Lincoln Electric Holdings,
Inc.
2007 Management Incentive
Compensation Plan
(as amended and restated as of December 31,
2008)
1.
Purpose . The purpose of the Lincoln Electric
Holdings, Inc. 2007 Management Incentive Compensation Plan is to
reinforce corporate, organizational and business-development goals,
to promote the achievement of year-to-year financial and other
business objectives and to reward the performance of eligible
employees in fulfilling their personal responsibilities.
2.
Definitions . The following terms, as used herein,
shall have the following meanings:
(a)
“Affiliate” shall mean, with respect to the Company or
any of its subsidiaries, any other Person directly or indirectly
controlling or controlled by or under direct or indirect common
control with the Company.
(b)
“Award” shall mean an incentive compensation award,
granted pursuant to the Plan, that is contingent upon the
attainment of Performance Goals with respect to a Performance
Period. An Award shall be designated as either an “Annual
Award” or a “Long-Term Award.”
(c)
“Board” shall mean the Board of Directors of the
Company.
(d) “Change
in Control” shall mean (i) for the purposes of vesting
of any Award, the occurrence of a Change in Control as defined in
the Company’s 2006 Equity and Performance Incentive Plan (or
as set forth in the applicable award agreement under such plan);
and (ii) for purposes of payment of any Award that would be
deferred compensation within the meaning of Section 409A of
the Code, a change in the ownership or effective control of the
Company, or in the ownership of a substantial portion of the
Company’s assets, within the meaning of Section 409A of
the Code.
(e)
“Code” shall mean the U.S. Internal Revenue Code of
1986, as amended.
(f)
“Committee” shall mean the Compensation and Executive
Development Committee of the Board of Directors, the composition of
which shall at all times consist solely of two or more
“outside directors” within the meaning of Section
162(m) of the Code.
(g)
“Company” shall mean Lincoln Electric Holdings, Inc.
and its successors.
(h) “Covered
Employee” shall have the meaning set forth in
Section 162(m)(3) of the Code.
(i)
“Disability” means a disability covered under the
Company’s long-term disability program.
(j)
“Exchange Act” shall mean the Securities Exchange Act
of 1934, as amended.
(k)
“Negative Discretion” shall mean discretion exercised
by the Committee to cancel or reduce the amount of payment under an
Award; provided that the exercise of such discretion shall not
cause the affected Award to fail to qualify as
“performance-based compensation” under Section 162(m)
of the Code.
(l)
“Participant” shall mean any employee of the Company or
an Affiliate who is, pursuant to Section 4 of the Plan,
selected to participate in the Plan.
(m)
“Performance Goals” shall mean performance goals based
on one or more of the following criteria, where applicable:
(i) pre-tax income or after-tax income, adjusted or pro forma
net income; (ii) earnings including operating income, earnings
before or after taxes, earnings before or after interest, and/or
earnings before or after bonus, depreciation, amortization, and/or
extraordinary or special items or earnings before interest, taxes
and bonus or regional basis earnings before interest, taxes and
bonus; (iii) net income excluding amortization of intangible
assets, depreciation and impairment of goodwill and intangible
assets; (iv) operating income; (v) earnings or book value
per share (basic or diluted); (vi) return on assets (gross or
net), return on investment, return on capital, or return on equity;
(vii) return on revenues; (viii) net tangible assets
(working capital plus property, plants and equipment) or return on
net tangible assets (operating income divided by average net
tangible assets) or working capital or average operating working
capital or average operating working capital to sales (average
operating working capital divided by sales); (ix) operating
cash flow (operating income plus or minus changes in working
capital less capital expenditures); (x) cash flow, free cash
flow, cash flow return on investment (discounted or otherwise), net
cash provided by operations, or cash flow in excess of cost of
capital; (xi) sales or sales growth; (xii) operating
margin or profit margin; (xiii) share price or total
shareholder return; (xiv) earnings from continuing operations;
(xv) cost targets, reductions or savings, productivity or
efficiencies; (xvi) economic value added; and
(xvii) strategic business criteria, consisting of one or more
objectives based on meeting specified market penetration or market
share, geographic business expansion, customer satisfaction,
employee satisfaction, human resources management, financial
management, project management, supervision of litigation,
information technology, or goals relating to divestitures, joint
ventures or similar transactions. Where applicable, the Performance
Goals may be expressed in terms of attaining a specified level of
the particular criterion or the attainment of a percentage increase
or decrease in the particular criterion, and may be applied to one
or more of the Company or a subsidiary of the Company, or a
division or strategic business unit of the Company, all as
determined by the Committee. The Performance Goals may include a
threshold level of performance below which no payment will be made
(or no vesting will occur), levels of performance at which
specified payments will be paid (or specified vesting will occur)
and a maximum level of performance above which no additional
payment will be made (or at which full vesting will
occur).
2
(n)
“Performance Period” shall mean, unless the Committee
determines otherwise, a period of no longer than
(i) 12 months with respect to an Annual Award and
(ii) 36 months with respect to a Long-Term
Award.
(o)
“Person” shall have the meaning given in
Section 3(a)(9) of the Exchange Act, as modified and used in
Sections 13(d) and 14(d) thereof.
(p)
“Plan” shall mean Lincoln Electric Holdings, Inc. 2007
Management Incentive Compensation Plan, as amended from time to
time.
(q)
“Retirement” means a Participant’s retirement
from active employment with the Company and each of its Affiliates
pursuant to which the Participant is entitled to receive a normal
retirement pension under The Lincoln Electric Company Retirement
Annuity Program.
3.
Administration . The Plan shall be administered by
the Committee. The Committee shall have the authority in its sole
discretion, subject to and not inconsistent with the express
provisions of the Plan, to administer the Plan and to exercise all
the powers and authorities either specifically granted to it under
the Plan or necessary or advisable in the administration of the
Plan, including, without limitation, the authority to grant Awards;
to determine the persons to whom and the time or times at which
Awards shall be granted; to determine the terms, conditions,
restrictions and performance criteria, including Performance Goals,
relating to any Award; to determine whether, to what extent, and
under what circumstances an Award may be settled, cancelled,
forfeited, or surrendered; to construe and interpret the Plan and
any Award; to prescribe, amend and rescind rules and regulations
relating to the Plan; to determine the terms and provisions of
Awards; and to make all other determinations deemed necessary
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