Attached files
Exhibit 10.01
KEITHLEY INSTRUMENTS, INC.
2010 Annual Incentive Compensation Plan
Introduction
Keithley Instruments, Inc. (the "Company") has established an Annual
Incentive Compensation Plan (the "Plan") as part of a competitive compensation
program for the officers and key management employees of the Employers (as
defined below). This Plan is also referred to as the Short-Term Incentive
Compensation Plan.
Plan Objective
The Company desires to attract, retain and incent talented employees
to enable the Company to meet its financial and business objectives. The
objective of the Plan is to provide an opportunity to those employees whose
performance has a significant impact on the Company's short-term and long-term
profitability to earn annual incentive compensation based on such profitability.
Administration
The Plan is administered by the Compensation and Human Resources
Committee of the Board of Directors of the Company (the "Committee"). The
Committee:
(a) May amend, modify, or discontinue the Plan.
(b) Will designate Plan Participants at the officer level.
(c) Will review and approve the annual performance criteria.
(d) Will approve individual incentive compensation Awards to Participants
who are officers.
(e) Delegates to the Chief Executive Officer of the Company the power to
designate Plan Participants and approve incentive compensation Awards
to Participants who are not officers.
(f) Except as determined by the Committee, a Participant must be employed
on September 30 of the Award Term in order to be entitled to receive an
Award hereunder. Notwithstanding the foregoing, the Committee may
approve a pro rata incentive compensation Award for Participants who
terminate employment prior to September 30 of the Award Term, provided
those Participants were actively at work for the first one hundred and
eighty days in the Award Term and (1) whose employment is terminated
due to death, Disability, Retirement or (2) at the recommendation of
the Chief Executive Officer.
The Committee shall have complete authority to interpret all
provisions of this Plan consistent with law, to prescribe the form of any
instrument evidencing any Award granted or paid under this Plan, to adopt, amend
and rescind general and special rules and regulations for its administration,
and to make all other determinations necessary or advisable for the
administration of this Plan. A majority of the Committee shall constitute a
quorum, and the action of members of the Committee present at any meeting at
which a quorum is present or acts unanimously approved in writing by all
Committee members, shall be the act of the Committee. All acts and decisions of
the Committee with respect to any questions arising in connection with the
administration and interpretation of this Plan, including the severability of
any or all of the provisions hereof, shall be conclusive, final and binding upon
the Company and all present and former Participants and employees and their
respective descendants, successors and assigns. No member of the Committee shall
be liable for any such act or decision made in good faith.
Determination of Individual Incentive Compensation Awards
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Target incentive percentage for each Participant in the Plan will be
established at the beginning of each Award Term and approved by the Committee,
if required, or the Chief Executive Officer in cases where he has been delegated
power by the Committee and will be established with consideration of competitive
market data. Individual target incentive compensation will be calculated at the
end of the Award Term based on performance against the criteria. Individual
incentive compensation may then be further modified based on a Participant's
performance and contributions for the year by up to 25% either plus or minus of
target payout. If a Participant's performance during the Award Term is
determined to be unsatisfactory, the Committee, or the Chief Executive Officer
in the case of non-officers, reserves the right to reduce the Participant's
Award for the Award Term to zero. Individual incentive compensation Awards may
not exceed two (2) times the Target Incentive Award.
Payment Date/Taxes
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Promptly following the Committee's or the Chief Executive Officer's
approval, as appropriate, of the final Awards, the Participants' Employer shall
pay the amount of such Awards to the Participants in cash, subject to all
withholdings and deductions described in the following sentence; provided,
however, that (i) no Award shall be payable to a Participant except as
determined by the Committee or the Chief Executive Officer, as appropriate and
(ii) and Awards earned during the Award Term shall be paid during the period
from October 1st through December 31st of the fiscal year following the Award
Term provided that no valid deferral election has been previously made by the
Participant. Any Award paid to a Participant under this Plan shall be subject to
all applicable foreign, federal, state and local income tax, social security and
other standard withholdings and deductions.
Definitions
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(a) "Award" means cash paid to a Participant under the Plan for the
applicable Award Term in an amount determined in accordance with the Plan.
(b) "Award Term" means the period corresponding with the Company's
fiscal year beginning October 1 through the following September 30.
(c) "Disability" means an approved application for disability benefits
under an Employer's long term disability plan or under any applicable government
program.
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(d) "Employer" means each of the Company and its wholly owned
subsidiaries, as applicable.
(e) "Participant" means any person who is classified by an Employer as
a salaried employee who in the judgment of the Committee or the Chief Executive
Officer, as appropriate occupies a key position in which his efforts may
significantly contribute to the profits or growth of the Company; and provided
that following the end of the Award Term the Committee, or the Chief Executive
Officer, as appropriate, may make one or more discretionary Awards to employees
of an Employer who were not previously designated as Participants. Directors of
an Employer who also are employees of the Company are eligible to participate in
the Plan. The Committee, or the Chief Executive officer in the case of a
non-officer Participant, shall have the power to add Participants at any later
date in the Award Term if individuals subsequently become eligible to
participate in the Plan. Each Participant shall be notified that he is eligible
to receive an Award and the amount of his target Award. All target awards are
based the salary in effect on October 1 of the applicable Award Term, or in the
case of a Participant added to the Plan at a later date his starting salary or
then current salary.
(f) "Retirement" means a termination of employment with the Company or
any Employer at or after age 55 and the completion of 10 or more years of
service with the Company or any Employer.
General Plan Provisions
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(a) No Right of Employment. Neither the adoption or operation of this
Plan, nor any document describing or referring to this Plan, or any part
thereof, shall confer upon any employee any right to continue in the employ of
the Employer, or shall in any way affect the right and power of an Employer to
terminate the employment of any employee at any time with or without assigning a
reason therefor to the same extent as the Company might have done if this Plan
had not been adopted.
(b) Governing Law. The provisions of this Plan shall be governed by
and construed in accordance with the laws of the State of Ohio.
(c) Miscellaneous. Headings are given to the sections of this Plan
solely as a convenience to facilitate reference. Such headings, numbering and
paragraphing shall not in any case be deemed in any way material or relevant to
the construction of this Plan or any provisions thereof. The use of the
masculine gender shall also include within its meaning the feminine. The use of
the singular shall also include within its meaning the plural, and vice versa.
(d) American Jobs Creation Act. It is intended that this Plan be
exempt from the requirements of Section 409A of the Internal Revenue Code, as
enacted by the American Jobs Creation Act.
(e) Limitation on Rights of Participants; No Trust. No trust has been
created by the Company or any Employer for the payment of Awards granted under
this Plan; nor have the Participants been granted any lien on any assets of the
Company or any Employer to secure payment of such benefits. This Plan represents
only an unfunded, unsecured promise to pay by the Company and a Participant
hereunder is a mere unsecured creditor of his Employer.
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(f) Payment to Guardian. If an Award is payable to a minor, to a
person declared incompetent or to a person incapable of handling the disposition
of his property, the Committee may direct payment of such Award to the guardian,
legal representative or person having the care and custody of such minor,
incompetent or person. The Committee may require such proof of incompetency,
minority, incapacity or guardianship as it may deem appropriate prior to the
distribution of such Award. Such distribution shall completely discharge the
Employers from all liability with respect to such Award.
(g) Effective Date. This Plan shall become effective as of October 1,
2009.
Performance Targets
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The performance targets for the Plan are attached as an Addendum to
this document.
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FY2010 Performance Targets
For the fiscal year ending September 30, 2010 ("fiscal year 2010"), Awards may
be paid to Participants in the amounts specified in such Participant's Award
upon the following terms and conditions:
1. For each fiscal quarter in fiscal year 2010, 25% of the amount by which
the Company's Return on Sales (as defined below) exceeds 5% will be
contributed to a bonus pool (the "Bonus Pool") to be divided among
Participants in accordance with the percentage of the Bonus Pool
specified in such Participant's Award.
Return on Sales is defined as follows:* Pre-tax Earnings / Net Sales
* Excluding special items as approved by the Committee in its sole
discretion
2. No monies will be allocated to the Bonus Pool in each quarter of fiscal
year 2010 unless the Company has restored its salaries and 401(k) plan
match to at least the levels in place immediately prior to January 1,
2009. The 5% threshold above assumes full restoration of compensation.
3. As of the end of fiscal year 2010, the aggregate amount accumulated in
the Bonus Pool will be payable to the Participants in accordance with
such Participant's Award and the other terms and conditions of the
Plan. Each quarter the percentage of total bonus will be calculated
based on the current Participants at quarter end.
