Exhibit 10.1

 

ECOLAB INC.

MANAGEMENT PERFORMANCE INCENTIVE PLAN

 

(As amended and restated on February 27, 2014)

 

1.                                      Purpose of Plan.

 

The purpose of the Ecolab Inc. Management Performance Incentive Plan, as amended
(the “Plan”) is to advance the interests of Ecolab Inc. (the “Company”) and its
stockholders by enabling the Company and its Subsidiaries to attract and retain
key executives of outstanding ability, by focusing such key executives on
pre-established, objective performance goals and by providing such key
executives with opportunities to earn financial rewards based on the achievement
of such performance goals. The Plan is intended to constitute a qualified
performance-based compensation plan under Section 162(m)(4)(C) of the Internal
Revenue Code of 1986, as amended (the “Code”) and shall be administered and
interpreted so as to ensure such compliance. In addition, the Plan is intended
to be exempt from the requirements of Section 409A of the Code by reason of the
short term deferral exception under Treas. Reg. Sec. 1.409A-1(b)(4).

 

2.                                      Definitions.

 

For the purposes of the Plan, the following terms will have the meanings set
forth below, unless the context clearly otherwise requires:

 

2.1                               “Award” means a right granted to a Participant
pursuant to Section 5 of the Plan to receive a cash payment from the Company (or
a Subsidiary) based upon the extent to which the Participant’s Performance
Goal(s) are achieved during the relevant Performance Period and subject to the
Committee’s discretion pursuant to Section 3.1.

 

2.2                               “Board” means the Board of Directors of the
Company.

 

2.3                               “Code” is defined in Section 1 of the Plan.

 

2.4                               “Committee” is defined in Section 3 of the
Plan.

 

2.5                               “Company” is defined in Section 1 of the Plan.

 

2.6                               “Disability” means the disability of the
Participant such as would entitle the Participant to receive disability income
benefits pursuant to the long-term disability plan of the Company or Subsidiary
then covering the Participant or, if no such plan exists or is applicable to the
Participant, a determination by the Committee that the Participant is
permanently and totally disabled within the meaning of Section 22(e)(3) of the
Code.

 

2.7                               “Executive Officer” means an executive officer
of the Company within the meaning of Rule 3b-7 under the Securities Exchange Act
of 1934, as amended.

 

2.8                               “GAAP” means generally accepted accounting
principles set forth in the opinions, statements and pronouncements of the
Financial Accounting Standards Board, United States (or predecessors or
successors thereto or agencies with similar functions), or in such other
statements by such other entity as may be in general use by significant segments
of the accounting profession, which are applicable to the circumstances as of
the date of determination and in any event applied in a manner consistent with
the application thereof used in the preparation of the Company’s financial
statements.

 

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2.9                               “Participant” means an Executive Officer of
the Company to whom an Award is granted by the Committee under the Plan.

 

2.10                        “Performance Goal” means a performance objective
established by the Committee for a particular Participant for a Performance
Period pursuant to Section 5 of the Plan for the purpose of determining the
extent to which an Award has been earned for such Performance Period. Each
Performance Goal will consist of (a)  “Performance Criteria,” as defined in
Section 5.2 of the Plan, which are one or more objectively determinable measures
related to individual, business unit or Company performance, and (b) a
“Performance Target,” which is the level at which the relevant Performance
Criteria must be achieved for purposes of determining whether a cash payment is
to be made under an Award, which may be stated as a threshold level below which
no payment will be made, a maximum level at or above which full payment will be
made and intermediate targets which will result in payment between such
threshold and maximum level.

 

2.11                        “Performance Period” means a Plan Year or, for an
Executive Officer who is first hired as, or first becomes eligible for this Plan
as, an Executive Officer after the first day of the Plan Year and who becomes a
Participant during the Plan Year, such portion of the Plan Year as determined by
the Committee.

 

2.12                        “Plan” is defined in Section 1 of the Plan.

 

2.13                        “Plan Year” means the fiscal year of the Company.

 

2.14                        “Retirement” means termination of employment at an
age and length of service such that the Participant would be eligible to an
immediate commencement of benefit payments under the final average compensation
formula of the Company’s defined benefit pension plan available generally to its
employees, whether or not such individual actually elects to commence such
payments (provided that, (i) if the Participant is not covered by the Company’s
defined benefit pension plan, or (ii) if the Participant is covered under the
cash balance formula of such plan, then the Participant will be deemed to be
covered by the final average compensation formula of such plan for purposes of
this Plan).

 

2.15                        “Subsidiary” means any entity that is directly or
indirectly controlled by the Company, as determined by the Committee.

 

3.                                      Plan Administration.

 

3.1                               The Committee. The Plan will be administered
by a committee appointed by the Board consisting solely of two or more
directors, each of whom is an “outside director” within the meaning of
Section 162(m)(4)(C)(i) of the Code (the “Committee”). In accordance with and
subject to the provisions of the Plan, the Committee will have full authority
and discretion with respect to Awards made under the Plan, including without
limitation the following: (a) selecting the Executive Officers to be
Participants; (b) establishing the terms of each Award; (c) determining the time
or times when Awards will be granted; and (d) establishing the restrictions and
other conditions to which the payment of Awards may be subject. The Committee
will have no authority under the Plan to amend or modify, in any manner, the
terms of any outstanding Award; provided, however, that (x) the Committee shall
have the authority provided for in Section 3.2 of the Plan; and (y) the
Committee shall have the authority to reduce or eliminate the compensation or
other economic benefit due pursuant to an Award upon the attainment of one or
more Performance Goals included in such Award. Each determination,
interpretation or other action made or taken by the Committee pursuant to the
provisions of the Plan will be conclusive and binding for all

 

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purposes and on all persons, and no member of the Committee will be liable for
any action or determination made in good faith with respect to the Plan or any
Award granted under the Plan.

 

3.2                               Adjustments. In the event of (a) any merger,
reorganization, consolidation, recapitalization, liquidation, reclassification,
stock dividend, stock split, combination of shares, rights, offering,
extraordinary dividend (including a spin-off) or other similar change affecting
the Company’s shares, (b) any purchase, acquisition, sale or disposition of a
significant amount of assets other than in the ordinary course of business, or
of a significant business, (c) any change resulting from the accounting effects
of discontinued operations, extraordinary income or loss, changes in accounting
as determined under GAAP, or restatement of earnings or (d) any charge or credit
resulting from an item which is classified as “non-recurring,” “restructuring,”
or similar unusual item on the Company’s audited annual Statement of Income
which, in the case of (a) — (d), results in a change in the components of the
calculations of any of the Performance Criteria, as established by the
Committee, in each case with respect to the Company or any other entity whose
performance is relevant to the achievement of any Performance Goal included in
an Award, the Committee (or, if the Company is not the surviving corporation in
any such transaction, a committee of the board of directors of the surviving
corporation consisting solely of two or more “outside directors” within the
meaning of Section 162(m)(4)(C)(i) of the Code) shall, without the consent of
any affected Participant, amend or modify the terms of any outstanding Award
that includes any Performance Goal based in whole or in part on the financial
performance of the Company (or any Subsidiary or division thereof) or such other
entity so as equitably to reflect such event or events, such that the criteria
for evaluating such financial performance of the Company or such other entity
(and the achievement of the corresponding Performance Goal) will be
substantially the same (as determined by the Committee or the committee of the
board of directors of the surviving corporation) following such event as prior
to such event; provided, however, that the Committee shall not take any action
pursuant to this Section which would constitute an impermissible exercise of
discretion pursuant to Section 162(m) of the Code.

 

4.                                      Participation.

 

The Participants for any Performance Period shall be those Executive Officers
who are granted Awards by the Committee under the Plan for such Performance
Period.

 

5.                                 Grant of Awards.

 

5.1                               Nature of Awards. An Award granted under the
Plan shall provide for a cash payment to be made solely on account of the
attainment of one or more pre-established, objective Performance Goals included
in such Award, subject to the Committee’s authority pursuant to Sections 3 and
10 of the Plan.

 

5.2                               Performance Criteria. Performance Criteria
which the Committee may include in Awards made under the Plan include the
following measurements as applied to the Company as a consolidated entity or,
except as to Diluted Earnings Per Share, a business division or business or
staff unit thereof:

 

(a)                                 “Diluted Earnings Per Share” (“EPS”) means
net income (loss) per common share, diluted, as reported in the Company’s
audited year-end Consolidated Statement of Income (“Statement of Income”) for
the Plan Year;

 

(b)                                 “Operating Income” means “operating income”
as reported or included in the Company’s Statement of Income;

 

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(c)                                  “Net Sales” means “net sales” as reported
or included in the Company’s Statement of Income;

 

(d)                                 “Days Sales Outstanding” (“DSO”) means the
12 point average of month-end DSO numbers, and month-end DSO numbers shall mean
monthly performance for days sales invested in trade accounts receivable,
determined by using the “exhaustion method”;

 

(e)                                  “Capital Expenditures” means “capital
expenditures” reported or included in the Company’s year-end audited
Consolidated Statement of Cash Flows for the Plan year;

 

(f)                                   “Inventory Days On Hand” (“DOH”) means, by
category of inventory, the average of the 12 month-end DOH numbers, and the
month-end DOH numbers shall mean, by category of inventory, (i) inventory on
hand at standard cost, divided by (ii) cost of goods at standard cost based on
either forecasted requirements or historical shipments;

 

(g)                                  “Controllable Expenses” means expenses
under the control of the Participant;

 

(h)                                 “Return on Beginning Equity” means net
income (loss) as reported or included in the Company’s Statement of Income
divided by beginning of the year “shareholders equity” as reported or included
in the Company’s year-end audited financial statements for the Plan Year; and

 

(i)                                     “Return on Net Assets” means
(i) Operating Income, less income taxes at the applicable effective rate,
divided by (ii) total assets less cash and cash equivalents, investments in
securities and non-interest bearing liabilities as reported or included in the
Company’s year-end audited financial statements for the Plan year, including
footnotes.

 

Any Performance Goal based on one or more of the foregoing Performance Criteria
may, in the Committee’s discretion, be expressed in absolute amounts, relative
to one or more other Performance Criteria, as a growth rate or change from
preceding periods, or as a comparison to the performance of specified companies
or a published or special index (including stock market indices) or other
external measures.

 

5.3                               Establishment of Performance Goals. Not later
than 90 days after the commencement of the Plan Year (or such earlier date as
may be required pursuant to Section 162(m) of the Code) the Committee shall
determine in writing for each Participant:

 

(a)                                 the Performance Goal(s) for the Participant,
including in each case one or more of the Performance Criteria set forth in
Section 5.2 of the Plan and the Performance Target for each Performance
Criteria;

 

(b)                                 if more than one Performance Goal is
specified for a Participant, the relative weight assigned to each Performance
Goal; and

 

(c)                                  the cash award expressed as a percentage of
the base salary for the Participant for the Performance Period (as fixed at the
time the Performance Goal(s) are established), provided that the Committee shall
also place a maximum dollar amount on such cash award which may not exceed $7
million.

 

For an Executive Officer who is first hired as, or first becomes eligible for
this Plan as, an Executive Officer and who becomes a Participant after the first
day of the Plan Year, the Performance

 

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Goals shall be established by the Committee as set forth in this Section within
the time period permitted by Section 162(m) of the Code.  In establishing the
Performance Goals applicable to any Award, the Committee may provide that one or
more objectively determinable adjustments may be made to the manner of
calculating the Performance Criteria on which the Performance Goals are based to
take into account the impact of events of the type specified in Section 3.2 of
the Plan.

 

6.                                      Payment of Awards.

 

As soon as practicable after the Committee has received the appropriate
financial and other data after the end of a Plan Year, the Committee will for
each Participant certify in writing the extent to which the applicable
Performance Goals for such Participant have been met and the corresponding
amount of the Award earned by such Participant. Payment of each Award in a cash
lump sum, less applicable withholding taxes pursuant to Section 8 of the Plan,
shall be made as soon as practicable thereafter, but not later than the later of
(i) the 15th  day of the third month following the end of the Participant’s
first taxable year in which the right to payment is no longer subject to a
substantial risk of forfeiture, or (ii) the 15th  day of the third month
following the end of the Company’s first taxable year in which the right to
payment is no longer subject to a substantial risk of forfeiture.
Notwithstanding anything in the Plan to the contrary, no payment made pursuant
to any Award in respect of any Performance Period shall exceed $7 million.

 

7.                                      Effect of Termination of Employment.

 

7.1                               Termination Due to Death, Disability or
Retirement. In the event a Participant’s employment with the Company and all
Subsidiaries is terminated by reason of death, Disability or Retirement during a
Performance Period, the Participant (or the Participant’s estate) (subject to
the Committee’s discretion as allowed by clause (y) of Section 3.1 of the Plan)
shall be paid (pursuant to Section 6 of the Plan, including satisfaction of the
applicable Performance Goals, after the completion of the Plan Year) a
percentage of the amount earned according to the terms of the Award equal to the
portion of the Performance Period through the Participant’s death, Disability or
Retirement, as the case may be, as determined by the Committee.

 

7.2                               Termination for Reasons Other than Death,
Disability or Retirement. In the event a Participant’s employment is terminated
with the Company and all Subsidiaries prior to the end of the Performance Period
for any reason other than death, Disability or Retirement, or a Participant is
in the employ of a Subsidiary and the Subsidiary ceases to be a Subsidiary of
the Company (unless the Participant continues in the employ of the Company or
another Subsidiary), the Participant’s Award for such Performance Period shall
be immediately forfeited and the Participant shall have no right to any payment
thereafter; provided, however, that under such circumstances the Committee may
pay the Participant (pursuant to Section 6 of the Plan, including satisfaction
of the applicable Performance Goals) after completion of the Plan Year, an
amount not to exceed a percentage of the amount earned according to the terms of
the Award equal to the portion of the Performance Period through the
Participant’s termination.

 

8.                                      Payment of Withholding Taxes.

 

The Company is entitled to withhold and deduct from the payment made pursuant to
an Award or from future wages of the Participant (or from other amounts that may
be due and owing to the Participant from the Company or a Subsidiary), or make
other arrangements for the collection of, all amounts the Company (or
Subsidiary) reasonably determines are necessary to satisfy any and all federal,
state and local withholding and employment-related tax requirements attributable
to any payment made pursuant to an Award.

 

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9.                                      Rights of Eligible Executive Officers
and Participants; Transferability.

 

9.1                               Employment. Nothing in the Plan will interfere
with or limit in any way the right of the Company or any Subsidiary to terminate
the employment or otherwise modify the terms and conditions of the employment of
any Executive Officer or Participant at any time, nor confer upon any Executive
Officer or Participant any right to continue in the employ of the Company or any
Subsidiary.

 

9.2                               Restrictions on Transfer. Except pursuant to
testamentary will or the laws of descent and as otherwise expressly permitted by
the Plan, no right or interest of any Participant in an Award will be assignable
or transferable, or subjected to any lien, during the lifetime of the
Participant, either voluntarily or involuntarily, directly or indirectly, by
operation of law or otherwise.

 

9.3                               Non - Exclusivity of the Plan. Nothing
contained in the Plan is intended to modify or rescind any previously approved
compensation plans or programs of the Company or any Subsidiary or create any
limitations on the power or authority of the Board or any committee thereof to
adopt such additional or other compensation arrangements as the Board or
committee may deem necessary or appropriate.

 

10.                               Plan Amendment, Modification and Termination.

 

The Board may suspend or terminate the Plan or any portion thereof at any time,
and may amend the Plan from time to time in such respects as the Board may deem
advisable in order that Awards under the Plan will conform to any change in
applicable laws or regulations or in any other respect the Board may deem to be
in the best interests of the Company; provided, however, that no amendments to
the Plan will be effective without the approval of the stockholders of the
Company if stockholder approval of the amendment is then required for the Plan
to continue to be a qualified performance-based compensation plan pursuant to
Section 162(m) of the Code. Any termination, suspension or amendment of the Plan
may adversely affect any outstanding Award without the consent of the affected
Participant.

 

11.                               Unfunded, Unsecured Obligation.

 

A Participant’s only interest under the Plan shall be the right to receive a
cash payment under an Award pursuant to the terms of the Award and the Plan
(subject to the authority of the Committee pursuant to Sections 3 and 10 of the
Plan). No portion of the amount payable to Participants upon the achievement of
any Performance Goal therein shall be held by the Company or any Subsidiary in
trust or escrow or any other form of asset segregation. To the extent that a
participant acquires a right to receive such a cash payment under the Plan, such
right shall be no greater than the right of any unsecured, general creditor of
the Company.

 

12.                               Effective Date and Duration of the Plan.

 

The Plan (originally titled the “1999 Ecolab Inc. Management Performance
Incentive Plan”) was originally approved by the Board on February 19, 1999 and
by the Company’s stockholders on May 14, 1999. The Plan was further amended and
restated by the Board on February 28, 2004, and approved by the Company’s
stockholders on May 7, 2004. The Plan was further amended and restated by the
Board on February 27, 2009, and approved by the Company’s stockholders on May 8,
2009. The Plan was further amended and restated by the Board on February 27,
2014, subject to stockholder approval as required by Section 162(m) of the Code.
No benefits will be granted or amounts will be paid pursuant to the further
amended and restated Plan unless and until such stockholder approval is
obtained. If approved, the further amended Plan shall be effective for the Plan
Year beginning on January 1, 2014 and will remain in effect

 

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until the date of the first meeting of the Company’s stockholders that occurs in
2019. The Plan may be terminated at any time by the Board. Any payments pursuant
to Awards outstanding upon termination of the Plan may continue to be made in
accordance with the terms of the Awards, subject to the authority of the
Committee pursuant to Sections 3 and 10 of the Plan.

 

13.                               Miscellaneous.

 

13.1                        Governing Law. Except to the extent in connection
with other matters of corporate governance and authority (all of which shall be
governed by the laws of the Company’s jurisdiction of incorporation), the
validity, construction, interpretation, administration and effect of the Plan
and any rules, regulations and actions relating to the Plan will be governed by
and construed exclusively in accordance with the internal, substantive laws of
the State of Minnesota, without regard to the conflict of law rules of the State
of Minnesota or any other jurisdiction.

 

13.2                        Successors. The Plan will be binding upon and inure
to the benefit of the successors of the Company and the Participants.

 

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