Exhibit 10.25
CEO ANNUAL AND LONG-TERM EQUITY INCENTIVE PROCESS
A. Overview
1. The CEO's equity incentive will be paid in TNL restricted
stock which will be issued and governed by Restricted Stock
Plan II, except as otherwise provided in this document.
2. The CEO's equity incentive will have two parts:
a. An annual equity incentive which will be determined by
the degree to which the CEO achieves his/her annual,
non-financial goals as agreed upon by the Board and
the CEO.
b. A long-term equity incentive which will be determined
by the degree to which the Board determines that the
CEO has, through his leadership and guidance, created
long-term value for the various constituents of the
Company. It is recognized that the Board's
determination will be both quantitative and
qualitative, but will not necessarily be based on
specific goals or targets.
3. All determinations by the Board regarding the degree to which
the CEO has earned annual or long-term equity incentive will
be final and absolute.
B. Process
1. Annual Equity Incentive
a. The number of shares comprising the CEO's annual
equity incentive will be determined each year by the
Compensation Committee and approved by the Board at
the January meeting. (Note: for 2005, the CEO's equity
incentive will be a maximum of 15,000 shares of TNL
stock).
b. Not later that January 10 each year, the CEO will
circulate to the Board his/her evaluation of his/her
performance against his prior year's goals and other
matters which the CEO believes are relevant and
germane to an understanding of his/her performance
against these goals.
c. Not later than January 10 of each year, each Board
member will submit to the Chair of the Compensation
Committee his/her evaluation of the CEO's past year's
performance using the then standard TNL rating
assessment form as may be modified by the Compensation
Committee specifically for the CEO from time to time.
d. At the private session after the January board meeting
each year, the Board and CEO will meet for the annual
CEO evaluation discussion. At this meeting, they will
discuss the CEO's performance against his/her annual
non-financial goals and the assessment forms earlier
submitted by the Board (which will have been tallied
and summarized by the Chairman of the Compensation
Committee). As a result of that process, the Board
will determine to what degree the CEO has earned his
annual equity incentive
award (from zero to 100%). The restricted shares
granted as a result will be issued by the Company as
soon as possible thereafter and will have a one-year
vesting period from the date of grant.
2. Long-Term Equity Award
a. Every three years the Board will review the CEO's
overall long-term performance to determine his/her
contribution to building long-term value for the
Company and all of its constituents.
b. The Board and CEO recognize the inherent difficulty in
constructing three-year plans, goals or specific,
objective performance criteria due to changing
circumstances, shifting priorities, external and
internal events as well as the shifting nature of the
businesses in which the Company is engaged.
c. Accordingly, the CEO's long-term equity award will be
based on the Board's subjective judgment (into which
account will be taken the CEO's views and opinions on
his/her long-term performance) regarding how the
Company has progressed over rolling three-year periods
(the first period will end on December 31, 2007, the
second on December 31, 2010, and so on until otherwise
determined by the Board).
d. The criteria the Board may look at in determining the
CEO's long-term performance will include, but not be
limited to, total shareholder return for the period,
performance against the Company's identified peer
group in the various metrics the Company periodically
measures, performance against the indices the Company
utilizes in its proxy disclosure, changes in revenues,
changes in operating profit (both in dollars and
percentage of revenues), changes in economic profit,
acquisitions and divestitures, geographic changes in
operations; changes in markets addressed; changes in
analysts' coverage of the Company; succession
planning; talent development and any other metrics
which the Board determines are relevant to assessing
the overall long-term performance of the Company
taking into account both internal and external
circumstances during the period.
e. The CEO's long-term equity incentive award will be set
at the beginning of each three-year period. (For the
initial period ended December 31, 2007, the maximum
equity incentive award will be 25,000 shares).