EXHIBIT 10.6
[GIANT INDUSTRIES, INC. LOGO]
2005 MANAGEMENT DISCRETIONARY BONUS PLAN
1. During 2005, the Corporation will accrue funds from which bonuses may be
paid. Generally, the achievement of a minimum targeted pre-tax earnings
level will be required before bonuses will be considered under this Plan.
As company financial performance exceeds this level during the year, the
Administrative Committee shall proportionately increase the accrual until
the actual accrual equals the budgeted incentive bonus plan accrual.
Thereafter, additional funds shall be accrued based on an assessment by
the Administrative Committee of anticipated company performance and other
factors which it may deem appropriate.
2. This plan is not a profit sharing plan. Annual cash bonuses awarded to
plan participants from funds accrued in the bonus pool are based on an
evaluation of individual performance and accomplishments and the
participant's contributions to and support of the Corporation's goals for
(1) pre-tax earnings, cash flow and capital expenditures; (2) raw
materials supply and low sulfur motor fuel compliance; (3) strategic
growth of the Company; and (4) maintenance of our Sarbanes Oxley 404
compliance status.
3. Supervisors shall recommend the amount of bonus to be paid to the
Administrative Committee. The bonus recommended, if any, is within the
complete and sole discretion of the participant's supervisor. Supervisors
are encouraged to provide regular performance feedback to employees who
participate in this bonus plan. Supervisors shall utilize measurable
performance goals and achievements, commitment to the Company's values,
and other incentive or performance measurement criteria as applicable and
effective in their area of responsibility in determining a participant's
eligibility for, and the amount of, a recommended bonus.
4. The amount of bonus recommended and the reasons therefore shall be
delivered to the Administrative Committee at the end of the year. The
amount of bonus paid, if any, is as determined by the Administrative
Committee in its sole discretion.
5. Any participant who is dissatisfied with a bonus may appeal the decision
by submitting a written notice with reasons to the Committee within ten
days of being advised of the amount of bonus. Decisions by the
Administrative Committee concerning the amount of bonus to be paid to a
participant, or concerning the administration, eligibility,
interpretation, decision on appeal, or any other aspect of this Plan,
shall be final and conclusive.
6. The amount of bonus awarded, if any, will be paid as soon as reasonably
practical after year-end, but no later than March 15, 2006. To receive a
bonus, a participant must be employed by the Corporation at the time the
funds are paid. The participant shall forfeit any right to receive a bonus
and any bonus awarded but not already paid if a participant's employment
is terminated for any reason, voluntarily or involuntarily, prior to such
date.
7. Participants in this Plan must be members of the management team. If a
participant receives a bonus under any other bonus program, that bonus
payout will be deducted from any payment awarded under this plan. All
eligible participants in the 2005 Bonus Plan will be provided a copy of
this document.
8. Management employees hired after January 1, 2005, who have been approved
for inclusion in advance by the Administrative Committee, are also
eligible to participate in this Plan.
9. The Company's 2005 financial targets are based on the Company's 2005
budget. The financial targets are subject to change based on the
acquisition or divestiture of significant assets or other matters, as the
Compensation Committee shall determine in its sole discretion.
10. The Board of Directors reserves the right, in its sole discretion, to
amend, modify or eliminate this Plan or its application or administration,
in whole or in part, in future years.
11. The Administrative Committee shall be comprised of the Chief Executive
Officer, President, and the Vice President of Human Resources.