Baldor Electric Company Bonus Plan for Executive Officers
This agreement outlines Baldor Electric Company's bonus plan for its executive officers, as administered by the Board of Directors. The plan provides annual bonuses based on the company's sales and pre-tax earnings, with specific percentage payouts tied to performance goals. Bonuses are paid in a lump sum after financial results are certified. Participation does not guarantee employment, and bonuses may be forfeited if employment ends, except for prorated payments in cases of retirement or disability. The plan is subject to annual review and revision by the Board.
EXHIBIT 10(iii).7
BALDOR ELECTRIC COMPANY
BONUS PLAN FOR EXECUTIVE OFFICERS
PLAN ADMINISTRATION
The Board of Directors of the Company (the “Administrator”) 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 “Executive 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 applicable 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 (“Company Plan”) for each year the Plan is implemented. The formula is constructed so a bonus (using the percentage as defined below) of total compensation, base and contingent combined, will be paid on a segment when that segment’s goal of the approved Company Plan is met. The formula will have two independent segments as specified below.
| BONUS FORMULA | Company Plan | Stretch | ||||||||
| Segment 1 | Sales | $ | tbd | $ | tbd | |||||
| Bonus based on sales goals | 2.5 | % | 5.0 | % | ||||||
| Segment 2 | Pre-tax earnings | $ | tbd | $ | tbd | |||||
| Bonus based on financial performance | 2.5 | % | 5.0 | % | ||||||
| EPS | $ | tbd | $ | tbd | ||||||
Segment 1 – Sales Goals
The sales component will provide 50% of the Bonus Formula. The maximum bonus to be paid for this component is 5%. For sales below Company Plan, 0% bonus is earned. For sales at or above Company Plan, the bonus will be paid on a straight line pro-rata basis up to the percentages indicated as “Stretch”.
Segment 2 – Financial Performance
The pre-tax earnings component will provide 50% of the Bonus Formula. The maximum bonus to be paid for this component is 5%. For pre-tax earnings below Company Plan, 0% bonus is earned. For pre-tax earnings at or above Company Plan, the bonus will be paid on a straight line basis up to the percentages indicated as “Stretch”.
