EX-10.1






Exhibit 10.1



NOTE: CERTAIN MATERIAL HAS BEEN REDACTED FROM THIS DOCUMENT AND FILED SEPARATELY WITH THE SEC
PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT UNDER RULE 24b-2. THE LOCATIONS OF THESE
REDACTIONS ARE INDICATED THROUGHOUT THE DOCUMENT BY THE FOLLOWING MARKING: [***].




2009 EXECUTIVE MANAGEMENT INCENTIVE AWARDS

As Adopted by the Compensation and Human Resources Committee of the Board of Directors on March 23, 2009




Introduction




     2009 Executive Management Incentive Awards (“EMIA”), made pursuant to Article 9 of the King
Pharmaceuticals, Inc. (the “Company”) Incentive Plan (the “Plan”), will be based upon one or more
financial objectives (“Financial Objectives”). In determining the potential EMIA payout for any
participant, the Financial Objectives shall be evaluated and applied either by the Committee or by
the Chief Executive Officer, as further detailed below. All capitalized terms not otherwise
defined shall have the meanings assigned to them in the Plan.



Administration




     The Compensation and Human Resources Committee of the Board of Directors of the Company (the
“Committee”) shall have complete discretionary authority over the administration of the EMIAs as
set forth herein including, without limitation, the authority to adjudicate claims related to
EMIAs, interpret the terms of EMIAs, and to resolve disputes and factual questions related to
EMIAs. Determinations of the Committee shall be binding on the Company and the EMIA participants.



Eligibility to Participate




     Except as otherwise determined by the Committee, executives having the title of Vice President
or more senior titles as of January 1, 2009 shall be eligible to participate in the 2009 EMIA. The
following officers shall be designated “Top Executives” for purposes of the Plan: President and
Chief Executive Officer; Chief Financial Officer; Chief Commercial Officer; President, Alpharma
Animal Health; Chief Legal Officer; Corporate Compliance Officer; Chief Science Officer.



          The Committee and/or the Chief Executive Officer, as further detailed below in the section
entitled “Approval of Objectives”, may establish an EMIA for an executive who is hired or promoted
to fill an EMIA-eligible position after January 1, 2009; provided, however, that





	 	a.	 	unless the Committee shall determine otherwise, an EMIA may be established for a Top
Executive after 90 days have elapsed since January 1, 2009 only if 75.1% or more of the
performance time period is remaining at the time the EMIA is established, in accordance
with Treas. Reg. § 1.162-27(e);
	 
	 	b.	 	any executive hired after September 30, 2009 is ineligible for an EMIA; and
	 
	 	c.	 	any employee of the Company promoted into an EMIA-eligible position who becomes an EMIA
Participant (but who is not a Top Executive) shall participate prorata in the EMIA




 









 





	 	 	 	program and in any other 2009 cash incentive plan in which the employee participated prior
to becoming an EMIA Participant.





Objectives




     The EMIA for each Participant shall be based entirely upon one or more Financial Objectives.
Each Financial Objective shall be based upon prospective financial goals, the accomplishment of
which is substantially uncertain at the time of the establishment of the EMIA. Unless the Committee
shall determine otherwise, EMIAs for Top Executives shall be established during the first 25% of
the applicable performance period.



Approval of Objectives




     The Committee shall establish and approve each Financial Objective and any amendments thereto.



Weighting of Objectives




     The weighting of EMIA objectives shall be as follows:



	 	 	 
	 	 	Financial
	Executive	 	Objective*
	President and Chief Executive Officer

	 	100% Corporate Cash from Operations
	 
	 	 
	Steven J. Andrzejewski and Commercial

	 	80% Corporate Cash from Operations;
	Operations Participants

	 	20% Total prescriptions and/or
	 

	 	units for promoted products
	 
	 	 
	Eric J. Bruce and Animal Health

	 	80% Corporate Cash from Operations;
	Participants

	 	20% Animal Health Operating Income
	 
	 	 
	Dennis O’Brien and Meridian

	 	80% Corporate Cash from Operations;
	Participants

	 	20% Meridian Operating Income
	 
	 	 
	All other Participants

	 	100% Corporate Cash from Operations








 




			
	*	 	See below for details regarding the Financial Objectives.





Determination of Award Amounts




     Each EMIA Participants is eligible for a cash award (“EMIA Payout”) which is a percentage of
his or her 2009 base salary earned. An EMIA payout is calculated as follows:




			
	EMIA Payout ($) =	 	   2009 base salary earned ($)

x Weighted Financial Objective Achievement Percentage (%)





          The sections below provide further detail regarding the elements of this calculation.




2









 





Weighted Financial Objective Achievement Percentage




          An EMIA Participant’s Financial Objective Achievement Percentage is determined, for each
Financial Objective to which he or she is subject, using the table below, according to the degree
of achievement (none, threshold, target or stretch, or a prorata percentage between levels using
straight-line interpolation).




	 	 	 	 	 	 	 
	 	 	ACHIEVEMENT PERCENTAGE
	POSITION	 	THRESHOLD	 	TARGET	 	STRETCH
	President & Chief Executive Officer
	 	50%	 	100%	 	200%
	Chief Financial Officer
	 	35%	 	70%	 	140%
	Chief Commercial Officer
	 	30%	 	60%	 	120%
	President, Animal Health
	 	30%	 	60%	 	120%
	Chief Science Officer
	 	30%	 	60%	 	120%
	Chief Legal Officer
	 	30%	 	60%	 	120%
	EVP Level 1
	 	25%	 	50%	 	100%
	EVP Level 2
	 	20%	 	40%	 	80%
	[***]
	 	[***]%	 	[***]%	 	[***]%
	[***]
	 	[***]%	 	[***]%	 	[***]%
	[***]
	 	[***]%	 	[***]%	 	[***]%






          In the case of an EMIA Participant having only one Financial Objective, the Weighted Financial
Objective Achievement Percentage is equal to the Financial Objective Achievement Percentage
determined above for the one applicable Financial Objective.




          In the case of an EMIA Participant having more than one Financial Objective, the Weighted
Financial Objective Achievement Percentage is determined by calculating the average of the
Achievement Percentages of the Participant’s Financial Objectives, with each Achievement Percentage
weighted according to its proportional representation among the Participant’s overall mix of
Financial Objectives.




Limitation of Payouts




          The total payout (the “Total Payout”) under the Plan and any substantially similar cash
incentive plans employed by the Company during 2009, but not including cash incentive plans for
members of the Company’s sales force (the “2009 Cash Incentive Plans”), shall not exceed an amount
equal to the aggregate amount that would be payable to all participants in the 2009 Cash Incentive
Plans, based upon actual results, if all such participants had Financial Objective 1, as described
below, as their sole objective (the “Cash Incentive Funding Limit”). In the event that the Total
Payout would exceed the Cash Incentive Payout Limit, all individual payouts under all 2009 Cash
Incentive Plans shall be reduced by the uniform percentage necessary to reduce the Total Payout to
the Cash Incentive Funding Limit. The provisions of the prior sentence notwithstanding, the Chief
Executive Officer may determine, however, in his sole judgment, not to reduce any payout to any or
all EMIA Participants who are not Top Executives.




          In the event that the Total Payout is less than the Cash Incentive Funding Limit, the Company
shall retain the difference between the Total Payout and the Cash Incentive Funding Limit.




          No payouts shall be made under the Plan if actual Corporate Cash from Operations is less than
the Threshold Achievement Level.




3









 





Eligibility for EMIA Payout




          Payment of any EMIA shall be contingent upon the Committee’s determination that the applicable
Financial Objectives have been met by the Company, and at what achievement level these Financial
Objectives have been met. Also:





	 	a.	 	In the case of any of the Top Executives, EMIA Payouts shall be contingent upon the
Committee’s approval of the Weighted Financial Objective Achievement Percentage.
	 
	 	b.	 	In the case of all other EMIA Participants, payment of any EMIA shall be contingent
upon the determination of the Chief Executive Officer, or his designee, of the Weighted
Financial Objective Achievement Percentage.





          Other than for reasons of Death, Incapacity, Disability or Approved Retirement, an EMIA
Participant must be employed by the Company on December 31, 2009 or the EMIA Participant will
forfeit any EMIA which he or she may have otherwise qualified to receive.




          In the event of an EMIA Participant’s death on or after January 1, 2010, the EMIA shall be
paid to his or her estate. In the event of an EMIA Participant’s death on or before December 31,
2009, a prorata portion of the Participant’s target payout percentage, as indicated in the table on
page 3, reflecting the EMIA Participant’s time in service during the performance year, shall be
paid to his or her estate as soon as reasonably practicable.




          In the event of an EMIA Participant’s termination due to incapacity (as evidenced by the
judgment or decree of a court of competent jurisdiction) on the date his or her EMIA is paid by the
Company, the EMIA shall be paid to his or her legal guardian or appointed representative. In the
event of an EMIA Participant’s incapacity on or before December 31, 2009, a prorata portion of the
Participant’s target payout percentage, as indicated in the table on page 3, reflecting the EMIA
Participant’s time in service during the performance year, shall be paid to his or her legal
guardian or appointed representative as soon as reasonably practicable.




          In the event of an EMIA Participant’s termination due to Disability on or before December 31,
2009, a prorata portion of the Participant’s target payout percentage, as indicated in the table on
page 3, reflecting the EMIA Participant’s time in service during the performance year, shall be
paid to the Participant as soon as reasonably practicable.




          In the event of an EMIA Participant’s Approved Retirement on or before December 31, 2009, a
prorata portion of the Participant’s target payout percentage, as indicated in the table on page 3,
reflecting the EMIA Participant’s time in service during the performance year, shall be paid to the
Participant as soon as reasonably practicable.




Timing of EMIA Payout




          The payment of all EMIA Payouts, if any, will be made between January 1 and March 15, 2010.




4









 





Tax Matters




          All EMIA payments are subject to applicable state, federal, local and other tax withholding
requirements.




          To the maximum extent possible, all EMIA Payouts are intended to be “qualified
performance-based compensation” in accordance with Treas. Reg. § 1.162-27(e) and shall be
interpreted and administered as such unless the Committee determines that it is in the best
interests of the Company not to adhere to the requirements of 162(m) of the Internal Revenue Code
of 1986, as amended (the “Code”), and Treas. Reg. § 1.162-27.




Other Matters




          The Committee, in its discretion, may reduce or eliminate any EMIA Payout in the event it
determines it is in the best interests of the Company to do so for reasons including, without
limitation, financial distress of the Company, administrative difficulties or that the EMIA Payout
is nondeductible by the Company under the Internal Revenue Code. The reduction of one or more EMIA
Payouts shall not increase the EMIA Payout of any other EMIA Participant.




          The Committee may, at any time, amend or terminate this EMIA program. The Board of Directors
of the Company, in its discretion, may, at any time, withdraw the Committee’s authority over this
EMIA program.




          The grant of an EMIA shall in no way be construed or interpreted to establish or guarantee a
term of employment and does not change the “at-will” or other status of any person employed by the
Company.




          The terms and conditions of this EMIA program are, in their entirety, set forth in this
document and the EMIA documents pertaining to a specific EMIA Participant. Once established, the
Financial Objectives may only be altered by valid written notice to that effect from the Committee,
as described in the section above entitled “Approval of Objectives”. Any oral representation or
writing not authorized and approved by the Committee shall be void and of no effect, and shall not
be binding on the Company or the Committee.




5









 





Financial Objectives




          The time period for the measurement of performance of the Financial Objectives is January 1
through December 31, 2009. In the event that achievement of a Financial Objective is greater than
Threshold but less than Stretch, payout percentages applicable to the Financial Objective will be
prorated to reflect actual achievement (e.g., actual Corporate Cash from Operations), using
straight-line interpolation between the two adjacent achievement levels.




Financial Objective 1: Cash From Operations




	 	 	 	 	 	 	 
	 	 	ACHIEVEMENT LEVEL
	 	 	Threshold	 	Target	 	Stretch
	Corporate Cash from Operations (1)
	 	$[***]
	 	$[***]
	 	$[***]








 




			
	(1)	 	[***]





Financial Objective 2: Total Prescriptions and/or Units from Promoted Products




     The Achievement Level for this item shall be determined by calculating the average achievement
level for the Company’s promoted products, as provided below.



     [***]:



	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	ACHIEVEMENT LEVEL
	Product	 	Metric (2)	 	Weight	 	Threshold	 	Target	 	Stretch
	[***]
	 	[***]
	 	[***]%
	 	[***]
	 	[***]
	 	[***]








 




			
	(2)	 	[***]





     [***]:



	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	ACHIEVEMENT LEVEL
	Product	 	Metric (3)	 	Weight	 	Threshold	 	Target	 	Stretch
	[***]
	 	[***]
	 	[***]%
	 	[***]
	 	[***]
	 	[***]








 




			
	(3)	 	[***]





     [***].



Financial Objective 3: Animal Health Operating Income




	 	 	 	 	 	 	 
	 	 	ACHIEVEMENT LEVEL
	 	 	Threshold	 	Target	 	Stretch
	Animal Health Operating Income (4)
	 	$[***]
	 	$[***]
	 	$[***]








 




			
	(4)	 	[***].





Financial Objective 4: Meridian Medical Technologies, Inc. Operating Income




6









 





	 	 	 	 	 	 	 
	 	 	ACHIEVEMENT LEVEL
	 	 	Threshold	 	Target	 	Stretch
	Meridian Medical Technologies, Inc. 

Operating Income (5)
	 	$[***]
	 	$[***]
	 	$[***]








 




			
	(5)	 	[***].






7