The E. W. Scripps Company Executive Bonus Plan
EXHIBIT 10.04
Approved by the board of directors 2/10/05
Subject to approval by the shareholders on 4/14/05
The E. W. Scripps Company
Executive Bonus Plan
1. Purpose of the Plan
The purpose of the Executive Bonus Plan (the “Plan”) is to promote the interests of The E. W. Scripps Company (the “Company”) and its shareholders by providing incentive compensation for certain designated key executives and employees of the Company and its subsidiaries.
2. Definitions
As used in this Plan, the following capitalized terms have the respective meanings set forth in this section:
| (a) | Act: The Securities Exchange Act of 1934, as amended, or any successor thereto. |
| (b) | Award: A periodic cash bonus award granted pursuant to the Plan. |
| (c) | Beneficial Owner: As such term is defined in Rule 13d-3 under the Act (or any successor rule thereto). |
| (d) | Board: The Board of Directors of the Company. |
| (e) | “Change in Control” shall occur with respect to all participants in the Plan when: |
(i) any Person becomes a “Beneficial Owner” of a majority of the outstanding Common Voting Shares, $.01 par value, of the Company (or shares of capital stock of the Company with comparable or unlimited voting rights), excluding, however, The Edward W. Scripps Trust (the “Trust”) and the trustees thereof, and any person that is or becomes a party to the Scripps Family Agreement, dated October 15, 1992, as amended currently and as it may be amended from time to time in the future (the “Family Agreement”);
(ii) the majority of the Board of Directors of the Company (the “Board”) consists of individuals other than Incumbent Directors; or
(iii) assets of the Company accounting for 90% or more of the Company’s revenues (hereinafter referred to as “substantially all of the Company’s assets”) are disposed of pursuant to a merger, consolidation, sale, or plan of liquidation and dissolution (unless the Trust or the parties to the Family Agreement have Beneficial Ownership of, directly or indirectly, a controlling interest (defined as owning a majority of the voting power) in the entity surviving such merger or consolidation or acquiring such assets upon such sale or in connection with such plan of liquidation and dissolution);
| (f) | “Change in Control” shall occur with respect to a particular participant in the Plan employed by a particular subsidiary or division of a subsidiary when: |
(i) any Person, other than the Company or an Affiliate, acquires Beneficial Ownership of securities of the particular subsidiary of the Company employing the participant having at least fifty percent (50%) of the voting power of such subsidiary’s then outstanding securities; or
(ii) the particular subsidiary sells to any Person other than the Company or an Affiliate all or substantially all of the assets of the particular division thereof to which the participant is assigned.
| (g) | Code: The internal Revenue Code of 1986, as amended, or any successor thereto. |
| (h) | Committee: The Incentive Plan Committee of the Board, or any successor thereto, or any other committee designated by the Board to assume the obligations of the Committee hereunder. |
| (i) | Company: The E. W. Scripps Company, an Ohio corporation. |
| (j) | Covered Employee: An employee who is, or who is anticipated to become, a covered employee, as such term is defined in Section 162(m) of the Code (or any successor section thereto). |
| (k) | Effective Date: The date on which the Plan took effect, which was January 1, 2000. |
| (l) | Participant: A Covered Employee of the Company or any of its Subsidiaries who is selected by the Committee to participate in the Plan pursuant to Section 4 of the Plan. |
| (m) | Performance Period: The calendar year or any other period that the Committee, in its sole discretion, may determine. |
| (n) | Person: As such term is used for purposes of Section 13(d) or 14(d) of the Act or any successor sections thereto. |
| (o) | Plan: The E. W. Scripps Company’s Executive Bonus Plan. |
| (p) | Shares: Class A common shares of the Company. |
3. Administration
The Plan shall be administered by the Committee or such other persons designated by the Board. The Committee shall have the authority to select the Covered Employees to be granted Awards under the Plan, to determine the size and terms of an Award (subject to the limitations imposed on Awards in Section 5 below), to modify the terms of any Award that has been granted (except for any modification that would increase the amount of the Award), to determine the time when Awards will be made and the Performance Period to which they relate, to establish performance objectives in respect of such Performance Periods and to certify that such performance objectives were attained; provided, however, that any such action shall be consistent with the applicable provisions of Section 162(m) of the Code. The Committee is authorized to interpret the Plan, to establish, amend and rescind any rules and regulations relating to the Plan, and to make any other determinations that it deems necessary or desirable for the administration of the Plan; provided, however, that any action permitted to be taken by the Committee may be taken by the Board, in its discretion. Any decision of the Committee in the interpretation and administration of the Plan, as described herein, shall lie within its sole and absolute discretion and shall be final, conclusive and binding on all parties concerned. Determinations made by the Committee under the Plan need not be uniform and may be made selectively among Participants, whether or not such Participants are similarly situated. The Committee shall have the right to deduct from any payment made under the Plan any federal, state, local or foreign income or other taxes required by law to be withheld with respect to such payment. To the extent consistent with the applicable provisions of Sections 162(m) of the Code, the Committee may delegate to one or more employees of the Company or any of its Subsidiaries the authority to take actions on its behalf pursuant to the Plan.
4. Eligibility and Participation
The Committee shall designate those persons who shall be Participants for each Performance Period. Participants shall be selected from among the Covered Employees of the Company and any of its Subsidiaries who are in a position to have a material impact on the results of the operations of the Company or of one or more of its Subsidiaries.
5. Awards
| (a) | Performance Goals. A Participant’s Award shall be determined based on the attainment of written performance goals approved by the Committee for a Performance Period established by the Committee (i) while the outcome for the Performance Period is substantially uncertain and (ii) no more than 90 days after the commencement of the Performance Period to which the performance goal relates. The performance goals, which must be objective, shall be based solely upon one or more or the following criteria: |
| 1. | Earnings per share; |
| 2. | Operating cash flow; |
| 3. | Gross margin; |
| 4. | Operating or other expenses; |
| 5. | Earnings before interest and taxes (“EBIT”); |
| 6. | Earnings before interest, taxes, depreciation and amortization; |
| 7. | Net income; |
| 8. | Return on investment (determined with reference to one or more categories of income or cash flow and one or more categories of assets, capital or equity); and |
9. Stock price appreciation.
The foregoing criteria may relate to the Company, one or more of its Subsidiaries or one or more of its divisions, units, partnerships, joint ventures or minority investments, product lines or products or any combination of the foregoing, and may be applied on an absolute basis or be relative to the Company’s annual budget, one or more peer group companies or indices, or any combination thereof, all as the Committee shall determine. In addition, to the degree consistent with Section 162(m) of the Code (or any successor section thereto), the performance goals may be calculated without regard to extraordinary items or adjusted for unusual or unplanned items. The maximum amount of an Award to any Participant with respect to a fiscal year of the Company shall be $3,000,000.
| (b) | Payment. The Committee shall determine whether, with respect to a Performance Period, the applicable performance goals have been met with respect to a given Participant and, if they have, to so certify, and ascertain the amount of the applicable Award. No Awards will be paid for such Performance Period until such certification is made by the Committee. The amount of the Award actually paid to a given Participant may be less than the amount determined by the applicable performance goal formula (including zero), at the discretion of the Committee. The amount of the Award determined by the Committee for a Performance Period shall be paid to the Participant at such time as determined by the Committee in its sole discretion after the end of such Performance Period. |
| (c) | Compliance with Section 162(m) of the Code. The provisions of this Section 5 shall be administered and interpreted in accordance with Section 162(m) of the Code to ensure the deductibility by the Company or its Subsidiaries of the payment of Awards; provided, however, that the Committee may, in its sole discretion, administer the Plan in violation of Section 162(m) of the Code. |
| (d) | Termination of Employment. If a Participant dies, retires, is assigned to a different position, is granted a leave of absence, or if the Participant’s employment is otherwise terminated (except with cause by the Company, as determined by the Committee in its sole discretion) during a Performance Period (other than a Performance Period in which a Change in Control occurs), a pro rata share of the Participant’s award based on the period of actual participation shall be paid to the Participant after the end of the Performance Period if it would have become earned and payable had the Participant’s employment status not changed; provided, however, that the amount of the Award actually paid to a given Participant may be less than the amount determined by the applicable performance goal formula (including zero), at the discretion of the Committee. |
6. Amendments or Termination
The Board or the Committee may amend, alter or discontinue the Plan, but no amendment, alteration or discontinuation shall be made which would impair any of the rights or obligations under any Award theretofore granted to a Participant under the Plan without such Participant’s consent; provided, however, that the Board or the Committee may amend the Plan in such manner as it deems necessary to permit the granting of Awards meeting the requirements of the Section 162(m) of the Code or other applicable laws. Notwithstanding anything to the contrary herein, the Board may not amend, alter or discontinue the provisions relating to Section 10(b) of the Plan after the occurrence of a Change in Control.
7. No Right to Employment
Neither the Plan nor any action taken hereunder shall be construed as giving any Participant or other person any right to continue to be employed by or perform services for the Company or any Subsidiary, and the right to terminate the employment of or performance of services by any Participant at any time and for any reason is specifically reserved to the Company and its Subsidiaries.
8. Nontransferability of Awards
An award shall not be transferable or assignable by the Participant otherwise than by will or by the laws of descent and distribution.
9. Reduction of Awards
Notwithstanding anything to the contrary herein, the Committee, in its sole discretion (but subject to applicable law), may reduce any amounts payable to any Participant hereunder in order to satisfy any liabilities owed to the Company or any of its Subsidiaries by the Participant.
10. Adjustments Upon Certain Events
| (a) | Generally. In the event of any change in the outstanding Shares by reason of any Share dividend or split, reorganization, recapitalization, merger, consolidation, spin-off, combination or exchange of Shares or other corporate exchange, or any distribution to stockholders of Shares other than regular cash dividends, the Committee in its sole discretion and without liability to any person may make such substitution or adjustment, if any, as it deems to be equitable, as to any affected terms of outstanding Awards. |
| (b) | Change in Control. In the event that (i) a Participant’s employment is terminated during a given Performance Period (the “Affected Performance Period”) and (ii) a Change in Control shall have occurred within the 365 days immediately preceding the date of such termination, then such Participant shall receive, promptly after the date of such termination, an Award for the Affected Performance Period as if the performance goals for such Performance Period had been achieved at 100%. |
11. Nonqualified Deferred Compensation
Notwithstanding anything to the contrary in Sections 5(d) and 10(b), in the event that it is determined that any payment to be made hereunder is considered “nonqualified deferred compensation” subject to Section 409A of the Code, payment will be delayed for six (6) months following separation from service.
12. Miscellaneous Provisions
The Company is the sponsor and legal obligor under the Plan and shall make all payments hereunder. The Company shall not be required to establish any special or separate fund or to make any other segregation of assets to ensure the payment of any amounts under the Plan, and the Participants’ rights to the payment hereunder shall be no greater than the rights of the Company’s (or Subsidiary’s) unsecured creditors. All expenses involved in administering the Plan shall be borne by the Company.
13. Choice of Law
The Plan shall be governed by and construed in accordance with Ohio law.
Executive Bonus Plan
Adjustment Formula
If the target is exceeded, or it is not met,
the following percentages will be applied to the target bonus.
| % goal attained | % of target bonus earned | |
| 120% | 150% | |
| 119% | 146% | |
| 118% | 143% | |
| 117% | 140% | |
| 116% | 137% | |
| 115% | 134% | |
| 114% | 131% | |
| 113% | 128% | |
| 112% | 125% | |
| 111% | 122% | |
| 110% | 119% | |
| 109% | 117% | |
| 108% | 115% | |
| 107% | 113% | |
| 106% | 111% | |
| 105% | 109% | |
| 104% | 107% | |
| 103% | 105% | |
| 102% | 103% | |
| 101% | 101% | |
| 100% | 100% | |
| 99% | 95% | |
| 98% | 90% | |
| 97% | 85% | |
| 96% | 80% | |
| 95% | 75% | |
| 94% | 70% | |
| 93% | 65% | |
| 92% | 60% | |
| 91% | 55% | |
| 90% | 50% | |
| 89% | 47% | |
| 88% | 44% | |
| 87% | 41% | |
| 86% | 38% | |
| 85% | 35% | |
| 84% | 32% | |
| 83% | 29% | |
| 82% | 26% | |
| 81% | 23% | |
| 80% | 20% |
Appropriate proration will be made between brackets.
