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EXHIBIT 10.10
M-tron Bonus Plan for the Year 2000
1. Financial Basis:
M-tron's year 2000 management bonus will be based on adjusted earning
before taxes (EBT) minus 20% of (average assets minus beginning fixed
assets minus current liabilities)
This quantity of money will be called Economic Profit
Economic Profit was $564,000 in 1998
$787,000 in 1999
$1,966,000 fcst for 2000
Example (1999 M-tron Results):
<TABLE>
<S> <C>
Sales: $26.5 million
EBT: $1.57 million
Adjustments: $0.24 million (Lynch Corp and Bonuses)
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Adj. EBT: $1.81 million
Average Assets
Acc Rec: $3.30 million
Inventory: $3.79 million
Equipment: $2.47 million
Other: $0.36 million
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Total Avg Assets: $9.92 million
Adjustments: $2.43 million (beginning fixed assets)
Acc Payable: $1.42 million
Other Liab: $0.99 million
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Net Ave Capital: $5.08 million
Minimum Return: $1.02 million (20% rate of return)
Economic Profit: $0.79 million
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2. Your bonus will be based on a combination of M-tron company performance and
on your group/department performance. A few people will have their year 2000
bonus paid entirely on their department performance.
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<CAPTION>
Company Department
------- ----------
<S> <C> <C>
Proposed Plan: President 100% 0%
VP's & Directors 70% 30%
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3. For management bonuses to be paid, our year 2000 EBT (profits) must exceed
our 1999 EBT (profits). This means that we must achieve at least 60% of
our planned EBT to have any bonus payment.
4: Your personal bonus plan will be determined by the MOC and your supervisor.
For the corporate part of your bonus, you will be assigned a block of M-tron
Year 2000 Bonus Stock. The dividends from this stock will be determined by
M-tron's Economic Profit for the year 2000 and will be paid early in the year
2001.
Example:
Sue has been assigned 100 shares of M-tron Year 2000 Bonus Stock. If M-tron
meets its year 2000 plan, our Economic Profit is estimated to be $1.966 million
and the M-tron Year Bonus Stock is estimated to pay cash dividends of $8.14 per
share.
Sue would receive a cash bonus payment estimated to be $814 (less taxes) about
March of the year 2001.
5. The estimated cash dividend per share changes rapidly with our overall
performance and Economic Profit.
<TABLE>
<CAPTION>
% of Yr 2000 Plan: 60% 80% 100% 120%
--- --- ---- ----
<S> <C> <C> <C> <C>
Est. Dividend/Share: $1.16 $5.19 $8.14 $11.21
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Changes We Are Making:
1. Bonus shares will be determined early in the year and progress toward the
bonus will be tracked during the year. This will be communicated to all
eligible employees.
2. The bonus plan will more aggressively incent year-on-year business growth.
This plan does not make a bonus payment until last year's performance has
been exceeded. This means that we must achieve 60% of our plan to have any
bonus payment.
3. The bonus plan will be more highly leveraged around the annual business
plan; i.e., more pain when we miss, more gain when we meet and exceed the
plan.
4. All non-sales managers and supervisors in the company will have a
significant portion of their compensation tied to M-tron corporate
financial performance.
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M-tron Industries Bonus Plan Worksheet EP built with Liability Offset
<TABLE>
<CAPTION>
HISTORICAL FINANCIALS: 1997 1998 1999 2000
--------------------- ------- ------- ------- -------
Plan
<S> <C> <C> <C> <C>
Revenue $22,828 $22,798 $26,467 $31,975
EBT $ 1,415 $ 1,242 $ 1,568 $ 2,622
Management Fee $ 100 $ 100 $ 100 $ 100
Bonus $ 150 $ 120 $ 135 $ 420
EBT+Mange Fee+Bonus $ 1,665 $ 1,462 $ 1,803 $ 3,142
Opening Stock Holder Equity $ 2,642 $ 3,398 $ 4,215 $ 5,505
YE Total Asset $ 8,858 $ 8,898 $10,940 $11,836
Average Total Assets $ 8,878 $ 9,919 $11,982
Average Liabilities Less Bank Payables $ 2,190 $ 2,407 $ 3,602
YE PP&E Assets $ 2,200 $ 2,433 $ 2,498
EBITDA $ 2,260 $ 2,173 $ 2,623 $ 3,832
Net Bonus Pool $ 201 $ 123 $ 150 $ 353
Other Management Bonuses $ 50
Total Management Bonuses $ 199
Gross Bonus Pool @ EBT+MF+B - 25% SHE $ 1,005 $ 613 $ 749 $ 1,766
Gross Bonus Pool @ EBT+MF+B - 20%AA $ 564 $ 787 $ 1,966
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Plan Based On Adjusted Assets (Average Total Assets Less Beginning PP&E Assets)
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<CAPTION>
2000 EBT PLAN ATTAINMENT 50% 60% 70% 80% 90% 100%
------------------------ ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
EBT $1,311 $1,573 $1,835 $2,098 $2,360 $2,622
EBT+Mange Fee+Bonus $1,831 $2,093 $2,355 $2,618 $2,880 $3,142
Year 2000 Gross Bonus Pool @ EBT+MF+B - .2*
Adjusted Assets: $1,966
Pool @ EBT+MF+B - .2*AA $ 655 $ 917 $1,179 $1,441 $1,703 $1,966
Number of Bonus Plan Shares: 50,000
Percent of Plan $ Assigned 90%
Estimated Management Bonus per Share: $ 0.00 $ 1.16 $ 2.76 $ 5.19 $ 6.44 $ 8.14
Estimated Splits:
Pres: % of Shares 33.3%
# of Shares 16,667
Total Bonus $
Old Plan
S. VP % of Shares 12.0%
# of Corp Shares 4,200
% Corp 70.0%
# of Shares 6,000
Corp Bonus $
Total Bonus $
VP % of Shares 8.0%
# of Corp Shares 2,800
% Corp 70.0%
# of Shares 4,000
Corp Bonus $
Total Bonus $
Sr. Dir % of Shares 4.0%
# of Corp Shares 1,400
% Corp 70.0%
# of Shares 2,000
Corp Bonus $
Total Bonus $
Dir % of Shares 2.5%
# of Corp Shares 875
% Corp 70.0%
# of Shares 1,250
Corp Bonus $
Total Bonus $
Prod. Man % of Shares 2.5%
# of Corp Shares 625
% Corp 50.0%
# of Shares 1,250
Corp Bonus $
Total Bonus $
Managers % of Shares 23.2%
# of Shares 11,583
Total Bonus $
</TABLE>
<TABLE>
<CAPTION>
2000 EBT Plan Attainment 110% 120% 130% 140% 150% 200%
------------------------ ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
EBT $2,884 $3,146 $3,409 $3,671 $3,933 $5,244
EBT+Mange Fee+Bonus $3,404 $3,666 $3,929 $4,191 $4,453 $5,764
Year 2000 Gross Bonus Pool @ EBT+MF+B - .2*
Adjusted Assets:
Pool @ EBT+MF+B - .2*AA $2,228 $2,490 $2,752 $3,014 $3,277 $4,588
Number of Bonus Plan Shares:
Percent of Plan $ Assigned
Estimated Management Bonus per Share: $ 9.82 $11.21 $12.38 $13.56 $14.74 $20.64
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