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Profits Incentive Program

The Profits Incentive Program is an annual incentive program for management that has proven to be one of the most motivational and rewarding systems in use today. The program can be used successfully in any size company, any industry and during any business cycle. The Profits Incentive Program is the culmination of some of the best programs used by Fortune 100 companies over the last three decades.

Key Program Components

Clear definition of worldwide objectives at the corporate and business unit levels are critical to achieving financial success. Just as critical is the need to identify the key executive positions that will make those objectives a reality. The Profits Incentive Program guides management in clearly defining:

• Revenue Growth expected from each business area
• Expense Control expected in the generation of profits
• Functional objectives required to support the organization
• Executives to be included in the annual incentive plan
• Target and maximum incentives to be used for each participant
• Incentive pools for each business area
• Criteria that ensure deductibility under IRS Tax Code Section 162(m)

Some of the best-designed Business Plans never become reality because management does not fully understand the organization’s objectives and the motivational tools set up to achieve them. The Profits Incentive Program ensures executives know what is expected by supplying them with:

• A complete overview of how the plan works
• Documentation on the financial and functional results needed from each business area
• Materials specific to each participant describing what is required in order to earn individual awards
• Periodic identification of individual performance progress and related award status
• Ongoing identification of the best way to achieve maximum results

The Profits Incentive Program uses a grid / block system to measure business progress and determine executive awards. Key ingredients of the grid system are:

• Finite break points at key financial milestones
• Exact executive awards for each financial milestone achieved
• Financial statements of the Corporation and business units drive the entire program

Actual awards under the Profits Incentive Program are completely straightforward:

• Once financial results are audited it is a simple task to determine awards
• There is no ambiguity or question about what has been achieved or what awards have been earned
• Compiled financial results and resultant awards are easy to present to the Compensation Committee for Board approval
• Awards reinforce Pay for Performance

In order to be successful, it is paramount that the organization drives management to achieve its clearly defined objectives. It is not realistic to believe that management will do everything possible to meet or exceed expectations just because of their loyalty to the organization. To truly motivate executives to achieve desired organizational results, the Profits Incentive Program:

• Sets potential incentive levels that capture the executive’s attention
• Commits substantial monies to be either earned or lost
• Guarantees rewards for given levels of performance
• Pays out exponentially for each successive increase in performance
• Sets up a team mentality where everyone must pull together

Assisting Your Success
• We guide you through the process, step by step
• We ask the questions, you make the decisions on what is right for you
• We prepare all printed materials and communications for your distribution
• We assist you with presentations to your participants and the Compensation Committee of your Board of Directors
• We assist you on Proxy wording
• If desired, we can also prepare periodic updates for you and your participants on actual progress during the plan year