EXHIBIT 10.2
LADD FURNITURE, INC.
1998 LONG-TERM INCENTIVE PLAN
SHAREHOLDER VALUE 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 (1998-2000).
2. Award levels are based on the participant's base salary in effect when the
award is granted as follows:
a) LADD President (CEO)
Stock Options 15,000
Target Performance Bonus 40% of Base Salary
b) LADD Executive Vice Presidents
Stock Options 9,000
Target Performance Bonus 30% of Base Salary
c) Casegoods Operating Presidents
Stock Options 6,000
Target Performance Bonus 20% of Base Salary
d) Other Designated Participants
Stock Options 4,000
Target Performance Bonus 10% of Base Salary
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. Performance will be measured by total annual compounded
stockholder return (TSR) of LADD Furniture, Inc. common stock from
1/1/98 to 12/31/00 versus a peer group defined by SIC Code 251
Household Furniture Index as utilized by Media General Financial
Services Inc. and incorporated in LADD's annual Proxy to Shareholders.
4. The Performance Bonus will be valued at the end of the performance
period (12/31/2000) using a graduated scale as follows:
EXHIBIT 10.2
TSR Level I TSR Level II Bonus as a % of Target
----------- ------------ ----------------------
Below Peers Below Peers 0%
At Peers At Peers 50%
110% of Peers Peers + 1% Point 100%
120% of Peers Peers + 2% Point 150%
130% of Peers Peers + 3% Point 200%
140% of Peers Peers + 4% Point 250%
150% of Peers Peers + 5% Point 300%
Payments for Performance Bonus earned will be made no later than 75
days after the fiscal year end. Payments will be made 50% in cash and
50% in shares of LADD common stock.
Payout will be determined and paid on the lower of TSR Level I or TSR
Level II -- ie, Peer Group total return is 5% and LADD is 6%, LADD
return is 120% of Peers (TSR Level I) but only 1 point (TSR Level II).
Payout would be based on TSR Level II or 100% of Target.
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.
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.
2
EXHIBIT 10.2
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.
3