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Exhibit 10.5 MANAGEMENT INCENTIVE PLAN DOCUMENT
Fiscal Year 2009 Plan Name and Effective Date The
name of this Plan is the ADC Telecommunications, Inc. Management
Incentive Plan. The Plan is effective from November 1, 2008
through September 30, 2009. Purpose The purpose
of the Plan is to provide, with full regard to the protection of
shareholder’s investments, a direct financial incentive for
eligible managers to make a significant contribution to ADC’s
established annual goals. Eligibility Eligibility for
Fiscal Year 2009 is limited to full or part-time regular employees
in the U.S. and in such other countries where ADC has specifically
notified employees of eligibility for participation in the Plan.
Eligibility for participation in this Plan is limited to such
employees who hold executive officer and certain management
positions reporting to the Chief Executive Officer. The CEO does
not participate in the Plan. In order to be eligible, an employee
cannot participate in any other ADC incentive plan, except as
approved by the Compensation Committee of the Board of Directors,
and must be employed in an eligible position on or before
August 1, 2009. The MIP is intended to encourage and reward
both excellence of performance and employee retention. Accordingly,
a participant must be an employee of ADC on the day of payment of
incentive, in addition to satisfying all other eligibility
requirements as outlined in the Plan, to be eligible to receive an
incentive award. Timing of Payment Payments that
become due under this Plan are made as soon as administratively
feasible following the close of ADC’s fiscal year, but within
seventy-five days of that event, generally in December. All
payments are subject to appropriate withholdings. Plan
Goals The Plan reinforces the key goals that support
ADC’s long-term strategic plans. The key factors in
ADC’s FY09 corporate success are Pro Forma Operating Income
and Net Sales. These factors are the same for ADC’s operating
units: Global Connectivity Solutions (GCS), Network Solutions, and
ADC Professional Services (APS). Accounting methodology changes and
extraordinary events such as acquisitions, divestitures, etc. may
dictate corresponding goal modifications during the plan year.
Additionally, a portion of each participant’s MIP is based
upon individual contribution. Following is a description of the
Plan’s financial components:
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Plan Goal
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Definition
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Pro Forma Operating Income
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Net Sales less all relevant expenses incurred to
produce the products or deliver services. Expenses include direct
material and labor costs as well as regional and Business Unit
costs, including engineering, sales & marketing expenses, and
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Plan Goal
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Definition
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corporate overhead costs. Pro Forma Operating
Income does not include interest income, interest expense, income
tax or other non-operating income. It also excludes restructuring
and other one-time expenses that are not reflective of the ongoing
business.
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Corporate overhead costs not directly attributable
to the Business Unit are assessed as a shared service charge set at
a fixed percentage of Revenue. ADC-level Pro Forma Operating Income
will reflect absorption of ALL corporate expenses including
variances above or below the level of the shared service
charge.
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Net Sales
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The amount ADC can recognize in accordance with
Generally Accepted Accounting Principles (GAAP) for goods
shipped or services provided to third-party customers, net of
returns received and discounts.
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NOTE: For the Business Units, Net Sales, and Pro-Forma Operating
Income are measured on Plan foreign exchange rates. Goal
Weightings Executives participating in the Plan will have
the following business/corporate weightings:
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75% of Total Award
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Business
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Net Sales
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Weight
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OI Metric
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Metric
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BU Leader
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50% BU
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55
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%
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20
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%
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50% ADC
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55
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%
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20
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%
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Corporate Function Leader
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100% ADC
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55
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%
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20
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%
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For purposes of this Plan, Global Connectivity Solutions,
Network Solutions and APS will be treated as separate Business
Units. Individual Performance Each participant will
have twenty-five percent (25%) of their target MIP award tied to
one (1) to three (3) individual goals mutually agreed
upon by the participant and the CEO. Achievement of the agreed-upon
goals yields a 100% award payout. The individual performance
component does not have a performance gate, it is based on the
employee’s percent of achievement. An additional
overachievement award may be made as recommended by the CEO at his
sole discretion to the Compensation Committee. The maximum
individual performance award is 50% of the participant’s
total target MIP award. Modifications may be made to individual
goals before August 1, 2009. Any changes made to individual
goals require documentation and approval of the CEO, Chief
Financial Officer and Chief Administrative Officer. Undocumented
modifications of individual plans will not be honored for award
payment. Performance Gates
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To ensure protection of shareholder interest, no payment will be
provided as the result of any ADC-wide financial performance factor
unless ADC achieves its threshold Pro-Forma Operating Income for
the year. Similarly, no payment will be provided as the
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