Exhibit 10.8
NOTE: CERTAIN MATERIAL HAS BEEN REDACTED FROM THIS DOCUMENT AND FILED SEPARATELY
WITH THE SEC PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT UNDER RULE 24b-2.
THE LOCATIONS OF THESE REDACTIONS ARE INDICATED THROUGHOUT THE DOCUMENT BY THE
FOLLOWING MARKING: [***].
2007 EXECUTIVE MANAGEMENT INCENTIVE AWARDS
     As Adopted by the Compensation and Human Resources Committee of the Board
of Directors on March 21, 2007
Introduction
     2007 Executive Management Incentive Awards (“EMIA”), made pursuant to
Article 9 of the King Pharmaceuticals, Inc. (the “Company”) Incentive Plan (the
“Plan”), will be comprised of 1 to 2 financial objectives (“Financial
Objectives”) and, for most participants, approximately 4 individual operational
objectives (“Operational Objectives”). In determining the potential EMIA payout
for any participant, Financial Objectives and Operational Objectives shall be
weighted as determined either by the Committee or by the Chief Executive
Officer, as further detailed below. All capitalized terms not otherwise defined
shall have the meanings assigned to them in the Plan.
Administration
     The Compensation and Human Resources Committee of the Board of Directors of
the Company (the “Committee”) shall have complete discretionary authority over
the administration of the EMIAs as set forth herein including, without
limitation, the authority to adjudicate claims related to EMIAs, interpret the
terms of EMIAs, and to resolve disputes and factual questions related to EMIAs.
Determinations of the Committee shall be binding on the Company and the EMIA
participants.
Eligibility to Participate
     Except as otherwise determined by the Committee, executives having the
title of Vice President or more senior titles as of March 21, 2007 shall be
eligible to participate in the 2007 EMIA. The Chief Executive Officer,
President, Chief Financial Officer, Chief Commercial Officer, Chief Technical
Operational Officer, General Counsel, Corporate Compliance Officer, Chief
Science Officer are designated “Top Executives.”
     The Committee and/or the Chief Executive Officer, as further detailed below
in the section entitled “Objective Approval and Weighting,” may establish an
EMIA for an executive who is hired or promoted to fill an EMIA-eligible position
after March 21, 2007; provided, however, that

  a.   an EMIA may be established for a Top Executive after 90 days have elapsed
since January 1, 2007 only if 75.1% or more of the performance time period is
remaining at the time the EMIA is established, in accordance with Treas. Reg. §
1.162-27(e);     b.   any executive hired after September 30, 2007 is ineligible
for an EMIA; and     c.   any employee of the Company promoted into an
EMIA-eligible position and who becomes an EMIA Participant (but who is not a Top
Executive) shall participate in the EMIA and 2007 Management Incentive Plan
prorata (if a participant of the Management Incentive Plan).

 

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Objective Approval and Weighting
     The Committee shall establish and approve all Financial Objectives and any
amendments thereto. EMIAs for the Top Executives shall be based entirely upon
Financial Objectives. The Committee shall approve the specific weighting of the
Financial Objectives for the Top Executives and any amendments thereto. EMIAs
for Top Executives shall be established during the first 25% of the applicable
performance period and shall be based upon prospective financial goals the
accomplishment of which is substantially uncertain at the time of the
establishment of the EMIA.
     The Chief Executive Officer or his designee shall approve, for all EMIA
Participants other than Top Executives, (1) the weighting of their Financial
Objectives, based upon each executive’s ability to affect the accomplishment of
those objectives, and (2) their Operational Objectives, and any amendments to
either of these items.
     The weighting of EMIA objectives shall be as follows:

              Executive   Financial Objectives   Operational Objectives
Chief Executive Officer
  75% EPS and 25% Revenues     0 %
Chief Financial Officer
  100% EPS     0 %
Chief Commercial Officer
  25% EPS and 75% Revenues     0 %
Remaining direct reports to the CEO
  100% EPS     0 %
All other EMIA Participants
  50% EPS     50 %

Award Payout Schedule
     EMIA Participants are eligible for cash awards which are a percentage of
their 2007 base salary paid, as described in the table below.

                              ACHIEVEMENT LEVEL POSITION   THRESHOLD   TARGET  
STRETCH
President & Chief Executive Officer
    50 %     100 %     200 %
Chief Financial Officer
    35 %     70 %     140 %
Chief Commercial Officer
    30 %     60 %     120 %
Chief Technical Operations Officer
    30 %     60 %     120 %
Chief Science Officer
    25 %     50 %     100 %
General Counsel
    25 %     50 %     100 %
EVP Level 1
    25 %     50 %     100 %
EVP Level 2
    20 %     40 %     80 %
Senior Vice President
    17.5 %     35 %     70 %
Vice President
    15 %     30 %     60 %

Calculating an EMIA Payout
     The weight previously established for each objective (a percentage) is
multiplied by the percentage (as provided in the table above) associated with
the EMIA Participant’s achievement level in connection with that objective
(none, threshold, target or stretch, or, in the case of Financial Objectives, a
prorata percentage between these levels). Once this calculation is performed for
each objective, the results of all calculations are summed and that sum is
multiplied by the 2007 base salary

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paid to the EMIA Participant. The result is the payout amount for the EMIA
Participant. See the attached example.
     The award for any person who becomes an EMIA Participant, or for an EMIA
Participant who is promoted, during the performance period will be prorated
based on the portion of the year spent in each position. The award for any EMIA
Participant who retires during 2007 will be prorated based on portion of the
year spent in the applicable position.
Eligibility for EMIA Payout
     Payment of any EMIA shall be contingent upon the Committee’s determination
that Financial Objectives have been met by the Company, and at what achievement
level those objectives have been met. Also:

  a.   In the case of any of the Top Executives, payment of any EMIA shall be
contingent upon the Committee’s certification of the achievement level
applicable to the executive in connection with each Financial Objective.     b.
  In the case of any EMIA Participant who holds the title of EVP Level 1 or a
more senior title, other than the Top Executives, payment of any EMIA shall be
contingent upon the Committee’s approval of the determination of the Chief
Executive Officer, or his designee, of the achievement level applicable to each
of the EMIA Participant’s Operational Objectives.     c.   In the case of any
EMIA Participant who holds a title more junior than EVP Level 1, payment of any
EMIA shall be contingent upon the determination of the Chief Executive Officer,
or his designee, of the achievement level applicable to each of the EMIA
Participant’s Operational Objectives.

     Other than for reasons of Death, Disability or Approved Retirement, an EMIA
Participant must be employed by the Company on December 31, 2007 or the EMIA
Participant will forfeit any EMIA which he or she may have otherwise qualified
to receive.
     In the event of an EMIA Participant’s death on or after January 1, 2008,
the EMIA shall be paid to his or her estate. In the event of an EMIA
Participant’s death on or before December 31, 2007, a prorata portion of the
EMIA, reflecting the EMIA Participant’s time in service during the performance
year, shall be paid to his or her estate.
     In the event of an EMIA Participant’s incapacity on the date his or her
EMIA is paid by the Company, the EMIA shall be paid to his or her legal guardian
or appointed representative. In the event of an EMIA Participant’s incapacity on
or before December 31, 2007, a prorata portion of the EMIA, reflecting the EMIA
Participant’s time in service during the performance year, shall be paid to his
or her legal guardian or appointed representative.
Timing of EMIA Payout
     The payment of each EMIA will be made on or before March 15, 2008.

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Tax Matters
     All EMIA payments are subject to applicable state, federal, local and other
tax withholding requirements.
     In the case of the Top Executives, all EMIAs are intended to be “qualified
performance-based compensation” in accordance with Treas. Reg. § 1.162-27(e) and
shall be interpreted and administered as such unless the Committee determines
that it is in the best interests of the Company not to adhere to the
requirements of 162(m) of the Internal Revenue Code of 1986, as amended (the
“Code”), and Treas. Reg. § 1.162-27.
Other Matters
     The Committee, in its discretion, may reduce or eliminate any EMIA in the
event it determines it is in the best interests of the Company to do so for
reasons including, without limitation, financial distress of the Company,
administrative difficulties or that the EMIA payment is nondeductible by the
Company under the Internal Revenue Code. The reduction of one or more EMIAs
shall not increase the EMIA of any other EMIA Participant.
     The Committee, in its discretion, may (i) accelerate an EMIA payment
provided such payment is reduced to reasonably reflect present value, or
(ii) delay payment of any EMIA and adjust the amount of the payment based on a
reasonable rate of interest or an actual predetermined investment.
     The Committee may, at any time, amend or terminate this EMIA program. The
Board of Directors of the Company, in its discretion, may, at any time, withdraw
the Committee’s authority over this EMIA program.
     The grant of an EMIA shall in no way be construed or interpreted to
establish or guarantee a term of employment and does not change the “at-will” or
other status of any person employed by the Company.
     The terms and conditions of this EMIA program are, in their entirety, set
forth in this document and the EMIA documents pertaining to a specific EMIA
Participant. Once established, EMIA objectives may only be altered by valid
written notice to that effect from the Committee or the Chief Executive Officer
or his designee, as applicable, as described in the section above entitled
“Objective Approval and Weighting.” Any oral representation or writing not
authorized and approved by the Committee, or the Chief Executive Officer or his
designee, as applicable, shall be void and of no effect, and shall not be
binding on the Company or the Committee.

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Financial Objectives
     The time period for the measurement of performance of Financial Objectives
is January 1 through December 31, 2007. In the event that achievement of
Financial Objectives is greater than Threshold but less than Stretch, payout
percentages applicable to Financial Objectives will be prorated to reflect
actual achievement (actual revenues or earnings per share).
Financial Objective 1: Revenues
     The portion of any EMIA payable pursuant to Financial Objective 1 will be
based on achieving the 2007 revenue targets detailed in the following table.

                              ACHIEVEMENT LEVEL     Threshold1   Target1  
Stretch1
Revenues
  $[***] billion   $[***] billion   $[***] billion

Financial Objective 2: Earnings Per Share
     The portion of any EMIA payable pursuant to Financial Objective 2 will be
based on achieving the 2007 earnings per share targets as detailed in the
following table.

                              ACHIEVEMENT LEVEL     Threshold1   Target1  
Stretch1
Earnings per share1
    $[***]       $[***]       $[***]  

Operational Objectives
     Each executive other than the Top Executives and direct reports to the CEO
will own approximately 4 Operational Objectives with the percentage weighting of
each based on the importance of that objective to the success of the business.
The time period for the measurement of performance of Operational Objectives is
January 1 through December 31, 2007.
Minimum Earnings Per Share Requirement
     No payout will be made for any objective unless the company achieves 60% of
Target earnings per share.
 

1   [***]

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EMIA Calculation Example
Sample Position: EVP Level 2

                                                      Payout   Objective
Objective   Weight   Performance   Percentage   Payout
Financial 1 – Revenues
    10 %   Threshold     20 %     0.02 (2%)  
Financial 2 – EPS
    40 %   Target     40 %     0.16 (16%)  
Operational Objective 1
    10 %   Stretch     80 %     0.8 (8%)  
Operational Objective 2
    15 %   Target     40 %     0.06 (6%)  
Operational Objective 3
    15 %   Target     40 %     0.06 (6%)  
Operational Objective 4
    10 %   Threshold     20 %     0.02 (2%)  
Total Objectives Weight
    100 %                        
Total EMIA Payout
                            0.40 (40%)  

The EVP receives 40% of his or her 2007 base pay paid as the EMIA.
Note: In the event that achievement of Financial Objectives is greater than
Threshold but less than Stretch, payout percentages applicable to Financial
Objectives will be prorated to reflect actual achievement (actual revenues or
earnings per share); provided, however, that no payout will be made for any
Financial Objective or Operational Objective unless the Company achieves 60% of
Target earnings per share.

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