\nMet or exceeded all objectives 0.9-1.1 1.2-1.4 1.5-1.6 1.7-2.0
\n————————————————————————————————–
\nMet objectives 0.7-0.8 0.9-1.1 1.2-1.4 1.5-1.7
\n————————————————————————————————–
\nMet objectives with few 0.5-0.6 0.7-0.8 0.9-1.1 1.2-1.4
\nexceptions
\n————————————————————————————————–
\nMet some objectives, fell 0.3-0.4 0.5-0.6 0.7-0.8 1.0-1.1
\nshort in others
\n————————————————————————————————–
\nFailed to meet most, fell 0-0.2 0.3-0.4 0.5-0.6 0.7-0.9
\nshort in other objectives
\n————————————————————————————————–
\n<\/c><\/c><\/c><\/c><\/s><\/caption>\n<\/table>\nMANAGEMENT INCENTIVE PLAN QUESTIONS AND ANSWERS<\/p>\n
ELIGIBILITY AND PARTICIPATION<\/p>\n
1. Who is eligible to participate in our management incentive plan?
\n Participation is for those in a position to significantly influence the
\n performance of their business units.<\/p>\n
Headquarter participants are generally line or staff managers in grade 26
\n or above who report to a Company officer.<\/p>\n
Division and operating unit participants are department heads with
\n functional responsibility for the entire division or business unit. They
\n usually report directly to the division or general manager.<\/p>\n
2. How are participants added?
\n Participants must meet the eligibility requirements specified above.
\n Individual participation requires CEO approval.<\/p>\n
3. What happens if a participant retires or dies during a plan year?
\n Generally, payment of an award is made only if the participant is an
\n employee at year-end. However, prorated payments are made to participants
\n who retires or to survivors in the case of death of the participant.<\/p>\n
Normal calculation procedures are used. The prorated share is paid at the
\n same time that active participants receive their awards. Managers should
\n compute a participant’s final year incentive using the current years
\n business performance factor and strategic performance factor ratings.<\/p>\n
4. What are the guidelines for employees who transfer from one business unit
\n to another during the plan year?<\/p>\n
Ratings are determined at each unit using the pertinent information
\n (performance ratings, weightings, base earnings, total ratings and actual
\n incentive). The transferring unit sends this information to the new unit.
\n Awards are paid by the new unit. The appropriate proration of the award is
\n charged to the transferring unit.<\/p>\n
TARGET INCENTIVE<\/p>\n
1. What is target incentive compensation? Why do we have it?<\/p>\n
Target incentive represents a specific percentage of a participant’s base
\n salary. The target establishes the cash incentive opportunity for 1.0
\n performance. Target incentive percentages are established to ensure a
\n competitive total compensation opportunity.<\/p>\n
2. Target incentive opportunities generally range from a minimum of 15% to a
\n maximum of 65% of base salary earnings. What is the rationale for this?<\/p>\n
Higher incentive percentages at higher responsibility levels is consistent
\n with the competitive practice of placing more of the higher level manager’s
\n total compensation at risk.<\/p>\n
3. Actual awards can range from 0 to 200 percent of the target Why establish
\n these limits?<\/p>\n
The 1.0 target performance corresponds to business or individual results
\n that are judged to have a 50-50 chance of being achieved. This level
\n represents a competitive incentive compensation opportunity. The lower
\n limit of 0 preserves the participant’s base salary and other compensation.
\n The 2.0 limit protects against unanticipated windfalls and the inexactitude
\n of the target setting process. It assures our shareholders that
\n compensation will not be excessive.<\/p>\n
BUSINESS PERFORMANCE FACTOR (BPF)<\/p>\n
1. How does UDLP ensure that long-term business performance is not affected by
\n the short-term focus of the plan?<\/p>\n
Research, business development and other significant strategic investments
\n essential for the long-term growth of a business unit are considered in the
\n target setting process.<\/p>\n
2. Business performance targets are finalized early in the year. Can they be
\n changed during the plan year?<\/p>\n
These are normally not changed during the year.<\/p>\n
STRATEGIC PERFORMANCE FACTOR (SPF)<\/p>\n
1. What are Strategic Performance Objectives?<\/p>\n
They are a set of individual performance objectives established early
\n each year by participants and their managers.
\n SPF objectives include a few significant result level objectives that
\n support the business unit or company strategies. These are not usually
\n financial objectives, but they should be quantifiable. These
\n objectives could include market share and cost improvements,
\n diversity, management development, globalization, operational
\n effectiveness, and product development, etc.<\/p>\n
2. How does the rating of the strategic performance factor relate to the
\n performance management (appraisal) process?<\/p>\n
Each evaluation is developed separately and at different times. These
\n evaluations differ in the following significant ways:<\/p>\n
. SPF ratings apply to incentive plan participants only. This SPF
\n rating considers performance of overall responsibilities,
\n performance in unanticipated circumstances, contributions to
\n management team as well as attainment of specific strategic
\n performance objectives. Determination of the SPF rating includes
\n both the degree of success and the degree of difficulty.<\/p>\n
. Performance appraisal ratings (needs improvement, good, etc.)
\n apply to all salaried personnel. The primary purpose is to assess
\n the total individual contribution and overall performance results
\n in order to develop the individual’s capabilities and
\n contributions.<\/p>\n
3. UDLP talks about stretch objectives. How does the company reward a
\n participant for setting and hitting (or almost hitting) tougher objectives?<\/p>\n
Achievement of tougher objectives receives a higher strategic performance
\n factor rating, which translates into a higher incentive award. For example,
\n a participant who sets unusually demanding objectives and then misses one
\n might receive a 1.4 SPF rating. A participant who sets more easily achieved
\n objectives and then hits them all might receive 1.0 SPF rating.<\/p>\n
WEIGHTING OF PERFORMANCE FACTORS<\/p>\n
1. Do participants ever have their incentive calculated based on the results
\n of more than one unit or organizational level? If so, why?<\/p>\n
Yes, in order to recognize the interdependence and the need for cooperation
\n between units or organizational levels. This approach also recognizes a
\n participant’s responsibility for the performance of more than one business
\n unit.<\/p>\n
The relative weightings of such split factors are determined by the
\n relative influence the participant has upon the results of each unit or
\n level. Participants who transfer during a plan year generally have their
\n incentives calculated with two separate components. They will use the
\n formula factors and weighting associated with both positions.<\/p>\n
2. How are weights established for SPF and BPF?<\/p>\n
Theoretically, the weights for these factors vary from one business unit to
\n another, reflecting the relative importance of each factor to that unit
\n during any one incentive period. At the present time, because of the need
\n to attain certain financial results, BPF is 80% with SPF 20%.<\/p>\n
3. How are weights established for the financial measures?<\/p>\n
Within the business performance factor, performance measures are weighted
\n depending on their relative contribution to a particular business. For
\n example, in the immediate years following the sale of UDLP to Carlyle,
\n buying down the debt was the most important financial objective, hence
\n there was only one financial measure, cash flow.<\/p>\n
INCENTIVE AWARD CALCULATION – EXAMPLE<\/p>\n
Your Strategic Performance Factor (SPF) is weighted at 20% and Business
\n Performance Factor (BPF) weighted at 80%. Within the BPF, Cash Flow (CF)
\n and Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA)
\n are weighted 70% and 30%, respectively. This year, the Cash Flow rating was
\n 1.74 and the EBITDA was 2.00.<\/p>\n
——————————————————————————–
\nYour SPF rating was: 1.80
\n——————————————————————————–
\nYour Incentive Award Eligible Earnings were: $130,000
\n——————————————————————————–
\nYour Incentive Award Target Percentage is: 25%
\n——————————————————————————–
\nYour Incentive Award Target Amount was: $ 32,500
\n——————————————————————————–<\/p>\n
INCENTIVE AWARD CALCULATIONS
\n—————————-<\/p>\n
——————————————————————————–
\n(1) WEIGHTED SPF DETERMINATION
\n——————————————————————————–
\nYour SPF Rating X SPF Weight Weighted SPF Rating
\n——————————————————————————–
\n1.80 X .20 36
\n——————————————————————————–<\/p>\n
——————————————————————————–
\n(2) WEIGHTED CCF\/EBITDA DETERMINATIONS
\n——————————————————————————–
\nCF contribution below, is the BPF weight times the CF weight; EBITDA
\nContribution below, is the BPF weight times the EBITDA
\n——————————————————————————–
\nCF Contribution EBITDA Contribution
\n——————————————————————————–
\nWeighted Rating X Weight = Rating Weighted Rating X Weight = Rating
\n——————————————————————————–
\n1.74 X .56 = .9744 2.00 X .24 = .48
\n——————————————————————————–
\n(3) WEIGHTED CCF\/EBITDA DETERMINATIONS
\n——————————————————————————–
\nCF contribution below, is the BPF weight times the CF weight; EBITDA
\nContribution below, is the BPF weight times the EBITDA
\n——————————————————————————–
\nCF Contribution EBITDA Contribution
\n——————————————————————- ————
\nWeighted Rating X Weight = Rating Weighted Rating X Weight = Rating
\n——————————————————————————–
\n1.74 X .56 = .9744 2.00 X .24 = .48
\n——————————————————————————–
\n(4) YOUR AWARD DETERMINATION (ROUNDED TO NEAREST DOLLAR):
\n——————————————————————————–
\nTARGET AMOUNT X Total Rating = Actual Incentive Award
\n——————————————————————————–
\nTarget Amount X Total Rating = Actual Incentive Award
\n——————————————————————————–
\n$32,500 1.8144 $58,968
\n——————————————————————————–<\/p>\n
Approval: SIGNED ORIGINAL ON FILE IN ARLINGTON OFFICE 1\/1\/98
\n ——————————————-
\n Robert N. Sankovich, Vice President, Human Resources<\/p>\n
——————————————————————————–
\nResponsible Function: Human Resources<\/p>\n
Revalidation Date: July 2001
\n——————————————————————————–<\/p>\n","protected":false},"template":"","meta":{"_acf_changed":false,"_stopmodifiedupdate":true,"_modified_date":"","_cloudinary_featured_overwrite":false},"corporate_contracts_companies":[9167],"corporate_contracts_industries":[9477],"corporate_contracts_types":[9539,9546],"class_list":["post-40109","corporate_contracts","type-corporate_contracts","status-publish","hentry","corporate_contracts_companies-united-defense-industries-inc","corporate_contracts_industries-aerospace__vehicles","corporate_contracts_types-compensation","corporate_contracts_types-compensation__incentive"],"acf":[],"_links":{"self":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts\/40109","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts"}],"about":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/types\/corporate_contracts"}],"wp:attachment":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/media?parent=40109"}],"wp:term":[{"taxonomy":"corporate_contracts_companies","embeddable":true,"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts_companies?post=40109"},{"taxonomy":"corporate_contracts_industries","embeddable":true,"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts_industries?post=40109"},{"taxonomy":"corporate_contracts_types","embeddable":true,"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts_types?post=40109"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}