Exhibit 10-u

Amended and Restated as of
February 25, 2003

 

Bausch & Lomb Incorporated

ANNUAL INCENTIVE COMPENSATION PLAN

I.      Introduction.

The Bausch & Lomb Incorporated Annual Incentive Compensation Plan (the "Plan")
is established to create effective incentives for managers of Bausch & Lomb
Incorporated (the "Company") to set and achieve objectives that are designed to
enhance business performance and increase shareholder value. The Plan is also
designed to provide competitive levels of compensation to enable the Company to
attract and retain managers who are able to exert a significant impact on the
value of the Company for its shareholders.

II.     Plan Participants.

Employees of the Company who are in the mid management band and above and are
selected to participate in the Plan are eligible to participate in the Plan
("Participants").

III.    Definitions. Capitalized terms not otherwise defined when used in this
Plan shall have the following meanings.

A.     "Approved Incentive Award" or "Bonus". An Approved Incentive Award or
Bonus is the incentive which has been approved in accordance with this Plan to
be paid by the Company to the Participant.

B.     "Bonus Pool". shall have the meaning set forth in Section VI.A.1.

C.     "Committee". means the Committee on Management of the Company's Board of
Directors.

D.     "Performance Management Process (PMP) objectives". PMP objectives are
team or individual performance measures which are established in accordance with
guidelines issued by the Corporate Senior Vice President - Human Resources, and
approved by the immediate manager of the individual or team to whom the measure
applies and that person's immediate manager, as further defined in Section IV B
hereof.

E.     "Operating Unit Objective". An Operating Unit Objective is a performance
target for one or more of the Company's geographic regional businesses (e.g.
Americas; Asia; Europe, Middle East and Africa) or functional centers (Research
Development & Engineering; Global Supply Chain), which is established early in a
Plan Year with approval from the relevant Operating Unit head, the Corporate
Senior Vice President-Human Resources, the Senior Vice President and Chief
Financial Officer and the Chief Executive Officer, as further defined in Article
IV B hereof.

F.     "Plan Year" means each one year period coincident with a fiscal year of
the Company.

 

G.     "Standard Incentive Funding". is the Bonus Pool funding at Standard
Incentive percentage for all Participants in a particular group or Operating
Unit. A standard incentive percentage has been established by job band and is
applied to eligible base salary earnings to determine the appropriate funding.

H.     "stretch goal". Defined in Article V.

I.      "target goal". Defined in Article V.

J.     "threshold goal". Defined in Article V.

K.     "Total Company Objective". A Total Company Objective is a performance
target set for the Company as a whole, which is established early in a Plan Year
with approval by the Committee, as further defined in Article IV B hereof.

IV.    Performance Measurement.

A.     Each Plan Year, the Company and each Operating Unit and eligible
Participant will set objectives in accordance with this Plan. These will be
applied for Incentive Plan purposes either to fund a Bonus Pool (as to Total
Company and Operating Unit Objectives) or to allocate a Bonus Pool among
Participants.

B.     Total Company, Operating Unit and PMP Objectives will be set early in the
Plan Year in which performance is to occur. Total Company performance will be
evaluated based on Total Company Objectives which are set with approval from the
Committee. Operating Unit Objectives for commercial business units shall be
based on objective identifiable measures of business performance, including, for
example, sales and operating earnings, return on assets/equity and cash flow.
Operating Unit Objectives for units other than commercial business units (e.g.,
RD&E, Global Supply Chain) shall be based on deliverables required to meet
annual plan and longer term objectives, including, for example, cost
containment, cost improvement, product launch, product quality and cash flow
goals. All Operating Unit Objectives shall be approved by the relevant Operating
Unit head as well as the Senior Vice President- Human Resources, Senior Vice
President and Chief Financial Officer, and the Chief Executive Officer.

Company and Operating Unit Objectives will be assigned a weighting for Bonus
Pool funding purposes. (Bonus Pool funding is described further under Section VI
of this Plan). The weighting of Company and Operating Unit Objectives will be
approved by the Committee at the time Company Objectives are approved. 2003
Annual Incentive Plan weightings for Bonus Pool Funding are set forth in
Appendix B hereto.

PMP objectives will be team or individual measures which will, where possible,
impact the Operating Unit Objectives and ultimately the Total Company
Objectives. PMP objectives shall be set in accordance with guidelines issued by
the Senior Vice President-Human Resources, and shall be approved by the
immediate manager of the individual or team to whom the measure applies, and
that person's immediate manager (i.e., a "one-over-one" approval).

 

V.     Threshold, Target and Stretch Goals

All objectives (Total Company, Operating Unit, and PMP objectives where
appropriate) will be set with a "target" goal, a "stretch" goal and a
"threshold" goal. Achievement of the "target" goal should reflect performance
which is in line with expected performance, and which supports expected Company
performance. "Stretch" goals should assume performance well in excess of that
required to achieve the target goal, while "threshold" goals should define a
minimum level of performance warranting payment of any Bonus. "Stretch" and
"threshold" goals must be approved with respect to each Objective at the same
time and in the same manner that the respective Objective is approved.

VI.    Bonus Calculation.

A.     The amount of an individual Participant's Approved Incentive Award (or
Bonus) in any Plan Year is determined as follows:

1.    A Bonus Pool for Corporate Officers, Corporate Staff and for each
Operating Unit will be calculated and funded based on a factor taking into
account (a) Standard Incentive Funding within the Operating Unit or Staff and
(b) performance against Company Objectives and, where applicable, Operating Unit
Objectives. Where an Operating Unit has multiple Operating Unit Objectives,
performance will be assessed based on aggregate achievement against all
Objectives on a weighted average basis in accordance with guidelines established
by the Corporate Senior Vice President - Human Resources.

2.    The Bonus Pool which is so determined shall then be allocated among the
individual participants within a group (Corporate Officers or Corporate Staff)
or Operating Unit based upon achievement by the members of that group or
Operating Unit against PMP objectives. The total of Annual Incentive Awards with
respect to a group or Operating Unit shall not exceed the Bonus Pool for such
group or Operating Unit.

3.    The Approved Incentive Award is based on the extent to which the relevant
Bonus Pool is funded and on an assessment of performance against PMP objectives.
Assessment of performance against PMP objectives shall be in accordance with
guidelines issued by the Senior Vice President, Human Resources, and shall be
subject to discretionary upward or downward modification in accordance with such
guidelines.

4.    Where performance against Company or Operating Unit Objectives meets or
exceeds the "stretch goal" established with respect to that Objective, the
calculation of the funded Bonus Pool which is attributable to that Objective
shall be 200% of the Standard Incentive Funding. This is the maximum extent of
Bonus Pool Funding. Conversely, where performance against a Company or Operating
Unit Objective meets the "threshold goal" established with respect to that
Objective, the calculation of the funded Bonus Pool will start at 0% of the
Standard Incentive Funding.

 

5.    Where actual performance on a particular Objective falls between
"threshold", "target" and "stretch" goals, the Bonus Pool Funding which is
attributable to that Objective shall be calculated on a pro-rata basis with
respect to the payouts set for achievement of goals (50%, 100%, and 200%)
depending on where performance lies between such goals.

B.     Bonus Pool Funding may be modified as a result of the following:

1.    Performance against Company or Operating Unit Objectives may be modified
by the Committee based on the Committee's overall assessment of the manner in
which such performance was achieved or, with respect to Operating Unit
performance, relative contribution to Total Company Performance.

2.    In addition, Bonus Pool Funding for a group or Operating Unit may be
modified by the Chief Executive Officer, in his sole discretion, to reflect a
group's or Operating Unit's relative contribution to Total Company performance,
provided that such modification shall not have the effect of increasing the
total Funded Bonus Pool for the Company as a whole beyond the level approved by
the Committee.

3.    Any modification to the Chief Executive Officer's Approved Incentive Award
shall be approved by the Committee.

C.     An individual Participant's Approved Incentive Award shall be determined
based upon relevant performance against PMP objectives, which will allow for
allocation to the Participant of a portion of the funded Bonus Pool of such
Participant's group or Operating Unit. Assessment of performance against PMP
objectives shall be in accordance with guidelines issued by the Senior Vice
President, Human Resources. Approved Incentive Awards may vary upward or
downward against the targeted level based on evaluation of his or her
performance PMP objectives. However, the total of all Bonuses within each group
or Operating Unit cannot exceed 100% of the funded Bonus Pool as to such group
or Operating Unit.

VII.    Change in Status During Plan Year

A.     New Hires and Promotions.

1.    A newly hired or recently promoted employee of the Company who is a
Participant in the Plan for at least six months of his/her first Plan Year will
be eligible for a Bonus which is based on salary paid during the partial Plan
Year after the effective date of hire or promotion, as the case may be.

2.    A newly hired or recently promoted employee of the Company who is a
Participant for less than six months in his/her initial Plan Year will be
eligible for a Bonus for a portion of that Plan Year after the effective date of
hire or promotion, as the case may be, only if the terms of such partial Plan
Year bonus are agreed to in writing between the Participant and the Company at
the time of hire. These arrangements must be approved in writing in advance by
Corporate Senior Vice President Human Resources and normal one-over-one approval
matrix.

 

B.     Transfers.

1.    Where a Participant transfers from one Operating Unit or group to another
during a Plan Year, the Bonus for the Plan Year in which the transfer occurs
will be based on Bonus Pool Funding as to the particular Operating Unit or group
in which the Participant worked for the majority of the Plan Year, or as
otherwise approved by the Corporate Senior Vice President Human Resources.

C.     Terminations.

1.    A Participant who terminates voluntarily from the Company during a Plan
Year will not be eligible for any bonus for that Plan Year.

2.    In cases of involuntary termination due to death, disability, reduction in
work force, or the sale or closing of a plant or business unit before completion
by the Participant of at least six months service as an eligible Participant
during the Plan Year, such Participant will not be eligible for any Bonus for
that Plan Year. In cases of involuntary termination due to death, disability,
reduction in work force, or the sale or closing of a plant or business unit
after completion by the Participant of at least six months service as an
eligible Participant during the Plan Year, a pro rata Bonus will be calculated
and paid in accordance with the Plan.

3.    A Participant who is terminated during a Plan Year involuntarily for any
other reason will not be eligible for any Bonus for the Plan Year in which
termination occurs.

D.     Leave of Absence.

An employee whose status as an active employee is changed during a Plan Year as
a result of a leave of absence may, at the discretion of the Committee, be
eligible for a pro rata Bonus determined in the same way as in Subsection VII A.

E.     Demotions.

1.    An employee who is transferred into a non-eligible group of employees
after having served six months during the Plan Year shall be paid a pro-rata
Bonus determined in the same manner as in Subsection VII A.

2.    An employee who is transferred into a non-eligible group of employees
prior to having served six months during the Plan Year in an eligible group of
employees shall not be entitled to a Bonus.

3.    Where an employee is transferred into a lower band position within a Plan
Year, such employee's Standard Incentive Award percentage shall be based on the
band or position in which the employee spent the majority of the Plan Year.

 

VIII.    Change of Control.

Notwithstanding any other provision of this Plan, a special incentive bonus
shall be paid to Participants if there is a change in control of the Company
during the Plan Year.

1.     The amount of the special incentive bonus shall equal the greater of (a)
the Bonus based upon "target" performance without regard to any other
calculations under the Plan, prorated where applicable, through the date of
termination of the Participant's employment where it is terminated involuntarily
other than for good cause, or (b) the Bonus which would be payable to the
Participant based on results for the full Plan Year, prorated where applicable,
through the date of termination of the Participant's employment where it is
terminated involuntarily other than for good cause, as applicable.

A change of control of the Company is defined as follows:

(a)      The acquisition by any individual, entity or group (within the meaning
of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act")) (a "Person") of beneficial ownership (within the
meaning of Rule 13d-3 promulgated under the Exchange Act) of 20% or more of
either (i) the then outstanding shares of common stock of the Company (the
"Outstanding Company Common Stock") or (ii) the combined voting power of the
then outstanding voting securities of the Company entitled to vote generally in
the election of directors (the "Outstanding Company Voting Securities");
provided, however, that the following acquisitions shall not constitute a Change
of Control: (i) any acquisition directly from the Company (excluding an
acquisition by virtue of the exercise of a conversion privilege unless the
security being so converted was itself acquired directly from the Company), (ii)
any acquisition by the Company, (iii) any acquisition by any employee benefit
plan (or related trust) sponsored or maintained by the Company or any
corporation controlled by the Company or (iv) any acquisition by any corporation
pursuant to a reorganization, merger or consolidation, if, following such
reorganization, merger or consolidation, the conditions described in clauses
(i), (ii) and (iii) of subsection (c) of this Section are satisfied; or

(b)      Individuals who, as of February 25, 2003, constitute the Board (the
"Incumbent Board") cease for any reason to constitute at least a majority of the
Board; provided, however, that any individual becoming a director subsequent to
February 25, 2003 whose election, or nomination for election by the Company's
shareholders, was approved by a vote of at least a majority of the directors
then comprising the Incumbent Board shall be considered as though such
individual were a member of the Incumbent Board, but excluding, for this
purpose, any such individual whose initial assumption of office occurs as a
result of either an actual or threatened election contest (as such terms are
used in Rule 14a-11 of Regulation 14A promulgated under the Exchange Act) or
other actual or threatened solicitation of proxies or consents by or on behalf
of a Person other than the Board; or

 

(c)       Approval by the shareholders of the Company of a reorganization,
merger, binding share exchange or consolidation, in each case, unless, following
such reorganization, merger, binding share exchange or consolidation, (i) more
than 60% of, respectively, the then outstanding shares of common stock of the
corporation resulting from such reorganization, merger, binding share exchange
or consolidation and the combined voting power of the then outstanding voting
securities of such corporation entitled to vote generally in the election of
directors is then beneficially owned, directly or indirectly, by all or
substantially all of the individuals and entities who were the beneficial
owners, respectively, of the Outstanding Company Common Stock and Outstanding
Company Voting Securities immediately prior to such reorganization, merger,
binding share exchange or consolidation in substantially the same proportions as
their ownership, immediately prior to such reorganization, merger, binding share
exchange or consolidation, of the Outstanding Company Common Stock and
Outstanding Company Voting Securities, as the case may be, (ii) no Person
(excluding the Company, any employee benefit plan (or related trust) of the
Company or such corporation resulting from such reorganization, merger, binding
share exchange or consolidation and any Person beneficially owning, immediately
prior to such reorganization, merger, binding share exchange or consolidation,
directly or indirectly, 20% or more of the Outstanding Company Common Stock or
Outstanding Voting Securities, as the case may be) beneficially owns, directly
or indirectly, 20% or more of, respectively, the then outstanding shares of
common stock of the corporation resulting from such reorganization, merger,
binding share exchange or consolidation or the combined voting power of the then
outstanding voting securities of such corporation entitled to vote generally in
the election of directors and (iii) at least a majority of the members of the
board of directors of the corporation resulting from such reorganization,
merger, binding share exchange or consolidation were members of the Incumbent
Board at the time of the execution of the initial agreement providing for such
reorganization, merger, binding share exchange or consolidation; or

(d)       Approval by the shareholders of the Company of (i) a complete
liquidation or dissolution of the Company or (ii) the sale or other disposition
of all or substantially all of the assets of the Company, other than to a
corporation, with respect to which following such sale or other disposition, (A)
more than 60% of, respectively, the then outstanding shares of common stock of
such corporation and the combined voting power of the then outstanding voting
securities of such corporation entitled to vote generally in the election of
directors is then beneficially owned, directly or indirectly, by all or
substantially all of the individuals and entities who were the beneficial
owners, respectively, of the Outstanding Company Common Stock and Outstanding
Company Voting Securities immediately prior to such sale or other disposition in
substantially the same proportion as their ownership, immediately prior to such
sale or other disposition, of the Outstanding Company Common Stock and
Outstanding Company Voting Securities, as the case may be, (B) no Person
(excluding the Company and any employee benefit plan (or related trust) of the
Company or such corporation and any Person beneficially owning, immediately
prior to such sale or other disposition, directly or indirectly, 20% or more of
the Outstanding Company Common Stock or Outstanding Company Voting Securities,
as the case may be) beneficially owns, directly or indirectly, 20% or more of,
respectively, the then outstanding shares of common stock of such corporation
and the combined voting power of the then outstanding voting securities of such
corporation entitled to vote generally in the election of directors and (C) at
least a majority of the members of the board of directors of such corporation
were members of the Incumbent Board at the time of the execution of the initial
agreement or action of the Board providing for such sale or other disposition of
assets of the Company.

IX.     Miscellaneous.

A.     Amendments. The Committee shall have the right to modify or amend this
Plan from time to time, or suspend it or terminate it entirely; provided that no
such modification, amendment, suspension, or termination may, without the
consent of any affected Participants (or beneficiaries of such Participants in
the event of death), reduce the rights of any such Participants (or
beneficiaries, as applicable) to a payment or distribution already payable under
Plan terms in effect prior to such change.

B.     Role of the Committee. (i) Interpretation of the Plan. Any decision of
the Committee with respect to any issue concerning individuals selected as
Participants, the amount, terms, form and time of payment of bonuses, and
interpretation of any Plan guideline, definition, term or requirement shall be
final and binding.

(ii)      Administration. The Committee has designated the Corporate Senior Vice
President Human Resources to control and manage the operation and administration
of the Plan. The Corporate Senior Vice President Human Resources shall
administer the Plan in accordance with its terms and shall have all powers
necessary to carry out the provisions of the Plan, except such powers as are
specifically reserved to the Committee or some other person. These powers
include the power to make and publish such rules and regulations as he or she
may deem necessary to carry out the provisions of the Plan.

(iii)      Adjustment to Objectives. If any event occurs during a performance
period which requires changes to preserve the incentive features of this Plan,
the Committee may make appropriate upward or downward adjustments in the
specified performance levels.

C.     Right to Continued Employment; Additional Awards. Participation in the
Plan or the receipt of a bonus under the Plan shall not give the recipient any
right to continued employment (such employment shall be "at will"), and the
right and power to dismiss any employee is specifically reserved to the Company.
In addition, the receipt of a bonus with respect to any Plan Year shall not
entitle the recipient to any bonus with respect to any subsequent Plan Year,
except as expressly provided in the Plan.

D.     Withholding Taxes. The Company shall have the right to deduct from all
payments under this Plan any Federal or state taxes required by law to be
withheld with respect to such payments.

E.     Deferred Compensation. Participants may elect to defer all or part of a
Bonus in accordance with the procedures set forth in the Company's Executive
Deferred Compensation Plan.

F.     Interaction with Management Incentive Compensation Plan. Amounts payable
under this Plan shall be offset against amounts actually paid to a Participant
under the Bausch & Lomb Incorporated Management Incentive Compensation Plan,
dated as of January 1, 1998.

G.     Governing Law. This Plan shall be construed in accordance with and
governed by the laws of the State of New York.

 

                                              BAUSCH & LOMB INCORPORATED

 

                                              By:_/s/__________________________
                                                                   David Nachbar
                                                      Corporate Senior Vice
President
                                                                 Human Resources
                                                          Dated: February 25,
2003

 

 

APPENDIX LIST

 

 

Appendix A          STANDARD INCENTIVE PERCENTAGE TABLE

Appendix B          INCENTIVE WEIGHTINGS

APPENDIX A

Amended and Restated as of February 25, 2003

 

STANDARD INCENTIVE PERCENTAGE

 

 

BAND/GRADE

STANDARD INCENTIVE PERCENTAGE (AS A % OF BASE SALARY)

 

 

NON-OFFICERS:

 

MM/T

15%

   

EXEC

30%

   

SR. EXEC

35%

   

OFFICERS*:

         

*Standard incentive levels will range from 40% to 100% of base salary, depending
on position, as approved at the beginning of each Plan Year by the Committee on
Management of the Board of Directors.

 

 

 

Amended and Restated as of February 25, 2003

Appendix B

Bonus Pool Funding

 

 

Total Company

Operating Unit

Corporate Officers

100%

--

Corporate Staff

100%

--

Global Supply Chain:

75%

25%

Global RD&E:

75%

25%

Regional/Commercial:

75%

25%

Global Category Groups

75%

25%

Other Operating Units as approved by the CEO

75%

25%