Exhibit 10.4
(EV3 LOGO) [c47026c4702600.gif]
Employee Performance Incentive
Compensation Plan
(2008 Revised)
Effective January 1, 2008
Performance Period: January 1 — December 31, 2008

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

 

     
(EV3 LOGO) [c47026c4702601.gif]
  Employee Performance Incentive Comp Plan
Effective January 1, 2008
Performance Period
January 1 — December 31, 2008

I.   Philosophy/Purpose of the Plan       The purpose of the ev3, Inc.
Performance Incentive Compensation Plan (the “Plan”) is to provide financial
reward in addition to base salary, based on achievement of specific performance,
to those who significantly impact the growth and success of the company. The
plan is designed to reward employees for achieving stretch annual goals and to
closely align their accomplishments with the interests of the company’s
shareholders. This is done by providing annual incentives for the achievement of
key business and individual performance measures that are critical to the
success of the Company while linking a significant portion of an employee’s
annual compensation to the achievement of such measures.   II.   Eligible
Participants       The Company will determine eligibility criteria for the Plan
on an annual basis and in its sole discretion. For 2008, the Plan covers the
following: (i) all regular, salaried, exempt United States employees in Levels 2
and above, inclusive, and (ii) international and expatriate/inpatriate employees
who are determined by the Company to be eligible for participation.
Notwithstanding the foregoing, employees in positions covered by sales
compensation plans are not eligible participants in the Plan.       The Plan
year runs from January 1 — December 31 of each year (the “Plan Year”). Payouts
will be made on an annual basis during the period beginning on the first day of
the calendar year following the performance year and ending on March 15th of
such calendar year. Participants with less than a full year of service or whose
incentive target percent has changed during a Plan Year may be eligible to
participate in the plan on a prorated basis, determined by the percentage of
time they were eligible to participate during that Plan Year under applicable
criteria. Plan Participants with less than four (4) full months of eligible
service on December 31 of a particular Plan Year will not be eligible to receive
an award under the Plan for that Plan Year.       To be eligible, employees must
have established and approved annual individual performance goals by the end of
the first quarter of each Plan Year (or, for new employees, within two
(2) months of the employee’s start date). Managers are responsible for meeting
this deadline. Employees and Managers who do not complete the annual individual
performance goal setting process by such deadlines may become ineligible to
participate in the Plan for that Plan Year.   III.   Administration of the Plan
      The Compensation Committee of the Board of Directors of the Company will
administer the Plan. The Compensation Committee, in its sole discretion, may
delegate to the Company’s Chief Executive Officer activities relating to Plan
administration that are not required to be exercised by the Compensation
Committee under applicable laws, rules, regulations and the Compensation
Committee Charter. Delegable activities include, but are not limited to,
establishing any policies under the Plan, interpreting provisions of the Plan,
determining eligibility to participate in the Plan, and approving any final
payouts under the Plan that do not affect Executive Officer level employees. All
decisions of the Compensation Committee and the Chief Executive Officer will be
final and binding upon all parties, including the Company and Plan participants.

2

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

 

     
(EV3 LOGO) [c47026c4702601.gif]
  Employee Performance Incentive Comp Plan
Effective January 1, 2008
Performance Period
January 1 — December 31, 2008

IV.   Incentive Targets       Incentive targets have been approved by the
Compensation Committee for all eligible Plan participants based upon their level
of responsibility within the Company and impact on the business. These incentive
targets represent the incentive (as a percent of a Plan participant’s base
salary) that a Plan Participant is eligible to receive under the Plan. It is the
Company’s intention to provide significant incentive and reward opportunities to
its employees for world-class performance achievement.       Each position level
(2-11) has an established target bonus, expressed as a percentage of base
salary, as illustrated below and in the attached Target Bonus Table.

              Salary Level   Standard % of Base Salary Earned
CEO
  11   100%
WW President
  10   65%
Business Unit President
  9   60%
CFO
  9   60%
OC Members
  8   50%
VP
  7   40%
Director
  6   30%
Managers, Principals
  5   25%
Supervisors/Sr. Level Contributors
  4   15%
Intermediate level
  3   10%
Entry Level Individuals Contributors
  2     8%
Non-exempt
  1   Not eligible

    The actual incentive is capped at 150% standard, or may result in 0 bonus
based on achievement. In unusual circumstances, modifications may be made if, in
the Compensation Committee’s final judgment the calculations does not accurately
reflect performance.   V.   Individual Performance Measures       Individual
performance measures for a Plan Year are established during the annual goal
setting process. Each Plan Year, all Plan participants are required to develop
three to five written, measurable and specific Management By Objectives (MBO’s),
which must be agreed to and approved by each participant’s direct manager by the
end of the first quarter. up. For Executives in Grade Level 8 and up, each MBO
and targeted achievement levels must be approved by the President and CEO and
the Compensation Committee. All objectives are weighted by agreement, with areas
of critical importance or critical focus weighted most heavily. A rating of 1 to
5 is agreed upon, providing specific achievement levels for each rating. A
rating of 3 will always equal “on plan” performance.   VI.   Company Performance
Measures       For each Plan Year, the Compensation Committee, together with
input from the Company’s Chief Executive Officer, will identify critical Company
performance measures. The 2008 Company performance measures are:

  •   Worldwide Revenue     •   Operating Profit

3

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

 

     
(EV3 LOGO) [c47026c4702601.gif]
  Employee Performance Incentive Comp Plan
Effective January 1, 2008
Performance Period
January 1 — December 31, 2008

  •   Daily Sales Outstanding — “DSO”     •   Days on Hand “Inventory DOH”

    The finance team will work with each operating unit to establish specific
financial objectives for the Incentive Plan Company performance measures, which
will be tied to the company’s approved operating plan. All objectives are
weighted by agreement, with areas of critical importance or critical focus
weighted most heavily. In addition, for each performance measure, targets have
been established for each rating level 1 to 5. A rating of 3 will always equal
“on plan” performance.   VII.   Bonus Calculation       An aggregate average for
the corporate, divisions and individuals goals must meet at least a 2.0 to meet
the minimum 75% payout threshold. There are no awards if final overall rating is
below a 2.0. A scale for calculating actual achievement percentage will be used
as follows:

      Overall Rating   Percentage Achievement 5   150% 4   125% 3   100% 2   75%
1     0%

    All Plan performance measures and objectives are rated (based on the
achievement grid) and weighted based on relative importance in order to obtain a
weighted performance rating for each objective.       All weighted performance
ratings are then added together to obtain an overall rating for each
participant.       Increments between rating levels will be interpolated as
closely as possible to determine an actual incentive percentage, e.g. an overall
rating of 3.5 equals a 112.5% incentive percentage.       For each participant
the actual incentive percentage is multiplied by the target bonus percentage to
calculate the award, e.g. 112.5% actual incentive percentage times 20% target
bonus equals an award of 28% of earned base salary.       For new or newly
eligible participants who join the plan during the plan year, the award may be
calculated either by using base salary or pro-rated salary depending on the
terms and conditions of the job offer, as documented in the offer letter and
approved in advance by the Compensation Committee.   VIII.   Individual
Incentive Payment Criteria, Calculation, and Payout       A Plan participant
must remain actively employed by the Company past December 31st of the Plan Year
to be eligible for an incentive payment under the Plan for that Plan Year.

    The incentive payment under the Plan for any eligible Plan participant for a
particular Plan Year will vary depending upon the approved individual objectives
and company performance measures, the Plan participant’s base salary as of
November 1 of that Plan Year, and the Plan participant’s incentive target for
that Plan Year..

4

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

 

     
(EV3 LOGO) [c47026c4702601.gif]
  Employee Performance Incentive Comp Plan
Effective January 1, 2008
Performance Period
January 1 — December 31, 2008

    In the following cases, the final incentive payout will be prorated. If the
Plan participant was on a Leave of Absence for part of the Plan Year, their
bonus will be pro-rated based upon the number of days they were actively working
within the year. If the Plan participant works less than a full-time schedule
(40 hours/week), the incentive payout will be prorated for the hours worked or
if the Plan participant has a change to their full-time status throughout the
year, their incentive payout will likewise be prorated for the portion of the
year in which they worked a part time schedule. If the Plan participant received
a promotion during the year prior to November 1 with a change in target
incentive, the final payout will be prorated for the time spent at each
incentive target.       At the end of the plan year, each participant will
review their MBO’s and results with their direct manager to determine the rating
earned for each MBO objective. Each MBO objective rating will be combined to
calculate an overall rating for the individual objectives. In addition, as soon
as practicable after the appropriate financial and other data has been compiled,
the finance department will calculate the ratings for the overall ev3 and each
business unit financial goals. These ratings will be combined together per the
applicable weighting factors to determine the final payout for each individual
Plan participant. Individual incentive payments under the Plan will be made in a
lump sum, less applicable withholding taxes, as soon as reasonably practicable
after the determination of such payments, during the period beginning on the
first day of the calendar year following the performance year and ending on
March 15 of such calendar year.       In all cases, recommendations for final
incentive awards are submitted to the Chief Executive Officer for approval, with
final approval by the Compensation Committee.       The CEO and/or the
Compensation Committee may make a recommendation to modify an award by
plus/minus 20% if, in its subjective judgment, the participant has not been
equitably treated by the mechanics of the incentive plan. Such modifications of
awards should only be used in truly exceptional cases.   IX.   Plan Discretion  
    All benefits payable under the Plan are discretionary and no Plan
participant shall have any right to payment under the Plan until actually paid.
      To the extent necessary with respect to any Plan Year, in order to avoid
any undue windfall or hardship due to external causes, the Compensation
Committee may without the consent of any affected Plan participant, revise one
or more of the Company performance measures, or otherwise make adjustments to
payouts under the Plan to take into account any acquisition or disposition by
the Company not planned for at the time the Company performance measures were
established, any change in accounting principles or standards, or any
extraordinary or non-recurring event or item, so as equitably to reflect such
event or events, such that the criteria for evaluating whether a Company
performance measure has been achieved will be substantially the same (as
determined by the Compensation Committee) following such event as prior to such
event.   X.   Termination, Suspension, or Modification       The Company may
terminate, suspend, modify and if suspended, may reinstate or modify, all or
part of the Plan at any time, with or without notice to the Plan participants.
Exceptions to the eligibility of, or the extent to which the Plan applies to,
any particular Plan participant must be approved, on a case-by-case basis, by
the Compensation Committee

5

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

 

     
(EV3 LOGO) [c47026c4702601.gif]
  Employee Performance Incentive Comp Plan
Effective January 1, 2008
Performance Period
January 1 — December 31, 2008

XI.   Limitation of Liability       No member of the Company’s Board of
Directors, the Compensation Committee, any officer, employee, or agent of the
Company, or any other person participating in any determination of any question
under the Plan, or in the interpretation, administration, or application of the
Plan, shall have any liability to any party for any action taken, or not taken,
in good faith under the Plan.   XII.   No Right to Employment       This
document sets forth the terms of the Plan and it is not intended to be a
contract or employment agreement between any Plan participant and the Company.
Nothing contained in the Plan (or in any other documents related to the Plan)
shall confer upon any employee or Plan participant any right to continue in the
employ or other service of the Company or constitute any contract or limit in
any way the right of the Company to change such person’s compensation or other
benefits or to terminate the employment or other service of such person with or
without cause or notice.   XIII.   Non-Assignability       Except for the
designation of a beneficiary(ies) to receive payments of benefits for a
particular Plan year following a Plan participant’s death after the completion
of such Plan Year, no amount payable at any time under the Plan shall be subject
to sale, transfer, assignment, pledge, attachment, or other encumbrance of any
kind. Any attempt to sell, transfer, assign, pledge, attach, or otherwise
encumber any such benefits, whether currently or thereafter payable, shall be
void.   XIV.   Withholding Taxes       The Company is entitled to withhold and
deduct from any payments made pursuant to the Plan or from future wages of a
Plan participant (or from other amounts that may be due and owing to the Plan
participant from the Company), or make other arrangements for the collection of,
all legally required amounts necessary to satisfy any and all federal, state,
and local withholding and employment-related tax requirements attributable to
any payment made pursuant to the Plan.   XV.   Unfunded Status of Plan       The
Plan shall be unfunded. No provisions of the Plan shall require the Company, for
the purpose of satisfying any obligations under the Plan, to purchase assets or
place any assets in a trust or other entity to which contributions are made or
otherwise to segregate any assets. Plan participants shall have no rights under
the Plan other than as unsecured general creditors of the Company.   XVI.  
Other       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.

6