Exhibit 10.1

Oil-Dri Corporation of America
Annual Incentive Plan
(As Amended and Restated Effective August 1, 2006)

I.

Purpose

 

 

 

To provide eligible Salaried Employees with an annual incentive opportunity
based on the potential contribution level of each position and to reward
individuals for outstanding Company and individual performance, thereby allowing
the Company to attract and retain the high quality of human resources needed to
successfully operate its business.

 

 

II.

Definitions

 

 

 

A.

Base Salary means the regular base salary actually paid by the Company to a
participant during the Fiscal Year while the participant was an active employee
or on authorized leave of absence, subject to the following:

 

 

          (i)          The base salary for a participant on a military leave of
absence granted under the Company’s military leave policy shall be adjusted to
include the base salary which the participant would have received during the
Fiscal Year had he or she not been on military leave;

 

 

          (ii)          The base salary for a participant on an authorized leave
of absence, other than a military leave, who is receiving compensation from a
third party on account of such authorized leave of absence (for example, payment
from the Company’s workers’ compensation insurance carrier or a state disability
insurance program) shall be adjusted to include up to three months, but no more
than three months, of the base salary which the participant would have received
during the Fiscal Year had he or she not been on authorized leave of absence.

 

 

Base Salary also includes overtime pay received by a participant who is not
exempt from the overtime pay requirements of the Fair Labor Standards Act. Base
Salary does not include:  Plan awards; other incentive awards or bonuses,
whether short or long-term in nature; commissions; disability benefit payments
or salary paid for a period exceeding three months while a participant is on an
authorized leave of absence (or multiple leaves of absence), other than a
military leave; imputed income from such programs as life insurance; or
nonrecurring payments.  Base Salary is determined without regard to any
reductions for such items as before-tax contributions under Sections 401(k), 125
and 129 (flexible benefit plan contributions, including FSAs), or 132 (qualified
transportation expenses) of the Internal Revenue Code of 1986, as amended, or
income deferred under a non-qualified deferred compensation plan sponsored by
the Company, or similar reductions under the tax laws of other countries.

 

 

 

 

B.

CEO means the Chief Executive Officer of the Company.

 

 

 

 

C.

Compensation Committee means the Compensation Committee of the Company’s Board
of Directors.

 

 

 

 

D.

Company means Oil-Dri Corporation of America and its subsidiaries participating
in the Plan, as may be designated by the CEO from time to time, and their
respective successors and legal representatives.

 

 

 

 

E.

Corporate Financial Performance refers to the relationship between the Company’s
designated performance targets and the achievement of, or failure to achieve,
those targets.

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F.

Executive Officers means the Company’s executive officers as defined in the
Securities Exchange Act of 1934, as amended, and the rules thereunder, as well
as the Company’s controller or other principal accounting officer.

 

 

 

 

G

Fiscal Year means the Company’s Fiscal Year beginning August 1 and ending July
31.

 

 

 

 

H.

Plan means the Oil-Dri Corporation of America Annual Incentive Plan as amended
from time to time.

 

 

 

 

I.

Salaried Employee means a regular full- or part-time employee hired by the
Company prior to July 1st of the Fiscal Year and paid on a salaried basis or
paid on an hourly basis for clerical or professional duties.  The term does not
include employees paid on an hourly basis for work which is not clerical or
professional, temporary employees, interns, and individuals classified by the
Company as independent contractors.

 

 

 

 

J.

Special Performance refers to the relationship between an individual’s,
department’s or division’s designated performance targets and the achievement
of, or failure to achieve, those targets.

 

 

 

III.

Employees Covered By This Plan

 

 

 

This Plan covers, for any Fiscal Year, those Salaried Employees designated as
participants by the CEO.  The CEO also shall be a participant in the Plan unless
the Compensation Committee, due to its approval of an alternative short-term
incentive arrangement or otherwise, determines that the CEO shall not be covered
by the Plan for a particular Fiscal Year or particular Fiscal Years.

 

 

IV.

Performance Measures, Targets and Payout Ranges

 

 

 

The performance measures, targets and payout ranges used under the Plan for
incentive purposes shall be established for each Fiscal Year based on the
Company’s annual business plan.  The performance measures, targets and payout
ranges shall be approved by the CEO.

 

 

V.

Role of Compensation Committee

 

 

 

A.

The Compensation Committee is responsible to set the compensation payable to the
CEO, including compensation payable under the Plan; the CEO shall have no
discretion to make adjustments to awards payable to himself under the Plan.

 

 

 

 

B.

The CEO is responsible to supervise compensation payable under the Plan and to
exercise authority and discretion as specified in the Plan for all other
employees, including the Executive Officers, except as specified below in
sub-section C. and in the second paragraph of Section X.

 

 

 

 

C.

The Compensation Committee shall have the general authority to review and
determine the reasonableness of the Target Bonus as a Percent of Base Salary,
performance measures and payout ranges (and any changes thereto) under the Plan,
as these relate to the total compensation of the Executive Officers.

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VI.

Corporate Financial Performance Award

 

 

 

Up to 100% of a participant’s bonus opportunity may be based upon Corporate
Financial Performance.

 

 

 

A participant in the Plan shall be entitled to a Corporate Financial Performance
Award computed in accordance with the following formula:

Percent of Target Bonus Subject to Corporate
Financial
Performance

x

Target
Bonus as a
Percent of
Base Salary

x

Percent of
Corporate Financial
Performance Bonus
Earned

x

Base
Salary

=

Corporate
Financial
Performance
Award

 

Where:

 

 

 

•

“Percent of Target Bonus Subject to Corporate Financial Performance” shall range
from 0% to 100% and may vary from Fiscal Year to Fiscal Year.

 

 

 

 

•

“Target Bonus as a Percent of Base Salary” is determined for the particular
position or salary grade for each Fiscal Year.

 

 

 

 

•

“Target Bonus” is a participant’s Target Bonus as a Percent of Base Salary
multiplied by the participant’s Base Salary.  If corporate target(s) and
individual and/or departmental or divisional targets are achieved but not
exceeded in a Fiscal Year, a participant’s combined Corporate Financial
Performance Bonus, Special Performance Bonus and Executive Deferred Bonus will
be 100% of Target Bonus, subject to the participant’s satisfaction of all
requirements for entitlement and any adjustments made due to extraordinary
circumstances or otherwise.

 

 

 

 

•

“Base Salary” is defined in Section II A.

 

 

 

 

•

“Percent of Corporate Financial Performance Bonus Earned” ranges from 0% to 200%
and is determined by the relationship of actual achievement to targeted
achievement at the corporate level.  Actual achievement which is below the range
of Corporate Financial Performance established for awards will result in no
award based on that particular financial measure or combination of measures. 
For actual performance within the established range of Corporate Financial
Performance, a payout range (which may vary from 0% to 200% of Target Bonus) is
established.  The relationship of actual achievement to the performance range
will be determined based on guidelines established each year.

 

 

 

VII.

Special Performance Award

 

 

 

A participant may be eligible for an award dependent on Special Performance
which may include or may be exclusively individual, departmental and/or
divisional performance.  Participant eligibility for a Special Performance Award
is determined by the CEO or his or her designee.  Up to 100% of a participant’s
bonus opportunity may based upon Special Performance.

 

 

 

For each participant who is eligible for a Special Performance Award,
individual, departmental and/or divisional goals shall be established for the
Fiscal Year and communicated to the participant.  After the end of a Fiscal
year, each participant’s achievement of such goals will be evaluated and a
Special Objectives Achievement Percentage from 0% to 200% will be recommended,
reflecting the achievement of the individual, departmental and/or divisional
goals during such Fiscal Year.

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A participant shall be entitled to a Special Performance Award computed as
follows:

Percent of Target
Bonus Subject to
Special
Performance

x

Target
Bonus as a
Percent of
Base Salary

x

Percent of
Special Objectives
Earned

x

Base
Salary

=

Special
Performance
Award

 

Where:

 

 

 

•

“Percent of Bonus Subject to Special Performance” shall range from 0% to 100%
and may vary from Fiscal year to Fiscal Year.

 

 

 

 

•

“Target Bonus as a Percent of Base Salary” is determined for the particular
position or salary grade each Fiscal Year

 

 

 

 

•

“Target Bonus” is a participant’s Target Bonus as a Percent of Salary multiplied
by the participant’s Base Salary.  If corporate target(s) and individual and/or
departmental or divisional goals are achieved but not exceeded in a Fiscal Year,
a participant’s combined Corporate Financial Performance Bonus, Special
Performance Bonus and Executive Deferred Bonus will be 100% of Target Bonus,
subject to the participant’s satisfaction of all requirements for entitlement
and any adjustments made due to extraordinary circumstances or otherwise.

 

 

 

 

•

“Base Salary” is defined in Section II A.

 

 

 

 

•

“Percent of Special Objectives Earned “ is determined by the performance of the
individual, department and/or division against established special goals.  The
percent earned may also be dependent on established levels of Corporate
Financial Performance.  The Percent of Special Objectives Earned may range from
0% to 200% if the Special Performance Bonus and the Corporate Financial
Performance Bonus are independent of one another.  If the Special Performance
Bonus and the Corporate Financial Performance Bonus are integrated, the Percent
of Special Objectives Earned may be negative so that the total bonus earned may
be as low as zero.

 

 

 

VIII.

Executive Deferred Bonus Award

 

 

 

Participant eligibility for an Executive Deferred Bonus Award is determined by
the CEO or his or her designee.  Up to 100% of a participant’s bonus opportunity
may be in the form of an Executive Deferred Bonus.  Payment of Executive
Deferred Bonus Awards is deferred until the vesting date(s) established for each
Fiscal Year’s award.

 

 

 

A participant in the Plan shall be entitled to an Executive Deferred Bonus Award
computed in accordance with the following formula:

Percent of Target
Bonus Payable as
Executive Deferred
Bonus

x

Target Bonus
as a Percent of
Base Salary

x

Percent of
Executive
Deferred Bonus
Earned

x

Base
Salary

=

Executive
Deferred
Bonus
Award

 

Where:

 

 

 

•

“Percent of Target Bonus Payable as Executive Deferred Bonus” shall range from
0% to 100% and may vary from Fiscal Year to Fiscal Year.

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•

“Target Bonus as a Percent of Base Salary” is determined for the particular
position or salary grade for each Fiscal Year.

 

 

 

 

•

“Target Bonus” is a participant’s Target Bonus as a Percent of Salary multiplied
by the participant’s Base Salary.  If corporate target(s) and individual and/or
departmental or divisional goals are achieved but not exceeded in a Fiscal Year,
a participant’s combined Corporate Financial Performance Bonus, Special
Performance Bonus and Executive Deferred Bonus will be 100% of Target Bonus,
subject to the participant’s satisfaction of all requirements for entitlement
and any adjustments made due to extraordinary circumstances or otherwise.

 

 

 

 

•

“Base Salary” is defined in Section II A.

 

 

 

 

•

“Percent of Executive Deferred Bonus Earned” ranges from 0% to 200% and is
determined by the relationship of actual achievement to targeted achievement of
established goals.  Goals may be Corporate Financial Performance goals, special
performance goals for the participant and/or the participant’s department or
division or a combination of Corporate Financial Performance and special
performance goals.  A specific level of Corporate Financial Performance may be
required before any Executive Deferred Bonus can be awarded.  For actual
performance within the established goals, a payout range (which may vary from 0%
to 200% of Target Bonus) is established. The CEO has complete discretion to
adjust individual awards downward or upward, depending on the participant’s
individual performance and/or the performance of the participant’s department or
division.  The relationship of actual achievement to the performance range will
be determined based on guidelines established each year.

 

 

 

 

Accounts and Interest:

 

 

 

•

The Company shall establish a bookkeeping account for each participant
reflecting Executive Deferred Bonus Awards and any distributions to the
participant, together with any adjustments for earnings.

 

 

 

 

•

Until distributed, Executive Deferred Bonus Awards shall earn interest at a rate
equal to the Company’s long-term borrowing cost plus one percent.

 

 

 

 

•

The Company shall provide each participant as soon as practicable after the end
of each Fiscal Year with a statement of his or her account as of the last
business day of the Fiscal Year, reflecting the amounts of Executive Deferred
Bonus awarded, interest, and distributions of such account since the prior
statement.

 

 

 

 

Payout of Executive Deferred Bonus Awards:

 

 

 

•

Executive Deferred Bonus Awards shall vest (become payable) according to the
vesting schedule established for each Fiscal Year.  Awards shall be paid as soon
as administratively practicable after they vest but in no event later than March
15th of the calendar year following the calendar year in which they vest.

 

 

 

 

•

Except as specified below, no Executive Deferred Bonus Award shall be paid to
any participant who is not employed by the Company on the date the award vests. 
However, awards shall be immediately 100% vested and immediately payable except
as otherwise indicated below if the participant:

 

 

 

 

 

•

Dies;

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•

Retires and (1) he or she is eligible for an immediate benefit under a Company
sponsored defined benefit pension plan and (2) his or her age plus years of
service on the date of retirement equals at least 80; provided, however, that if
the participant is a “specified employee” (as defined in proposed Treasury
Regulation section 1.409A-1(i), as such regulation may subsequently be
finalized), such award shall not be payable until six months and one day
following the date of such participant’s “separation from service” (as defined
in proposed Treasury Regulation section 1.409A-1(h), as such regulation may
subsequently be finalized.)  A termination for cause or for poor performance
will not be considered a retirement regardless of the age or years of service of
the participant;

 

 

 

 

 

 

•

Becomes permanently disabled as defined under the Company’s long-term disability
plan.

 

 

 

 

 

 

In addition, awards shall be immediately 100% vested and payable upon a change
in control of the Company as defined in the Company’s 2006 Long Term Incentive
Plan or any successor plan thereto.

 

 

 

IX.

Individual Discretionary Adjustment

 

 

 

The CEO may at his or her sole discretion increase or decrease any participant’s
Percent of Corporate Financial Performance Bonus Earned by up to 25 points,
provided that:  (a) the Company achieves the minimum level of performance
necessary to achieve an award for Corporate Financial Performance; (b) the
combination of any Corporate Financial Performance, Special Performance and
Executive Deferred Bonus Award(s) after giving effect to the individual
discretionary adjustment would not exceed 200% of the participant’s Target
Bonus; and (c) any such increases or decreases will not increase or decrease the
total dollar amount of awards earned under the Plan by all participants.  For
example, if, per the Corporate Financial Performance measure(s), 75% of the
Corporate Financial Performance Bonus has been earned, the CEO may adjust a
participant’s Percent of Corporate Financial Performance Bonus Earned to as
little as 50% or as much as 100%.

 

 

X.

Changes to Target and Other Adjustments

 

 

 

The  CEO may at any time prior to the final determination of awards, change the
performance measures, targets and payout ranges used for incentive purposes if,
in the judgment of the CEO, such change is desirable in the interest of
equitable treatment of the participants and the Company as a result of
extraordinary or nonrecurring events, changes in applicable accounting rules or
principles, changes in the Company’s methods of accounting, changes in
applicable law, changes due to consolidation, acquisitions, reorganization,
stock split or stock dividends, combination of shares or other changes in the
Company’s corporate structure or shares, significant, unanticipated changes in
general economic or market conditions, or any other change in circumstances or
event.

 

 

 

Further, the CEO may at his or her discretion adjust, upward or downward, any
award otherwise payable under the Plan, provided that after such adjustment the
total of all awards to the participant under the Plan would not exceed 200% of
the participant’s Target Bonus and further provided that any such adjustment of
an award to the CEO shall be determined by the Compensation Committee and any
such adjustment of an award to an Executive Officer shall be reviewed for
reasonableness by the Compensation Committee.

 

 

 

Further, the Compensation Committee may, for a specific Fiscal Year or Fiscal
Years, grant to the CEO discretionary authority to make adjustments, including
adjustments in addition to those stated in the Plan, to the performance
measure(s), targets and payout ranges, or awards to individual participants
including the Executive Officers, provided that in no event will the CEO be
granted authority to make total awards under the Plan to any participant which
exceed 200% of the participant’s Target Bonus.

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XI.

Computation and Disbursement of Awards

 

 

 

As soon as administratively practicable after the close of a Fiscal Year, the
CEO or his or her designee will review and approve for each participant a final
Corporate Financial Performance Award;  a Special Objectives Achievement
Percentage and Special Performance Award, if any; an Executive Deferred Bonus
Award, if any; and an Individual Discretionary Award, if any.  Payment of the
awards shall be made thereafter.  All payments of awards shall be subject to
applicable payroll taxes and withholding.

 

 

XII.

Partial Awards

 

 

 

A participant who is not an active employee for the entire Fiscal Year shall be
entitled to payment of a partial award computed in accordance with Sections VI,
VII, VIII and IX and based on Base Salary for the Fiscal Year if, prior to the
end of such Fiscal Year, the participant:

 

 

 

•

Dies;

 

 

 

 

•

Retires at or after age 55 with at least 10 years of service or at or after age
60 with at least five years of service.  A termination for cause or for poor
performance will not be considered a retirement regardless of the age or years
of service of the participant;

 

 

 

 

•

Becomes permanently disabled as defined under the Company’s long-term disability
plan;

 

 

 

 

•

Transfers to a position not eligible for participation in the Plan;

 

 

 

 

•

Enters active duty military service in the Armed Forces of the United States;

 

 

 

 

•

Takes an approved leave of absence,

 

 

 

 

provided that the participant was an active employee for a minimum of three
consecutive calendar months during such Fiscal Year.  Such partial awards shall
be paid when payments of awards for such Fiscal Year are made, or such earlier
date as may be approved by the CEO.

 

 

 

An employee who is hired as a Salaried Employee during the first eleven months
of a Fiscal Year, who is designated as eligible to participate, and who is
employed through the end of such Fiscal Year shall be eligible for an award
based on his or her Base Salary during such Fiscal Year while eligible to
participate.  An employee who is transferred during a Fiscal Year to a position
as a Salaried Employee eligible to participant in the Plan from another position
with the Company or its subsidiaries and who is employed through the end of such
Fiscal Year shall be eligible for an award based on his or her Base Salary
during such Fiscal Year while eligible to participate, regardless of when the
transfer takes place.

 

 

 

No partial award shall be payable under any circumstances other than those
described in this Section, except with the express approval of the CEO.

 

 

XIII.

Employment on Payment Date Requirement

 

 

 

Except as specified in Sections VIII and XII above, no award shall be payable to
any participant who is not employed by the Company on the date payment of awards
for the Fiscal Year being paid is made, except with the express approval of the
CEO.

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XIV.

Administration

 

 

 

This Plan shall be administered by the Human Resources Department of the
Company, subject to the control and supervision of the CEO.  The CEO shall have
discretionary authority to construe and interpret the Plan and decide all cases
of eligibility and entitlement to benefits.  Such determinations shall be final
and binding.

 

 

XV.

No Employment Contract or Obligation to Continue Plan

 

 

 

Participation in this Plan shall not confer upon any participant any right to
continue in the employ of the Company nor interfere in any way with the right of
the Company to terminate any participant’s employment at any time.  The Company
is under no obligation to continue the Plan in future Fiscal Years.

 

 

XVI.

Amendment or Termination

 

 

 

The Company may at any time (a) amend, alter or modify the provisions of this
Plan, (b) terminate this Plan, or (c) terminate the participation of a group of
employees in this Plan provided, however, that in the event of termination of
this Plan or a termination of the participation of a group of employees without
cause, the Company shall provide partial awards to the affected participants for
the portion of the Fiscal Year during which such employees were participants in
this Plan, in a manner which the Company, in its sole judgment, determines to be
equitable to such participants and the Company.

 

 

XVII.

General Provisions

 

 

 

A.

No rights under this Plan shall be assignable, either voluntarily or
involuntarily by way of encumbrance, pledge, attachment, levy or charge of any
nature (except as may be required by state or federal law).

 

 

 

 

B.

Nothing in this Plan shall require the Company to segregate or set aside any
funds or other property for the purpose of paying any portion of an award.  No
participant, beneficiary or other person shall have any right, title or interest
in any amount awarded under the Plan prior to the payment of such award, or in
any property of the Company or its affiliates.

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