Royal Precision Executive Bonus Program Plan for FY 2003

Contract Categories: Human Resources › Bonus & Incentive Agreements
Summary

This agreement outlines the Royal Precision Executive Bonus Program for fiscal year 2003, which sets out how managers and executives are eligible for annual bonuses based on company performance targets. Bonuses are determined by financial results, specifically EBIT and working capital metrics, and may be adjusted for individual performance. The program is discretionary, can be changed or terminated by the company, and does not guarantee continued employment or affect other benefits. Bonus payments are made within 60 days after the fiscal year ends and audited financials are received.

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EX-10.62 4 ex1062.txt EXECUTIVE BONUS PROGRAM PLAN Exhibit 10.62 ROYAL PRECISION EXECUTIVE BONUS PROGRAM FY 2003 PURPOSE OF THE PROGRAM The purpose of the Royal Precision Executive Bonus Program is to use a combination of performance elements to focus management attention on various objectives to improve shareholder value and to reward participants for achieving those objectives. OPERATION OF THE PROGRAM I. Eligibility A. Royal Precision managers and executives who are continuously employed from the beginning of each fiscal year through the date of payment of bonus are eligible to participate in the Royal Precision Executive Bonus Program. B. Royal Precision managers and executives whose employment in that capacity starts after the beginning of the fiscal year or whose employment in that capacity terminates prior to the date of payment of the bonus are eligible to participate in the Executive Bonus Program only if approved by the Chairman and CEO of Royal Precision. II. Basis of Distribution A. Bonus Opportunity Levels Bonus opportunity levels are established for each participant at the beginning of the fiscal year, or on a subsequent date if employment starts after the beginning of the fiscal year. Bonus opportunity levels are assigned to each participant based on competitive rates of pay, internal equity and the ability to influence results. B. Performance Elements Performance will be measured on the following elements:
PERFORMANCE TARGET ELEMENT DEFINITION WEIGHT LEVEL ------- ---------- ------ ----- EBIT Earnings before interest, taxes, 80% * and non-operating items approved in advance by the Chairman and CEO. Operating Working A four-quarter average of the 20% * Capital per Sales Dollar following calculation: the sum of accounts receivable and net inventories, less accounts payables (net of customer deposits) as of quarter end, divided by the annualized quarter sales.
C. Eligible Compensation Eligible compensation reflects each participant's annual base salary, or base salary paid during the period of eligibility if employment started after the beginning of the fiscal year. III. Determination of Bonus Award A. The Bonus Award for each participant will be determined on the following guidelines: * CONFIDENTIAL TREATMENT REQUESTED 1. Actual results for each Performance Element will be determined on year- end financial results as reflected in the audited financial statements. 2. Achievement of Bonus Targets will be based on percent of Targeted Performance attained, as summarized below and illustrated in Exhibit 1.* PERCENT OF PERCENT OF TARGETED PERFORMANCE BONUS TARGET EARNED -------------------- ------------------- Below 80% 0% 80% 80% 100% 100% 115% 115% 125% and above Linear 3. The calculation of the Bonus Award is an annual computation. Overperformance or underperformance in any year will not be carried forward or carried backward for use in another year's computation. B. A hypothetical example of the calculation of a participant's Bonus Award is provided in Exhibit 1.* The exhibit shows the level to which calculations will be rounded. IV. Individual Performance Adjustment The Chairman and CEO of Royal Precision may adjust a participant's formula-derived Bonus Award upward or downward by up to 25% to reflect individual performance. The final Bonus Award for any participant may range from 75% to 125% of the formula-derived bonus award calculated from Exhibit 1.* V. Payment of Bonus Awards and Discretionary Bonuses Bonus Awards and any Discretionary Special Bonuses will be paid within 60 days following the end of the Company's fiscal year and after receipt of audited financial statements. VI. Unexpected Changes in Operations or Unusual Adjustments In the event of major unexpected changes in operations or unusual adjustments during the fiscal year, Company management may recommend adjustments or changes to the approved bonus program. The Chairman and CEO of Royal Precision will have final approval on any adjustments or changes to the approved program. VII. General Provisions A. The Royal Precision Bonus Program is implemented solely at the discretion of the Company, subject to approval by the Compensation Committee who reserves the right to amend, modify, suspend, or terminate the Bonus Program. B. Bonus Awards are totally separate from all other Company benefits. They will not be used as a basis for determining levels of any other benefit such as vacation pay, life insurance coverage, future bonus pay, etc. C. Establishment of the Royal Precision Bonus Program shall not be construed as conferring any legal rights upon any employee or any person for continuation of employment, nor shall it interfere with the rights of the Company to discharge any employee without regard to the effect such discharge might have upon the employee's eligibility or receipt of benefits through the Corporate Bonus Program. * EXHIBIT 1 OMITTED AS HYPOTHETICAL AND CONFIDENTIAL TREATMENT REQUESTED.