Exhibit 10.5
July 23, 1998
Xxxxxx X. Xxxx
Chairman of the Board and Chief Executive Officer
Xxx Xxxx Corporation
RE: 1998/99 Executive Management Incentive Plan Award Agreement
Dear Xxxx:
Xxx Xxxx Corporation (the "Company") has adopted the Xxx Xxxx
Corporation 1995 Executive Management Incentive Plan (the "Plan"). Under the
Plan, the Human Resources Committee (the "Committee") of the Company's Board of
Directors is authorized to make awards of performance-based compensation to you.
The Committee has decided to make an award to you pursuant to which you
may become entitled to receive performance-based compensation. The payment of
the performance-based compensation is subject to the terms and provisions of the
Plan and this letter, which is the "Award Agreement".
1. Performance Compensation: The maximum amount of your Performance
Compensation will depend on the level at which the Performance Goals are
satisfied. For fiscal year 1999 ("Performance Period"), this amount will not
exceed the lesser of 2,000,000 or 2 1/2 % of pre-tax, pre-incentive earnings.
The Committee will evaluate performance under one or more of three specific
performance elements: after tax net earnings, net margin, and return on equity
relative to return of the comparator peer group. The Performance Compensation
and Performance Goals under which the 1998/99 Performance Award will be made are
set forth in Exhibit A.
If the Performance Goal or Goals are satisfied during the Performance
Period, you will be entitled to receive the Performance Compensation provided by
this paragraph, subject to the discretionary adjustment provisions of paragraph
2. If the Performance Goal evaluation is not satisfied at the minimum level, you
will not be entitled to receive any performance-based compensation.
Your Performance Compensation, if any, will be paid to you as soon as
administratively feasible following the date the Committee certifies that the
Performance Goals for the Performance Period have been satisfied.
2. Target Bonus: Solely for purposes of limitation under SERP, your
bonus target is deemed to be 120% of base salary.
Xx. Xxxxxx X. Xxxx
July 23, 1998
Page 2
3. Discretionary Adjustments: We have set the Performance Compensation
that could be payable to you upon attainment of the Performance Goals at an
intentionally high level. We have followed this approach because under the terms
of the Plan the Committee has the discretion to reduce or eliminate (but not
increase) the amount of your Performance Compensation on the basis of subjective
factors the Committee determines to be appropriate. The Committee reserves this
right.
4. Status of Plan: This Award Agreement is made pursuant to the
provisions of the Plan. The Plan is incorporated herein and a copy is attached
as Exhibit B. In the event of any conflict between the provisions of the Plan
and this Award Agreement, the provisions of the Plan control.
5. Deferral of Payments: You may elect to defer all or a portion of the
Performance Compensation payable to you pursuant to the terms and provisions of
the Xxx Xxxx Corporation Deferred Compensation Plan. Any such election must be
made on or before December 15, 1998.
6. Amendments: This Award Agreement may be amended only by a written
agreement executed by the Company and you. Any changes required in order to
qualify the Performance Compensation as performance-based compensation for the
purposes of Section 162(m) of the Internal Revenue Code of 1986, however, may be
unilaterally adopted by the Company without your consent.
Please execute the acknowledgment in the enclosed extra copy of this
letter and return it in the enclosed self-addressed, stamped envelope.
XXX XXXX CORPORATION
By: _________________________________
Chairman, Human Resources Committee
ACKNOWLEDGMENT
--------------
I acknowledge receipt of a copy of the Xxx Xxxx Corporation 1995
Executive Management Incentive Plan. I also acknowledge that no amounts will be
payable to me pursuant to the Plan or this Award Agreement if the Performance
Goals referred to above are not attained within the Performance Period. I also
acknowledge that the Committee has the right to reduce the Performance
Compensation in the exercise of its discretion. I accept the terms and
provisions of this Award Agreement and the Plan.
DATED: ____________________, 1998 ____________________________________
Your signature
