Rayovac 2008 Annual Report Download - page 81

Table of Contents
Index to Financial Statements
Management Incentive Plan
Each of our named executive officers, as well as other management personnel of the Company, participate in the Company’s annual performance-based
bonus program referred to as the Management Incentive Plan (“MIP”), which is designed to compensate executives and other managers based on achievement of
annual corporate, business segment and/or divisional goals. Under the MIP, each participant has the opportunity to earn a threshold, target or maximum bonus
amount that is contingent upon achieving the performance goals set by the Compensation Committee and reviewed by the Board of Directors. The particular
performance goals are typically established during the first quarter of the relevant fiscal year and reflect the Compensation Committee’s then-current views of the
critical indicators of success of the Company in light of the Company’s then-current primary business priorities.
The specific performance targets with respect to each of these performance goals are set by the Compensation Committee based on to the Company’s
annual operating plan, as approved by our Board of Directors. Consistent with the Company’s operation of each of its three business segments, Global Batteries
and Personal Care, Home and Garden and Global Pet Supplies, as stand alone business segments, the annual operating plan includes performance targets for the
Company as a whole as well as for each business segment. In the case of divisional managers within those business segments, divisional level performance
targets have also been established.
For Fiscal 2008, the Compensation Committee established adjusted EBITDA and cash flow as the performance goals of the Company, weighted at 50%
each, after considering the annual operating plan, the cash requirements imposed by the interest due with respect to the Company’s outstanding indebtedness, the
financial condition of the Company and the Company’s publicly stated intention to explore possible strategic alternatives, including the divesting of assets. For
purposes of the 2008 MIP, adjusted EBITDA was measured as earnings (defined as operating income (loss) plus other income less other expenses) before
interest, taxes, depreciation and amortization and excluding restructuring and other one-time charges. In order to emphasize management’s and the Board of
Directors’ intention to minimize restructuring expenditures going forward and ensure that senior management is fully focused on the total cash costs of such
expenditures, the Compensation Committee took these factors into account to adjust how cash flow was measured for the 2008 MIP. For the 2008 MIP, cash
flow was measured as adjusted EBITDA (as described above) plus or minus changes in current and long term assets and liabilities, less payments for taxes, cash
restructuring and interest (defined as the variance between actual and planned interest payments), but excluding proceeds from dispositions and payments for
financing fees (if incurred). The Compensation Committee retained the ability to modify the measurement criteria if, in its view, the circumstances so warrant.
For Fiscal 2008 the performance targets for each of Mr. Hussey and Mr. Genito were those established for the Company as a whole. With respect to
Mr. Lumley, Mr. Heil and Ms. Yoder, the Fiscal 2008 MIP performance targets were based 80% on the performance targets established for their respective
business segments and 20% on the performance targets established for the Company as a whole.
The target MIP award levels achievable by each of the named executive officers (that is to say, the amount achievable if 100% of the applicable
performance targets are met) are as set forth in each such named executive officer’s employment agreement, expressed as a percentage of annual base salary. For
purposes of the 2008 MIP, the target award percentages for the named executive officers were as follows:
Named Executive
Target as %
of Annual Base
Kent J. Hussey 125%
Anthony L. Genito 100%
David R. Lumley 100%
John A. Heil 100%
Amy J. Yoder 100%
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Source: Spectrum Brands, Inc, 10-K, December 10, 2008