Performance Unit Award Summary
I. Introduction
The
purpose of the Exide Technologies Annual Long-term Performance
Program (the “Program”), established pursuant to the
Exide Technologies 2004 Stock Incentive Plan (the “Stock
Incentive Plan”) is to advance the interests of Exide
Technologies, (the “Company”) and to increase
shareholder value by providing key executives of the Company,
consistent with the Company’s compensation philosophy, with
long term incentives as a reward for past performance, as a
motivation for future performance, and as a retention tool for
continued employment. The Program is designed to motivate and
reward key executives for accomplishing the strategic objectives of
the organization, which include:
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Creating
shareholder value
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Attainment of
Company operating earnings objectives
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Effective use of
Company Assets
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II.
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Type of
Program and Award Vehicles
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The
Program is a single vehicle, multi-year performance program, with
incentive award opportunities defined as a specific cash dollar
award target and incorporates a Performance Unit cash settled award
as its primary incentive vehicle.
III. Payment of
Awards
No
portion of the award is earned at the beginning of the performance
period. The entire award may be earned at the end of the
performance period, based on attainment of established performance
goals and continuation of employment. For example, options may vest
over time, but cash awards will only be payable upon the attainment
of certain goals. The goals for the cash portion of the 2006
Program are listed below.
IV. Performance
Period
The
Program is a multi-year performance Program. Each year, a new
multi-year program cycle will commence. The initial performance
period will run for thirty months (e.g., the 2006 Program would run
from December 1, 2005 through March 31, 2008). Subsequent
performance periods are contemplated to run for three
years.
V. Incentive Award
Opportunity
Each
year, the CEO will recommend total award opportunities, but not
Performance Targets, for each eligible participant as agreed to by
the Compensation Committee (the “Committee”) or, for
“Key Employees” as defined in the Compensation
Committee Charter, by the Board of Directors. These recommendations
are based on the Company’s compensation philosophy. The
Committee, or, where applicable, the Board of Directors, shall have
discretion to reject, adopt, or amend and adopt the recommendations
of the CEO or otherwise set the award opportunities.
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VI.
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Performance
Measures and Performance Target Levels for Cash Award Paid at End
of Performance Period
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The
CEO will recommend to the Committee for approval at least two
performance measures for each performance period, which will be key
strategic measures tied to the long-term performance of the
Company. Measures and Targets selected will be in effect for the
entire performance period unless amended by the Committee due to
special situations. Each three-year performance program may have
new metrics and goals.
The
metrics are tied to key strategic and operational performance over
the period. For the performance period ending March 31, 2008,
the metrics will be:
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Adjusted EBITDA
(Earnings Before Interest, Taxes, Depreciation, Amortization and
Restructuring)
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If the
level of achievement with respect to each metric is the same, each
metric will provide 50% of the total payable cash award. However,
if the level of achievement is different for each metric, the
amount earned with respect to each metric will equal a larger or
smaller percentage of the total payable cash award.
Performance Targets for each Performance Measure
will be recommended by the CEO and approved by the Compensation
Committee on an annual basis for each performance period. The
Performance Target setting process will be conducted in conjunction
with both the Company’s profit planning process and strategic
planning process.
Target
and Threshold
