Exhibit 10.1

 

 

 

 

 

 

 

 

 

 

ST. JUDE MEDICAL, INC.

AMENDED AND RESTATED

MANAGEMENT INCENTIVE COMPENSATION PLAN

 

(AS ADOPTED ON DECEMBER 8, 2014)

 

 

 

 

 

 

 

 

 

 

 

 

 

--------------------------------------------------------------------------------

 

TABLE OF CONTENTS

 

Section 1.

Purpose

1

Section 2.

Definitions

1

Section 3.

Eligibility

2

Section 4.

Administration

2

 

(a)

Timing of Designations

2

 

(b)

Adjustments

2

 

(c)

Certifications

2

 

 

 

Section 5.

Financial Performance Goals

2

Section 6.

Payment of Incentive Compensation; Nonassignability

3

Section 7.

No Right To Continued Employment

3

Section 8.

Amendment and Termination

4

Section 9.

Shareholder Approval of Plan

4

 

--------------------------------------------------------------------------------

 

ST. JUDE MEDICAL, INC.

AMENDED AND RESTATED
MANAGEMENT INCENTIVE COMPENSATION PLAN
(AS ADOPTED ON DECEMBER 8, 2014)

 

Section 1.                                Purpose.

 

The Plan is designed to attract, retain and reward highly qualified executives
who are important to the Company’s success and to provide incentives relating
directly to the financial performance and long-term growth of the Company.

 

Section 2.                                Definitions.

 

As used in the Plan, the following terms shall have the meanings set forth
below:

 

(a)                               “Board” shall mean the Board of Directors of
St. Jude Medical, Inc.

 

(b)                              “Code” shall mean the Internal Revenue Code of
1986, as amended from time to time, and any regulations promulgated thereunder.

 

(c)                               “Committee” shall mean the Compensation
Committee of the Board or any successor committee of the Board designated by the
Board to administer the Plan.  Each member of the Committee shall be an “outside
director” within the meaning of Section 162(m) of the Code.

 

(d)                             “Company” shall mean St. Jude Medical, Inc., a
Minnesota corporation, or any successor corporation and any other corporation in
which St. Jude Medical, Inc. controls, directly or indirectly, 50% or more of
the combined voting power of all classes of voting securities.

 

(e)                               “Exchange Act” shall mean the Securities
Exchange Act of 1934, as amended.

 

(f)                                “Executive Officer” shall mean any officer of
the Company subject to the reporting requirements of Section 16 of the Exchange
Act.

 

(g)                              “Incentive Compensation” shall mean the cash
incentive awarded to a Participant pursuant to terms and conditions of the Plan.

 

(h)                              “Participant” shall mean any Executive Officer
and any other employee or class of management employees of the Company as may be
designated by the Committee.

 

(i)                                  “Plan” shall mean this St. Jude
Medical, Inc. Management Incentive Compensation Plan, as amended from time to
time.

 

(j)                                  “Salary” shall mean the direct gross (as
opposed to taxable) compensation earned by the Participant as base salary during
the fiscal year, excluding any and all commissions, bonuses, incentive payments
payable during the fiscal year, and other similar payments.

 

--------------------------------------------------------------------------------

 

Section 3.                                Eligibility.

 

Each fiscal year, the Committee shall designate those employees of the Company,
including Executive Officers, who are eligible to receive Incentive Compensation
under this Plan for the fiscal year.

 

Section 4.                                Administration.

 

The awards under the Plan shall be based on the attainment of financial
performance goals for the fiscal year, as determined for each Participant by the
Committee. From time to time, the Committee may designate an award granted
pursuant to the Plan as an award of “qualified performance-based compensation”
within the meaning of Section 162(m) of the Code (a “Qualified Performance
Award”).  The Committee shall administer the Plan and shall have full power and
authority necessary to construe, interpret and administer the Plan to comply
with the requirements of Section 162(m) of the Code. The Committee’s decisions
shall be final, conclusive, and binding upon all persons.  Except with respect
to Incentive Compensation payable to Executive Officers or any other employee
who is a “covered employee” within the meaning of Section 162(m) of the Code,
the Committee may delegate the establishment of performance goals, and the
general powers of the Committee described above with respect to the Plan, to the
Chief Executive Officer of the Company.

 

(a)                               Timing of Designations.  Not later than 90
days after the beginning of a fiscal year, the Committee shall: (i) determine
the percentage of the Participant’s Salary that may be awarded as Incentive
Compensation for the fiscal year, up to a maximum award under the Plan of
$5,000,000; (ii) determine the Participants eligible to participate in the Plan
for the fiscal year; (iii) determine financial performance goals as set forth in
Section 5 herein for each Participant on which Incentive Compensation will be
paid; (iv) determine each Participant’s Incentive Compensation for the fiscal
year; and (v) determine the frequency at which each Participant’s Incentive
Compensation will be paid when attained.

 

(b)                              Adjustments.  Notwithstanding any provision of
the Plan to the contrary, the Committee in its sole discretion may adjust the
amount payable pursuant to an award; provided, however, that (1) the Committee
may adjust downwards (but not upwards) the amount payable pursuant to a
Qualified Performance Award, and (2) the Committee may not waive the achievement
of the applicable performance goals established for a fiscal year with respect
to a Qualified Performance Award, except in the case of the death or disability
of the Participant or a change in control of the Company.

 

(c)                               Certifications.  The Committee shall certify
in writing prior to commencement of payment of the Incentive Compensation that
the performance goal or goals under which the Incentive Compensation is to be
paid has or have been achieved.

 

Section 5.                                Financial Performance Goals.

 

With respect to any Participant who is an Executive Officer or a “covered
employee” within the meaning of section 162(m) of the Code, the Committee shall
establish performance

 

2

--------------------------------------------------------------------------------

 

goals based on net earnings; operating earnings or income; earnings growth; net
income; cash flow (including operating cash flow, free cash flow, discounted
cash flow return on investment, and cash flow in excess of cost of capital);
earnings per share; earnings per share growth; stock price; total shareholder
return; absolute and/or relative return on common shareholders equity; return on
shareholders equity; return on capital; return on assets; economic value added
(income in excess of cost of capital); independent customer satisfaction studies
or indices; expense reduction; sales; ratio of operating expenses to operating
revenues; market share; or the expenses or profitability of the Company or any
division or subsidiary; or any combination of such goals for the fiscal year, or
a portion thereof. For employees other than Executive Officers, subjective,
individual performance goals may also be established. Any performance goal shall
be established in a manner such that a third party having knowledge of the
relevant performance results could calculate the amount to be paid to the
Participant. Any such goal shall be established when the outcome of the goal is
substantially uncertain. The Incentive Compensation may be paid in whole or in
part upon the attainment of any one of the goals. Any performance goals that
relate to Qualified Performance Awards shall comply with the applicable
requirements of Section 162(m) of the Code and any regulations promulgated
thereunder. To the extent consistent with Section 162(m) of the Code, the
Committee may, when it establishes performance goals, also specify whether or
not the applicable performance goals will be applied on a pre- or post-tax basis
and whether or not the applicable performance goals will be adjusted to include
or exclude objectively determinable components of any performance goals,
including, without limitation, special charges such as restructuring or
impairment charges, debt refinancing costs, extraordinary or noncash items,
unusual, nonrecurring or one-time events affecting the Company or its financial
statements or changes in law or accounting principles.

 

With respect to any Participant other than an Executive Officer or any other
employee who is a “covered employee” within the meaning of Section 162(m) of the
Code, the Committee may establish performance goals based on criteria other than
the financial performance of the Company specified above.

 

Section 6.                                Payment of Incentive Compensation;
Nonassignability.

 

The Incentive Compensation shall be paid only upon certification of the
attainment of the pre-established performance goals by the Committee. Such
Incentive Compensation shall be paid within 90 days of the end of the fiscal
year, but any Participant who is eligible to participate in the Company’s
deferred compensation plan may elect to defer part or all of such Incentive
Compensation under such plan. No Incentive Compensation or any other benefit
under the Plan shall be assignable or transferable by the Participant during the
Participant’s lifetime.

 

Section 7.                                No Right To Continued Employment.

 

Nothing in the Plan shall confer upon any employee any right to continue in the
employ of the Company or shall interfere with or restrict in any way the right
of the Company to discharge an employee at any time for any reason whatsoever,
with or without cause.

 

3

--------------------------------------------------------------------------------

 

Section 8.                                Amendment and Termination.

 

The Committee may amend, modify, suspend or terminate the Plan for the purpose
of meeting or addressing any changes in legal requirements or for any other
purpose permitted by law.  The Committee will seek shareholder approval of any
amendment determined to require shareholder approval or to be advisable under
the regulations of the Internal Revenue Service or other applicable law or
regulation.

 

Section 9.                                Shareholder Approval of Plan.

 

Any Qualified Performance Award shall be null and void and have no effect
whatsoever unless the Plan shall have been approved by the shareholders of the
Company at the Company’s 2015 Annual Meeting of Shareholders.  The Plan must be
re-approved by shareholders no later than the first shareholder meeting that
occurs in 2020 (i.e., the fifth year following the year in which the
shareholders previously approved the Plan).  No Qualified Performance Award
shall be granted after such meeting of shareholders unless the shareholders have
re-approved the Plan.

 

4

--------------------------------------------------------------------------------