Exhibit 10.1
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.

 

 

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(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.

 

 

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(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.
(t) “STIC Award” or “Award” means, with respect to a Participant for a Fiscal
Year, an Award under which the amount payable to the Participant (if any) is
contingent on the achievement of pre-established Performance Targets during the
Fiscal Year.
(u) “STIC Award Payment” means the cash payment under a STIC Award.
(v) “Subsidiary” means any corporation in an unbroken chain of corporations
beginning with the Company, if each of the corporations other than the last
corporation in the unbroken chain then owns stock possessing fifty percent (50%)
or more of the total combined voting power of all classes of stock in one of the
other corporations in the chain.
(w) “Termination of Employment,” or similar uses of the words “Termination” (or
a derivation thereof) and “Employment” in close proximity, means complete
termination of the employment relationship between a Participant and all
Employers.
Section 2.02. Rules of Interpretation. The following rules shall govern in
interpreting the Plan:
(a) Except to the extent preempted by United States federal law or as otherwise
expressly provided herein, the Plan and all Awards shall be interpreted in
accordance with and governed by the internal laws of the State of Indiana
without giving effect to any choice or conflict of law provisions, principles,
or rules.
(b) All amounts payable under the Plan are intended to constitute
Performance-Based Compensation, and the Plan and each Award shall be interpreted
and administered to effect such intent.
(c) The Plan and all Awards are intended to comply with the requirements of Code
Section 409A, and the Plan and all Awards shall be administered to effect
compliance with such intent.
(d) Any reference herein to a provision of law, regulation, or rule shall be
deemed to include a reference to the successor of such law, regulation, or rule.

 

 

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(e) To the extent consistent with the context, any masculine term shall include
the feminine, and vice versa, and the singular shall include the plural, and
vice versa.
(f) If any provision of the Plan shall be held illegal or invalid for any
reason, the illegality or invalidity of that provision shall not affect the
remaining parts of the Plan, and the Plan shall be interpreted and enforced as
if the illegal or invalid provision had never been included herein.
ARTICLE III.
ADMINISTRATION
The Committee shall administer the Plan, and it shall have all powers and
authority necessary or appropriate to fulfill its duties hereunder. The
Committee shall have the authority and discretion to interpret the Plan, to
establish and revise rules and regulations relating to the Plan, and to make any
other determinations that it believes necessary or advisable for administration
of the Plan. The Committee’s determination as to all matters relating to the
Plan shall be final and binding.
ARTICLE IV.
STIC AWARDS
Section 4.01. Selection of Participants. The Committee may, in its sole
discretion, grant STIC Awards to one or more Executive Employees as provided in
this Article. Nothing herein shall obligate the Committee to grant a STIC Award
to any Executive Employee.
Section 4.02. Award Criteria. Within ninety (90) days after the start of each
Fiscal Year for which it grants STIC Awards, the Committee shall establish
(i) the Performance Measures and Performance Targets applicable to each STIC
Award for that Fiscal Year and (ii) an objective formula for computing the
Payment Amount based on achievement of the established Performance Targets. The
Committee shall have sole discretion to determine the Performance Measures,
Performance Targets, and the formula for calculating the Payment Amount. The
Committee may establish minimum, target, and maximum Performance Targets, with
the Payment Amount based on the level of the Performance Target(s) achieved.
Once established, Performance Targets, Performance Measures, and the related
formula for determining the Payment Amount shall not be changed; provided,
however, the Committee may, in its sole discretion (subject to the provisions of
Subsection 4.05(a)), eliminate or decrease the Payment Amount with respect to
any Award, based upon such criteria as the Committee deems appropriate. The
Committee may impose conditions on the receipt of STIC Award Payments in
addition to the achievement of Performance Targets.
Section 4.03. Certification of Performance. As soon as practicable after the
Company’s audited financial statements are available for a Fiscal Year, the
Committee shall determine the Company’s performance in relation to the
Performance Targets for the Fiscal Year and certify in writing the extent to
which the Performance Targets were achieved and the Payment Amounts with respect
to each STIC Award for the Fiscal Year. The Committee may, in its discretion,
utilize the services of an accounting professional in connection with such
certification by the Committee.
Section 4.04. STIC Award Payments. The Employer shall pay STIC Award Payments in
cash, subject to applicable tax withholding, as determined by the Employer.
Except as provided in Section 4.07, STIC Award Payments for a Fiscal Year shall
be paid to the Participant (or, if the Participant is deceased, his estate)
during the first ninety (90) days after the end such Fiscal Year.

 

 

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Section 4.05. Termination of Employment.
(a) If a Participant’s Employment Terminates on account of his (i) death, (ii)
Disability, (iii) Retirement, (iv) involuntary Termination of Employment without
Cause, or, (v) to the extent provided in his employment agreement with the
Employer (if any), voluntary Termination of Employment for Good Reason before
STIC Award Payments for a Fiscal Year are made, the Participant’s STIC Award
Payment, if any, shall first be determined on an interim basis according to the
applicable Award formula before considering any discretionary reduction that
might be made by the Committee. If the Participant’s Employment Terminated
during the Fiscal Year for which the STIC Award Payment is being determined, the
interim payment amount (as determined pursuant to the preceding sentence) shall
be multiplied by a fraction, the numerator of which is the number of full weeks
during which the Participant was employed by an Employer during such Fiscal Year
and the denominator of which is 52. If the Participant’s Employment Terminated
after the end of the Fiscal Year for which the STIC Award Payment is being
determined, the preceding sentence shall not apply and the interim payment
amount previously determined as provided above in this Subsection shall not be
prorated. The Committee, in its discretion, may then reduce (but not increase)
the interim payment amount determined under the preceding provisions of this
Subsection by up to one-third in order to arrive at the STIC Award Payment to be
made with respect to such Participant. Such payment shall be paid at the same
time at which the Participant would have been paid if a Termination of
Employment had not occurred with respect to such Participant.
(b) If a Participant’s Employment Terminates for any reason not specified in
clauses (i)-(v) of Subsection 4.05(a) before STIC Award Payments for a Fiscal
Year are made, the Participant shall forfeit his interest in and shall not
receive any such payment for that Fiscal Year.
Section 4.06. Non-Duplication of Payments. Notwithstanding any other provision
hereof, if a Participant receives a payment under a change in control or other
agreement with the Employer, which payment is identified as or measured by an
amount payable under this Plan with respect to a certain Fiscal Year, the
Participant shall not be entitled to a payment of a duplicate amount hereunder
for that same Fiscal Year.
Section 4.07. Election to Defer of STIC Award Payment. A Participant may elect
to defer all or any portion of a STIC Award Payment for a Fiscal Year by
submitting a written Deferral Election to the Vice President of Human Resources
of the Company before the end of the immediately preceding Fiscal Year. Amounts
deferred pursuant to the Deferral Election shall be subject to the terms of the
Hillenbrand, Inc. Executive Deferred Compensation Program, as amended from time
to time.
Section 4.08. Limitation of Payment Amount. Under no circumstances shall the
Payment Amount with respect to any Participant for a Fiscal Year exceed the
lesser of (i) three times the Participant’s base salary for the Fiscal Year or
(ii) Five Million Dollars.
ARTICLE V.
TERM
The Plan is contingent on approval by the Company’s shareholders, as provided in
Section 1.03, and it shall remain in effect until such time as it shall be
terminated by the Board or, if earlier, five years after the Effective Date.

 

 

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ARTICLE VI.
AMENDMENT AND TERMINATION
Except as provided below, the Board may, in its sole discretion, amend or
terminate the Plan. No such amendment or termination, however, shall adversely
effect any right or obligation with respect to any Award already issued, cause
any Participant to incur taxes under Code Section 409A, or cause amounts payable
under the Plan to cease to be Performance-Based Compensation. Shareholder
approval of an amendment is required to the extent necessary to satisfy
applicable legal rules, including the rule set forth in Code Section 162(m).
ARTICLE VII.
MISCELLANEOUS PROVISIONS
Section 7.01. Limitations. No Employee shall have any claim or right (legal,
equitable, or other) to be granted an Award, and no person or entity other than
the Committee shall have the authority to enter into any agreement with any
person for the making or payment of any Award or to make any representation or
warranty with respect thereto. Neither the existence of the Plan nor the grant
of any Award shall give a Participant any right to be retained in the employ of
any Employer or limit the right of any Employer to terminate the employment of
any Participant.
Section 7.02. Additional Payments. Nothing in the Plan shall preclude the
Company from making additional payments or special awards to Participants
outside of the Plan that may or may not constitute Performance-Based
Compensation, provided that such payment or award does not affect the
qualification of any Payment Amount as Performance-Based Compensation.