Exhibit 10.3

 

HILLENBRAND, INC.
SHORT-TERM INCENTIVE COMPENSATION PLAN
FOR KEY EXECUTIVES

 

ARTICLE I.
GENERAL PROVISIONS

 

Section 1.01.  Restatement.  Hillenbrand, Inc. (“Company”) previously adopted
the Hillenbrand, Inc. Short-Term Incentive Compensation Plan for Key Executives
(“Plan”), effective as of October 1, 2008.  Effective as of October 1, 2013, and
contingent on approval of the Plan by the Company’s shareholders as provided in
Section 1.03, the Company hereby adopts this restated version of the Plan with
the changes referenced herein.

 

Section 1.02.  Purpose.  The purpose of the Plan is to advance the interests of
the Company and its Subsidiaries by providing for annual bonuses to
participating Executive Employees based on the achievement of pre-established
objective performance goals.  By linking a significant portion of the
compensation of Executives to pre-established objective goals, the Company more
closely aligns the interests of its Executive Employees with those of its
shareholders.  Amounts payable under the Plan are intended to constitute
Performance-Based Compensation.

 

Section 1.03.  Shareholder Approval.  No benefits shall be paid under the Plan
with respect to any Participant, unless the Plan is approved by the Company’s
shareholders, as required by the terms of the Plan and the regulations under
Code Section 162(m) applicable to Performance-Based Compensation.

 

ARTICLE II.
DEFINED TERMS AND INTERPRETATION

 

Section 2.01.  Definitions.  When capitalized in this Plan, the following terms
shall have the meanings specified below (or as elsewhere defined), unless the
context otherwise requires:

 

(a)                                 “Board” or “Board of Directors” means the
Company’s Board of Directors.

 

(b)                                 “Cause” means, (i) for an Employee who is a
party to a written employment agreement with the Employer that defines “cause”
or a comparable term at the relevant time, the definition in such employment
agreement, and (ii) for all other Employees, the Committee’s good faith
determination that the Employee has:

 

(1)                                 failed or refused to comply fully and timely
with any reasonable instruction or order of the Employer, provided that such
noncompliance is not based primarily on the Participant’s compliance with
applicable legal or ethical standards;

 

(2)                                 acquiesced or participated in any conduct
that is dishonest, fraudulent, illegal (at the felony level), unethical,
involves moral turpitude or is otherwise illegal and involves conduct that has
the potential to cause the Employer or its related companies or any of their
respective officers or directors embarrassment or ridicule;

 

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(3)                                 violated any Employer policy or procedure,
including the Company’s Code of Ethical Business Conduct; or

 

(4)                                 engaged in any act that is contrary to the
best interests of or would expose the Employer, its related businesses, or any
of their respective officers or directors to probable civil or criminal
liability, excluding the Participant’s actions in accordance with applicable
legal and ethical standards.

 

(c)                                  “Code” means the Internal Revenue Code of
1986, as amended from time to time.

 

(d)                                 “Committee” means the Compensation and
Management Development Committee of the Board.  Each Committee member shall be
an outside director within the meaning of Code Section 162(m).

 

(e)                                  “Company” means Hillenbrand, Inc., and any
successor thereto.

 

(f)                                   “Disability” means, (i) for an Employee
who is a party to a written employment agreement with the Employer that defines
“disability” or a comparable term at the relevant time, the definition in such
employment agreement, and (ii) for all other Employees, the Committee’s good
faith determination that the Employee is eligible (except for the waiting
period) for permanent disability benefits under Title II of the Federal Social
Security Act.

 

(g)                                  “Deferral Election” means an election
pursuant to the provisions of the Plan on a form acceptable to the Committee to
defer all or a portion of a STIC Award Payment.

 

(h)                                 “Effective Date” means October 1, 2013.

 

(i)                                     “Employee” means an employee of the
Employer.

 

(j)                                    “Employer” means the Company and/or any
Subsidiary.

 

(k)                                 “Executive” or “Executive Employee” means
any Employee who is an officer of the Company.

 

(l)                                     “Fiscal Year” means that fiscal year of
the Company, which is the twelve (12)-month period beginning on October 1 and
ending on the following September 30.

 

(m)                             “Good Reason” means, for an Employee who is a
party to a written employment agreement with the Employer at the relevant time,
the definition given to such term or a comparable term in such agreement.

 

(n)                                 “Participant” means, with respect to a
Fiscal Year, an Executive to whom the Committee has granted a STIC Award for the
year.

 

(o)                                 “Payment Amount” means the amount of a STIC
Award Payment.

 

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(p)                                 “Performance-Based Compensation” means
compensation described in Code Section 162(m) that is excluded from “applicable
employee remuneration” under Code Section 162(m).

 

(q)                                 “Performance Measures” means, with respect
to a STIC Award, the objective factors used to determine the amount (if any)
payable pursuant to the Award.  “Performance Measures” shall be based on any of
the factors listed below, alone or in combination, as determined by the
Committee.  Such factors may be applied (i) including or excluding one or more
Subsidiaries, (ii) in comparison with plan, budget or prior performance, and/or
(iii) on an absolute basis or in comparison with peer-group performance.  The
factors that may be used as Performance Measures are: (1) return on assets,
(2) return on equity, (3) net revenue, (4) operating income, (5) net income,
(6) earnings per share, (7) income before interest and taxes, (8) income before
taxes, (9) cash flow, (10) order intake, (11) new products, (12) customer
satisfaction, (13) brand development, or (14) strategic objectives.  In
establishing Performance Targets for a year, the Committee may provide for
appropriate objectively determinable adjustments to any Performance Measure for
extraordinary and/or non-recurring items.

 

(r)                                    “Performance Target” means, with respect
to a STIC Award for a Fiscal Year, the objective performance under the
Performance Measures for that Fiscal Year that will result in payments under the
STIC Award.  Performance Targets may differ from Participant to Participant and
Award to Award.

 

(s)                                   “Retirement” means, with respect to a
Participant, Termination of Employment after having (i) completed at least five
years of continuous service with the Company and/or a Subsidiary and
(ii) reached age fifty-five (55).  For purposes of the preceding sentence,
service with the Company’s predecessor, Hill-Rom Holdings, Inc. (formerly known
as Hillenbrand Industries, Inc.) shall be considered service with the Company.

 

(t)                                    “STIC Award” or “Award” means, with
respect to a Participant for a Fiscal Year, an Award under which the amount
payable to the Participant (if any) is contingent on the achievement of
pre-established Performance Targets during the Fiscal Year.

 

(u)                                 “STIC Award Payment” means the cash payment
under a STIC Award.

 

(v)                                 “Subsidiary” means any corporation,
partnership, joint venture or other entity in which the Company owns, directly
or indirectly, more than 50% of the ownership interests.

 

(w)                               “Termination of Employment,” or similar uses
of the words “Termination” (or a derivation thereof) and “Employment” in close
proximity, means complete termination of the employment relationship between a
Participant and all Employers.

 

Section 2.02.  Rules of Interpretation.  The following rules shall govern in
interpreting the Plan:

 

(a)                                 Except to the extent preempted by United
States federal law or as otherwise expressly provided herein, the Plan and all
Awards shall be interpreted in accordance with and governed by the internal laws
of the State of Indiana without giving effect to any choice or conflict of law
provisions, principles or rules.

 

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(b)                                 All amounts payable under the Plan are
intended to constitute Performance-Based Compensation, and the Plan and each
Award shall be interpreted and administered to effect such intent.

 

(c)                                  The Plan and all Awards are intended to be
exempt from provisions of Code Section 409A, and the Plan and all Awards shall
be administered to effect compliance with such intent.

 

(d)                                 Any reference herein to a provision of law,
regulation or rule shall be deemed to include a reference to the successor of
such law, regulation or rule.

 

(e)                                  To the extent consistent with the context,
any masculine term shall include the feminine, and vice versa, and the singular
shall include the plural, and vice versa.

 

(f)                                   If any provision of the Plan shall be held
illegal or invalid for any reason, the illegality or invalidity of that
provision shall not affect the remaining parts of the Plan, and the Plan shall
be interpreted and enforced as if the illegal or invalid provision had never
been included herein.

 

ARTICLE III.
ADMINISTRATION

 

The Committee shall administer the Plan, and it shall have all powers and
authority necessary or appropriate to fulfill its duties hereunder.  The
Committee shall have the authority and discretion to interpret the Plan, to
establish and revise rules and regulations relating to the Plan, and to make any
other determinations that it believes necessary or advisable for administration
of the Plan.  The Committee’s determination as to all matters relating to the
Plan shall be final and binding.

 

ARTICLE IV.
STIC AWARDS

 

Section 4.01.  Selection of Participants.  The Committee may, in its sole
discretion, grant STIC Awards to one or more Executive Employees as provided in
this Article.  Nothing herein shall obligate the Committee to grant a STIC Award
to any Executive Employee.

 

Section 4.02.  Award Criteria.  Within ninety (90) days after the start of each
Fiscal Year for which it grants STIC Awards, the Committee shall establish
(a) the Performance Measures and Performance Targets applicable to each STIC
Award for that Fiscal Year, and (b) an objective formula for computing the
Payment Amount based on achievement of the established Performance Targets.  The
Committee shall have sole discretion to determine Performance Measures,
Performance Targets and the formula for calculating the Payment Amount.  The
Committee may establish minimum, target and maximum Performance Targets, with
the Payment Amount based on the level of the Performance Target(s) achieved. 
Once established, Performance Targets, Performance Measures and the related
formula for determining the Payment Amount shall not be changed; provided,
however, the Committee may, in its sole discretion (subject to the provisions of
Subsection 4.05(a)), eliminate or decrease the Payment Amount with respect to
any Participant’s Award, based upon such criteria as the

 

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Committee deems appropriate. The Committee may impose conditions on the receipt
of STIC Award Payments in addition to the achievement of Performance Targets.

 

Section 4.03.  Certification of Performance.  As soon as practicable after the
Company’s audited financial statements are available for a Fiscal Year, the
Committee shall determine the Company’s and other applicable performance in
relation to the Performance Targets for the Fiscal Year and certify in writing
the extent to which the Performance Targets were achieved and the Payment
Amounts with respect to each STIC Award for the Fiscal Year.

 

Section 4.04.  STIC Award Payments.  The Employer shall pay STIC Award Payments
in cash, subject to applicable tax withholding, as determined by the Employer. 
Except as provided in Section 4.07, STIC Award Payments for a Fiscal Year shall
be paid to the Participant (or, if the Participant is deceased, his estate)
during the first ninety (90) days after the end of such Fiscal Year.

 

Section 4.05.  Termination of Employment.

 

(a)                                 If a Participant’s Employment Terminates on
account of his (i) death, (ii) Disability, (iii) Retirement, (iv) involuntary
Termination of Employment without Cause, or (v) to the extent provided in his
employment agreement with the Employer (if any), voluntary Termination of
Employment for Good Reason, in each case before STIC Award Payments for a Fiscal
Year are made, the Participant’s STIC Award Payment, if any, shall first be
determined on an interim basis according to the applicable Award formula before
considering any discretionary reduction that might be made by the Committee.  If
the Participant’s Employment Terminated on account of one of the aforementioned
reasons during the Fiscal Year for which the STIC Award Payment is being
determined, the interim payment amount (as determined pursuant to the preceding
sentence) shall be multiplied by a fraction, the numerator of which is the
number of full weeks during which the Participant was employed by an Employer
during such Fiscal Year, and the denominator of which is 52.  If the
Participant’s Employment Terminated on account of one of the aforementioned
reasons after the end of the Fiscal Year for which the STIC Award Payment is
being determined, the preceding sentence shall not apply and the interim payment
amount previously determined as provided above in this Subsection shall not be
prorated.  The Committee, in its discretion, may then reduce (but not increase)
the interim payment amount determined under the preceding provisions of this
Subsection by up to one-third in order to arrive at the STIC Award Payment to be
made with respect to such Participant.  Such payment shall be paid at the same
time at which the Participant would have been paid if a Termination of
Employment had not occurred with respect to such Participant.

 

(b)                                 If a Participant’s Employment Terminates for
any reason not specified in clauses (i)-(v) of Subsection 4.05(a) before STIC
Award Payments for a Fiscal Year are made, the Participant shall forfeit his
interest in and shall not receive any such payment for that Fiscal Year.

 

Section 4.06.  Non-Duplication of Payments.  Notwithstanding any other provision
hereof, if a Participant receives a payment under a change in control or other
agreement with the Employer, which payment is identified as or measured by an
amount payable under this Plan

 

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with respect to a certain Fiscal Year, the Participant shall not be entitled to
a payment of a duplicate amount hereunder for that same Fiscal Year.

 

Section 4.07.  Election to Defer STIC Award Payment.  To the extent permitted by
Code Section 409A, the Committee may permit a Participant to elect to defer
payment of a STIC Award Payment for a specified period or until a specified
event, upon such terms as are determined by the Committee.

 

Section 4.08.  Limitation of Payment Amount.  Under no circumstances shall the
Payment Amount with respect to any Participant for a Fiscal Year exceed the
lesser of (a) three times the Participant’s base salary for the Fiscal Year or
(b) Five Million Dollars.

 

ARTICLE V.
TERM

 

The Plan is contingent on approval by the Company’s shareholders, as provided in
Section 1.03, and it shall remain in effect until such time as it shall be
terminated by the Board or, if earlier, five years after the Effective Date.

 

ARTICLE VI.
AMENDMENT AND TERMINATION

 

The Board may, in its sole discretion, amend or terminate the Plan; provided,
however, no such amendment or termination shall adversely affect any right or
obligation with respect to any Award already issued, cause any Participant to
incur taxes under Code Section 409A, or cause amounts payable under the Plan to
cease to be Performance-Based Compensation.

 

ARTICLE VII.
MISCELLANEOUS PROVISIONS

 

Section 7.01.  Limitations.  No Employee shall have any claim or right (legal,
equitable or other) to be granted an Award, and no person or entity other than
the Committee shall have the authority to enter into any agreement with any
person for the making or payment of any Award or to make any representation or
warranty with respect thereto.  Neither the existence of the Plan nor the grant
of any Award shall give a Participant any right to be retained in the employ of
any Employer or limit the right of any Employer to terminate the employment of
any Participant.

 

Section 7.02.  Additional Payments.  Nothing in the Plan shall preclude the
Company from making additional payments or special awards to Participants
outside of the Plan that may or may not constitute Performance-Based
Compensation, provided that such payment or award does not affect the
qualification of any Payment Amount as Performance-Based Compensation.

 

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