Exhibit 10.1

 

LOGO [g86790ex10_1logo.jpg]             Rewards - Compensation        
Management Short-Term Incentive –         Executive Officers           (STI)
Plan        

 

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.

Plan Design    The plan design is based on the following financial metrics.    •
   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:    •    Region Standard

 

Metric & Weighting Per Metric EPS   Region Organic
Revenue   Region Operating
Income ($) 30%   30%   40%

 

  •    Corporate/Global

 

Metric & Weighting Per Metric EPS   HBF Organic Revenue   HBF Operating
Income ($) 30%   30%   40%

 

 

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LOGO [g86790ex10_1logo.jpg]             Rewards - Compensation        
Management Short-Term Incentive –         Executive Officers           (STI)
Plan        

 

   •    VP Sr, Emerging Markets

 

Metric & Weighting Per Metric EPS   Emerging
Markets
Organic
Revenue   Emerging
Markets
Contribution
Margin   Hygiene
Revenue   Hygiene
Gross
Margin 30%   20%   20%   15%   15%

 

   •    VP Sr, Americas Adhesives

 

Metric & Weighting Per Metric EPS   Americas Adhesives +
Construction
Products Organic
Revenue   Americas Adhesives +
Construction Products
Operating Income   Packaging
Revenue   Packaging
Gross Margin 30%   20%   20%   15%   15%

 

   •    VP Sr, Market Development

 

Metric & Weighting Per Metric EPS   HBF
Operating
Income   Durable
Assembly
Revenue   Durable
Assembly Gross
Margin 30%   20%   25%   25%

 

   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:       •    Sales, Organic Revenue: 90% of target       •
   Operating Income/EBITDA: 80% of target       •    EPS: 80% of target       •
   Gross Margin, Contribution Margin: 80% of target    •    Payout at the
threshold level of performance will be 50% of the target allocated to that
metric.

 

 

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LOGO [g86790ex10_1logo.jpg] Rewards - Compensation   Management Short-Term
Incentive –   Executive Officers     (STI) Plan       

 

Superior • Superior performance levels will be established for each metric as
follows: • Sales, Organic Revenue: 110% of target • Operating Income/EBITDA:
115% of target • EPS: 115% of target • 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: • Organic Revenue: 115%
of target • Operating Income/EBITDA: 125% of target • EPS: 125% of target •
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. 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.

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.

 

 

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LOGO [g86790ex10_1logo.jpg] Rewards - Compensation   Management Short-Term
Incentive –   Executive Officers     (STI) Plan       

 

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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LOGO [g86790ex10_1logo.jpg]             Rewards - Compensation        
Management Short-Term Incentive –         Executive Officers           (STI)
Plan        

 

Appendix

STIP Payment Schedule for

EPS, Operating Income/EBITDA,

Gross Margin, Contribution Margin

Metric
Performance   Payout (as % of
target) 125%       200.0%     124%       195.0%     123%       190.0%     122%  
    185.0%     121%       180.0%     120%       175.0%     119%       170.0%    
118%       165.0%     117%       160.0%     116%       155.0%     115%  
    150.0%*   114%       146.7%     113%       143.3%     112%       140.0%    
111%       136.7%     110%       133.3%     109%       130.0%     108%  
    126.7%     107%       123.3%     106%       120.0%     105%       116.7%    
104%       113.3%     103%       110.0%     102%       106.7%     101%  
    103.3%     100%       100.0%       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%    

    

STIP Payment schedule for

Organic Revenue

Metric
Performance   Payout (as % of
target) 115%       200.0%     114%       190.0%     113%       180.0%     112%  
    170.0%     111%       160.0%     110%       150.0%*   109%       145.0%    
108%       140.0%     107%       135.0%     106%       130.0%     105%  
    125.0%     104%       120.0%     103%       115.0%     102%       110.0%    
101%       105.0%     100%       100.0%       99%         95.0%       98%  
      90.0%       97%         85.0%       96%         80.0%       95%  
      75.0%       94%         70.0%       93%         65.0%       92%  
      60.0%       91%         55.0%       90%         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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LOGO [g86790ex10_1logo.jpg] Rewards - Compensation   Management Short-Term
Incentive –   Executive Officers     (STI) Plan       

 

Calculation Guidelines

 

  1. Company EPS. As reported adjusted for STIP & UPB accruals (see below).

 

  2. Organic Revenue. The reported revenue is adjusted for the following:

 

  a. Currency impact compared to budgeted exchange rates for Europe and Asia
Pacific regions.

 

  3. HBF Operating Income. The reported operating income is adjusted for the
following:

 

  a. STIP & UPB accruals (see below).

 

  b. Currency impact compared to budgeted exchange rates for the Europe and Asia
Pacific regions.

 

  4. Fully allocated regional operating income.

 

  a. Regional operating income targets include corporate governance allocation
at budget.

 

  b. For evaluating performance against target, the actual corporate governance
allocation is adjusted to reflect Corporate STIP and UPB accruals at target.

 

  c. At the region level and one level below, corporate governance allocations
will be included in determining targets and performance. Below these levels, the
corporate governance allocation is not to be included in determining targets or
performance.

 

  5. Impact of STIP & UPB accruals. For income related metrics, performance is
evaluated assuming the STIP and UPB accruals are at target.

 

  6. North America. Basis of targets is US dollars. For purposes of determining
performance against targets, there is to be no adjustment back to budgeted
exchange rates for Canada.

 

  7. Europe.

 

  a. Revenue and operating income are in Euros.

 

  b. The actual corporate governance allocation will be converted to Euros at
the budgeted exchange rate for determining performance against the operating
income target.

 

  8. Latin America. Basis of targets is the US dollar. For purposes of
determining performance against targets, there is to be no adjustment back to
budgeted exchange rates for individual countries.

 

  9. Asia Pacific. For revenue and income metrics expressed in US dollars, the
budgeted exchange rates will be used to assess performance.

 

 

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LOGO [g86790ex10_1logo.jpg] Rewards - Compensation   Management Short-Term
Incentive –   Executive Officers     (STI) Plan       

 

  10. 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. Unbudgeted acquisitions and divestitures will be excluded from all actual
and target metric calculations, as applicable.

 

  d. Any unbudgeted asset write-downs in excess of $2 million will not be
included in metric calculations.

 

  e. 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) and Emerging Markets or (2) account for changes
resulting from new accounting definitions, requirements or pronouncements.

 

 

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