Attached files
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8-K - FORM 8K - LUFKIN INDUSTRIES INC | form8k.htm |
Exhibit
10.1
LUFKIN
INDUSTRIES, INC.
2010
VARIABLE COMPENSATION PLAN
Policy:
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A
Variable Compensation Plan for 2010 has been established and approved for
designated participants to encourage sustained high performance and
continued employment with the Company. In order for the 2010 Variable
Compensation Plan to be operational, the Company's performance must clear
established hurdles. The triggering mechanism for the plan is a percent of
shareholders' equity goal. To maintain a 9% return on average equity from
operational earnings before Pension and LIFO would have to be $61.1
million pretax profits from operations and $39.1 million after tax profits
from operations (excluding "other
income").
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Individual
Participation:
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Anticipating
that the Company's performance objectives are attained in 2010 for
purposes of this Plan, designated individuals may participate by achieving
their established divisional, departmental and personal goals. Each
participant will be provided with an Individual Incentive Plan, which
describes their variable compensation opportunities and the corresponding
goals that must be obtained.
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Establishment
of Goals:
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The
establishment of an individual's goals should be consistent with the
Company's overall budget and business plan for 2010. Additionally, every
goal established for an individual will be illustrated as having three
separate attainment levels for purposes of measurement. The three
attainment levels will be identified as: (1) Threshold, (2) Target and (3)
Maximum.
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Individual
Opportunity:
Opportunity
as a % of Base Salary
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Threshold
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Target
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Maximum
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Tier
I
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36
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77
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154
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Tier
II
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30
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50
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100
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Tier
III
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20
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30
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41
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Tier
IV
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15
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25
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35
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Tier
V
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8
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15
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22
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Measurement
of Objectives:
Individual
and unit measurements should:
1.
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Relate
to the goals and objectives of the
Company.
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2.
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Be
perceived as equitable and valid measures of job
performance.
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3.
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Quantifiable
to the extent possible.
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Awards
to Plan Participants:
Awards to
participants of this plan will be made based upon:
1.
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The
level of accomplishment of assigned goals and
objectives.
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2.
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Overall
contribution to the Company's
performance.
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3.
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Consistency
within the framework of the Plan.
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4.
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Extraordinary
financial items (both favorable and unfavorable) will not be considered as
part of performance information.
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5.
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President
reserves the right, subject to approval from the Compensation Committee,
to reduce or forfeit any participant's award if he believes the individual
or unit's performance does not truly reflect the award generated by this
plan.
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6.
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President
may recommend, with the approval of the Compensation Committee, an
incentive award to a participant or other key employee if, in his opinion,
the calculated award does not truly reflect the participant's contribution
to the company.
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Plan
Administration:
1.
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Participation
in the Variable Compensation Plan does not constitute an employment
contract.
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2.
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Participation
in the Variable Compensation Plan does not guarantee participation in any
subsequent year.
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3.
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All
participants are advised that their participation in this plan must be
held strictly confidential.
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