REXNORD MANAGEMENT INCENTIVE COMPENSATION PLAN (MICP)

EX-10.14 3 dex1014.htm REXNORD MANAGEMENT INCENTIVE COMPENSATION PLAN Rexnord Management Incentive Compensation Plan

Exhibit 10.14

REXNORD

MANAGEMENT

INCENTIVE

COMPENSATION PLAN

(“MICP”)


REVISED: June 18, 2009

Plan Name:

Rexnord Management Incentive Compensation Plan (MICP)

Plan Objectives:

Establish a meaningful variable compensation component of an attractive pay-for-performance total cash compensation program designed to support the achievement of Outstanding Strategic, Financial and Operational Performance

Plan Term:

The Plan commences on the first day of the fiscal year and ends on the last day of the fiscal year

Plan Eligibility:

As approved by the CEO, in consultation with the Chairman of the Board.

Target Bonus Levels:

Determined based on a mix of level-of-impact toward the achievement of Company objectives, and sound pay-for-performance total cash compensation guidelines

Performance Measures:

 

 

Budgeted EBITDA (Earnings before interest, taxes, depreciation and amortization)

 

 

Debt Reduction / Divisional Cash Flow

 

 

Non-financial Goals & Objectives (Personal Performance Factor)

Plan Design:

Payout Determined by Formula

 

Year End     Individual     Financial*     Personal    

 

Bonus

Payout

Base   X   Target   X   Factor   X   Performance   =  
Salary     Bonus %         Factor    

 

* NOTE - Financial Factor may be determined by a “mix” of more than one Organizational Financial Factor (percentage weighted – example: 80% Division + 20% Corporate)


Performance Criteria:

 

Individual Achievements   =   “Personal Performance Factor”
TEAM Achievements   =   “Financial Factor”

Company Financial Factor based on:

 

 

EBITDA*

 

 

Debt Reduction/Divisional Cash Flow*

 

* NOTES:

 

   

EBITDA & Debt Reduction/Cash Flow targets will be recommended by Management, reviewed/approved by the Chairman, and then approved by the Compensation Committee of the Board of Directors of RBS Global, Inc, (the “Compensation Committee”).

 

   

% weighting of EBITDA and Debt Reduction/Cash Flow will normally be 50%/50% (variances from this weighting will be recommended by Management and reviewed/approved by the Chairman)

Financial Thresholds

Minimum EBITDA or Minimum Debt Reduction/Divisional Cash Flow thresholds must be achieved in order to trigger a potential bonus payment under the plan (“The Cliff”)

 

“Cliff”   =   80% - 90% of Target*

 

* NOTES

 

   

Corporate will be at 90%

 

   

Business Units will normally be at 80% (Chairman to approve any business units at the 90% cliff)

 

Upper Limit   =   None (No Cap)

Performance Range:

 

   

See examples in Addendum A


Financial Factor Calculation Example:

 

EBITDA as a % of the Financial Factor calculation

   =    50

Debt Reduction as a % of the Financial Factor

   =    50

Cliff

   =    90

% of EBITDA Target Achieved

   =    110

 

% of Divisional Cash Flow Achieved

   =    97

Calculation:

  1.25 x .50    =    .625   
  .85 x .50    =    .425   

 

Company Financial Factor

   =    1.05   

Personal Performance Factor

 

 

Based primarily on Individual Non-Financial Goals & Objectives

 

   

Re-enforce Cross-Functional / Business Teamwork

 

   

DIFFERENTIATE for Performance

 

 

Range

 

0   1.0   1.5
Unacceptable   Meets Expectations   Outstanding

 

 

Focus - No More Than Five Personal Objectives Which:

 

   

Generally Tie to Strategy Deployment Objectives

 

   

Are Aggressive

 

   

Are Measurable

 

   

Are Critical to Business Success


 

Setting Objectives

 

   

Common Format

 

 

MICP Non-Financial Goals & Objectives
PARTICIPANT INFORMATION                 
Name:                        
Title:        Fiscal Year:              
Business Unit:                        
Supervisor                        
                     Supervisor Evaluation
#  

Non-Financial Objectives

  Goals
(Measures/Targets)
 

Results

  Weight
(%)
   Personal
Performance
Factor
(see scale below)
  Weighted
PPF
1       Associate Comments:        0
              
      Supervisor Comments:       
                      
2       Associate Comments:        0
              
      Supervisor Comments:       
                      
3       Associate Comments:        0
              
      Supervisor Comments:       
                      
4       Associate Comments:        0
              
      Supervisor Comments:       
                      
5       Associate Comments:        0
              
      Supervisor Comments:       
                      
   

Personal Performance Factor Scale

0.0                                                                  1.0                                                                 1.5                         

Unacceptable                                 Meets expectations (“Budget”)        Outstanding Performance (“SOP”)

  0%        0.00

 

GOAL & OBJECTIVES AGREED TO
AT THE BEGINNING OF  THE YEAR
 

EVALUATION OF GOALS & OBJECTIVES
AT THE END OF THE YEAR

            
                          
Associate Signature & Date  

Associate Signature & Date

            
                          
Manager Signature & Date  

Manager Signature & Date

            
                          
One-over-One Manager Signature & Date  

One-over-One Manager Signature & Date

   

Following Signature the “One-Over-One Manager” should send copies of this form to the Associate’s Manager and HR

(it will be HR’s responsibility to ensure that this closed-loop process is followed)

     

Following Signature the “One-Over-One Manager” should send copies of this form to the Associate’s Manager and HR

(it will be HR’s responsibility to ensure that this closed-loop process is followed)

            

PLEASE NOTE: ALTHOUGH THE FORM CALLS FOR SIGNATURE FOLLOWING YEAR-END; THIS SHOULD NOT BE CONFUSED WITH THE NEED FOR VERY REGULAR/MONTHLY REVIEW BETWEEN ASSOCIATE & MANAGER THROUGHOUT THE YEAR ON PROGRESS/ COUNTERMEASURES – THE OBJECTIVE IS TO ENABLE ACHIEVEMENT OF THE HIGHEST LEVEL OF STRETCH PERFORMANCE POSSIBLE


Annual Payout Calculation Example:

 

Year End     Individual's     Company     Personal
Base   X   Target   X   Financial   X   Performance
Salary     Bonus%     Factor     Factor

 

March 31st Base Salary   =   $115,000
Individual Target Bonus % / $   =   15% / $17,250
Company Financial Factor   =   1.05
Personal Performance Factor   =   1.15

Actual Payout = $115,000 x .15 x 1.05 x 1.15 = $20,829

Miscellaneous Plan Guidelines:

 

 

The Plan will be administered in accordance with the following guidelines:

 

   

Plan Design & Continuation – to be determined by the Compensation Committee.

 

   

Plan Participation – to be determined by the CEO, in consultation with the Chairman.

 

   

Payout Calculations and Timing – the Compensation Committee shall approve the total annual payout, as well as specific payouts to the CEO and the other Named Executive Officers. The rest of the payouts shall be approved by the CEO, in consultation with the Chairman.

 

   

The CEO shall apply discretionary management judgment, as appropriate, in administering all other aspects of the Plan, based on specific business situations or individual considerations. The CEO may delegate the daily administration of the Plan to other managers and associates, including payments of the amounts to be issued to participants under the Plan.

 

 

Plan participants must be employed by the Company on the date of payment in order to qualify for payout (normally June)

 

   

Exceptions due to retirement, disability, or death will be at the sole discretion of the CEO, in consultation with the Chairman.

 

 

Promotions / Transfers

 

   

Where a transfer from one organizational unit to another organizational unit occurs during the Plan year, the individual will receive a pro-rated award based on time and base salary / target MICP % in the multiple assignments

 

   

When a promotion occurs and the associate remains in the same organizational unit, the base salary and target MICP % in effect @ year-end (3/31) will be used for the entire year

 

 

Partial Year participants will normally be eligible for a payment on a pro rata amount calculated at a rate of 1/12 of the annual amount for each complete calendar month

 

 

Each Plan Participant will receive individual written notification of the following plan details at the beginning of each fiscal year:

 

   

Financial Factor “Mix”

 

   

Applicable EBITDA and Debt Reduction/Divisional Cash Flow Targets

 

   

% Weighting of EBITDA & Debt Reduction/Divisional Cash Flow in calculating Financial Factor

 

   

Guidelines for Establishing Participant’s Annual Personal Objectives


Addendum A

(Performance Ranges by Cliff %)

 

 

For 90% Cliff

 

Performance of EBITDA & Debt Reduction / Modified Cash Target Achievement  

90% of

Target

 

100% of

Target

 

105% of

Target

 

110% of

Target

 

115% of

Target

 

120% of

Target

 

125% of

Target

 

130%

or > of

Target

Financial Factor   50%   100%   112.5%   125%   150%   175%   200%  

225%

and >*

 

** For each additional 5% increase in the percent of Target Bonus Plan Achievement above 115%, the financial factor will increase 25%.

 

 

For 80% Cliff

 

Performance of EBITDA & Debt Reduction / Modified Cash Target Achievement  

80% of

Target

 

90% of

Target

 

100% of

Target

 

105% of

Target

 

110% of

Target

 

115% of

Target

 

120% of

Target

 

125% of

Target

 

130%

or > of

Target

Financial Factor   40%   50%   100%   107.5%   115.5%   130.5%   145.5%   160.5%  

175.5%

and >*

 

* For each additional 5% increase in the percent of Target Bonus Plan Achievement above 115%, the financial factor will increase 15%.

 

* NOTE – Regardless of Cliff %, any business segment with financial targets that are either negative or under a million dollars will be treated outside the payout matrix above. The payout methodology will be developed and agreed upon between the Management Team and Finance and will be approved by the CEO, in consultation with the Chairman.