HAWK CORPORATION
ANNUAL INCENTIVE COMPENSATION
PLAN
1.
Purpose
The Hawk
Corporation Annual Incentive Compensation Plan (the
“Plan”) is designed to attract, retain, and reward
highly-qualified executives who are important to the
Company’s success and to provide incentives relating directly
to the financial performance and long-term growth of the
Company.
2.
Definitions
(a) “Award”
means an incentive award entitling an Executive Officer to receive
performance-based incentive compensation based on reference to
specified levels of, growth in, or ratios involving, one or more
Performance Goals, or any other amounts determined by the
Committee, pursuant to terms and conditions of the Plan.
(b) “Board”
means the Board of Directors of Hawk Corporation.
(c) “Code”
means the Internal Revenue Code of 1986, as amended.
(d) “Committee”
means the Compensation Committee of the Board, or such other
committee of the Board that is designated by the Board to
administer the Plan, in compliance with requirements of Section
162(m) of the Code.
(e) “Company”
means Hawk Corporation and any other corporation in which Hawk
Corporation controls, directly or indirectly fifty percent (50%) or
more of the combined voting power of all classes of voting
securities.
(f) “EBITDA”
means the Company’s earnings before interest, taxes,
depreciation and amortization (before consideration of the
incentive awards paid under this Plan and under a similar plan for
all salaried and eligible hourly employees) for each Plan
Year.
(g) “Executive
Officer” means any officer of the Company subject to the
reporting requirements of Section 16 of the Securities Exchange Act
of 1934, as amended (“Exchange Act”).
(h) “Participant”
means an Executive Officer of the Company.
(i) “Performance
Goal” means the corporate performance goals considered by the
Committee that may include the attainment of one or more of the
following: EBITDA, earnings per share from continuing operations,
internal growth, new business awards, new product development,
economic value added, operating income, revenues, gross margin,
return on operating assets, return on equity, stock price
appreciation, total stockholder return (measured in terms of stock
price appreciation and dividend growth), cost control, acquisitions
or divestitures, customer relationships, or other items deemed
material to the short or long term success of the
Company.
(j) “Plan”
means the Hawk Corporation Annual Incentive Compensation
Plan.
(k) “Plan
Year” means a period beginning on January 1 of each calendar
year and continuing through December 31 of such calendar
year.
(l) “Section
409A” means Section 409A of the Code and the U.S. Treasury
Regulations and other interpretive guidance issued
thereunder.
3.
Eligibility
Only Executive
Officers are eligible to participate in the Plan.
4.
Administration
The Committee
shall administer the Plan. The Committee will approve
the Performance Goals, participation, target Awards, actual Awards,
timing of payment and other action necessary to the administration
of the Plan. The Committee’s decisions shall be
final, conclusive, and binding upon all persons. The
provisions of the Plan are intended to ensure that all Awards
granted hereunder to any Participant who is or may be a
“covered employee” (within the meaning of Section
162(m)(3) of the Code) qualify for the Section 162(m) exception for
performance-based compensation, and all Awards and the Plan shall
be interpreted and operated consistent with that
intention. The Committee has the authority to interpret
the Plan and the Awards, to proscribe, amend and rescind rules and
regulation relating to the Plan and the Awards and to make all
other determinations deemed necessary or advisable for the
administration of the Plan and the Awards, including anything
necessary to comply with the requirements of Section 162(m) of the
Code.
The
Committee’s determinations under the Plan need not be uniform
and may be made by it selectively among persons who receive, or are
eligible to receive, awards under the Plan, whether or not such
persons are similarly situated. With limiting the
generality of the foregoing, the Committee shall be entitled, among
other things, to make nonuniform and selective determinations and
to establish nonuniform and selective performance goals,
performance criteria and the weightings thereof.
5.
Awards
The Committee
may make Awards to Participants with respect to each Plan Year,
subject to the terms and conditions set forth in the
Plan.
Establishment of Awards and Performance
Goals. Within
90 days after the commencement of each Plan Year (or such other
date as required by Section 162(m) of the Code and the regulations
promulgated thereunder), the Committee shall, in writing, select
the Participants for such Plan Year and set the Performance Goals
and target Award (dollar amounts calculated by reference to such
Performance Goals) for each Participant for such Plan
Year. No Participant will be assigned an Award greater
than $4,000,000 for any Plan Year. The method used to
determine the Award shall be stated in terms of objective formulas
that preclude discretion to increase the amount of the Award that
would otherwise be due upon the attainment of the Performance
Goals. No provision in this Plan shall preclude the
Committee from exercising negative discretion to reduce any Award
hereunder.
A
Participant’s Award opportunity in any Plan Year is the
maximum amount that the Participant may receive under the Plan in
that Plan Year. Whether or not a Participant will
receive all or any portion of his Award will be based on the
achievement of Performance Goals established for that Participant
for the Plan Year and on the achievement of any individual
goals.
Award
Determination. At the end of the Plan Year, the Committee shall
certify, in writing, prior to the payment of any Award, whether and
to what extent the Performance Goals have been achieved for the
Plan Year. Notwithstanding the attainment of the
Performance Goal, the Committee shall have the discretion to reduce
or eliminate the Award amount based upon the performance of the
Company or the individual goals of the Participant or such other
factors as the Committee determines in its
discretion. The Committee may not increase the amount of
such Award or waive the achievement of the Performance
Goal.
Payments under
this Plan shall be made no later than March 15 of the calendar year
following the end of the applicable calendar year in which the
amounts are earned and accrued. Payment of any Award
under the Plan shall be made in cash.
The Committee
shall have the right to allow Participants to elect to defer up to
100% o
