Exhibit 10.1

 

IPSCO Inc. Senior Officer Annual Incentive Plan

 

ARTICLE 1

Statement of Purpose

The Plan is intended to increase shareholder value and the success of the
Company by motivating key executives to perform and to achieve the Company's
objectives. The Plan's goals are to be achieved by providing key executives with
incentive awards based on the achievement of goals relating to the performance
of the Company and upon the achievement of objectively determinable individual
performance goals. The Plan is intended to permit the payment of Awards that may
qualify as performance-based compensation under Code Section 162(m).

ARTICLE 2

Definitions

The terms used in this Plan include the feminine as well as the masculine gender
and the plural as well as the singular, as the context in which they are used
requires. The following terms, unless the context requires otherwise, are
defined as follows:

2.1

“Affiliate” means any parent, subsidiary or other entity that is directly or
indirectly controlled by, or controls, the Company.

 

2.2

“Award” means, with respect to each Participant, the award determined by the
Committee under Section 4.3 for the Performance Period, subject to the
Committee’s authority to eliminate or reduce the Award otherwise payable.

 

2.3

“Base Salary” means, as to any Performance Period, the Participant’s annualized
salary rate on the last day of the Performance Period. Such Base Salary shall be
determined before both (a) deductions for taxes or benefits, and (b) deferrals
of compensation pursuant to Company-sponsored benefit plans or deferral
arrangements.

 

2.4

“Board” means the IPSCO Inc. Board of Directors.

 

2.5

“Code” means the Internal Revenue Code of 1986, as amended.

 

2.6

“Committee” means the Compensation Committee of the Board or any successor
committee with responsibility for compensation, or any subcommittee, as long as
the number of Committee members and their qualifications shall at all times be
sufficient to meet the applicable requirements for “outside directors” under
Section 162(m) and the regulations thereunder, as in effect from time to time,
and the independence requirements of the New York Stock Exchange, Inc. or any
other applicable exchange on which the Company’s common equity is at the time
listed.

 

 

 

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2.7

“Company” means IPSCO Inc. and any of its Affiliates that adopt this Plan or
that have employees who are Participants under this Plan.

 

2.8

“Determination Date” means the date that is 90 days after the beginning of the
Performance Period or, if earlier, the date on which no more than 25% of the
Performance Period has elapsed.

 

2.9

“Disability” means permanent and total disability as defined in the Company’s
long term disability plan or, if no such plan is then in effect, as defined in
Code Section 22(e)(3).

 

2.10

“Executive Officer” means any Company employee who is an “executive officer” as
defined in Rule 3b-7 promulgated under the Exchange Act.

 

2.11

“Exchange Act” means the Securities Exchange Act of 1934, as amended.

 

2.12

“Maximum Award” means as to any Participant for any Performance Period,

$3 million.

 

2.13

“Participant” means an Executive Officer or key management employee as described
in Article 3 of this Plan.

 

2.14

“Performance Period” means the period for which an Award may be made. Unless
otherwise specified by the Committee, the Performance Period shall be a calendar
year, beginning on January 1 of any year.

 

2.15

“Plan” means this IPSCO Inc. Senior Officer Annual Incentive Plan, as it may be
amended from time to time.

 

2.16

“Retirement” means a Termination of Employment, after appropriate notice to the
Company, (a) on or after the earliest permissible retirement date under a
qualified pension or retirement plan of the Company or (b) upon such terms and
conditions approved by the Committee, or officers of the Company designated by
the Board or the Committee.

 

2.17

“SEC” means the Securities and Exchange Commission.

 

2.18

“Section 162(m)” means Code Section 162(m) and regulations promulgated
thereunder by the Secretary of the Treasury.

 

2.19

“Termination of Employment” means (a) the termination of the Participant’s
active employment relationship with the Company, unless otherwise expressly
provided by the

 

 

 

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Committee, or (b) the occurrence of a transaction by which the Participant’s
employer ceases to be the Company or an Affiliate.

 

ARTICLE 3

Participation

An Executive Officer or other key management employee of the Company designated
by the Committee with respect to a Performance Period shall be a Participant in
this Plan and shall continue to be a Participant until any Award he may receive
has been paid or forfeited under the terms of this Plan. No person shall be
automatically entitled to participate in the Plan.

 

ARTICLE 4

Incentive Awards

4.1

Objective Performance Goals. The Committee shall establish written, objective
performance goals for a Performance Period no later than the Determination Date.
The objective performance goals shall be stated as specific amounts of, or
specific changes in, one or more of the financial measures described in Section
4.2. Objective performance goals may also include operational goals such as:
productivity, safety, other strategic objectives and individual performance
goals. The objective performance goals need not be the same for different
Performance Periods and for any Performance Period may be stated: (a) as goals
for IPSCO Inc., for one or more of its Affiliates, divisions, business or
organizational units, or for any combination of the foregoing; (b) on an
absolute basis or relative to the performance of other companies or of a
specified index or indices, or be based on any combination of the foregoing; and
(c) separately for one or more of the Participants, collectively for the entire
group of Participants, or in any combination of the two.

 

4.2

Financial Measures. The Committee shall use any one or more of the following
financial measures to establish objective performance goals under Section 4.1:
earnings, operating earnings, earnings per share, operating earnings per share,
earnings before interest taxes depreciation and amortization (EBITDA), revenues,
shareholders’ equity, return on equity, return on assets, return on invested
capital, economic value added, operating margins, cash flow, total shareholder
return, expenses, dept-to-capital ratio or market share. The Committee may
specify any reasonable definition of the financial measures it uses. Such
definitions may provide for reasonable adjustments and may include or exclude
items, including but not limited to: realized investment gains and losses;
extraordinary, unusual or non-recurring items; effects of accounting changes,
currency fluctuations, acquisitions, divestitures, or necessary financing
activities; recapitalizations, including stock splits and dividends; expenses
for restructuring or productivity initiatives; and other non-operating items.

 

 

 

 

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4.3

Award. On or prior to the Determination Date, the Committee, in its sole
discretion, shall establish a formula, matrix or other objective mechanism for
determining the Award (if any) that may be payable, in cash to each Participant
upon achievement of the applicable objective performance goals. Each formula
shall be set forth in writing and may provide one or more levels of Award (e.g.,
“Target”, “Threshold”, “Maximum”, etc.), as determined by the Committee;
provided, however, that in no event shall a Participant’s Award for any
Performance Period exceed the Maximum Award. For any Performance Period, the
Committee shall have sole and absolute discretion to reduce the amount of, or
eliminate entirely, the Award that would otherwise be payable to a Participant
under the Award formula.

 

4.4

Performance Evaluation. Within a reasonable time after the close of a
Performance Period, the Committee shall determine whether and to what extent the
objective performance goals established for that Performance Period have been
met by the respective Participants. If the objective performance goals and any
other material terms established by the Committee have been met by a
Participant, the Committee shall so certify in writing with respect to such
Participant.

 

4.5

Payment or Deferral of the Award.

(a)          As soon as practicable after the Committee’s determination under
Section 4.4, but subject to Section 4.5(b), the Company shall pay the Award to
the Participant. The target timing for the payments under the Plan shall be on
or before the date that is 2 ½ months after the end of the Performance Period;
provided, however, that payments shall be made no later than the December 31
following the end of the Performance Period unless such Award has otherwise been
deferred pursuant to Section 4.5(b). The Company shall have the right to deduct
from any Award, any applicable Federal, state and local income and employment
taxes, and any other amounts that the Company is otherwise required to deduct.

(b)          Subject to the Committee’s approval and applicable law,
Participants may request that payments of an Award be deferred under a deferred
compensation arrangement maintained by the Company by making a deferral election
pursuant to such rules and procedures as the Committee may establish from time
to time.

 

4.6

Eligibility for Payments.

(a) Except as otherwise provided in this Section 4.6, a Participant shall be
eligible to receive an Award for a Performance Period only if such Participant
is employed by the Company continuously from the beginning of the Performance
Period to the end of the Performance Period.

(b) Under Section 4.6(a), a leave of absence that lasts less than three months
and that is approved in accordance with applicable Company policies is not a
break in continuous employment. In the case of a leave of absence of three
months or longer: (1) the Committee shall determine whether the leave of absence
constitutes a break in

 

 

 

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continuous employment, and (2) if a Participant is on a leave of absence on the
date that an Award or payment of the Award is to be made, the Committee may
require that the Participant return to active employment with the Company at the
end of the leave of absence as a condition of receiving the Award or payment.

(c) The Committee may determine, in its sole discretion, that an Award will be
payable pro-rata for a Participant who either becomes eligible to participate
during the Performance Period has a Termination of Employment during the
Performance Period due to his death, Retirement or Disability.

 

ARTICLE 5

Administration

5.1

General Administration. This Plan shall be administered by the Committee,
subject to such requirements for review and approval by the Board as the Board
may establish. Subject to the terms and conditions of this Plan and Section
162(m), the Committee is authorized and empowered in its sole discretion to
select or approve Participants and to make Awards in such amounts and upon such
terms and conditions as it shall determine.

 

5.2

Administrative Rules. The Committee shall have full power and authority to
adopt, amend and rescind administrative guidelines, rules and regulations
pertaining to this Plan and to interpret this Plan and rule on any questions
respecting any of its provisions, terms and conditions. Subject to the
requirements of Section 162(m), the Committee may delegate specific
administrative tasks to Company employees or others as appropriate for proper
administration of the Plan.

 

5.3

Committee Members Not Eligible. No member of the Committee shall be eligible to
participate in this Plan.

 

5.4

Committee Members Not Liable. The Committee and each of its members shall be
entitled to rely upon certificates of appropriate officers of the Company with
respect to financial and statistical data in order to determine if the objective
performance goals for a Performance Period have been met. Neither the Committee
nor any member shall be liable for any action or determination made in good
faith with respect to this Plan or any Award made hereunder.

 

5.5

Decisions Binding. All decisions, actions and interpretations of the Committee
concerning this Plan shall be final and binding on IPSCO Inc. and its Affiliates
and their respective boards of directors, and on all Participants and other
persons claiming rights under this Plan.

 

5.6

Application of Section 162(m); Shareholder Approval.

 

 

 

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(a)          This Plan is intended to be administered, interpreted and construed
so that Award payments remain tax deductible to the Company and unlimited by
Section 162(m), which restricts under certain circumstances the Federal income
tax deduction for compensation paid by a public company to named executives in
excess of $1 million per year. The Committee, or the Board, may, without
shareholder approval, amend this Plan retroactively or prospectively to the
extent it determines necessary to comply with any subsequent amendment or
clarification of Section 162(m) required to preserve the Company’s Federal
income tax deduction for compensation paid pursuant to this Plan.

 

(b)        All Awards under the Plan shall be contingent upon shareholder
approval of this Plan in accordance with Section 162(m), the regulations
thereunder and other applicable U.S. Treasury regulations. Unless and until such
shareholder approval is obtained, no Award shall be made pursuant to this Plan.

 

ARTICLE 6

Amendments; Termination

This Plan may be amended or terminated by the Board or the Committee. All
amendments to this Plan, including an amendment to terminate this Plan, shall be
in writing. An amendment to this Plan shall not be effective without the prior
approval of the shareholders of IPSCO Inc. if such approval is necessary to
continue to qualify Awards as performance-based compensation under Section
162(m), or otherwise under Treasury or SEC regulations, the rules of the New
York Stock Exchange, Inc. or any other applicable exchange or any other
applicable law or regulations. Unless otherwise expressly provided by the Board
or the Committee, no amendment to this Plan shall apply to Awards made before
the effective date of such amendment. A Participant’s rights with respect to any
Awards made to him may not be abridged by any amendment, modification or
termination of this Plan without his individual consent.

 

ARTICLE 7

Other Provisions

7.1

Duration of the Plan. This Plan is effective as of January 1, 2006 (the
“Effective Date”), subject to the approval of the shareholders of the Company.
This Plan shall remain in effect until all Awards made under this Plan have been
paid or forfeited under the terms of this Plan, and all Performance Periods
related to Awards made under this Plan have expired. No Awards may be made under
this Plan for any Performance Period that would end after December 31, 2010
unless the Board, subject to any shareholder approval that may then be required
to continue to qualify this Plan as a performance-based plan under Section
162(m), extends this Plan.

 

7.2

Awards Not Assignable. No Award or any right thereto shall be assignable or
transferable by a Participant except by will or by the laws of descent and
distribution. Any

 

 

 

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other attempted assignment or alienation shall be void and of no force or
effect.

 

7.3

Participant’s Rights. The right of any Participant to receive any payments under
an Award granted to such Participant pursuant to the provisions of this Plan
shall be an unsecured claim against the general assets of the Company. This Plan
shall not create, nor be construed in any manner as having created, any right by
a Participant to any Award for a Performance Period because of a Participant’s
participation in this Plan for any prior Performance Period, or because the
Committee has made a written certification under Section 4.4 for the Performance
Period. Moreover, there is not obligation for uniform treatment for Participants
under this Plan.

 

7.4

Termination of Employment. The Company retains the right to terminate the
employment of any Participant or other employee at any time for any reason or no
reason, and an Award is not, and shall not be construed in any manner to be, a
waiver of such right.

 

7.5

Exclusion from Benefits. Awards under this Plan shall not constitute
compensation for the purpose of determining participation or benefits under any
other plan of the Company unless specifically included as compensation in such
plan.

 

7.6

Successors. Any successor (whether direct or indirect, by purchase, merger,
consolidation or otherwise) to all or substantially all of the Company’s
business or assets, shall assume the Company’s liabilities under this Plan and
perform any duties and responsibilities in the same manner and to the same
extent that the Company would be required to perform if no such succession had
taken place.

 

7.7

Law Governing Construction. The construction and administration of this Plan and
all questions pertaining thereto shall be governed by the laws of the State of
Illinois, except to the extent that such law is preempted by Federal law.

 

7.8

Headings Not a Part Hereto. Any headings preceding the text of the several
Articles, Sections, subsections, or paragraphs hereof are inserted solely for
convenience of reference and shall not constitute a part of this Plan, nor shall
they affect its meaning, construction or effect.

 

7.9

Severability of Provisions. If any provision of this Plan is determined to be
void by any court of competent jurisdiction, this Plan shall continue to operate
and, for the purposes of the jurisdiction of the court only, shall be deemed not
to include the provision determined to be void.

 

 

 

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