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MANAGEMENT INCENTIVE PLAN

Equity Incentive Plan Agreement

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This Equity Incentive Plan Agreement involves

ADC TELECOMMUNICATIONS INC

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Title: MANAGEMENT INCENTIVE PLAN
Governing Law: Minnesota     Date: 12/22/2008
Industry: Communications Equipment     Sector: Technology

MANAGEMENT INCENTIVE PLAN, Parties: adc telecommunications inc
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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:

 

 

 

Plan Goal

 

Definition

Pro Forma Operating Income

 

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

 

Definition

 

 

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.

 

 

 

 

 

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.

 

 

 

Net Sales

 

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.

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:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

75% of Total Award

 

 

Business

 

 

 

 

 

Net Sales

 

 

Weight

 

OI Metric

 

Metric

BU Leader

 

50% BU

 

 

55

%

 

 

20

%

 

 

50% ADC

 

 

55

%

 

 

20

%

 

 

 

 

 

 

 

 

 

 

 

 

 

Corporate Function Leader

 

100% ADC

 

 

55

%

 

 

20

%

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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