Exhibit 10.1

 

AVERY DENNISON CORPORATION

AMENDED AND RESTATED ANNUAL INCENTIVE PLAN

WHEREAS, Avery Dennison Corporation (the “Company”) wishes to amend and restate
the Amended and Restated Annual Incentive Plan, effective as of January 1, 2015,
by adopting this Amended and Restated Annual Incentive Plan (“AIP” or the
“Plan”),  effective as of January 1,  2020 (the “Effective Date”); and

WHEREAS, this Plan was approved by the Compensation and Executive Personnel
Committee of the Company’s Board of Directors or any successor committee of the
Board with similar responsibilities (the “Committee”) pursuant to Section 6(c)
of the Plan.

NOW, THEREFORE, this Plan is hereby amended and restated, effective as of the
Effective Date, as follows:

1.           PURPOSE

The purposes of the Plan are as follows:

a.

To attract and retain the best possible employee talent;

b.

To permit employees of the Company to share in its success;

c.

To promote the success of the Company; and

d.

To link employee rewards to individual and Company performance.

2.           DEFINITIONS

a.

Administrator.  “Administrator” means (i) with respect to the “executive
officers”1 of the Company, the Committee and (ii) with respect to all other
Participants, the Chief Executive Officer of the Company.

b.

Annual Rate of Pay.  “Annual Rate of Pay” means the annual rate of pay as
recorded in HR PeopleSoft or such other payroll system determined appropriate by
the Administrator (or such other definition as may be appropriate from time to
time as a result of or in connection with country-specific requirements).

c.

Base Compensation.  “Base Compensation” means Base Salary or Annual Rate of Pay,
as appropriate.

d.

Base Salary.  “Base Salary” means, with respect to a salaried employee
designated as a Participant in any Plan Year, the annual base salary applicable
to the Participant as of the end of such Plan Year.  For the avoidance of doubt,
“Base Salary” shall include amounts earned in the applicable Plan Year the
payment of which is deferred to a future year but shall not include amounts
earned in prior years the payment of which is deferred to the applicable Plan
Year, and “Base Salary” shall also not include any variable bonus, commission,
incentive or retention

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1    As defined by applicable regulations of the Securities and Exchange
Commission.

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payments, stock options or other long-term incentive compensation vehicles, or
other forms of employee benefits such as vacation, insurance, health or medical
benefits, disability benefits, workers’ compensation, supplemental unemployment
benefits, and post-employment or retirement benefits (including but not limited
to compensation, pension, health, medical or life insurance).  If a
Participant’s standard work hours change during a Plan Year (whether increased
or decreased), the Base Salary used for his or her AIP calculation will be
prorated based on each of the Participant’s previous and current standard hours
and the number of months associated with each status.

e.

Business Unit.  “Business Unit” means a group, division or Subsidiary of the
Company.

f.

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

g.

Delegate.  “Delegate” means any one of the following officers of the Company to
which the Company’s Chief Executive Officer may delegate his authority as
provided in this Plan:  (i) the Chief Operating Officer, if applicable; (ii) the
Chief Financial Officer;  (iii) the Chief Human Resources Officer; or (iv) the
Vice President, Total Rewards.

h.

Disability.  “Disability” means permanent and total disability as defined in
Section 22(e)3 of the Code.

i.

Financial Performance Objective.  “Financial Performance Objective” means one of
the defined pre-established financial performance objectives as determined,
within the first 90 days of the beginning of each Plan Year, by the
Administrator.  For each Financial Performance Objective, the Administrator will
set threshold, target and maximum levels for measuring achievement.

j.

Participant.  “Participant” means any employee of the Company or any of its
Subsidiaries who has been designated as a participant in the Plan in accordance
with Article 3.

k.

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

l.

Person.  “Person” means an individual, corporation, partnership, limited
liability company, trust, unincorporated association, government or any agency
or political subdivision thereof, or any other legal entity.

m.

Retirement.  “Retirement” means, unless otherwise determined by the
Administrator,  a Participant’s termination of active employment with the
Company or a Subsidiary thereof, on or after age 55 with 10 or more years of
service, provided that, in no event shall a Participant’s termination of
employment with the Company or a Subsidiary be deemed a Retirement if such
termination of employment results from (or is in connection with) (i) a
termination for Cause (as such term is defined in the 2017 Incentive Award Plan
or any successor long-term incentive plan) or otherwise occurs at a time when
events or circumstances constituting “Cause” exist (ii) the disaffiliation from
the Company or a Subsidiary of all or part of the assets or stock of the
Company, a Subsidiary or the Business Unit in which such Participant is employed
(including, without limitation, as a result of a public offering, spin-off or
sale).

n.

Section 409A.  “Section 409A” means Section 409A of the Code and the Department
of Treasury regulations and other interpretive guidance issued thereunder,
including without limitation any such regulations or guidance which may be
issued after the Effective Date.

 

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o.

Subsidiary.  “Subsidiary” means any corporation in an unbroken chain of
corporations beginning with the Company if each of the corporations other than
the last corporation in the unbroken chain then owns stock possessing 33% or
more of the total combined voting power of all classes of stock in one of the
other corporations in such chain, as well as partnerships and limited liability
companies in which the Company holds a 33% or more interest.

p.

Target Award. “Target Award” means with respect to a Participant for any Plan
Year the AIP opportunity for the Participant in such Plan Year, stated by the
Company in writing.  The Target Award is expressed as a percentage of the
Participant’s Base Compensation in effect at the end of the Plan Year.

q.

Variable Incentive Plan.  “Variable Incentive Plan” means any incentive
compensation plan, policy or arrangement in which the amount of the payments or
benefits thereunder is tied to the attainment of Company, Business Unit and/or
individual performance goals, or any other plan, policy or arrangement which is
designated as a Variable Incentive Plan by the Administrator in its discretion.

3.          PARTICIPATION

Participation in the Plan is limited to employees of the Company and its
Subsidiaries who have been designated as Participants by the Administrator or,
with respect only to non-executive officers of the Company, an authorized
Delegate.

4.          ANNUAL AIP OPPORTUNITY

a.          AIP Award

Subject to achievement (by the Company or any Business Unit thereof) of any
minimum benchmark established by the Administrator for the payment of any awards
under the Plan for a given Plan Year, Participants will have the opportunity to
earn an annual variable AIP award determined in accordance with this Article 4.

b.         AIP Award Payout

i. Subject to Section 4(b)(iv) below, a Participant’s annual AIP award payout
will be equal to the product of (A) the Participant’s Target Award, (B) the
Participant’s Base Compensation, (C) the Company’s (and, where appropriate, a
Business Unit’s) Financial Modifier (as determined below), and (D) the
Participant’s Individual Modifier (as determined below).

ii. The Financial Modifier will be a percentage determined based on the
Company’s results and/or, as applicable, the results of the respective Business
Unit(s) for each Participant, and calculated in relation to the Financial
Performance Objectives (with the percentages derived from each Financial
Performance Objective weighted in such manner as determined by the person or
entity which determined the Financial Performance Objective).

The percentage derived from each Financial Performance Objective (prior to
weighing) shall be:

1.          Zero if the Company or Business Unit(s) achieved less than the
threshold performance level for such Financial Performance Objective.

 

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2.          50% if the Company or Business Unit(s) achieved the threshold
performance level for such Financial Performance Objective.

3.          100% if the Company or Business Unit(s) achieved the target
performance level for such Financial Performance Objective.

4.          200% if the Company or Business Unit(s) achieved at least the
maximum performance level for such Financial Performance Objective.

Upon the achievement of between the threshold and the target levels or between
the target and the maximum levels for a Financial Performance Objective of the
Company or Business Unit(s), the Financial Modifier for such Financial
Performance Objective will be determined by means of linear interpolation.  The
maximum Financial Modifier shall be 200%, for each Financial Performance
Objective and in total.

iii. A Participant’s Individual Modifier shall be a percentage ranging from 0%
to 150% as determined by such Participant’s manager based on the Participant’s
individual performance.

iv. The Administrator may, in its discretion, increase or decrease award amounts
that would otherwise be payable under the Plan;  provided that the maximum award
amount payable under the Plan to any Participant shall be 200% of such
Participant’s Target Award  (his or her Financial Modifier and Individual
Modifier combined).

c.           AIP Award Determination in Cases of Prior or Subsequent
Participation in Another Variable Incentive or Similar Plan or Change in Target
Award.

Participants who are eligible to receive an award under another Variable
Incentive Plan (e.g., sales incentive plan) during part of the Plan Year and are
designated as Participants under the Plan during a portion of the Plan Year may
receive an  award under the Plan on a prorated basis as set forth in Section
4(h).  Participants who have a change in their Target Award are eligible to
receive an award under the Plan that is prorated based on the timing of the
change to the Participant’s Target Award.

d.          AIP Award Determination in Cases of Leave of Absence

If a Participant is on an approved leave of absence (including, without
limitation, leaves caused by short-term disability) for more than one month
during the Plan Year, then the Participant will continue to participate for that
Plan Year; provided that the Administrator may, in its discretion, decrease the
award that would otherwise be payable under the Plan.

e.          AIP Award Determination in Cases of Disability, Death or Retirement

i.

A Participant whose employment is terminated prior to the end of the Plan Year
as a result of Disability or death will be eligible to receive a portion of his
or her award for the Plan Year determined in accordance with Section 4(e)(iii)
upon such Termination on the basis of (A) a Financial Modifier of 100% and (B)
an Individual Modifier of 100%.

ii.

A Participant whose employment is terminated prior to the end of the Plan Year
as a result of Retirement will be eligible to receive a portion of his or her
award for the Plan Year determined in accordance with Section 4(e)(iii) after
the end of the Plan Year in accordance with Section 5 on the basis of (A) the
Financial Modifier based on the Company’s or applicable Business Unit(s)’
results for such Plan Year and (B) an Individual Modifier of 100%.

 

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iii.

To the extent a Participant is eligible for a portion of an award under Section
4(e)(i) or 4(e)(ii), such portion shall be calculated as follows:

a.

If the Participant’s employment is terminated during the first fiscal quarter of
the Plan Year,  he or she will not be eligible for any portion of the award for
the Plan Year.

b.

If the Participant’s employment is terminated in the fourth fiscal quarter of
the Plan Year, he or she will be eligible for the entire award.

c.

If the Participant’s employment is terminated in the second or third fiscal
quarters of the Plan Year, he or she will be eligible for a prorated award for
the Plan Year based on the number of months worked during the Plan Year;
provided that Participants must work through the 15th calendar day of any month
to receive credit for having worked that month.

f.           AIP Award Determination in Cases of Termination

Participants whose employment with the Company or a Subsidiary is terminated
prior to end of the Plan Year for any reason other than Retirement, Disability
or death shall not be eligible to receive awards under this Plan, as may be
amended or supplemented for local legal differences for employees of foreign
(non-U.S.) Subsidiaries.

g.          AIP Award Determination in Cases of New Participants or Participants
in Another Variable Incentive Plan

Participants who become eligible to participate in the Plan prior to the end of
the first fiscal quarter of the Plan Year and participate in the Plan for the
remainder of such Plan Year will be eligible for a full year AIP opportunity for
such Plan Year and Participants who become eligible to participate in the Plan
during the fourth fiscal quarter of the Plan Year will not be eligible for an
award under the Plan, unless approved by the Administrator or, with respect only
to non-executive officers of the Company, an authorized Delegate.  Participants
who become eligible to participate in the Plan during the second or third fiscal
quarters of the Plan Year will be eligible for a prorated award of between 25%
and 75% of the full year AIP opportunity, based on the number of months of the
Plan Year in which they worked and were eligible to participate in the
Plan.  Participants must (i) become eligible to participate in the Plan on or
prior to the 15th day of a month, and (ii) participate in the Plan through the
end of such month, in order to receive credit for such month toward a prorated
award.

Participants who are eligible to participate in the Plan at the beginning of the
Plan Year, but who subsequently become ineligible to participate in the Plan
prior to the end of the Plan Year may receive an award under the Plan on a
prorated basis, in the discretion of the Administrator or, with respect only to
non-executive officers of the Company, an authorized Delegate.

h.          Other Incentive Programs

No Participant may participate in any other Variable Incentive Plan, except as
provided for herein.

 

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5.          TIMING OF PAYMENT OF AWARDS

AIP awards for each Participant will be paid in the form (cash or Company
shares) as determined by the Committee, subject to such vesting as is determined
by the Committee, and subject to the terms and conditions of the 2017 Incentive
Award Plan, or any successor long-term incentive plan, as soon as conveniently
possible after the calculation of the Company’s (or the Business Unit’s)
achievement of the Performance Objectives and the award thereof by the
Administrator following the Plan Year to which such awards relate, but in no
event later than three months from the last day of the Plan Year to which such
award relates; provided that Participants, if applicable under the law governing
their employment contract with the Company or Subsidiary as the case may be, may
have elected to defer the receipt of all or part of such award, to the extent
permitted under Section 409A, in accordance with established deferred
compensation plans offered by the Company.

6.          PLAN ADMINISTRATION

a.           General Administration

This Plan will be administered by the Administrator, which may delegate its
administrative responsibilities in connection with the Plan to a Delegate with
respect to non-executive officers of the Company.  The Administrator (or the
authorized Delegate with respect to non-executive officers) or its delegate will
have full power and authority to interpret the Plan, to establish, amend and
rescind any rules, forms or procedures as it deems necessary for the proper
administration of the Plan, to determine the manner and time of payment of the
annual incentive compensation payable under the Plan, and to take any other
action as it deems necessary or advisable in connection with the Plan.  Any
decision made, action taken or interpretation made by the Administrator (or its
authorized Delegate) that is not inconsistent with the provisions of this Plan
will be final, conclusive, and binding on all persons interested in the Plan.

b.          Adjustments for Extraordinary Events

If an event occurs during a Plan Year that materially influences the Financial
Performance Objectives of the Company or Business Unit and is deemed by the
Committee to be extraordinary and out of the control of management, the
Committee may, in its discretion, increase or decrease the Financial Performance
Objectives used to determine the annual AIP payout.  Events warranting such
action may include, but are not limited to, changes in accounting, tax or
regulatory rulings, acquisitions, divestitures, mergers, consolidations,
spin-offs, reorganizations, significant changes in economic conditions resulting
in windfalls or hardships and other such events as the Committee, in its sole
discretion, may determine.

c.           Amendment, Suspension, or Termination

The Committee may amend, suspend or terminate the Plan, in whole or in part, at
any time, if, in the sole judgment of the Committee, such action is in the best
interests of the Company.  Notwithstanding the above, any such amendment,
suspension or termination must be prospective in that it may not deprive
then-current Participants of that which they otherwise would have received under
the Plan for the current Plan Year had the Plan not been amended, suspended or
terminated.

 

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7.          MISCELLANEOUS PROVISIONS

a.          Titles

Section and Article titles are provided herein for convenience only and are not
to serve as a basis for interpretation or construction of the Plan.

b.          Employment Not Guaranteed

Nothing contained in the Plan nor any action taken in the administration of the
Plan will be construed as a contract of employment or as giving a Participant
any right to be retained in the service of the Company or any of its
Subsidiaries.

c.           Validity

In the event that any provision of the Plan is held to be invalid, void or
unenforceable, the same will not affect, in any respect whatsoever, the validity
of any other provision of the Plan.

d.          Withholding Tax

All payments made pursuant to this Plan will be subject to withholding for all
applicable taxes and contributions required by law to be withheld therefrom.

e.           Clawback Provision

In the case of fraud or other intentional misconduct on the part of a
Participant (or any other event or circumstance set forth in any clawback policy
implemented by the Company or any Subsidiary, including, without limitation, any
clawback policy adopted to comply with the requirements of applicable law,
including, without limitation, the Dodd-Frank Wall Street Reform and Consumer
Protection Act and any rules or regulations promulgated thereunder (including,
without limitation, any listing rules or standards resulting therefrom)) that
necessitates a restatement of the Company’s or Business Unit’s financial results
(including, without limitation, any accounting restatement due to the
material  noncompliance with any financial reporting requirement), such
Participant will reimburse the Company for any awards or other incentive
compensation paid or issued to such Participant in excess of the amount that
would have been paid or issued based on the restated financial results, as
determined by the Administrator pursuant to any applicable clawback policy or
otherwise.

f.           Applicable Law

The Plan will be governed in accordance with the laws of the State of Delaware,
without giving effect to any principles of conflicts of law, whether of the
State of Delaware or any other jurisdiction, and where applicable, the laws of
the United States, that would result in the application of the laws of any other
jurisdiction.

g.          Section 409A

The annual variable awards granted under the Plan are intended to be exempt from
or comply in all respects with Section 409A and, to the extent applicable, the
Plan will be interpreted in accordance with Section 409A.  Notwithstanding any
provision of the Plan to the contrary, in the event that the Committee
determines that any payment under the Plan may be subject to penalty for
noncompliance with Section

 

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409A, the Committee shall have the right (without any obligation to do so or to
indemnify any Participant for failure to do so) to adopt such amendments to the
Plan or adopt other policies and procedures (including amendments, policies and
procedures with retroactive effect), or take any other actions that the
Committee determines are necessary or appropriate to (i) exempt the payment from
Section 409A and/or preserve the intended tax treatment of the benefits provided
with respect to the payment, or (ii) satisfy the requirements of Section 409A
and thereby avoid the application of penalty taxes under Section 409A.  No
provision of this Plan shall be interpreted or construed to transfer any
liability for failure to comply with the requirements of Section 409A from a
Participant or any other person to the Company or any of its Subsidiaries,
employees or agents.

In the case of a Participant who is a “specified employee” and where delayed
commencement of any payments under this Plan is required to avoid a prohibited
distribution under Section 409A(a)(2)(B)(i) of the Code, any payment under this
Plan that constitutes “non-qualified deferred compensation” subject to Section
409A may not be made before the date which is six months after the Participant’s
separation from service (or, if earlier, the date of the Participant’s
death).  For purposes of this Section 7(g), a Participant shall be a “specified
employee” if such Participant is a key employee (as defined in Section 416(i) of
the Code without regard to paragraph (5) thereof) of a corporation, any stock of
which is publicly traded on an established securities market or otherwise, as
determined under Section 409A(a)(2)(B)(i) of the Code and the Department of
Treasury regulations thereunder.

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