Exhibit 10.2
AWARD FORMULA FOR
2009
LEGGETT & PLATT,
INCORPORATED
2009 KEY OFFICERS INCENTIVE
PLAN
The 2009 Key Officers Incentive Plan
(“ Plan ”) provides cash awards to participants
based on the Company’s operating results for the prior year.
There are two award formulas under the Plan, one for Corporate
participants and one for Profit Center participants.
Under both formulas, a
participant’s award is calculated by reference to a
percentage of the participant’s annual salary at the end of
the year (the “ target percentage ”). The award
formula and each participant’s target percentage are
determined by the Plan Committee no later than 90 days after the
beginning of each year or before 25% of the performance period has
elapsed.
Participants in the Plan are the
executive officers of the Company. The Company has a separate Key
Management Incentive Plan for other employees. Awards under the Key
Management Incentive Plan are calculated in substantially the same
manner as awards under the Plan.
For 2009, awards under the Plan will
be determined by achievement of the following performance
objectives. In addition, awards will be made based on the
achievement of Individual Performance Goals, which will be
established separately from this Plan and will be wholly
independent of awards under this Plan.
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Performance
Objectives
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Relative
Weight
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Corporate Participants
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Return on
Capital Employed (ROCE)
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60
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%
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Cash
Flow
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20
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%
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Individual
Performance Goals*
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20
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%
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Profit Center Participants
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Return on
Capital Employed (ROCE)
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40
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%
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Budgeted
Earnings
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40
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%
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Individual
Performance Goals*
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20
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%
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*
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This portion
of the award is established outside the Plan.
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Award Formula for Corporate
Participants
Awards for Corporate participants
are determined by the Company’s aggregate 2009 financial
results. The performance objectives are calculated as follows.
Financial results from acquisitions completed during the year are
excluded from the calculations.
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ROCE =
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Net PP&E and Working
Capital 1,2
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1
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We use a
quarterly average for PP&E and Working Capital
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2
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Working
Capital, excluding cash and current maturities of long-term debt,
as presented on the December 31, 2008 and December 31,
2009 Company’s Consolidated Balance Sheets
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Cash
Flow =
EBITDA – Capital Expenditures +/- Change in Working
Capital 1
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1
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Change in Working Capital,
excluding cash and current maturities of long-term debt, from
December 31, 2008 to December 31, 2009, as reflected on
the Company’s Consolidated Balance Sheets
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The Committee shall adjust all items of gain,
loss or expense for the fiscal year determined to be
(i) extraordinary or unusual in nature, (ii) infrequent
in occurrence, (iii) related to the disposal of a segment of a
business, or (iv) related to a change in accounting principle,
all as determined in accordance with standards established under
Generally Accepted Accounting Principles.
Achievement targets and payout
percentages for Corporate participants are set forth below. No
awards are paid for ROCE achievement below 14.1% and Cash Flow
below $310M. The payout is capped at 150%. The payout will be
interpolated for achievement levels falling between those set out
in the schedule.
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2009
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Corporate Payout
Schedule
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