Sypris Solutions Inc. 2003 Executive Bonus Plan

Summary

Sypris Solutions Inc. established this Executive Bonus Plan for the 2003 fiscal year to incentivize designated officers with cash and stock option bonuses based on achieving specific profit and revenue targets. Eligibility is determined by the Compensation Committee, which also sets individual bonus potentials and performance objectives. Bonuses are awarded only if the company’s financial goals are met and the participant is employed at the time of payment. The plan is administered by the Compensation Committee, which has final authority over awards and may adjust targets for acquisitions or divestitures.

EX-10.2 4 dex102.txt EXECUTIVE BONUS PLAN, EFFECTIVE AS OF 1/1/03 Exhibit 10.2 SYPRIS SOLUTIONS INC. EXECUTIVE BONUS PLAN 2003 FISCAL YEAR 1. Establishment of Plan. Sypris Solutions Inc., a Delaware corporation (the "Company"), established this executive bonus plan effective as of January 1, 2003 (the "Plan"), to provide a financial incentive for employees of the Company to advance the growth and prosperity of the Company. 2. Eligibility. Officers of the Company who are specifically designated by the Compensation Committee of the Board of Directors of the Company (the "Compensation Committee") for participation during the current year shall be eligible to participate in the Plan. 3. Bonus Potential. The bonus potential for each participant will be established and approved by the Compensation Committee at the beginning of each Plan year. Each participant will be provided with a copy of this Plan, which will include an exhibit that lists the participant's full name, salary, effective date, cash bonus potential, stock option bonus potential, the Company's (and the subsidiary's, in the case of a subsidiary president) financial plan benchmarks and management objectives for the current year. The base Plan for 2003 will consist of two components, with 70% of the participant's bonus potential tied to the achievement of specific profit targets and the remaining 30% tied to the achievement of specific revenue targets. These targets will be established for each of the four quarters of the Plan year. In order for a participant to earn a bonus for any given quarter, the profit target must be achieved. Should the profit target and/or revenue target fail to be achieved during a quarter, the participant will still have the opportunity to earn the bonus associated with that quarter based upon the future achievement of the respective profit and revenue targets, as the case may be, on a year-to-date basis. Once a bonus component has been earned, it will remain available for future payment regardless of any subsequent shortfall in financial performance. In addition to the base Plan, there will also be a full year bonus that is specifically designed to reward those participants who achieve the profit and revenue targets for the full Plan year. The full year bonus will increase the amount a participant would otherwise qualify to receive by an additional 25%. The key targets for the 2003 Plan are as follows: (a) Profit Target Bonus. Objectives will be established for profit before bonus and tax for each quarter of the Plan year (the "Profit Targets"). The achievement of the Profit Target for a specific quarter, or on a year-to-date basis, must be achieved in order for a participant to qualify for the corresponding bonus award. The bonus potential will consist of cash and stock options. (b) Revenue Target Bonus. Objectives will be established for revenue for each quarter of the Plan year (the "Revenue Targets"). The achievement of the Revenue Target for a specific quarter, or on a year-to-date basis, must be accompanied by the achievement of the companion Profit Target in order for a participant to qualify for the bonus associated with the achievement of the Revenue Target. The bonus potential will consist of cash and stock options. (c) Full Year Target Bonus. Should the Profit Targets and Revenue Targets be achieved for the full Plan year, the participant will qualify for the Full Year Target bonus. The bonus potential will consist of cash and stock options. Participants who serve in the capacity of president of a Company subsidiary will derive 20% of their bonus potential from the performance of the Company and 80% of their bonus potential from the performance of the individual subsidiary for which they are responsible. All final bonus payments will be subject to the provisions of Section 4, including the participant's performance to objectives, which could result in bonus payments that are less than the potential amounts listed on Exhibit A. 4. Bonus Award. Each eligible participant will be entitled to an amount equal to the sum of the cash award components and the sum of the shares represented by the stock option award components that have been activated during the Plan year, subject to the provisions of Sections 7(a), 7(b) and the following: (a) Management Objectives. Each participant will have up to five Management Objectives for the Plan year, each of which will be specific with regard to (i) the expected outcome, (ii) the expected financial impact on the Company and (iii) the date or dates by which the objective must be achieved. Each objective will receive a weighting, the total of which for all objectives will be equal to 100%. The chief executive officer of the Company will have the responsibility to review and determine each participant's performance to objectives and to assign each individual a percentage that will be used as a factor to determine the actual amount of the awards to be distributed. (b) Discretionary Review. The chief executive officer of the Company will have the discretion to increase the actual amount of the awards to be distributed by up to 20% of the participant's Bonus Potential, based upon the individual's specific performance and contribution to the Company. Such discretion will be used sparingly and will generally be limited to the recognition of extenuating circumstances and/or exceptional accomplishments that may or may not have been captured by the Management Objectives. (c) Approval of the Compensation Committee. The Bonus Award for each participant will be subject to the review of and approval by the Compensation Committee. As a matter of policy, the Compensation Committee will not approve the award of any bonus that would otherwise lead or contribute to an operating loss as reported on the consolidated financial statements of Sypris Solutions Inc. (d) Qualification. Awards will be payable to each eligible participant as soon as administratively practicable after release of the audited annual financial statements of the Company and the approval of the Compensation Committee; provided, however, that the Plan shall be in effect as of the date of payment and such employee shall be employed by the Company as of the date of payment. NO EMPLOYEE SHALL HAVE ANY RIGHT TO PAYMENT OF AN AWARD UNLESS THE PLAN IS IN EFFECT AND THE EMPLOYEE IS EMPLOYED BY THE COMPANY AS OF THE DATE OF PAYMENT. 5. Method of Distribution. Cash awards shall be payable by check in lump sum. All such payments will be subject to withholding for income, social security or other such payroll taxes as may be appropriate. Stock option grants will be granted under and subject to the Sypris Solutions Inc. 1994 Stock Option Plan for Key Employees and will contain an option price that will be equal to the closing price of the common stock on the over-the-counter market, as reported by the Nasdaq Stock Market, on the date of grant. 2 6. Administration. The Compensation Committee shall administer this Plan. The decisions of the Compensation Committee in interpreting and applying the Plan shall be final. 7. Miscellaneous. (a) Employment Rights. The adoption and maintenance of this Plan is not an employment agreement between the Company and any employee. Nothing herein contained shall be deemed to give any employee the right to be retained in the employ of the Company nor to interfere with the right of the Company to discharge any employee at any time. (b) Acquisitions and Divestitures. The Profit Targets and Revenue Targets will be adjusted to reflect the expected impact of any acquisitions and/or divestitures that are completed during the current Plan year at the time of such acquisition or divestiture. (c) Amendment and Termination. The Company may, without the consent of any employee or beneficiary, amend or terminate the Plan at any time and from time-to-time. (d) Governing Law. This Plan shall be governed by and construed in accordance with the laws of the State of Delaware. (e) Construction. The headings and subheadings of this Plan have been inserted for convenience for reference only and are to be ignored in any construction of the provisions hereof. The masculine shall be deemed to include the feminine, the singular shall include the plural, and the plural shall include the singular unless the context otherwise requires. The invalidity or unenforceability of any provision hereunder shall not affect the validity or enforceability of the balance hereof. This Plan represents the entire undertaking by the Company concerning its subject matter and supersedes all prior undertakings with respect thereto. No provision hereof may be waived or discharged except by a written document approved by the Compensation Committee and signed by a duly authorized representative of the Company. The parties indicate their acknowledgement of the terms and conditions this Plan as of the date first written above. SYPRIS SOLUTIONS INC. PARTICIPANT ------------------------ ------------------------ Robert E. Gill Chairman ------------------------ Henry F. Frigon Chairman Compensation Committee ------------------------ Jeffrey T. Gill President and CEO 3