Exhibit 10.1

 

STERIS CORPORATION

 

SENIOR EXECUTIVE MANAGEMENT INCENTIVE COMPENSATION PLAN

 

1. Purpose. The purpose of the Senior Executive Management Incentive
Compensation Plan (the “Plan”) is to attract and retain key executives for
STERIS Corporation, an Ohio corporation (the “Company”), and its Subsidiaries
and to provide such persons with incentives for superior performance. Incentive
Compensation payments made under the Plan are intended to constitute qualified
“performance-based compensation” for purposes of Section 162(m) of the Internal
Revenue Code of 1986, as amended, and Section 1.162-27 of the Treasury
Regulations promulgated thereunder, and the Plan shall be construed consistently
with such intention.

 

2. Definitions. As used in this Plan,

 

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

 

“Code” means the Internal Revenue Code of 1986, as amended from time to time.

 

“Committee” means the Compensation and Corporate Governance Committee of the
Board or any other committee appointed by the Board to administer the Plan;
provided, however, that in any event the Committee shall be comprised of not
less than two directors of the Company, each of whom shall qualify as an
“outside director” for purposes of Section 162(m) of the Code and Section
1.162-27(e) (3) of the Regulations.

 

“Eligible Executive” means the Company’s Chief Executive Officer and any other
executive officer or other employee of the Company designated by the Committee.

 

“Incentive Compensation” shall mean, for each Eligible Executive, a compensation
opportunity amount determined by the Committee pursuant to Section 5 below.

 

“Performance Objectives” means the achievement of a performance objective or
objectives established pursuant to this Plan for Eligible Executives.
Performance Objectives may be described in terms of Company-wide objectives or
objectives that are related to the performance of the individual Eligible
Executive or of the Subsidiary, division, department or function within the
Company or Subsidiary in which the Eligible Executive is employed or for which
the Eligible Executive has responsibilities. The Performance Objectives shall be
limited to specified levels of, growth in or relative peer company performance
in one or more of the following: earnings per share, return on invested capital,
return on total capital, return on assets, return on equity, total shareholder
return, net income, revenue, free cash flow, operating profit, gross margin
and/or contribution margin, earnings before interest and taxes, earnings before
interest, taxes, depreciation and amortization, and productivity improvement.

 

“Regulations” mean the Treasury Regulations promulgated under the Code, as
amended from time to time.

 

“Subsidiary” means a corporation, partnership, joint venture, unincorporated
association or other entity in which the Company has a direct or indirect
ownership or other equity interest.

 

3. Administration of the Plan. The Plan shall be administered by the Committee,
which shall have full power and authority to construe, interpret and administer
the Plan and shall have the exclusive right to establish Performance Objectives
and the amount of Incentive Compensation payable to each Eligible Executive upon
the achievement of the specified Performance Objectives.

 

4. Eligibility. Eligibility under this Plan is limited to Eligible Executives
designated by the Committee in its sole and absolute discretion.

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5. Awards.

 

(a) Not later than the 90th day of each fiscal year of the Company, the
Committee shall establish the Performance Objectives for each Eligible Executive
and the amount of Incentive Compensation payable (or formula for determining
such amount) upon full achievement of the specified Performance Objectives for
such fiscal year. The Committee may further specify in respect of the specified
Performance Objectives a minimum acceptable level of achievement below which no
Incentive Compensation payment will be made and set forth a formula for
determining the amount of any payment to be made if performance is at or above
the minimum acceptable level but falls short of full achievement of the
specified Performance Objectives. The Committee may not modify any terms of
awards established pursuant to this section, except to the extent that after
such modification the Incentive Compensation would continue to constitute
qualified “performance-based compensation” for purposes of Section 162(m) of the
Code.

 

(b) The Committee retains the discretion to reduce the amount of any Incentive
Compensation that would be otherwise payable to an Eligible Executive (including
a reduction in such amount to zero).

 

(c) Notwithstanding any other provision of the Plan to the contrary, the
Incentive Compensation paid to an Eligible Executive under the Plan for a fiscal
year shall not exceed two and one-half (2 1/2 ) times the applicable Eligible
Executive’s annual base salary, and in no event shall such Incentive
Compensation exceed $2,000,000.

 

6. Committee Certification. As soon as reasonably practicable after the end of
each fiscal year of the Company, the Committee shall determine whether the
Performance Objectives have been achieved and the amount of the Incentive
Compensation to be paid to each Eligible Executive for such fiscal year and
shall document such determinations.

 

7. Payment of Incentive Compensation. Incentive Compensation shall be paid no
later than two and a half months from the end of the Company’s fiscal year.

 

8. No Right to Compensation or Continued Employment. Neither the establishment
of the Plan, the provision for or payment of any amounts hereunder nor any
action of the Company, the Board or the Committee with respect to the Plan shall
be held or construed to confer upon any person (a) any legal right to receive,
or any interest in, Incentive Compensation or any other benefit under the Plan
or (b) any legal right to continue to serve as an officer or employee of the
Company or any Subsidiary of the Company.

 

9. Withholding. The Company shall have the right to withhold, or require an
Eligible Executive to remit to the Company, an amount sufficient to satisfy any
applicable federal, state, local or foreign withholding tax requirements imposed
with respect to the payment of any Incentive Compensation.

 

10. Nontransferability. Except as expressly provided by the Committee, the
rights and benefits under the Plan shall not be transferable or assignable other
than by will or the laws of descent and distribution.

 

11. Amendment and Termination. The Committee may amend the Plan from time to
time, provided that any such amendment is subject to approval by the
shareholders of the Company to the extent required to satisfy the requirements
of Section 162(m) of the Code and the Regulations promulgated thereunder and
provided further that any such amendment shall not cause the amount payable
under Incentive Compensation to be increased as compared to the amount that
would have been paid in accordance with the terms established within such
period. The Committee may also terminate the Plan, on a prospective basis only,
at any time.

 

12. Effective Date. Subject to its approval by the shareholders, this Plan shall
become effective for the Company’s 2006 fiscal year, and shall remain effective
until the first annual meeting of shareholders to be held in the 2011 fiscal
year, subject to any further shareholder approvals (or reapprovals) mandated for
performance-based compensation under Section 162(m) of the Code, and subject to
the right of the Board to terminate the Plan, on a prospective basis only, at
any time.

 

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