EXHIBIT 10.12
LADD FURNITURE, INC.
1995 LONG-TERM INCENTIVE PROGRAM
PLAN HIGHLIGHTS
1. The Long-Term Incentive Program consists of an annual award of the
following three elements:
- Incentive Stock Options
- Restricted Stock Grants
- Performance Units convertible to cash at the end of a 3-year
planning period (1995-1997); par value is $100 per unit
2. Award levels are based on a percentage of the participant's base salary
in effect when the award is granted as follows:
a) LADD Chief Executive Officer and Chief Operating Officer
% of Salary
Incentive Stock Options 30.0%
Restricted Stock Grants 18.8%
Performance Units 18.7%
Total 67.5%
b) Operating Company Presidents & LADD Chief Financial Officer, VP
Human Resources, VP Market Development, VP Manufacturing Services
% of Salary
Incentive Stock Options 12.5%
Restricted Stock Grants 12.5%
Performance Units 25.0%
Total 50.0%
3. Performance Unit payments will be based on the achievement of sales
growth and return on investment goals as follows:
a) For Corporate Participants
3-Year Average ROE for LADD 55%
3-Year Sales Growth for LADD 45%
Total 100%
b) For Operating Company Participants
3-Year Average ROIC for Operating Company 55%
3-Year Sales Growth for Operating Company 45%
Total 100%
4. Valuation of Performance Units at the end of the 3-year planning period
will be based on the following performance criteria:
ROE ROIC Sales Growth
Minimum Incentive 8% 12% Industry Growth Rate*
Target Incentive 12% 16% Industry Growth Rate*+1.5%
Maximum Incentive 15% 20% Industry Growth Rate*+3%
*Industry Growth Rate defined to be U.S. Commerce Department Furniture
Growth Index. The Board reserves the right to change or modify the
index if experience shows the index not to be a good measure of the
Industry's performance.
5. Each Performance Unit will be valued at the end of the performance
period using a graduated scale ranging between $50 and $150 per unit. Minimum
performance levels are required to receive any payment.
- Minimum incentive - $50 per unit
- Target incentive - $100 per unit
- Maximum incentive - $150 per unit
Payments for Performance Units earned for 1995 - 1997
performance period will be made in cash by June 1, 1998.
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6. Incentive Stock Options will be granted at market price on the day of
the grant, and, as long as the participant remains an employee of LADD, will be
vested as follows:
After 1 Year 25%
After 2 Years 50%
After 3 Years 75%
After 4 Years 100%
7. Restricted Stock Grants will permit a participant to purchase LADD
shares for $.10 per share. The shares may be repurchased by LADD at the same
price if the participant ceases to be an employee of LADD before 5 years have
elapsed.
8. The participant must be an employee at the end of the planning period to
receive any payment for the Performance Units. If the participant changes LADD
business units during the planning period, a pro-rata share of the earned
Performance Units will be granted for the period the individual participated in
the Long-Term Incentive Program in the respective business units.
9. Participants who enter the plan other than at the beginning of the
planning period will receive stock options, restricted stock and performance
units as recommended by management and approved by the Compensation Committee
and the Board of Directors.
10. When a plan participant retires (minimum age 55), dies or becomes
disabled during a three-year plan period, the Compensation Committee and the
Board of Directors will determine the amount and terms of payment of performance
units earned and the amount of stock to be repurchased.
March 2, 1995
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