COLUMBUS MCKINNON CORPORATION
CORPORATE INCENTIVE PLAN
JULY 2001
This INCENTIVE PLAN will focus only on PRETAX INCOME, as defined.
At the beginning of each fiscal year the Columbus McKinnon Board of Directors
("Board") will establish a BUDGET TARGET PERCENTAGE defined as the percentage of
TARGET BONUS that will be paid if actual results equal budget for the quarter or
year. The BUDGET TARGET PERCENTAGE will be established by the Board at the
beginning of each year, and it will be based on the Board's judgment about the
budget, current and expected economic conditions, the financial condition of the
Company, and other pertinent factors.
PRETAX INCOME
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PRETAX INCOME will be consolidated pretax income as shown in the
periodically published financial statements of the Company, with the
following adjustments, which will be made at the discretion of the Board:
o The effects of acquisitions and divestitures, significant changes in
accounting rules, and other significant abnormal transactions during
the year will be adjusted appropriately so that ACTUAL PRETAX INCOME is
on a basis equivalent to BUDGETED PRETAX INCOME for that year.
o Both BUDGETED PRETAX INCOME and ACTUAL PRETAX INCOME will exclude any
BONUS expense.
BONUS FLOOR
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In no event will any BONUS be paid if ACTUAL PRETAX INCOME equals 75% or
less of BUDGETED PRETAX INCOME.
PARTICIPANTS
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Board designated CM associates, except Sales Directors, Regional Sales
Managers, and District Sales Managers (covered by a separate revenue
quota-based plan), will participate in the INCENTIVE PLAN.
BASE PAY
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BASE PAY used for the annual calculation is defined as compensation earned
during the calendar year that ends within the fiscal year, but it excludes
bonuses, severance pay, tuition reimbursement, restricted stock bonuses and
interest, dividends and in lieu of dividend payments, moving expense
reimbursement, and service and recognition awards. BASE PAY used for the
interim quarterly payments will be compensation earned during the PREVIOUS
fiscal quarter, with the same exclusions.
BONUS PAYMENTS
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BONUS payments will be made based upon each PARTICIPANT'S PARTICIPATION
PERCENTAGE, as assigned.
For ACTUAL PRETAX INCOME above the BONUS FLOOR, BONUSES will be calculated
by multiplying BASE PAY times the PARTICIPATION PERCENTAGE and again times
a factor, which is the Board-assigned annual BUDGETED TARGET PERCENTAGE
plus or minus two times the percentage difference between ACTUAL PRETAX
INCOME and BUDGETED PRETAX INCOME for the quarter or year.
For fiscal 2002, quarterly payments will not be made; one payment, based
upon the results for the full fiscal year ending March 31, 2002, will be
made within two-and-one-half months after the end of this fiscal year.
Beginning with fiscal 2003, for the first three fiscal quarters, 75% of the
BONUSES calculated based upon quarterly ACTUAL and BUDGETED PRETAX INCOME
will be paid within two months after the end of each quarter. At year-end
following the annual audit, the full year amount, reduced by previous
quarterly payments, will be paid out within two-and-one-half months after
the end of each fiscal year.
VESTING
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A PARTICIPANT who has BASE PAY AND is in the employ of CM on a date four
weeks after the end of the fiscal quarter or fiscal year ("VESTING DATE")
will be eligible for a BONUS payment. PARTICIPANTS who have terminated
prior to the VESTING DATE either voluntarily or with or without cause will
not be eligible for a BONUS payment. PARTICIPANTS who have died, retired,
are receiving short-term disability benefits or workers' compensation
benefits, or are on lay-off subject to recall as of the VESTING DATE will
be eligible for a BONUS payment.
TRANSFERS
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PARTICIPANTS who transfer during a year from one PARTICIPATION PERCENTAGE
to another will participate at the new PARTICIPATION PERCENTAGE beginning
the first day of the next fiscal quarter.
COLUMBUS MCKINNON CORPORATION
INCENTIVE PLAN ADDENDUM
JULY 2001
This INCENTIVE PLAN ADDENDUM will focus on DEBT REPAYMENT only, and it will be
in place for only Fiscal 2002.
At the beginning of Fiscal 2002, the CM Board of Directors established a TARGET
DEBT REPAYMENT amount -- $50 MILLION. An ADDENDUM BONUS will be paid for ACTUAL
DEBT REPAYMENT in excess of that TARGET DEBT REPAYMENT.
DEBT REPAYMENT
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DEBT REPAYMENT will be calculated as the reduction in consolidated funded
debt as shown in the published financial statements of the Company, with
the following adjustments:
o The effects of acquisitions, divestitures, and other significant
transactions outside the ordinary course of business during the year
will be excluded from the calculation.
BONUS FLOOR
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If ACTUAL DEBT REPAYMENT falls below the TARGET DEBT REPAYMENT, no ADDENDUM
BONUS will be paid, and no BONUS reduction will be assessed.
PARTICIPANTS
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Only members of the Executive Committee and the Operating Group Leaders
will participate in this INCENTIVE PLAN ADDENDUM.
BASE PAY, VESTING, AND TRANSFERS
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These terms will be defined as they are in the INCENTIVE PLAN.
ADDENDUM BONUS PAYMENTS
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An ADDENDUM BONUS will be calculated by multiplying one percentage point
per $1 million of the excess of ACTUAL DEBT REPAYMENT over TARGET DEBT
REPAYMENT times BASE PAY times the PARTICIPATION PERCENTAGE.
The ADDENDUM BONUS will be calculated and paid based upon the results for
the fiscal year only; no quarterly calculations or payments will be made.
Payment will be made after the year-end audit within two and one half
months after the end of the fiscal year.