1
Exhibit 10q
BRUSH WELLMAN INC. AND SUBSIDIARIES
MANAGEMENT PERFORMANCE COMPENSATION PLAN
(as adopted December 16, 1991, effective January 1, 1992 and as amended
February 24, 1992, December 15, 1992 and February 22, 1993 and February 7,
1995)
I. INTRODUCTION
------------
The Management Performance Compensation Plan provides compensation
opportunity to eligible employees based principally on the Company's
annual financial performance. Any Plan awards for members of the
Operations Team are linked exclusively to Company performance.
Opportunity for other participants is also predicated upon Company
performance and includes recognition of individual and combined
contributions toward personal/team objectives.
II. DEFINITIONS
-----------
PLAN YEAR:
The fiscal year for which the Company's pre-tax income and any Plan
awards are calculated
PRE-TAX INCOME:
The Plan's measure of Company performance in Income before Income
Taxes as presented in the Audited Financial Statement
Pre-tax Income will include the effects of any special charge,
write-off or accounting change and accrued performance or incentive
compensation.
OPERATING INCOME:
The Plan's measure of a subsidiary's (Technical Materials Inc. and
Williams Advanced Materials Inc.) performance in Income before Income
Taxes and Interest expenses.
Operating Income will include any special write-off or accounting
charge and accrued performance or incentive compensation.
2
Management Performance Compensation Plan
Page 2 of 5
PERSONAL/TEAM PERFORMANCE:
For participants in grades C through E, an assessment of an
individual's achievements and his or her contributions to work and
project teams during the Plan Year
For purposes of the Plan, the evaluation is expressed as a percentage
of base compensation.
BASE COMPENSATION:
The participant's annual base salary in effect on September 30 of the
Plan Year
III. PARTICIPATION
-------------
At the beginning of the Plan Year, the Operations Team will consider
the candidacy of exempt, salaried employees whose responsibilities
affect progress on critical issues facing the Company. Those
individuals selected by the Operations Team will be notified of their
participation, performance compensation grade and performance
compensation opportunity.
Following the beginning of the Plan Year, the Operations Team may
admit new hires or individuals who are promoted or assigned additional
and significant responsibilities. The Operations Team may also
alter performance compensation grade assignments to reflect changed
responsibilities of participants during the first half of the Plan
Year.
Participation of an individual who replaces a former participant must
be approved.
Employees who are designated as participants before April 1 of the
Plan year are eligible for full participation.
Participants who are newly employed on or after April 1 and before
July 1 are eligible for half of any award available for Personal/Team
and Company performance.
Participants who transfer from the Exempt Salaried Performance
Compensation Plan to the Management Performance Compensation Plan on
or after April 1 and before July 1 are eligible for full participation
in the Personal/Team performance component and for half participation
in the Company performance component. Their eligibility under the
Exempt Salaried Performance Compensation Plan ceases for the Plan
Year.
3
Management Performance Compensation Plan
Page 3 of 5
Changes in performance compensation grade assignments from April 1 to
July 1 will also result in pro-rated participation in awards for
Company performance.
The eligibility of employees hired or with changed job
responsibilities after June 30 will not be considered until the
subsequent Plan Year.
Normally, employees who are participants in any other incentive,
commission or performance compensation plan are not eligible. The
Operations Team may consider pro-rated participation under special
circumstances.
Generally, participants must be employed on the last day of the Plan
Year in order to be eligible for any performance compensation award.
The eligibility and award for any participant who terminates before
year-end is at the discretion of the Operations Team.
IV. PERFORMANCE COMPENSATION OPPORTUNITY FOR COMPANY PERFORMANCE
------------------------------------------------------------
The Organization and Compensation Committee of the Board of Directors
will establish Minimum, Target and Maximum Pre-tax Income levels under
the Plan for the Company and Minimum, Target and Maximum levels for
Operating Income at the subsidiaries by February 28 of the Plan Year.
Performance compensation opportunity by grade for achievement of the
Pre-tax Income or Operating Income Target for the respective unit is
expressed as a percentage of base compensation below:
Achieve
Pre-tax/Operating
Grade Income Target
----- -------------
A 52%
B 37%
C 17%
D 16%
E 10%
No award relating to Company performance will be paid for Pre-tax
Income or Operating Income below the Minimum value. Pre-tax Income or
Operating Income which reaches or exceeds the Maximum value will
result in awards at 150 percent of target opportunity for Company
performance. Amounts for Pre-tax Income or Operating Income between
Minimum and Target, or between Target and Maximum, will be pro- rated
according to level of achievement.
4
Management Performance Compensation Plan
Page 4 of 5
V. PERFORMANCE COMPENSATION OPPORTUNITY FOR PERSONAL/TEAM PERFORMANCE
------------------------------------------------------------------
The Organization and Compensation Committee of the Board of Directors
will establish a Threshold for Pre-tax Income under the Plan for the
Company and Thresholds for Operating Income for its subsidiaries by
February 28 of the Plan Year. The Threshold will be less than the
Minimum value for the Company Performance component. No awards for
Personal/Team performance will be paid for Pre-tax Income or Operating
Income below the Threshold that pertains to the respective unit.
Upon the attainment of the Threshold, participants in grades C, D and
E, may be eligible for a percentage of base compensation for
Personal/Team performance according to the scale below:
Personal/Team
Performance Range
----------- -----
Outstanding 9 - 10%
Very Good 6 - 8%
Good 4 - 5%
Satisfactory 1 - 3%
Unsatisfactory 0%
During the first quarter of the Plan Year, or upon eligibility if
later, the supervisor and employee will establish goals and
objectives. Based upon performance relative to the goals and
objectives, the supervisor will recommend a percentage from 0 to 10
percent for the employee's Personal/Team component. Although the
evaluation process may include peer review and other feedback, it will
be coordinated through the supervisor and must be supported by a
written appraisal and discussion with the employee. Personal/Team
performance determinations are subject to Operations Team review and
approval.
VI. PAYMENT
-------
Distribution of any performance compensation awards under the Plan to
participants will be no later than March 15 of the year following the
Plan Year.
In the event of death, any award due a participant will be made to the
employee's estate or, at the discretion of the Operations Team, to the
employee's spouse.
5
Management Performance Compensation Plan
Page 5 of 5
VII. GENERAL PROVISIONS
------------------
The Operations Team has authority to make administrative decisions in
the interests of the Plan.
The Board of Directors, through its Organization and Compensation
Committee, shall have final and conclusive authority for
interpretation and application of this Plan. Subject to the preceding
sentence, any determination by the Company's independent accountants
shall be final and conclusive.
The Chief Executive Officer will submit to the Committee prior to its
regularly scheduled meeting in December of each year, any changes in
the Plan due to changes in organization structure, acquisitions or
other factors which are deemed to be significant in the effective
Operation of the Plan.
The Board of Directors shall have full authority to terminate the Plan
other than with respect to the current Plan Year. The Board of
Directors may change the Plan for a future Plan Year at any time and
may make changes for the current Plan Year prior to February 28.
This Plan is not a contract of employment.