FLEETWOOD ENTERPRISES, INC.
SENIOR EXECUTIVE
INCENTIVE COMPENSATION PLAN
1. PURPOSE.
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The purpose of this Senior Executive Incentive Compensation Plan (the
'Plan') is to provide a means of paying incentive compensation to certain key
management employees who contribute materially to the success of Fleetwood
Enterprises, Inc. By relating incentive rewards of certain key executives to
operating profits, the Company will be in a position to provide additional
motivation and to reward extraordinary performance by making those employees
most responsible for such performance participants in the Company's success.
2. DEFINITIONS.
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A. Award Period. 'Award Period' shall mean each quarterly period of the
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Company adopted for accounting and reporting purposes.
B. Board. 'Board' shall mean the Board of Directors of the Company.
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C. Bonus Base Profit. 'Bonus Base Profit' shall be thirty percent (30%)
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of aggregate Net Income of the Company's Subsidiaries designated
pursuant to Section 5.4 hereof. Bonus Base Profit also shall be
adjusted upward or downward, as the case may be, by thirty percent
(30%) of the aggregate of the investment income earned on the
Company's invested capital net of interest expense. Investment income
shall include interest and dividends, and in the case of interest or
dividends on securities which are exempt from tax or are not fully
taxed under U.S. or applicable state laws, shall include the pretax
equivalents. It shall also include gains and losses (if any) from the
sale or other disposition of securities. Interest expense means the
interest cost on Company debt obligations and does not include
interest on non-debt liabilities (i.e., accounts payable, employee
compensation and benefit accruals, income tax payable and other
liabilities).
D. Committee. 'Committee' shall mean the Compensation Committee of the
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Board.
E. Company. The 'Company' is defined as Fleetwood Enterprises, Inc., and
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shall not include any Subsidiary or affiliate company.
F. Incentive Compensation. 'Incentive Compensation' shall mean the
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dollar amount awarded to a Participant.
G. Net Bonus Amount. 'Net Bonus Amount' shall be the amount available
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for distribution as Incentive Compensation under this Plan. It shall
be calculated for each Award Period by adding five percent (5%) of the
first two million dollars of Bonus Base Profit and, in the discretion
of the Committee as provided herein, an amount (the 'Excess
Percentage') up to four and one-half percent (4 1/2%) of the excess
over two million dollars of Bonus Base Profit.
H. Net Income. 'Net Income' as used herein shall be the respective
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Subsidiary's net income after excluding (i) gains or losses from the
disposition of capital assets, (ii) interest, dividends and other
receipts from investments, time deposits, and savings accounts, (iii)
taxes based upon or measured by income, (iv) incentive compensation or
bonus payments to its managers and assistant managers who have entered
into an employment contract with the Subsidiary and (v) contributions
to a retirement plan for the benefit of its managers and assistant
managers who have entered into an employment contract with the
Subsidiary.
I. Participant. 'Participant' means the Chief Executive Officer,
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President or Chief Operating Officer of the Company who is selected as
a Participant and who continues to be a Participant under the
provisions of this Plan.
J. Participant Points. 'Participant Points' are units of measurement
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utilized in determining the Incentive Compensation Awards of
Participants and shall be awarded to Participants in accordance with
Section 5.4 of the Plan.
K. Performance Goal. 'Performance Goal' means the achievement of
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positive Bonus Base Profit during an Award Period.
L. Subsidiary. 'Subsidiary' shall mean a corporation fifty percent (50%)
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or more of the outstanding voting stock of which is owned, directly or
indirectly, by the Company or by a subsidiary of the Company.
3. PLAN ADMINISTRATION.
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3.1. THE COMMITTEE.
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The Committee shall be comprised solely of two or more outside directors as
defined in Section 162(m) of the Internal Revenue Code of 1986, as amended (the
'Code') and the regulations promulgated thereunder. No member of the Committee
may, while serving on the Committee, also be a Participant in this Plan. The
Committee shall administer the Plan in accordance with its terms.
3.2 POWERS OF THE COMMITTEE.
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Subject to the express provisions of the Plan, the Committee has the
authority to interpret the Plan, to determine the terms and conditions of
Incentive Compensation and to make all other determinations necessary or
advisable for the administration of the Plan. The Committee has authority to
prescribe, amend and rescind rules and regulations relating to the Plan. All
interpretations, determinations and actions by the Committee shall be final,
conclusive and binding upon all parties.
3.3 ORGANIZATION AND OPERATION OF COMMITTEE.
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The Committee shall act by a majority of its members at the time in office,
and such action may be taken by a vote at a meeting, including a meeting at
which conference telephone or similar equipment is utilized by means of which
all persons participating in the meeting can hear each other, or by unanimous
written consent without a meeting. The Committee may authorize any one or more
of its members or any specifically designated officer of the company to execute
any document or documents on behalf of the Committee. The Committee may appoint
such accountants, counsel, specialists, and other persons as it deems necessary
or desirable in connection with the administration of this Plan.
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3.4 RELIANCE ON REPORTS.
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Each member of the Committee and each member of the Board shall be fully
justified in relying or acting in good faith upon any opinion or report made by
the independent public accountants of the Company and upon any other opinions,
reports or information furnished in connection with the Plan by any accountant,
counsel, or other specialist (including financial officers of the company). In
no event shall any person who is or shall have been a member of the Committee or
of the Board be liable for any determination made or other action taken or any
omission to act in reliance upon any such opinion, report or information or for
any action, including the furnishing of information, taken or failure to act, if
in good faith.
3.5 RECORDS AND REPORTS.
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The Committee shall keep a record of all its proceedings and acts, and
shall keep all such books of account, records and other data as may be necessary
for proper administration of the Plan.
3.6 PAYMENT OF EXPENSES.
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Unless otherwise determined by the Board, the members of the Committee
shall serve without compensation for services as such, but all expenses of the
Committee shall be paid by the Company. Such expenses shall include any
expenses incident to the functioning of the Committee, including, but not
limited to, fees of accountants, counsel, and other specialists, and other costs
of administering the Plan.
3.7 INDEMNIFICATION.
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Each person who is or shall have been a member of the Committee or of the
Board shall be indemnified and held harmless by the Company against and from any
loss, cost, liability, or expense that may be imposed upon or reasonably
incurred by him in connection with or resulting from any claim, action, suit, or
proceeding to which he may be a party or in which he may be involved by reason
of any action taken or failure to act under the Plan and against and from any
and all amounts paid by him in settlement thereof, with the Company's approval,
or paid by him in satisfaction of judgment in any such action, suit, or
proceeding against him, provided he shall give the Company an opportunity, at
its own expense, to handle and defend the same before he undertakes to handle
and defend it on his own behalf. The foregoing rights of indemnification shall
not be exclusive of any other rights or indemnification or exculpation to which
such persons may be entitled under the Company's Certificate of Incorporation or
bylaws, as a matter of law, or otherwise, or any power that the Company may have
to indemnify them or hold them harmless.
4. ELIGIBILITY AND PARTICIPATION.
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4.1 ELIGIBILITY.
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To be eligible as a Participant under the Plan, an employee must be the
Chief Executive Officer, President, or Chief Operating Officer of the Company.
4.2 SELECTION OF PARTICIPANTS.
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Participants shall be selected by the Committee from among those persons
who become eligible under Section 4.1, but the Committee need not select all
eligible persons as Participants. Participants shall be separately selected for
each Award Period and must be so designated prior to the commencement of an
Award Period. The Committee may specify that
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a Participant selected for an Award Period shall continue to be a Participant in
succeeding Award Periods until and unless the Committee makes a determination in
advance of any particular Award Period that such Participant shall not continue
as a Participant for such Award Period. The selection of a person as a
Participant for one Award Period shall not mean that such person will be
selected for participation with respect to any subsequent Award Period. No
person shall become a Participant with respect to any Award Period under the
Plan unless and until such person has been selected as a Participant by the
Committee.
4.3 DURATION OF PARTICIPATION.
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A person shall become a Participant upon selection as a Participant
pursuant to the preceding provisions of this Section 4. A person shall cease to
be a Participant with respect to any Award Period upon the earlier of such
person's (i) death, (ii) disability, (iii) retirement or (iv) termination of
eligibility as a Participant (including termination of employment). In such
event, such Participant shall be entitled, upon the determination of the
Committee pursuant to Section 6.1 hereof that Incentive Compensation is payable
for such Award Period and compliance with the provisions of Section 6.1, to that
portion of Incentive Compensation for said Award Period as the number of days he
or she is a Participant during the Award Period bears to the total number of
days in such Award Period.
5. DESIGNATIONS FOR AWARD PERIODS.
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5.1 SELECTION AND DESIGNATION OF PARTICIPANTS.
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Prior to the commencement of each Award Period, the Committee shall select
the persons who will be Participants during such Award Period. The Committee
may specify that the Participants selected for any Award Period shall continue
to be Participants in future Award Periods except as otherwise provided by the
Committee in advance of any Award Period. Such selection and designation shall
be made in accordance with the provision of Section 4 of the Plan. No person
shall be designated as a Participant for any Award Period following the
commencement of such Award Period.
5.2 AWARD OF PARTICIPANT POINTS TO PARTICIPANTS.
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Prior to the commencement of each Award Period, the Committee shall award
to each Participant a specific number of Participant Points as determined by the
Committee. The Committee may specify that the number of Participant Points
awarded to any Participant for any Award Period shall continue to future Award
Periods except as otherwise provided by the Committee in advance of any Award
Period. The number of Participant Points for a Participant may not be increased
during any Award Period with respect to Incentive Compensation during such Award
Period.
5.3 DETERMINATION OF EXCESS PERCENTAGE.
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Prior to the commencement of each Award Period, the Committee shall
establish the Excess Percentage to be utilized during such Award Period. The
Committee may specify that the Excess Percentage established for any Award
Period shall continue to apply to future Award Periods except as otherwise
provided by the Committee in advance of any Award Period. The Committee shall
have no authority to increase the Excess Percentage to be utilized in any Award
Period after the commencement of such Award Period.
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5.4 DESIGNATION OF SUBSIDIARIES.
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Unless otherwise designated by the Committee prior to the commencement of
an Award Period, all Subsidiaries of the Company shall be utilized in the
calculation of Bonus Base Profit for such Award Period. The Committee may
specify that a designation not to include a Subsidiary or Subsidiaries in the
calculation shall continue in succeeding Award Periods until and unless the
Committee makes a subsequent designation in advance of any particular Award
Period with respect to the Subsidiaries for such Award Period.
6. DETERMINATION OF INCENTIVE COMPENSATION.
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6.1 CALCULATION OF INCENTIVE COMPENSATION AWARD.
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The amount of Incentive Compensation payable for each Award Period to
designated Participants shall be determined as follows:
(i) Determination of Bonus Base Profit.
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As soon as practicable following the end of each Award Period, the
Committee shall determine Bonus Base Profit for such Award Period based upon the
Company's financial statements for such Award Period, which shall be prepared in
accordance with generally accepted accounting principles, consistently applied.
In the event the Bonus Base Profit during any Award Period or Award Periods
shall be negative, the amount of such deficit, on a cumulative basis, shall be
deducted from Bonus Base Profit in the next Award Period. The Committee, in its
discretion, may determine in advance of any Award Period to forgive all or any
portion of such deficit from prior Award Periods, in which case no such
deduction will be made in calculating Bonus Base Profit.
(ii) Failure to Achieve Performance Goal.
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If the Bonus Base Profit during any Award Period is zero or negative, no
Incentive Compensation shall be paid under this Plan for such Award Period.
(iii) Performance Exceeding Performance Goal.
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If the Committee determines that the Performance Goal for an Award Period
has been met, it shall:
A. Calculate the Net Bonus Amount available for Incentive Compensation for
such Award Period based upon the Bonus Base Profit for such Award Period.
B. Determine the distribution of the Net Bonus Amount for such Award
Period to each Participant in the Plan during such Award Period by multiplying
the Net Bonus Amount by a fraction, the numerator of which shall be the number
of Participant Points for such Participant during the Award Period and the
denominator of which shall be the total number of outstanding Participant Points
under the Plan at the commencement of such Award Period.
C. Prior to the payment of any Incentive Compensation to a Participant,
certify in writing that the Performance Goal has been met for such Award Period
and that all other material terms, if any, to such Incentive Compensation have
been satisfied. For this purpose, approved minutes of a Committee meeting in
which such certification is made shall be treated as a written certification.
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The Committee shall have no authority to increase the amount of Incentive
Compensation payable with respect to any Award Period over the amounts of
Incentive Compensation established pursuant to the provisions of this Section
6.1.
7. PAYMENT.
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7.1 FORM.
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At the end of each Award Period, the Committee shall determine in
accordance with Section 6 of this Plan the Incentive Compensation, if any, for
each Participant under the Plan. Incentive Compensation awarded under the terms
of this Plan shall be paid in cash as a lump sum as soon as practicable after
financial statements are available for the Award Period to which the Incentive
Compensation pertains, unless deferred by the Participant in accordance with any
applicable program for deferring incentive compensation under which such
Participant has made a valid election to defer all or part of such award. In
such latter case, the amount deferred by such Participant shall be handled in
accordance with the applicable provisions of such deferred compensation program,
provided, however, that any additional amount paid pursuant to such program
shall be based upon a reasonable interest rate for the period of such deferral.
7.2 DEATH PRIOR TO FULL PAYMENT.
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In the event that a Participant has amounts payable as Incentive
Compensation under this Plan and dies prior to the payment of such amounts, the
amounts payable at the time of the Participant's death shall be paid to the
Participant's beneficiary or, if no beneficiary was designated by the
Participant, to the Participant's estate.
8. CLAIM TO INCENTIVE COMPENSATION AND EMPLOYEE RIGHTS.
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No employee or other person shall have any claim or right to become
Participant under this Plan. Neither this Plan nor any action taken hereunder
shall be construed as giving any employee any right to be retained in the employ
of the Company, the employment contract, if any, between the Company and the
employee being the determining document with respect to the employment
relationship.
9. UNSECURED OBLIGATION.
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Participants under this Plan shall not have any interest in any fund or
specific assets of the Company by reason of this Plan. No trust fund shall be
created in connection with the Plan, and there shall be no funding of amounts
which may become or are payable to any Participant.
10. NONTRANSFERABILITY.
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A person's rights and interests under this Plan, including amounts payable,
may not be assigned, pledged, transferred or otherwise hypothecated except, in
the event of an employee's death, to his designated beneficiary as provided in
this Plan, or in the absence of such designation, to his heirs, devisees or
legatees by will or the laws of descent and distribution.
11. TAX WITHHOLDING.
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The Company shall have the right to deduct any Federal, state, local or
foreign taxes or other charges required by law to be withheld from payments made
to participants under the Plan.
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12. AMENDMENT AND TERMINATION.
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The Board may terminate this Plan or modify or amend this Plan from time to
time in such respects as it shall deem advisable. Unless this Plan shall
theretofore have been terminated as herein provided, the Committee shall not
have authority to award Incentive Compensation for Award Periods ending after
April 30, 2004. No termination or amendment of the Plan under this Section 12
shall reduce the amount of the benefit which a person who is a Participant at
the time such termination or amendment occurs has either already become entitled
to under Section 6 or may become entitled to as a result of Award Periods which
have commenced but have not theretofore been concluded, unless such Participant
consents to such reduction.
13. EFFECTIVE DATE OF PLAN.
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This Plan is adopted by the Committee effective as of April 24, 1994,
subject to shareholder approval. With respect to Award Periods prior to the date
of shareholder approval, the Committee shall pay the amounts due to Participants
under the Plan after such shareholder approval along with interest at a
reasonable rate from the time such amounts otherwise would have been due to the
Participants under the Plan. In addition, prior to shareholder approval of the
Plan, in its sole discretion, the Committee may advance funds to the
Participants in the amounts and at the times such Participants otherwise would
have been entitled to payment under the Plan subject to an agreement of such
Participants to repay such amounts (with interest at a reasonable rate) in the
event that shareholder approval is not obtained at the next regularly scheduled
shareholders' meeting.
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Senior Executive Incentive Compensation Plan - Fleetwood Enterprises Inc.
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