Exhibit 10.30
MICHAEL FOODS, INC.
EXECUTIVE OFFICERS INCENTIVE PLAN
I.
PURPOSE
A. The purpose of the Michael Foods, Inc. Executive Officers Incentive Plan
(the "Plan") is to incent and reward the executive officer group of Michael
Foods, Inc. (the "Company") for delivering or exceeding their annual
operating plan EBITDA.
B. The Plan will be effective January 1, 2004, will remain in effect until
amended or terminated, and supersedes any prior Executive Incentive Plan
which may have applied to this group of executives.
II.
ADMINISTRATION
A. The Plan will be administered by the Chief Executive Officer ("CEO") and
Chief Financial Officer ("CFO") of Michael Foods under the direction of the
Compensation Committee of the Board of Directors (the "Board").
III.
ELIGIBILITY
A. Participation in the Plan will be restricted to those positions that have a
clear impact on the Company's financial and operating performance.
B. Eligible participants will include only the Executive Officer group.
C. Participants will be recommended by the CEO of the Company and will be
approved by the Compensation Committee of the Board.
D. Participation will also be limited to executives who are not covered under
another approved incentive plan.
IV.
INCENTIVE OPPORTUNITY
The size of the maximum incentive award opportunity level will vary by the
position's responsibility level, as outlined below:
Maximum Incentive
Opportunity as a
Level Position(s) Percent of Base Salary
===============================================================================
I Corporate CEO, President 100%
II Executive Vice President, Chief 100%
Financial Officer and Chief Operating
Officer
V.
PLAN COMPONENTS
100% of the incentive opportunity will be paid based upon EBITDA achievement
against the target objective as determined by the Compensation Committee
according to the following table:
Payout Based on MFI Financial
Performance Against Target
---------------------------------
EBITDA Officer I Officer II
% of Target 75.0% 65.0%
- --------------------------------------------------
95.39% 0.00% 0.00%
95.40%-95.49% 6.82% 5.91%
95.50%-95.99% 13.64% 11.82%
96.00%-96.49% 20.45% 17.73%
96.50%-96.99% 27.27% 23.64%
97.00%-97.49% 34.09% 29.55%
97.50%-97.99% 40.91% 35.45%
98.00%-98.49% 47.73% 41.36%
98.50%-98.99% 54.55% 47.27%
99.00%-99.49% 61.36% 53.18%
99.50%-99.99% 68.18% 59.09%
100.00%-100.49% 75.00% 65.00%
100.50%-100.99% 77.50% 68.50%
101.00%-101.49% 80.00% 72.00%
101.50%-101.99% 82.50% 75.50%
102.00%-102.49% 85.00% 79.00%
102.50%-102.99% 87.50% 82.50%
103.00%-103.49% 90.00% 86.00%
103.50%-103.99% 92.50% 89.50%
104.00%-104.49% 95.00% 93.00%
104.50%-104.99% 97.50% 96.50%
105.00% 100.00% 100.00%
VI.
ORGANIZATION AND INDIVIDUAL PERFORMANCE MEASURES
The following measures of organization performance will be used to determine
actual incentive awards:
1. All participants will be awarded an incentive based upon EBITDA target
achievement. The target will be updated annually to reflect expected
growth of the Company.
VII.
ADMINISTRATIVE PROCEDURES
A. Additions of Individuals. All eligible participants must be designated by
the CEO of the Company as of the beginning of the Plan year.
2
B. Establishment of "Target or Maximum" Goals. The CEO retains the right to
set or adjust the EBITDA and balance sheet incentive goals based upon an
assessment of overall business conditions at the beginning of the Plan
year, subject to approval by the Compensation Committee of the Board.
C. Adjustments to Targets and/or Goals. The CEO retains the right to adjust
the targets and/or goals of the Plan based upon an assessment of business
conditions at the end of the second quarter of the Plan year, subject to
approval by the Compensation Committee of the Board.
D. Down Earnings Year. No cash incentive shall be paid to a participant if the
Company has a decline in EBITDA for the Plan year, except at the discretion
of the CEO with the approval of the Compensation Committee of the Board.
E. Termination/Death/Disability. Plan participants must be in the employ of
the Company on the day the incentive award is actually paid in order to be
eligible for incentive award payments except at the discretion of the CEO.
However, should a participant die or become disabled, the incentive award
for the year in which such death or disability occurs shall be prorated by
the number of months of service during the applicable Plan year and shall
be paid to the participant or the participant's estate, as the case may be.
F. Change in Position. Eligible employees under the Plan who have a change in
position during a Plan year will have their incentive award calculated
under the Plan award levels for both positions, prorating the incentive
award by the months of service at each level.
G. Exceptions. In each instance, exceptions must be approved in advance by the
CEO of the Company, and must be submitted to the Compensation Committee of
the Board for their concurrence.
VIII.
AMENDMENT AND TERMINATION
The Plan may be changed or terminated at any time at the discretion of the
President/CEO of Michael Foods, subject to approval by the Compensation
Committee of the Board. No such amendment or termination shall, however,
adversely affect the rights of any participant (without his/her prior consent)
with regard to any award previously earned.
IX.
RIGHT TO CONTINUED EMPLOYMENT
No participant shall have any claim or right to be granted an incentive (bonus)
award under this Plan and the granting of an incentive (bonus) award shall not
be construed as giving the participant the right of continued employment with
the Company. The Company further reserves the right to dismiss a participant at
any time, with or without cause, free from any claim or liability other than
provided under this Plan document.
3