Exhibit 10.1

 

 

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Purpose

The STI plan provides an annual performance-based cash bonus opportunity for
eligible employees. This is intended to achieve a number of goals including:

      ●     Emphasizing the Company’s commitment to competitive compensation
practices;       ●     Driving a high performance culture;       ●     Assuring
accountability;       ●     Focusing on results, not activity; and       ●    
Reinforcing the importance of measurable and aligned goals and objectives.    

Eligibility

These guidelines apply to Executive Officers.

      To receive payment under the STI Plan, the participant must be actively
employed as of fiscal year-end.            The plan design is based on the
following financial metrics.     Plan Design ●     Operating Income/EBITDA  
●     Organic Revenue   ●     Earnings Per Share   ●     Gross Margin   ●    
Contribution Margin           Each participant’s plan design will be based on
the participant’s position. Details of the design are as follows:       ●    
Corporate/Global

 

Weighting Per Metric

EPS

HBF Organic

Revenue

HBF Operating

Income

30%

30%

40%

 

 

  ●     Operating Segment

 

Weighting Per Metric

EPS

Operating Segment

Organic Revenue

Operating Segment

Operating Income*

30%

30%

40%

*EBITDA for Construction Products 

 

 

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          ●     Operating Segment with key global market responsibility
(includes SVP, Emerging Markets)

 

Weighting Per Metric

EPS

Operating

Segment Organic

Revenue

Operating Segment

Operating Income*

Key Market

Revenue

Key Market

Gross Margin

30%

20%

25%

15%

10%

*Contribution Margin for Emerging Markets

 

 

Target

●     Each metric will have a target level of performance. Payout will be
determined for each metric based on performance relative to target. The target
levels of performance will be established at the beginning of each fiscal year.

 

Threshold

●     Threshold performance levels will be established for each metric as
follows:

o     Sales, Organic Revenue: 90% of target

o     Operating Income/EBITDA: 80% of target

o     EPS: 80% of target

o     Gross Margin, Contribution Margin: 80% of target

 

●     Payout at the threshold level of performance will be 50% of the target
allocated to that metric.

 

 

Superior

●     Superior performance levels will be established for each metric as
follows:

o     Sales, Organic Revenue: 110% of target

o     Operating Income/EBITDA: 115% of target

o     EPS: 115% of target

o     Gross Margin, Contribution Margin: 115% of target

 

●     Payout at the superior level of performance will be 150% of the target
allocated to that metric.

 

 

Superior Stretch Goal – Executive Committee

●     Additional superior goals will be established for metrics for the EC
members as follows:

o     Organic Revenue: 115% of target

o     Operating Income/EBITDA: 125% of target

o     EPS: 125% of target

o     Gross Margin, Contribution Margin: 125% of target

 

●     Payout at the superior stretch goal will be 200% of the target allocated
to that metric

 

See Appendix for payout schedule.

 

 

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Payment

Payment will be made in cash, subject to taxes and deductions as applicable.

Payment will be made as close as possible to January 31 following the conclusion
of the relevant Plan Year, but will be made no later than March 15th of the
calendar year following the Plan Year.

   

Participant

Status Changes

If a participant begins employment with the company during the Plan Year, bonus
potential will be pro-rated for the time the participant was employed during the
Plan Year.

      If a participant transfers jobs and changes plan design standards,
potential bonus will be pro-rated for the time spent in each job.        

Administration

Participants may direct questions about the STI Plan to their local management
or human resources representatives.

      The Compensation Committee of the Board of Directors shall make a
certification decision with respect to performance of financial metrics and
consider extraordinary circumstances that may have positively or negatively
impacted the achievement of the objectives. The Board or management in their
discretion, reserves the right at any time to enhance, diminish or terminate all
or any portion of any compensation plan or program, on a collective or
individual basis; provided, however, that neither the Board nor the Compensation
Committee shall take any action that would cause the Section 162(m) exemption
for qualified performance-based compensation to become unavailable with respect
to the STI plan.    

Relevant Terms

Actively Employed - A full-time or part-time employee on the Company payroll. It
excludes any employee who has been terminated from employment with the Company –
voluntarily or involuntarily – in advance of fiscal year-end.

      Company - H.B. Fuller Company and its wholly owned subsidiaries.      
Eligible Earnings – To be determined by region/country.       Payment - The cash
reward payable after conclusion of the Plan Year.       Plan Year – The relevant
Company fiscal year.       Short Term Incentive (STI) Plan - The program
described herein. May also be referred to as “STIP” or “STI Plan”.

 

 

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Appendix

STIP Payment Schedule for

EPS, Operating Income/EBITDA,

Gross Margin, Contribution Margin

 

STIP Payment schedule for

Organic Revenue

 

 

 

Metric

Performance

 

Payout (as % of

target)

 

 

Metric

Performance

 

Payout (as % of

target)

 

 

125%

200.0%

 

115%

200.0%

 

 

124%

195.0%

 

114%

190.0%

 

 

123%

190.0%

 

113%

180.0%

 

 

122%

185.0%

 

112%

170.0%

 

 

121%

180.0%

 

111%

160.0%

 

 

120%

175.0%

 

110%

150.0%*

 

 

119%

170.0%

 

109%

145.0%

 

 

118%

165.0%

 

108%

140.0%

 

 

117%

160.0%

 

107%

135.0%

 

 

116%

155.0%

 

106%

130.0%

 

 

115%

150.0%*

 

105%

125.0%

 

 

114%

146.7%

 

104%

120.0%

 

 

113%

143.3%

 

103%

115.0%

 

 

112%

140.0%

 

102%

110.0%

 

 

111%

136.7%

 

101%

105.0%

 

 

110%

133.3%

 

100%

100.0%

 

 

109%

130.0%

 

99%

95.0%

 

  108% 126.7%   98% 90.0%     107% 123.3%   97% 85.0%     106% 120.0%   96%
80.0%     105% 116.7%   95% 75.0%     104% 113.3%   94% 70.0%     103% 110.0%  
93% 65.0%     102% 106.7%   92% 60.0%     101% 103.3%   91% 55.0%     100%
100.0%   90% 50.0%     99% 97.5%           98% 95.0%           97% 92.5%        
  96% 90.0%           95% 87.5%           94% 85.0%           93% 82.5%        
  92% 80.0%           91% 77.5%           90% 75.0%           89% 72.5%        
  88% 70.0%           87% 67.5%           86% 65.0%           85% 62.5%        
  84% 60.0%           83% 57.5%        

 

82%

55.0%

 

 

 

 

  81% 52.5%           80% 50.0%        

 

          * Executive Committee members have a maximum opportunity of 200%.    
  ●     Payout is calculated for each incremental increase in performance
(straight line interpolation).

  

 

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Calculation Guidelines

 

 

Total Company Metrics

 

Company EPS

 

The adjusted EPS as disclosed in the Company’s quarterly earnings release.

 

   

 

 

HBF Organic Revenue

 

  ●

The adjusted reported revenue as disclosed in the Company’s quarterly earnings
release is adjusted for currency impact compared to budgeted exchange rates.

 

   

 

 

  ●

Unbudgeted acquisitions and divestitures are excluded from the calculation.

 

   

 

 

HBF Operating Income

    ● The adjusted gross profit minus adjusted SG&A expenses as disclosed in the
Company’s quarterly earnings release adjusted for currency impact compared to
budgeted exchange rates.             ● Unbudgeted acquisitions and divestitures
are excluded from the calculation.           Region/Operating Segment Metrics  
Organic Revenue     ● Total company adjustments are transferred down to the
region/operating segment revenue which is impacted by the adjustments, unless
not approved by the CEO.             ● Basis of targets is US dollars. The
budgeted exchange rates will be used to assess performance.             ●
Unbudgeted acquisitions and divestitures are excluded from the calculation.    
      Fully allocated operating income     ● At the region/operating segment
level, operating income targets include corporate governance allocation at
budget. In determining performance, actual corporate governance allocations will
be used at the region/operating segment level. Below the region/operating
segment level, the corporate governance allocation will remain at budget for
measuring performance, where applicable.             ● Total company adjustments
are transferred down to the region/operating segment operating income which is
impacted by the adjustments, unless not approved by the CEO.             ● Basis
of targets is US dollars. The budgeted exchange rates will be used to assess
performance.

 

 

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    ● Unbudgeted acquisitions and divestitures are excluded from the
calculation.           Adjustments   In calculating the results, the following
adjustments will be made:     a. Individual legal settlements (payments or
receipts) with a value (net of insurance) of $3 million or greater will not be
included in metric calculations.     b. Any unbudgeted reorganization or
restructuring-related items which cannot be offset by related benefits in the
fiscal year will not be included in metric calculations.     c. Any unbudgeted
asset write-downs in excess of $2 million will not be included in metric
calculations.     d. Adjustments needed to (1) correct any inadvertent errors or
miscalculations made in setting a performance target for our key markets (such
as Hygiene, Packaging, or Durable Assembly) or (2) account for changes resulting
from new accounting definitions, requirements or pronouncements.     e. Other
items as publicly disclosed in the Company’s quarterly earnings release.
However, the above adjustments (a-d) will not be made to the extent they are
inconsistent with publicly disclosed earnings.           Any discretion related
to total company adjustments transferred to the region/operating segment
exercised by the CEO requires approval by the Compensation Committee of the
Board of Directors.

 

  

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