditures, as
approved by the Board of Directors in their review of the annual Profit
Plan. The approved Profit Plan Cash Flow is to be adjusted after the
beginning of the new year to reflect the actual prior year ending balance
sheet.
Actual Base Salary - Employee's actual base salary as of December 31 of the
calendar year for which incentive is calculated or at time of transfer,
promotion, or demotion to a different Performance Incentive Opportunity
level. For non-exempt salaried participants, actual overtime paid will also
be included.
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SUBJECT: PERFORMANCE INCENTIVE PLAN - 2003 - REVISED
Interpretation and Exceptions
Interpretation and exceptions to this policy will be the responsibility of the
Vice President Human Resources. Any exceptions to this policy must be approved
by the Chairman, President and Chief Executive Officer.
______________________________ _______________________________________
Vice President Human Resources Chairman, President and Chief Executive
Officer
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