COMPUSA INC.
OFFICERS' BONUS PLAN
ARTICLE I
PURPOSE OF THE PLAN
The purpose of this CompUSA Inc. Officers' Bonus Plan is to provide incentive
compensation opportunities for certain officers of the Company and its
affiliates. The Plan is designed to assist in the attraction, motivation and
retention of superior talent at the officer level, align the officers'
interests with those of the stockholders by placing a portion of their pay at
risk depending upon corporate performance, and support the achievement of
desired Company performance. Participants in the Plan will have the
opportunity to earn Awards upon the attainment of Performance Goals
established by the Compensation Committee as promptly as practicable but in
any event within the first 90 days of each Plan Year.
ARTICLE II
DEFINITIONS
When used in the Plan, the following terms shall have the following meanings:
2.1 AWARD means an annual incentive compensation award under the Plan.
2.2 BASE EARNINGS means base earnings paid to a Participant while serving in a
Bonus Eligible Position during the Plan Year.
2.3 BOARD OF DIRECTORS means the Board of Directors of the Company.
2.4 BONUS ELIGIBLE POSITION means a position of employment with the Company,
or one of its affiliates, that is designated by the Compensation Committee
or management of the Company or any of its affiliates as eligible for an
Award.
2.5 COMPANY means CompUSA Inc., a Delaware corporation.
2.6 COMPENSATION COMMITTEE means the Compensation Committee of the Board of
Directors, which will have overall responsibility for administering the
Plan.
2.7 DISABILITY: the "Disability" of a Participant shall be deemed to have
occurred whenever a Participant is rendered unable to engage in any
substantial gainful activity by reason of any medically determinable
physical or mental impairment that can be expected to result in death or
that has lasted or can be expected to last for a continuing period of not
less than twelve months. In the case of any dispute, the determination of
Disability will be made by a licensed physician selected by the
Compensation Committee, which physician's decision will be final and
binding.
2.8 PARTICIPANT means any employee of the Company or any affiliate thereof who
is described as eligible to participate in the Plan as set forth in
Article III hereof.
2.9 PERFORMANCE GOALS means the performance goals established each Plan Year
pursuant to the Plan against which performance will be measured.
2.10 PLAN means this CompUSA Inc. Officers' Bonus Plan, effective as of June
29, 1997, as set forth herein.
2.11 PLAN YEAR means the performance period of the Plan, which shall be
commensurate with the Company's fiscal year.
2.12 RETIREMENT means resignation by the Participant on or after the date on
which the Participant has served the Company or one or more of its
affiliates for at least five years in the aggregate.
2.13 TARGET AWARD means an Award that may be earned by a Participant for
service in a Bonus Eligible Position upon attainment of all Performance
Goals at the Target Level of Performance. The amount of the Target Award
for a Participant shall be equal to that Participant's Base Earnings
multiplied by the Target Percentage.
2.14 TARGET PERCENTAGE means the percentage (which may exceed 100%) of Base
Earnings of each Participant determined by the Compensation Committee
pursuant to Section 5.1.
2.15 TARGET LEVEL OF PERFORMANCE means the level of performance of a
Performance Goal that, if attained, will entitle the Participant to 100%
of the portion of the Target Award that is related to that Performance
Goal.
2.16 THRESHOLD LEVEL OF PERFORMANCE means the minimum level of attainment of a
Performance Goal that will entitle the Participant to some percentage,
less than 100%, of the portion of the Target Award that is related to that
Performance Goal.
ARTICLE III
ELIGIBILITY
3.1 Subject to the further provisions of this Article III, all employees of
the Company or an affiliate thereof who are "officers" of the Company as
defined in Rule 16a-1(f) promulgated by the Securities and Exchange
Commission under Section 16 of the Securities Exchange Act of 1934, as
amended, are eligible to participate in the Plan.
3.2 An employee must be employed (including approved annual vacation leave) in
a Bonus Eligible Position as of the last day of the Plan Year and have at
least 30 consecutive days of service in a Bonus Eligible Position during
the Plan Year in order to be eligible to receive an Award for such Plan
Year. An employee whose employment terminates during the Plan Year for
any reason other than those reasons set forth in Section 3.4 is not
eligible to receive an Award for such Plan Year.
3.3 Any provision of the Plan to the contrary notwithstanding: (i) for
purposes of determining an employee's period of service in a Bonus
Eligible Position during a Plan Year, any period of approved annual
vacation leave, and any period of a leave of absence (whether paid or
unpaid) to which the employee is entitled pursuant to the Family and
Medical Leave Act, shall be included as service for such Plan Year; and
(ii) for purposes of determining whether an employee is employed in a
Bonus Eligible Position as of the last day of a Plan Year, an employee on
a leave of absence as of the last day of a Plan Year (whether paid or
unpaid) to which the employee is entitled pursuant to the Family and
Medical Leave Act who was employed in a Bonus Eligible Position when such
leave of absence commenced, shall be deemed to be employed as of such
date.
3.4 Any Participant whose employment terminates during a Plan Year (but prior
to the last day of such Plan Year) due to Disability, Retirement or death
shall be eligible for an Award for the Plan Year based on the
Participant's service in a Bonus Eligible Position during the Plan Year,
provided such Participant has completed 30 consecutive days of service in
a Bonus Eligible Position during the Plan Year. In the event of an
employee's death, the beneficiary of the employee under the Plan shall be
the same as the Participant's designated beneficiary under the CompSavings
Plan for Employees of CompUSA Inc.
(ii)
ARTICLE IV
ADMINISTRATION OF THE PLAN; AMENDMENT AND TERMINATION
4.1 The Plan shall be administered by the Compensation Committee. Subject to
the provisions of the Plan, the Compensation Committee shall have the
right and authority, in its sole and absolute discretion, to: (i) adopt,
amend or rescind administrative and interpretive rules and regulations
relating to the Plan, (ii) construe the Plan, (iii) make all other
determinations necessary or advisable for administering the Plan and (iv)
exercise the powers conferred on the Compensation Committee under the
Plan. The Compensation Committee may correct any defect or supply any
omission or reconcile any inconsistency in the Plan in the manner and to
the extent it shall deem expedient to carry it into effect, and it shall
be the sole and final judge of such expediency. The determinations of the
Compensation Committee on the matters referred to in this Section 4.1
shall be final and binding.
4.2 Subject to the provisions of the Plan, the Board of Directors shall have
the exclusive authority to amend, modify, suspend or terminate the Plan at
any time with or without notice; provided that no amendment, modification,
suspension or termination of the Plan shall in any manner adversely affect
the right of any Participant to receive any amount to which such
Participant has become entitled prior to such amendment, modification,
suspension or termination.
ARTICLE V
DETERMINATION OF BONUS ELIGIBLE POSITIONS, PERFORMANCE GOALS AND TARGETS
5.1 As promptly as practicable but in any event within the first 90 days of
each Plan Year, the Compensation Committee shall determine (i) Bonus
Eligible Positions (which determination may be delegated to management of
the Company or any of its affiliates), (ii) Performance Goals for each
Participant, (iii) the Threshold Level of Performance and the Target Level
of Performance for each Performance Goal of each Participant and (iv) the
Target Percentage for each Participant. The Performance Goals established
by the Compensation Committee for a Plan Year may be based on earnings per
share, stock price, cash flow, gross income, net income, operating income,
inventory shrinkage, expense levels, debt balance, debt ratings, total
stockholder return, return on investment, return on equity, economic value
added, production volumes, gross margin dollars, sales or net asset value
per share. The Performance Goals may be based on (i) the performance of
the Company generally, in the absolute or in relation to its peers, (ii)
the performance of a particular Participant or (iii) the performance of a
particular division, department, branch, subsidiary or other unit to which
a Participant is assigned. If the Compensation Committee determines that
any Participant shall have more than one Performance Goal, each
Performance Goal shall be weighted (expressed as a percentage) to reflect
its relative importance to the Company's business plan for the Plan Year.
The sum of the weightings of the Performance Goals for a Participant for
the Plan Year shall equal 100%.
5.2 In addition to the Performance Goals established by the Compensation
Committee pursuant to Section 5.1, the Compensation Committee may, in its
sole discretion, establish Performance Goals for any Participant or group
of Participants for any Plan Year based on such factors other than those
listed in Section 5.1 as the Compensation Committee determines to be
appropriate for such Plan Year, even though any Award or portion of an
Award paid to a Participant that is based upon a Performance Goal not
listed in Section 5.1 may not qualify for exemption from the deduction
limitations of Section 162(m) of the Internal Revenue Code of 1986.
5.3 At any time during a Plan Year, the Compensation Committee may, in its
sole discretion, but subject to Section 4.2, cancel or revise its
determinations for such Plan Year made with respect to (i) Bonus Eligible
Positions, (ii) Performance Goals for each Participant, (iii) the
Threshold Level of Performance and the Target Level of Performance for
each Performance Goal of each Participant and (iv) the Target Percentage
for each Participant; provided that no revision that might result in an
increase of the amount of a Participant's Award for a Plan Year may be
made after the first 90 days of the Plan Year.
(iii)
ARTICLE VI
AMOUNT OF AWARDS
6.1 As promptly as practicable but in any event within 75 days after the end
of each Plan Year, a performance score, expressed as a percentage (which
may exceed 100%), shall be determined by management of the Company or any
of its affiliates and certified in writing by the Compensation Committee
for each Performance Goal of each Participant, with the degree of
achievement based upon actual performance compared to the Target Level of
Performance. If the degree of achievement for any Performance Goal is
less than the Threshold Level of Performance for such Performance Goal,
the performance score shall be zero.
6.2 If for any Plan Year a Participant has only one Performance Goal, the
Participant's Award for such Plan Year shall be determined by multiplying
the Participant's Target Award by the performance score applicable to such
Performance Goal as determined pursuant to Section 6.1. If more than one
Performance Goal has been established for a Participant, the amount of the
Participant's Award shall be determined by multiplying the Participant's
Target Award by a cumulative performance score that takes into account the
Participant's degree of achievement of each Performance Goal as well as
the weightings of all Performance Goals. Any provision of the Plan to the
contrary notwithstanding, the maximum Award that may be paid to any
Participant for a Plan Year calculated as described above shall be
$5,000,000.
6.3 In addition to the Awards based upon attainment of Performance Goals as
set forth above, the Compensation Committee may, in its sole discretion,
grant ad hoc bonuses to any Participant or group of Participants in such
amount or amounts as it shall determine to be appropriate based upon such
factors as it shall deem to be relevant. Any such ad hoc bonuses shall be
paid within 75 days following the end of the Plan Year.
ARTICLE VII
FORM AND TIMING OF AWARDS
7.1 Awards under the Plan shall be paid in cash by the Company, or with
respect to a Participant in the employ of an affiliate, by such affiliate,
within 75 days following the end of the Plan Year. Awards shall be
subject to the normal rules and regulations regarding withholding for
taxes and other deductions, if any, as may be in effect from time to time.
ARTICLE VIII
NO RIGHT OF EMPLOYMENT
8.1 Nothing in the Plan, including the employee's eligibility for
participation in the Plan, will confer upon such employee any right with
respect to the continuation of such employee's employment by the Company
or an affiliate thereof or interfere in any way with the right of the
Company or an affiliate thereof at any time to terminate such employment
or to increase or decrease the compensation of the employee.
ARTICLE IX
MISCELLANEOUS
9.1 A Participant shall not have the right to anticipate, alienate, sell,
transfer, assign, pledge, or encumber his or her right to receive any
Award.
9.2 The Plan is intended to constitute an unfunded plan of incentive
compensation. No Participant shall have any lien on or rights with
respect to any assets of the Company or any affiliate thereof that are
greater than those of a general creditor by reason of any rights to any
Award.
9.3 The adoption of the Plan or any modification or amendment hereof does not
imply any commitment to continue or adopt the same plan, or any
modification hereof, or any other plan for incentive compensation for any
succeeding year.
(iv)
9.4 The internal laws of the State of Texas (and not the principles relating
to conflicts of laws) shall govern the Plan.
9.5 The Plan shall be binding upon and inure to the benefit of the successors
and assigns of the Company and its affiliates.
9.6 The Plan shall be deemed adopted by the Board of Directors as of June 29,
1997. The Plan shall be deemed effective as of that date, provided it is
duly approved by the holders of a majority of the shares of Common Stock
of the Company present, or represented, and entitled to vote at the 1997
annual meeting of stockholders of the Company. If the Plan is not
approved by the stockholders at the 1997 annual meeting of stockholders,
the Plan shall terminate and all actions taken hereunder shall be null and
void.