EXHIBIT 10.13
PROPOSED
LADD FURNITURE, INC.
1996 LONG-TERM INCENTIVE PROGRAM
PLAN HIGHLIGHTS
1. The Long-Term Incentive Program consists of an annual award of the
following two elements:
- Stock Option Grants
- Performance Bonus payable in cash and stock at the
end of a 3- year planning period (1996-1998).
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 President (CEO) and Executive Vice Presidents
% of Salary
Stock Options 40.0%
Performance Bonus 25.0%
Total 65.0%
b) Operating Company Presidents, VP Human Resources, VP
Market Development
% of Salary
Stock Options 25.0%
Performance Bonus 25.0%
Total 50.0%
3. Valuation of Performance Bonus at the end of the 3-year planning period
will be based on the following performance criteria achieved by LADD Furniture,
Inc.
AGGREGATE EPS FOR 1997 AND 1998
Minimum Incentive $ 1.80
Target Incentive $ 2.45
Maximum Incentive $ 2.90
4. The Performance Bonus will be valued at the end of the performance
period using a graduated scale ranging between 12.5% and 37.5% of base salary.
Minimum performance levels are required to receive any payment.
Minimum Incentive - 12.5% of Base Salary
Target Incentive - 25.0% of Base Salary
Maximum incentive - 37.5% of Base Salary
Payments for Performance Bonus earned will be made by June 1,
1999. Payments will be made 50% in cash and 50% in shares of LADD
stock.
5. 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%
6. The participant must be an employee at the end of the planning period to
receive any payment for the Performance Bonus. If the participant changes LADD
business units during the planning period, a pro-rata share of the earned
Performance Bonus will be granted for the period the individual participated in
the Long-Term Incentive Program in the respective business units.
7. Participants who enter the plan other than at the beginning of the
planning period will receive stock options and performance bonus as recommended
by management and approved by the Compensation Committee and the Board of
Directors.
2
8. 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
bonus earned.
9. The company has the sole right to exclude from the operating profits of
each organizational unit items such as, but not limited to, extraordinary income
from the sale of assets, litigation recoveries, income or expenses attributable
to changes in accounting methods, bad debt charges and inventory valuations and
similar items. Such determinations will be made without recourse by an Incentive
Plan participant as to the effect, if any, on the incentive payment amount.
10. The earned performance bonus paid in stock will be restricted from
sale for a period of 2 years from issue date.
March 4, 1996
3