EX-10.19 3 a05-13922_1ex10d19.htm EX-10.19

 

 

 

Section A

 

Introduction and Principles

 

 

 

The FY’2006 Executive Incentive Plan (EIP) provides an opportunity for executives of Cintas to share in the company’s success. Year-end bonus awards are paid if performance measures are met or exceeded. Awards are tied directly to the annual performance of Cintas and its divisions.

 

 

Please note that the EIP is not just an individual incentive plan but rather, the recognition of both individual and organizational success.

 

 

Every executive will have at least 50% of their targeted incentive bonus based on the relevant Corporate measure (profit as a % of sales, % of revenue growth or EPS growth. As such, we all “succeed or fail as One Team”.

 

 

Plan Participation

 

 

This plan applies to all Cintas Officers.

 

 

Effective Date

 

 

This Plan year is effective from June 1, 2005 until the end of our fiscal year, May 31, 2006 and it supersedes all prior EIP or officer compensation plans. Cintas reserves the right to amend and/or adjust this plan based on the strategic needs of our business. Communication to our participating partners will be made in a timely fashion.

 

Section B

 

Plan Design / Measures, & Objectives

 

 

 

Plan Mix

 

 

The FY’2006 EIP introduces the concept of “plan mix”. Each participating officer will share in the success of Cintas based on three (3) different compensation vehicles; base salary, incentive bonuses, and long term incentives (i.e. stock and stock options).

 

 

Operations Officers will be eligible for cash incentive bonuses tied to the following; a business unit percent of Profit as a % of Sales objective and a business unit percent of Revenue Growth objective. These objectives will be linked to the Operations Officers’ individual level of responsibility. Additionally, Operations Officers will be eligible for long term incentives (LTI) based on the achievement of the combination of % of Sales Growth and Profit as a % of Sales in their areas of responsibility (Cintas Rule 35 calculation) and Cintas Earnings per Share (EPS) Growth.

 

 

Staff Officers will be eligible for cash incentive bonuses tied to both a Cintas EPS Growth, and the Individual Goals linked to the Staff Officer’s individual area of responsibility. Additionally, Staff Officers will be eligible for long term incentives (LTI) based the same formula as their annual cash incentive bonus.

 

 

For All Officers covered by the FY’2006 EIP, an officer could earn 0% up to a maximum of 200% of the cash bonus award depending on their overall performance in their two cash incentive bonus objectives. Additionally, depending on the results of the two LTI objectives, an officer could earn 0% LTI up to a maximum of 200% of the LTI award if that performance target is achieved.

 

 

 

Target Incentive Bonus

 

 

The “target incentive bonus” is the total cash incentive amount earned at the target objectives. Total Targeted Cash (TTC) represents an individuals base salary plus targeted cash incentives. Target bonus percentages may vary by position/level.

 

 

 

Pay-Out Calculation for Cash Incentives

 

 

For each measure, after the planned threshold is achieved, pay-out for that measure begins. If the “target” level is achieved, 100% of the bonus amount for that measure is earned, and if you achieve the level of maximum payout, 200% of the targeted award is earned.

 

 

2


 

 

 

 

Basis of Measures & Payout Schedule

 

 

The following charts describe the Basis of Measures, Objectives, and Payout Schedules for Corporate Staff and Division Officers Annual Bonus and LTI Awards.

 

 

 

Operations Officers

 

 

Cash Incentive Bonus

 

 

Business Unit Profit as a     % of Sales

 

 

Weighting

 

Level of Achievement

 

Bonus Payout %

 

 

50%

 

Below Threshold

 

0%

 

 

 

 

Threshold to Target

 

50% of target and then straight line bonus payout based on % of profit growth achieved

 

 

 

 

Target

 

100.00%

 

 

 

 

Target to Maximum

 

Accelerated straight line bonus payout based on % of profit growth achieved

 

 

 

 

Maximum

 

200.00%

 

 

Business Unit Percent of Revenue Growth

 

 

Weighting

 

Level of Achievement

 

Bonus Payout %

 

 

50%

 

Below Threshold

 

0%

 

 

 

 

Threshold to Target

 

50% of target and then straight line bonus payout based on % of revenue growth achieved

 

 

 

 

Target

 

100.00%

 

 

 

 

Target to Maximum

 

Accelerated straight line bonus payout based on% of revenue growth achieved

 

 

 

 

Maximum

 

200.00%

 

 

LTI Award

 

 

Operational Goals (Combination of Revenue Growth % Plus Profit %) —
Rule 35 Calculation

 

 

Weighting

 

Level of Achievement

 

LTI Award%

 

 

50%

 

Below Threshold

 

0%

 

 

 

 

Threshold to Target

 

50% of target and then predetermined levels based on hitting performance targets

 

 

 

 

Target

 

100.00%

 

 

 

 

Target to Maximum

 

Predetermined levels based on hitting performance targets

 

 

 

 

Maximum

 

200.00%

 

 

Cintas EPS

 

 

Weighting

 

Level of Achievement

 

LTI Award%

 

 

50%

 

Below Threshold

 

0%

 

 

 

 

Threshold to Target

 

50% of target and then predetermined levels based on hitting performance targets

 

 

 

 

Target

 

100.00%

 

 

 

 

Target to Maximum

 

Predetermined levels based on hitting performance targets

 

 

 

 

Maximum

 

200.00%

 

 

3


 

 

 

 

Staff Officers

 

 

Cash Incentive Bonus

 

 

Individual Goals

 

 

Weighting

 

Level of Achievement

 

Bonus Payout %

 

 

50%

 

Does Not Meet Goals

 

0%

 

 

 

 

Meets Most Goals

 

50%

 

 

 

 

Meets Goals

 

100.00%

 

 

 

 

Exceeds Goals

 

150.00%

 

 

 

 

Outstanding Achievement

 

200.00%

 

 

Cintas EPS

 

 

Weighting

 

Level of Achievement

 

Bonus Payout %

 

 

50%

 

Below Threshold

 

0%

 

 

 

 

Threshold to Target

 

50% at threshold and then predetermined levels for hitting EPS Performance Targets

 

 

 

 

Target

 

100.00%

 

 

 

 

Target to Maximum

 

Predetermined levels for hitting EPS Performance Targets

 

 

 

 

Maximum

 

200.00%

 

 

LTI Award

 

 

Individual Goals

 

 

Weighting

 

Level of Achievement

 

LTI Award %

 

 

50%

 

Does Not Meet

 

0%

 

 

 

 

Meets Most Goals

 

50% and then predetermined levels based on hitting performance targets

 

 

 

 

Meets Goals

 

100.00%

 

 

 

 

Exceeds Goals

 

Predetermined levels based on hitting performance targets

 

 

 

 

Outstanding Achievment

 

200.00%

 

 

Cintas EPS

 

 

Weighting

 

Level of Achievement

 

LTI Award %

 

 

50%

 

Below Threshold

 

0%

 

 

 

 

Threshold to Target

 

50% and then predetermined levels based on hitting performance targets

 

 

 

 

Target

 

100.00%

 

 

 

 

Target to Maximum

 

Predetermined levels based on hitting performance targets

 

 

 

 

Maximum

 

200.00%

 

Section C

 

Calculation of Bonus Payments