Exhibit 10.4



 






Exhibit 10.4




THE SCOTTS COMPANY LLC




EXECUTIVE/MANAGEMENT INCENTIVE PLAN (THE “PLAN” or “EMIP”)




TERMS AND CONDITIONS





	1.	 	Objectives






	 	1.1	 	Provide meaningful financial incentives consistent with and supportive of
Corporate strategies and objectives.
	 
	 	1.2	 	Encourage team effort toward achievement of corporate financial and strategic
goals aligned with our shareholders and customers.
	 
	 	1.3	 	Contribute toward a competitive compensation program for all Associates
participating in the Plan (“Participants”).






	2.	 	Participation






	 	2.1	 	All managers and more senior level employees of The Scotts Company LLC (the
“Company”) and all “Affiliates” and “Subsidiaries” (as defined in Internal Revenue Code
§414(b) and (c)) are eligible to participate upon recommendation by management and in
the case of covered employees (as defined in Internal Revenue Code §162(m)) approval by
the Compensation and Organization Committee of the Scotts Miracle-Gro Company (the
“Committee”).
	 
	 	2.2	 	Participants must be actively employed in an eligible job/position for at least
13 consecutive weeks during the Plan Year (fiscal year).
	 
	 	2.3	 	Participant eligibility is based on active status during the fiscal year.
Periods of inactive status such as short — term disability and other leaves will be
reflected in the eligible earnings and payout calculation.
	 
	 	2.4	 	Participants must be employed on the last day of the fiscal year to be eligible
for a payment.
	 
	 	2.5	 	Participants, whose employment terminates during the Plan Year, except in cases
of retirement, will not be eligible for an incentive payment, prorated or otherwise.
	 
	 	2.6	 	Participants who retire during the Plan Year will be eligible for a prorated
award.
	 
	 	2.7	 	Participants who hold an eligible position on a part — time basis are eligible
for the EMIP. All other terms and conditions apply.
	 
	 	2.8	 	Participants who move to a different EMIP eligible position or otherwise become
eligible for a different target percentage during the Plan Year will be pro — rated





 









 





	 	 	 	based on new metrics/target (if applicable) only if the move is for an eligible period
of at least 13 weeks in the fiscal year.
	 
	 	2.9	 	Participants who move to a non — EMIP eligible position during the Plan Year
will be eligible for a pro — rated payout (based on Plan Year earnings) providing other
eligibility requirements are met.
	 
	 	2.10	 	Participants shall not have any right with respect to any award until an award
shall, in fact, be paid to them.
	 
	 	2.11	 	The Plan confers no rights upon any associate to participate in the Plan or
remain in the employ of the Company. Neither the adoption of the Plan nor its operation
shall in any way affect the right of the associate or the Company to terminate the
employment relationship at any time.






	3.	 	Plan Design, Performance Measures, and Payouts






	 	3.1	 	The Plan is designed to recognize and reward performance against established
financial targets. The Plan is comprised of:






	 	(a)	 	A corporate net income “funding trigger” below which no
incentives will be paid to any participant;
	 
	 	(b)	 	Up to five standard Performance Measures from the list of
available Performance Measures, below;
	 
	 	(c)	 	An earnings “multiplier” that will reinforce the importance of
earnings by modifying the performance results against all of the other goals;
and
	 
	 	(d)	 	The ability to tailor incentive measure weights to each
particular group or unit reflecting the relative contribution that group or
unit can make to those results.






	 	3.2	 	Available Performance Measures under the Plan shall be measured over the period
established by the Committee and be limited to the following:






	 	(a)	 	Net earnings or net income (before or after taxes);
	 
	 	(b)	 	Earnings per share (basic or diluted);
	 
	 	(c)	 	Net sales or revenue growth;
	 
	 	(d)	 	Net operating profit;
	 
	 	(e)	 	Return measures (including, but not limited to, return on
assets, capital, invested capital, equity, sales, or revenue);





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	 	(f)	 	Cash flow (including, but not limited to, operating cash flow,
free cash flow, cash flow return on equity, and cash flow return on
investment);
	 
	 	(g)	 	Earnings before or after taxes, interest, depreciation, and/or
amortization;
	 
	 	(h)	 	Gross or operating margins;
	 
	 	(i)	 	Productivity ratios;
	 
	 	(j)	 	Share price (including, but not limited to, growth measures and
total shareholder return);
	 
	 	(k)	 	Expense targets;
	 
	 	(l)	 	Margins;
	 
	 	(m)	 	Operating efficiency;
	 
	 	(n)	 	Market share;
	 
	 	(o)	 	Customer satisfaction/service;
	 
	 	(p)	 	Product Fill Rate percent (% of orders filled on first
delivery) or All-In Fill Rate percent (% calculated dollar fill based on
potential) times Inventory Turns;
	 
	 	(q)	 	Working capital targets;
	 
	 	(r)	 	Economic value added or EVA(R)(net operating profit after tax
minus the sum of capital multiplied by the cost of capital);
	 
	 	(s)	 	Developing new products and lines of revenue;
	 
	 	(t)	 	Reducing operating expenses;
	 
	 	(u)	 	Developing new markets;
	 
	 	(v)	 	Meeting completion schedules;
	 
	 	(w)	 	Developing and managing relationships with regulatory and other
governmental agencies;
	 
	 	(x)	 	Managing cash;
	 
	 	(y)	 	Managing claims against the Company, including litigation; and




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	 	(z)	 	Identifying and completing strategic acquisitions.
	 
	 	(aa)	 	Any Performance Measure(s) may be used to measure the
performance of the Company, Subsidiary, and/or Affiliate as a whole or any
business unit of the Company, Subsidiary, and/or Affiliate or any combination
thereof, as the Committee may deem appropriate, or any of the above Performance
Measures as compared to the performance of a group of comparator companies, or
published or special index that the Committee, in its sole discretion, deems
appropriate.






	 	3.3	 	Performance above and below target performance goals will be incrementally
calculated so Participants will receive a payout calculated on a straight — line basis.
	 
	 	3.4	 	The maximum amount of compensation that could be paid to any Participant in any
Plan Year from this Plan is $2.5 million.
	 
	 	3.5	 	All payments under the Plan will be made by the 15th day of the third month
following the close of the applicable Plan Year.






	4.	 	Employee Agreement and Forfeiture of Payment






	 	4.1	 	Regardless of any other provision of this section and unless the Incentive
Review Committee specifies otherwise, in order to participate in the Plan, Participant
must execute an Employee Confidentiality, Noncompetition, Nonsolicitation Agreement.
	 
	 	4.2	 	Furthermore, regardless of any other provision of this section and unless the
Incentive Review Committee specifies otherwise, a Participant who breaches any part of
that Agreement will forfeit any future payment under the Plan and will also return to
the Company any monies paid out to Participant under this Plan within the three years
prior to said breach.
	 
	 	4.3	 	By Participating in this plan, a Participant hereby consents to a deduction
from any amount the Company may owe the Participant (including amounts owed to the
Participant as wages or other compensation, fringe benefits, or vacation pay as well as
any other amounts owed to the Participant by the Company), to the extent of the amounts
owed the Company under this section, whether or not the Company elects to make any
Set-Off in whole or in part. If the Company does not recover by means of set-off, the
full amount the Participant owes it, calculated as set forth above, the Participant
agree to pay immediately the unpaid balance to the Company.




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	5.	 	Administration






	 	5.1	 	The Plan is to be administered by the Vice President, Global Total Rewards or
the Committee designee, who will be responsible for:






	 	(a)	 	Recommending changes in the Plan as appropriate;
	 
	 	(b)	 	Recommending payout targets; and
	 
	 	(c)	 	Recommending additions or deletions to the list of eligible
associates.






	 	5.2	 	The Incentive Review Committee (comprised of the Chief Executive Officer,
Executive Vice President, Human Resources and the Chief Financial Officer) is
responsible for:






	 	(a)	 	Approving the percentages by which financial measurements vary
from approved budgets and business unit financial performance results;
	 
	 	(b)	 	Adjudicating changes and adjustments; and
	 
	 	(c)	 	Recommending Plan payouts.






	 	5.3	 	The Committee approves:






	 	(a)	 	Changes in the Plan design;
	 
	 	(b)	 	The payout percentage;
	 
	 	(c)	 	Additions or deletions of eligible associates; and
	 
	 	(e)	 	Payouts to all Participants after written certification that
Performance Measures have been met.






	 	5.4	 	The Committee shall approve the Plan measures within 90 days of the beginning
of the performance period but no later than 25% of the performance period. Material
terms of the Plan, including the Plan measures, are disclosed to shareholders and,
before payout, are approved by a majority of the votes cast on the proposal to adopt
this Plan with abstentions counted as negative votes. The foregoing qualifies payments
under the Plan as performance based compensation under Internal Revenue Code §162(m).
	 
	 	5.5	 	The Committee shall review the operation of the Plan and (subject to
restrictions imposed in Section 162(m) of the Internal Revenue Code), if at any time
the continuation of the Plan or any of its provisions becomes inappropriate or
inadvisable, the Committee shall revise or modify Plan provisions or recommend to the
Board of Directors of the Scotts Miracle-Gro Company (the “Board”) that





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	 	 	 	the Plan be
suspended or withdrawn. In addition, the Committee reserves the right to modify
incentive formulas to reflect unusual circumstances.
	 
	 	5.6	 	The Board reserves to itself the right to suspend the Plan, to withdraw the
Plan, and, to the extent allowed without shareholder approval, make alterations in Plan
concept.






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