Exhibit 10.1
Description of the Material Terms of Rocky Brands, Inc.’s
Bonus Plan for the Fiscal Year Ending December 31, 2007
Messrs. Brooks, Sharp, McDonald and Morrison (the “Executive Officers”) are eligible to
receive cash bonuses under the Company’s Bonus Plan for the fiscal year ending December 31, 2007
(the “2007 Bonus Plan”), based upon the attainment of certain Adjusted Operating Income targets.
For purposes of the 2007 Bonus Plan, Adjusted Operating Income is calculated as the Company’s
operating income excluding (i) operating income attributable to military sales, and (ii) bonuses
payable under the 2007 Bonus Plan. If the Adjusted Operating Income performance targets are met,
the Executive Officers will receive cash bonuses based on a percentage of their base salaries in
accordance with the table below (with bonus amounts to be interpolated between the performance
levels):
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Payout as a Percentage of Base Salary |
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Threshold |
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Target |
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Goal |
Mike Brooks |
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0 |
% |
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75 |
% |
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175 |
% |
Chairman of the Board and
Chief Executive Officer |
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David Sharp |
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0 |
% |
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60 |
% |
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140 |
% |
President and Chief Operating Officer |
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James E. McDonald |
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0 |
% |
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50 |
% |
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115 |
% |
Executive Vice President and
Chief Financial Officer |
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Thomas R. Morrison |
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% |
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30 |
% |
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60 |
% |
Senior Vice President of Wholesale Sales |
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No payment will be made for performance below the Threshold amount of Adjusted Operating
Income, and no payment will be required for performance above the Goal amount of Adjusted Operating
Income; provided, however, that to the extent Adjusted Operating Income exceeds the
Goal amount for fiscal 2007, 10% of all Adjusted Operating Income in excess of the Goal amount will
go into a pool to be distributed to any or all plan participants, including, but not limited to,
the Executive Officers of the Company, at the discretion of the Compensation Committee.
In addition to the foregoing, assuming that at least the Threshold amount of Adjusted
Operating Income is attained, 10% of any operating income attributable to military sales during
fiscal 2007 will go into a pool to be distributed, at the discretion of the Compensation Committee
of the Board, to any or all of the plan participants, including, but not limited to, the Executive
Officers of the Company, at the discretion of the Compensation Committee.
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If Mr. Brooks becomes eligible to receive a cash bonus under the 2007 Bonus Plan exceeding
$10,000, at the time scheduled for payment of the bonus, he may choose to receive any portion of his
bonus in the form of the issuance of restricted shares of common stock of the Company, which shares
will vest immediately but will not be tradable in the public markets for one year (the “Restricted
Stock”). If Messrs. Sharp and McDonald become eligible to receive a cash bonus under the 2007
Bonus Plan exceeding $10,000, at the time scheduled for payment of
the bonus, a minimum of 35% of
the bonus shall be paid in shares of Restricted Stock of the Company, and each of Messrs. Sharp and
McDonald may choose to receive any additional portion of his bonus in the form of shares of
Restricted Stock. If Mr. Morrison becomes eligible to receive a cash bonus exceeding $10,000, at
the time scheduled for payment of the bonus, a minimum of 10% of the cash bonus shall be paid in
shares of Restricted Stock of the Company, and Mr. Morrison may choose to receive any additional
portion of his bonus in the form of Restricted Stock.
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