HILLENBRAND,
INC.
SHORT-TERM INCENTIVE COMPENSATION PLAN
FOR KEY EXECUTIVES
ARTICLE
I.
GENERAL PROVISIONS
Section 1.01.
Establishment. Hillenbrand,
Inc. (“Company”) has adopted the Hillenbrand, Inc.
Short-Term Incentive Compensation Plan for Key Executives
(“Plan”), effective October 1, 2008, contingent on
approval of the Plan by the Company’s shareholders as
provided in Section 1.03.
Section 1.02.
Purpose. The
purpose of the Plan is to advance the interests of the Company and
its Subsidiaries by providing for annual bonuses to participating
Executive Employees based on the achievement of pre-established
quantitative performance goals. By linking a significant portion of
the compensation of Executives to pre-established objective goals,
the Company more closely aligns the interests of its Executive
Employees with those of its shareholders. Amounts payable under the
Plan are intended to constitute Performance-Based
Compensation.
Section 1.03.
Shareholder Approval. No
benefits shall be paid under the Plan with respect to any
Participant, unless the Plan is approved by the Company’s
shareholders, as required by the regulations under Code Section
162(m) applicable to Performance-Based Compensation.
ARTICLE
II.
DEFINED TERMS AND INTERPRETATION
Section 2.01.
Definitions. For
purposes of the Plan, when a term is capitalized as set out below,
the term shall have the following meanings:
(a) “Board”
or “Board of Directors” means the Company’s Board
of Directors.
(b) “Cause”
means, (i) for an Employee who is a party to a written
employment agreement with the Employer that defines
“cause” or a comparable term at the relevant time, the
definition in such employment agreement, and (ii) for all
other Employees, the Committee’s good faith determination
that the Employee has:
(1) failed
or refused to comply fully and timely with any reasonable
instruction or order of the Employer, provided that such
noncompliance is not based primarily on the Participant’s
compliance with applicable legal or ethical standards;
(2) acquiesced
or participated in any conduct that is dishonest, fraudulent,
illegal (at the felony level), unethical, involves moral turpitude,
or is otherwise illegal and involves conduct that has the potential
to cause the Employer or its related companies or any of their
respective officers or directors embarrassment or
ridicule;
(3) violated
any Employer policy or procedure, including the Company’s
Code of Ethical Business Conduct; or
(4) engaged
in any act that is contrary to the best interests of or would
expose the Employer, its related businesses, or any of their
respective officers or directors to probable civil or criminal
liability, excluding the Participant’s actions in accordance
with applicable legal and ethical standards.
(c) “Code”
means the Internal Revenue Code of 1986, as amended from time to
time.
(d) “Committee”
means the Compensation and Management Development Committee of the
Board. Each Committee member shall be an outside director within
the meaning of Code Section 162(m)(4)(C)(i).
(e) “Company”
means Hillenbrand, Inc., and any successor thereto.
(f) “Disability”
means, (i) for an Employee who is a party to a written
employment agreement with the Employer that defines
“disability” or a comparable term at the relevant time,
the definition in such employment agreement, and (ii) for all
other Employees, the Committee’s good faith determination
that the Employee is eligible (except for the waiting period) for
permanent disability benefits under Title II of the Federal Social
Security Act.
(g) “Deferral
Election” means an election pursuant to the provisions of the
Plan on a form acceptable to the Committee to defer all or a
portion of a STIC Award Payment.
(h) “Effective
Date” means October 1, 2008.
(i) “Employee”
means a common law employee of the Employer.
(j) “Employer”
means the Company and/or any Subsidiary.
(k) “Executive”
or “Executive Employee” means any Employee who is
either the Chief Executive Officer of the Company or an officer who
reports directly to the Chief Executive Officer of the
Company.
(l) “Fiscal
Year” means that fiscal year of the Company, which is the
twelve (12)-month period beginning on October 1 and ending on the
following September 30.
(m) “Good
Reason” means, for an Employee who is a party to a written
employment agreement with the Employer at the relevant time, the
definition given to such term or a comparable term in such
agreement.
(n) “Participant”
means, with respect to a Fiscal Year, an Executive to whom the
Committee has granted a STIC Award for the year.
(o) “Payment
Amount” means the amount of a STIC Award Payment.
(p) “Performance-Based
Compensation” means compensation described in Code Section
162(m)(4)(C) that is excluded from “applicable employee
remuneration” under Code Section 162(m).
(q) “Performance
Measures” means, with respect to a STIC Award, the objective
factors used to determine the amount (if any) payable pursuant to
the Award. “Performance Measures” shall be based on any
of the factors listed below, alone or in combination, as determined
by the Committee. Such factors may be applied (i) including or
excluding one or more Subsidiaries, (ii) in comparison with
plan, budget, or prior performance, and/or (iii) on an
absolute basis or in comparison with peer-group performance. The
factors that may be used as Performance Measures are
(i) return on assets, (ii) return on equity,
(iii) net revenue, (iv) operating income, (v) net income,
(vi) earnings per share, (vii) income before interest and
taxes, and (viii) income before taxes. In establishing
Performance Targets for a year, the Committee may provide for
appropriate objectively determinable adjustments to any Performance
Measure for extraordinary and/or non-recurring items.
(r) “Performance
Target” means, with respect to a STIC Award for a Fiscal
Year, the objective performance under the Performance Measures for
that Fiscal Year that will result in payments under the STIC Award.
Performance Targets may differ from Participant to Participant and
Award to Award.
(s) “Retirement”
means, with respect to a Participant, Termination of Employment
after having (i) completed at least five years of continuous
service with the Company and/or a Subsidiary and (ii) reached
age fifty-five (55). For purposes of the preceding sentence,
service with the Company’s predecessor, Hill-Rom Holdings,
Inc. (formerly known as Hillenbrand Industries, Inc.) shall be
considered service with the Company.
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