Exhibit 10.1
Description of the Material Terms of Rocky Brands, Inc.’s
Bonus Plan for the Fiscal Year Ending December 31, 2008
Messrs. Brooks, Sharp and McDonald (the “Executive Officers”) are eligible to receive cash
bonuses under the Company’s Bonus Plan for the fiscal year ending December 31, 2008 (the “2008
Bonus Plan”), based upon the attainment of certain Adjusted Operating Income targets. For purposes
of the 2008 Bonus Plan, Adjusted Operating Income is calculated as the Company’s operating income
excluding (i) operating income attributable to military sales, (ii) bonuses payable under the 2008
Bonus Plan, and (iii) gains or losses, or charges or adjustments resulting from unusual, one-time
events, such as intangible assets or goodwill impairment charges and charges or gains resulting
from changes in accounting policies, as determined by the Compensation Committee of the Board of
Directors. 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
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Mike Brooks
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0
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%
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75
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%
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175
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%
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Chairman of the Board and
Chief Executive Officer
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David Sharp
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0
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%
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60
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%
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140
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%
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President and Chief Operating Officer
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James E. McDonald
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0
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%
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50
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%
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115
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%
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Executive Vice President and
Chief Financial Officer
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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 2008, 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.
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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 2008 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.
If Mr. Brooks becomes eligible to receive a cash bonus under the 2008 Bonus Plan exceeding
$10,000, at the time scheduled for payment of the bonus, he may choose, at least six months prior
to payment, 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 or McDonald become eligible
to receive a cash bonus under the 2008 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 or McDonald may choose, at least six months prior to
payment, to receive any additional portion of his bonus in the form of shares of Restricted Stock.
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