1
Exhibit (10)(k)
LONG TERM INCENTIVE PLAN
------------------------
POLICY
- ------
CERTAIN OFFICERS AND HUFFY COMPANY PRESIDENTS SHALL PARTICIPATE IN A LONG TERM
INCENTIVE PLAN OF COMPENSATION. THE PURPOSE OF THE LONG TERM INCENTIVE PLAN
SHALL BE TO PROVIDE AN INCENTIVE FOR LONG TERM PERFORMANCE, BE COMPETITIVE WITH
THE MARKETPLACE, AND PROMOTE STOCK OWNERSHIP.
Award as a % of
Average 3 Year Salary Midpoint
------------------------------
Target Maximum
I. PARTICIPANTS ------ -------
------------
A. Chairman and President 50% 100%
Executive Vice President 34% 68%
B. Vice President-General Counsel & 17.5% 35%
Secretary
Vice President-Human Resources
Vice President-Corporate Affairs
Vice President-Finance and CFO
Vice President-Controller
Treasurer and Director, Investor
Relations
President & General Manager - HBC
President & General Manager - HSC
President & General Manager - GBPC
President & General Manager - HSF
President & General Manager - WIS
President & General Manager - TTH
II. MEASUREMENT:
-----------
Based on long term performance as measured 50% on average Company
performance during a three year cycle against average internal ROE
goal, and 50% on average Company performance as measured against
average Standard and Poor 400 Industrial ROE Average for the three
year period.
A. Award Cycle
-----------
The award cycle shall be based on the average of the results
at the end of each of the three calendar years in the cycle.
Examples of award cycles under this plan are as follows:
1991 - 1993
1992 - 1994
1993 - 1995
1994 - 1996
2
B. Definitions
-----------
HUFFY AVERAGE ROE1: Average of actual ROE for each of the
three years in the cycle. Formula for ROE is:
PROFIT AFTER TAX, AFTER COST OF PLAN*
------------------------------------
AVERAGE OF BEGINNING AND ENDING
COMMON SHAREHOLDERS'S EQUITY OF EACH YEAR
*the Board of Directors may at its discretion make an
adjustment for extraordinary items of such magnitude that
not to adjust would distort the purpose of the plan.
INTERNAL ROE GOAL: The ROE goal set by the Board of Directors
for the three year cycle.
S & P ROE GOAL: Average of the mean ROE for the companies in
the S & P 400 Industrials as reported for each of the three
years in the award cycle.
C. Award Scales*
------------
50% of Award 50% of Award
-------------------------------------------------------------------------------------------------------
3 year average ROE vs. ROE goal set for each 3 year average ROE vs. 3 year average S & P 400
cycle** Industrials for each cycle**
Actual ROE Actual ROE
versus % Award versus % Award
Goal Earned S & P Average Earned
------------------------ --------- ------------- ---------
Greater than 2 Points Greater than 2 Points
Below 0% Below 0%
-2 50% -2 50%
-1 75% -1 75%
TARGET EQUAL TO 100% TARGET EQUAL TO 100%
+1 120% +1 120%
+2 140% +2 140%
+3 160% +3 160%
+4 180% +4 180%
+5 200% +5 200%
<FN>
* Scale between points is linear
**Calendar 1990-1992, 1991-1992, 1992-1993, 1992-1994, etc.
(1) Note: Huffy Average ROE shown above is for award cycles beginning in
1990 and after. For annual cycles beginning prior to 1990, Huffy Average ROE
utilized is:
PROFIT AFTER TAX, AFTER COST OF PLAN
------------------------------------
COMMON SHAREHOLDER EQUITY AT THE BEGINNING OF EACH YEAR
3
III. PAYMENT
A. Timing
------
On September 1 following the completion of each award cycle or
as soon thereafter as practicable.
B. Form
----
Payment shall be 100% cash.
C. Eligibility for Payment
-----------------------
To be eligible to participate, the employee must have been on
the Company payroll and in an eligible position as of the
first day of the first calendar year of the cycle.
To be eligible to receive payment, participant must be on
Company payroll or in one of the following categories at the
time payment is made (and in addition may not have been
employed by a competitor since termination of employment with
the Company):
- On Company disability plan
- On Normal Retirement under the Company's Retirement Plan
- On Early Retirement under the Company's Retirement Plan
with the Company's written consent
- Have died after end of award cycle but before payment is
made
Participants who terminate employment due to any of these
causes shall be eligible for fractional awards for the next
two Award Cycles as follows:
A. Employed first two calendar years of Award Cycle -
66-2/3%
B. Employed first calendar year of Award Cycle - 33-1/3%
IV. CALCULATIONS
Awards under this Plan are to be based upon participant's Average
Actual Base Salary, calculated as the average of his/her actual
salary on the following dates:
1. First day of first calendar year in three-year award cycle
2. First day of second calendar year in three-year award cycle
3. First day of third calendar year in three-year award cycle
Participants who move between impact levels during a 3 year Award
Cycle will obtain a weighted average award based on their period of
service during such Award Cycle (expressed in quarters of a year) in
each impact Level.
4
V. ADMINISTRATION -- Administrator of the plan shall be the
Compensation Committee of the Board of Directors who can at any
time, with a majority vote, terminate, amend or make exceptions to
this policy.
VI. DISTRIBUTION -- Restricted to Corporate Officers and Huffy Company
Presidents.
/s/ George A. Plotner /s/ Gary E. Morin
- -------------------------------- -------------------------------------
Vice President - Human Resources Executive Vice President
/s/ Richard L. Molen
-------------------------------------
President and Chief Executive Officer