Baldor Electric Company Bonus Plan for Executive Officers
This agreement outlines the bonus plan for officers of Baldor Electric Company, as administered by the Board of Directors. Eligible officers may receive a lump-sum bonus based on the company's annual sales and earnings per share, with the bonus amount determined by performance against set targets. Bonuses are paid after financial results are certified, and participants who retire or become disabled during the year receive a prorated bonus. Participation does not guarantee employment or a bonus if employment ends for other reasons.
EXHIBIT 10(iii).6
BALDOR ELECTRIC COMPANY
BONUS PLAN
FOR OFFICERS
Plan Administration
The Board of Directors of the Company has sole responsibility for installation, review, and revision of the Plan and all its provisions, at their discretion, including year-to-year implementation of the plan.
Plan Participants
Participants include the “Officers” of the Company as designated by the Board of Directors. Participation in the Plan does not constitute a guarantee of employment and incentive awards for plan participants whose employment is terminated for any reason may forfeit their rights to the “Bonus”. Participants who retire or go on disability during the plan year will receive a prorated portion of their bonus earned.
Bonus Payment Date
The bonus will be paid in a lump sum as soon as practical after the Company’s financial results for the year have been certified by the outside auditors.
Bonus Formula For The Year
The formula used in the Plan is based on the Company’s Sales and Profit Plan for each year the Plan is implemented. The formula is constructed so a bonus (using the percentage (%) as defined below) of base compensation will be paid on a segment when that segment’s goal of the approved Company Plan is met. The formula for 2007 will have two independent segments made up of two components as specified below.
Bonus Formula
| Plan | Stretch | |||||||||
| Segment 1 | Sales | $ | xxx.xx | $ | xxx.xx | |||||
| Bonus based on sales goals | 5 | % | 5 | % | ||||||
| Segment 2 | Earnings per share | $ | x.xx EPS | $ | x.xx EPS | |||||
| Bonus based on financial performance | 5 | % | 5 | % | ||||||
Segment 1 – Sales Goals
The sales component will provide 50% of the Bonus Formula. For sales below Plan, 0% is earned. For sales at or above “Plan”, the bonus will be paid on a straight line pro-rata basis up to the percentages indicated as “Stretch.” For sales above “Stretch”, the bonus will be paid on a straight line pro-rata basis based on the ratio of Sales between “Plan” and “Stretch”.
Segment 2 – Financial Performance
The earnings component will provide 50% of the Bonus Formula. For earnings below Plan, 0% is earned. For earnings at or above “Plan”, the bonus will be paid on a straight line pro-rata basis up to the percentages indicated as “Stretch”. For earnings above “Stretch”, the bonus will be paid on a straight line pro-rata basis based on the ratio of earnings between “Plan” and “Stretch”.
