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8-K - KIMBALL INTERNATIONAL, INC. FORM 8-K - KIMBALL INTERNATIONAL INC | form8k102510.htm |
Exhibit 10.1
DESCRIPTION OF THE KIMBALL
INTERNATIONAL, INC.
2010 PROFIT SHARING INCENTIVE BONUS PLAN
Background. The Board of Directors
(the "Board") of Kimball International, Inc. (the "Company") believes
that the long-term success of your Company depends, in part, on its ability to
recruit and retain outstanding individuals as employees and to furnish these
employees maximum incentive to improve operations and increase profits. The
Board also believes it is important to align compensation of officers and
salaried employees with the common interests of Share Owners of the Company.
In accordance with this belief, the Board, upon recommendation of the
Compensation and Governance Committee ("Committee") of the Board (comprised of
independent outside directors), unanimously adopted and recommended for Share
Owner approval, the Kimball International, Inc. 2010 Profit Sharing Incentive
Bonus Plan (the "Plan"). On October 19, 2010, the Share Owners of the
Company approved the plan. The profit sharing framework of this Plan has been in
place since prior to the Company becoming publicly traded in 1976. The Plan
includes profit determinations at three levels within the Company: (1) Worldwide
for Company-wide performance ("Worldwide"); (2) at a Group level for certain
combinations of Business Units ("Group"); and (3) at a Business Unit level for
the performance of designated operations within the Company ("Business Unit").
All executive officers and other eligible employees participate at the
Worldwide, Group, or Business Unit level, or a combination thereof.
Share Owner approval of the Plan was sought to qualify the awards under the Plan
as "performance-based compensation" under Section 162(m) of the Internal Revenue
Code. Section 162(m) disallows a deduction for certain compensation paid in
excess of $1 million to the executive officers listed in the Summary
Compensation Table in the Company's proxy statement, but only if employed as of
the end of the fiscal year ("Named Executive Officers"). Performance-based
compensation, however, is fully deductible by the Company if the programs are
approved by Share Owners and meet certain other requirements.
Goal. The goal of the Plan is to link an employee's compensation
with the long-term financial success of the Company. The intent is to encourage
participants to think, act and be rewarded like owners, and to seek out and
undertake initiatives that continuously improve the long-term performance of the
Company.
Eligibility. Executive officers and full-time salaried employees
of the Company, except those covered under commission compensation programs, are
eligible to participate in the Plan ("Participants").
Bonus Criteria. The Plan measures profitability in terms of "economic
profit", generally equal to net income less the cost of capital. New capital
expenditures are not included in computing the cost of capital for an
appropriate period of time to encourage needed capital investments. The
Committee must approve the profitability tiers ("Targets") within the first 25%
of the period of service to which the Targets relate, but not later than 90 days
after the commencement of that period ("Relevant Time Period"). The Committee,
within the Relevant Time Period, may make adjustments for non-operating income
and loss and other profit-computation elements as it deems appropriate to
provide optimal incentives for eligible employees. If other adjustments are
necessary beyond the Relevant Time Period, the Named Executive Officers will not
be eligible to receive any bonus resulting from such adjustments.
Bonus Amounts. The Plan establishes potential bonus amounts as a
range of percentages of the Participant's salary, with the bonus percentage
increasing with higher levels of profitability. The Plan also establishes
different bonus percentage ranges across several Participant categories, setting
higher bonus-percentage ranges for Participants who, by virtue of their
responsibilities, are expected to have a greater effect on the Company's
profitability.
At the highest responsibility levels, Participants may earn bonuses of up to 100
percent of base salary. The Plan is designed so that Participants will achieve
maximum bonuses only if the Company achieves economic profitability near the top
quartile of leading public companies and/or its competitors.
A Participant's total bonus under the Plan may not exceed $1 million for any
fiscal year.
Administration. For a particular
fiscal year, the Committee must approve the Targets, profit-computation
adjustments, and any other conditions at the Worldwide and Group profitability
levels within the Relevant Time Period. Company management will determine the
comparable features for each Business Unit profitability level.
At the end of each fiscal year, but before Plan bonuses may be paid, the
Committee must certify in writing that Targets and other conditions have been
satisfied. The Committee does not have the discretion to increase the amount of
any bonus for the Named Executive Officers.
The Board may amend or terminate the Plan effective for future fiscal years. The
Board will not, however, amend the Plan without Share Owner approval if such
approval is required to comply with Section 162(m) of the Internal Revenue Code
or other applicable law or to comply with applicable stock exchange
requirements.
Bonus Payments. If a Participant's bonus for the fiscal year does not
exceed $2,000, the bonus will be paid in a single sum during the following
August. Bonuses exceeding that amount will be paid during the following fiscal
year in five cash installments - 50% in the following August and 12.5% in each
of the following September, January, April, and June.
If a Participant's employment is terminated before a scheduled payment date, the
former employee will not be entitled to receive that bonus payment or any
subsequent bonus payment, unless the Participant's termination was caused by
retirement after attaining the country-specific retirement age (62 in the U.S.),
death, or permanent disability, in which case, that Participant (or beneficiary,
in the event of the participant's death) will be entitled to receive all bonus
payments for the previous fiscal year and a pro-rata share for the current
fiscal year, all to be paid in full within 2 1/2 months after the end of the
Company's fiscal year.