exv10w36






Exhibit 10.36




WATERS CORPORATION




MANAGEMENT INCENTIVE PLAN










 



 


WATERS CORPORATION




Management Incentive Plan




1. Purpose




     The purpose of this Plan is to (i) align the interests of eligible employees with the
Company’s shareholders, (ii) motivate eligible employees to achieve annual financial and operating
targets, (iii) provide increasing levels of incentive plan payout opportunity consistent with
increasing levels of annual financial performance, (iv) enhance individual accountability for goal
achievement and align employee interests and objectives worldwide, and (v) attract and retain key
employees.



2. Definitions




     As used in this Plan, the following terms shall have the following meanings:



     2.1. Affiliate means any corporation, partnership, limited liability company, business
trust, or other entity controlling, controlled by or under common control with the Company.



     2.2.
Award means a right to receive a cash incentive payment pursuant to the terms and
conditions of the Plan.



     2.3. Board means the Company’s Board of Directors.



     2.4. Code means the Internal Revenue Code of 1986, as amended from time to time, or
any successor statute thereto, and any regulations issued from time to time thereunder.



     2.5. Committee means the Compensation Committee of the Board, which in general is
responsible for the administration of the Plan, as provided in Section 3 of this Plan. For any
period during which no such committee is in existence “Committee” shall mean the Board and all
authority and responsibility assigned to the Committee under the Plan shall be exercised, if at
all, by the Board.



     2.6. Company means Waters Corporation, a corporation organized under the laws of the
State of Delaware.



     2.7.
Covered Employee means a Participant who is a “covered employee” within the meaning of
Section 162(m) of the Code.



     2.8. Participant means an employee who is a holder of an Award under the Plan.



     2.9.
Performance Criteria means the criteria that the Committee selects for purposes of
establishing the Performance Goal or Performance Goals for a Participant for a Performance Period.
Solely with respect to Awards to Covered Employees, the Performance Criteria used to establish
Performance Goals are limited to: (i) cash flow (before or after dividends), (ii) earnings per
share (including, without limitation, earnings before interest, taxes, depreciation and
amortization), (iii) stock price, (iv) return on equity, (v) stockholder return or total
stockholder return, (vi) return on capital (including, without limitation, return on total capital
or return on invested capital), (vii) return on investment, (viii) return on assets or net assets,
(ix) market









 



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capitalization, (x) economic value added, (xi) debt leverage (debt to capital), (xii) revenue,
(xiii) sales or net sales, (xiv) backlog, (xv) income, pre-tax income or net income,
(xvi) operating income or pre-tax profit, (xvii) operating profit, net operating profit or economic
profit, (xviii) gross margin, operating margin or profit margin, (xix) return on operating revenue
or return on operating assets, (xx) cash from operations, (xxi) operating ratio, (xxii) operating
revenue, (xxiii) market share improvement, (xxiv) general and administrative expenses and
(xxv) customer service. The Performance Criteria used to establish Performance Goals for
Participants who are not Covered Employees shall not be so limited solely by reason of this
Section.




     2.10.
Performance Goals means, for a Performance Period, the written goal or goals established
by the Committee for the Performance Period based upon the Performance Criteria. The Performance
Goals may be expressed in terms of overall Company performance or the performance of a division,
business unit, subsidiary, or an individual, either individually, alternatively or in any
combination, applied to either the Company as a whole or to a business unit or Affiliate, either
individually, alternatively or in any combination, and measured either quarterly, annually or
cumulatively over a period of years, on an absolute basis or relative to a pre-established target,
to previous years’ results or to a designated comparison group, in each case as specified by the
Committee. The Committee will, in the manner and within the time prescribed by Section 162(m) of
the Code in the case of Qualified Performance-Based Awards, objectively define the manner of
calculating the Performance Goal or Goals it selects to use for such Performance Period for any
Participant. Solely with respect to Awards to Covered Employees, and to the extent consistent with
Section 162(m) of the Code (in the case of Qualified Performance-Based Awards), the Committee may
appropriately adjust any evaluation of performance against a Performance Goal to exclude any of the
following events that occurs during a Performance Period: (i) asset write-downs, (ii) litigation,
claims, judgments or settlements, (iii) the effect of changes in tax law, accounting principles or
other such laws or provisions affecting reported results, (iv) accruals for reorganization and
restructuring programs and (v) any extraordinary, unusual, non-recurring or non-comparable items
(A) as described in Accounting Principles Board Opinion No. 30, (B) as described in management’s
discussion and analysis of financial condition and results of operations appearing in the Company’s
Annual Report to stockholders for the applicable year, or (C) publicly announced by the Company in
a press release or conference call relating to the Company’s results of operations or financial
condition for a completed quarterly or annual fiscal period. With respect to Awards to
Participants who are not Covered Employees, the Committee may exclude or otherwise take into
account such other events that occur during a Performance Period as it deems appropriate in its
sole discretion.



     2.11.
Performance Period means a period of one calendar year over which the attainment of one
or more Performance Goals or other business objectives will be measured for purposes of determining
a Participant’s right to payment pursuant to an Award.



     2.12. Plan means this Management Incentive Plan of the Company, as amended from time
to time, and including any attachments or addenda hereto.



     2.13.
Qualified Performance-Based Awards means Awards intended to qualify as
“performance-based compensation” under Section 162(m) of the Code.









 



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3. Administration




     The Plan shall be administered by the Committee; provided, however, that at any time and on
any one or more occasions the Board may itself exercise any of the powers and responsibilities
assigned the Committee under the Plan and when so acting shall have the benefit of all of the
provisions of the Plan pertaining to the Committee’s exercise of its authorities hereunder; and
provided, further, that with respect to Awards to Participants who are not Covered Employees, the
Committee may delegate to an executive officer, officer or employee the authority to exercise any
of the powers and responsibilities assigned to the Committee under the Plan including the authority
to grant Awards to such Participants. Subject to the provisions of the Plan, the Committee shall
have complete authority, in its discretion, to make or to select the manner of making all
determinations with respect to the Plan. In making such determinations, the Committee may take
into account the nature of the services rendered by employees, their present and potential
contributions to the success of the Company and its Affiliates, and such other factors as the
Committee in its discretion shall deem relevant. Subject to the provisions of the Plan, the
Committee shall also have complete authority to interpret the Plan, to prescribe, amend and rescind
rules and regulations relating to it, and to make all other determinations necessary or advisable
for the administration of the Plan. The Committee’s determinations made in good faith on matters
referred to in the Plan shall be final, binding and conclusive on all persons having or claiming
any interest under the Plan or an Award granted pursuant hereto.



4. Eligibility for Awards




     4.1.
Eligibility. The Committee may from time to time and at any time prior to the
termination of the Plan grant Awards to any employee of one or more of the Company and its
Affiliates.



     4.2.
Effect of Termination of
Employment, Etc. Unless the Committee shall provide otherwise
with respect to any Award, in order to be eligible to receive payment pursuant to an Award, a
Participant must have remained in the continuous employ of the Company and its Affiliates through
the end of the applicable Performance Period and until date on which the Award payment is paid,
except as follows:



          (a) In the event of a Participant’s termination of employment during the Performance Period
due to death or disability the Committee may, in its sole discretion, authorize the Company or the
applicable Affiliate to make payment, in full or on a prorated basis, pursuant to an Award,
subject, unless the Committee determines otherwise, to achievement of the Performance Goal or Goals
within the applicable Performance Period.




          (b) In the event of the retirement (as determined by the Committee) of a Participant who is
not a Covered Employee during the Performance Period, the Committee may, in its sole discretion,
authorize the Company or the applicable Affiliate to make payment, in full or on a prorated basis,
pursuant to an Award, subject, unless the Committee determines otherwise, to achievement of the
Performance Goal or Goals within the applicable Performance Period.




          (c) In the event of the retirement (as determined by the Committee) during the Performance
Period of a Participant who is a Covered Employee, the Committee may, in its sole discretion,
authorize the Company or the applicable Affiliate to make payment, in full or on a prorated basis,
pursuant to an Award so long as the Committee has determined that the applicable Performance Goal
or Goals were achieved within the applicable Performance Period.










 



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5. Terms of Awards




     5.1.
General Terms. A Participant’s eligibility for an Award shall be subject to all
applicable terms and conditions of the Plan and such other terms and conditions, not inconsistent
with the terms of the Plan, as the Committee may prescribe. No prospective Participant shall have
any rights with respect to an Award, unless and until such Participant shall have complied with the
applicable terms and conditions of such Award. The Committee shall set Performance Goals or other
business objectives in its discretion which, depending on the extent to which they are met within
the applicable Performance Period, will determine the payment to be made to the Participant
pursuant to the terms of his or her Award. After the applicable Performance Period has ended, the
Participant shall be entitled to payment pursuant to the terms of his or her Award, to be
determined as a function of the extent to which the corresponding Performance Goals or other
business objectives have been achieved.



     5.2. Payments. Payment pursuant to an Award which is subject to U.S. taxation shall
be made in a single lump sum on or before the March 15th next following the close of the applicable
Performance Period. Payment pursuant to an Award which is not subject to U.S. taxation shall be
made in a single lump sum on or about the March 15th next following the close of the applicable
Performance Period or as soon as practicable thereafter.



     5.3.
Qualified Performance-Based Awards.



          (a) Purpose. The purpose of this Section 5.3 is to provide the Committee the ability
to qualify Awards as “performance-based compensation” under Section 162(m) of the Code. If the
Committee, in its discretion, decides to grant an Award as a Qualified Performance-Based Award, the
provisions of this Section 5.3 will control over any contrary provision contained in the Plan. In
the course of granting any Award, the Committee may specifically designate the Award as intended to
qualify as a Qualified Performance-Based Award. However, no Award shall be considered to have
failed to qualify as a Qualified Performance-Based Award solely because the Award is not expressly
designated as a Qualified Performance-Based Award, if the Award otherwise satisfies the provisions
of this Section 5.3 and the requirements of Section 162(m) of the Code and the regulations
promulgated thereunder applicable to “performance-based compensation.”




          (b) Authority. All grants of Awards intended to qualify as Qualified Performance-Based Awards
and determination of terms applicable thereto shall be made by the Committee or, if not all of the
members thereof qualify as “outside directors” within the meaning of applicable IRS regulations
under Section 162 of the Code, a subcommittee of the Committee consisting of such of the members of
the Committee as do so qualify. Any action by such a subcommittee shall be considered the action
of the Committee for purposes of the Plan.




          (c) Applicability. This Section 5.3 will apply only to those Covered Employees, or to
those persons who the Committee determines are reasonably likely to become Covered Employees in the
period covered by an Award, selected by the Committee to receive Qualified Performance-Based
Awards. The Committee may, in its discretion, grant Awards to Covered Employees that do not
satisfy the requirements of this Section 5.3.




          (d) Discretion
of Committee with Respect to
Qualified Performance-Based Awards. Each Award
intended to qualify as a Qualified Performance-Based Award shall be subject to satisfaction of one
or more Performance Goals. The Committee will have full










 



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discretion to select the length of any applicable Performance Period, the kind and/or level of
the applicable Performance Goal, and whether the Performance Goal is to apply to the Company, an
Affiliate or any division or business unit, or to the individual. Any Performance Goal or Goals
applicable to Qualified Performance-Based Awards shall be objective, shall be established not later
than ninety (90) days after the beginning of any applicable Performance Period (or at such other
date as may be required or permitted for “performance-based compensation” under Section 162(m) of
the Code) and shall otherwise meet the requirements of Section 162(m) of the Code, including the
requirement that the outcome of the Performance Goal or Goals be substantially uncertain (as
defined in the regulations under Section 162(m) of the Code) at the time established.




          (e) Payment of Qualified Performance-Based Awards. Except as otherwise provided in Section
4.2(a), a Participant will be eligible to receive payment under a Qualified Performance-Based Award
which is subject to achievement of a Performance Goal or Goals only if the applicable Performance
Goal or Goals are achieved within the applicable Performance Period, as determined by the
Committee. In determining the actual size of an individual Qualified Performance-Based Award, the
Committee may reduce or eliminate the amount of the Qualified Performance-Based Award earned for
the Performance Period, if in its sole and absolute discretion, such reduction or elimination is
appropriate.




          (f) Maximum Amount Payable. The maximum amount payable pursuant to Qualified
Performance-Based Awards to all Participants under the Plan (and, therefore, to any one Participant
under the Plan) for any Performance Period is $5,000,000.




          (g) Limitation on Adjustments for Certain Events. Unless otherwise approved by the Committee,
no adjustment of any Qualified Performance-Based Award pursuant to Section 6 shall be made except
on such basis, if any, as will not cause such Award to provide other than “performance-based
compensation” within the meaning of Section 162(m) of the Code.




6. Adjustment Provisions




     6.1. Adjustment of Awards Upon the Occurrence of Certain Unusual or Nonrecurring Events. In
the event of any corporate action including but not limited to a merger or consolidation of the
Company with or into another entity, a sale, transfer, or other disposition of all or substantially
all of the Company’s assets to one or more other persons in a single transaction or series of
related transactions, a liquidation or dissolution of the Company, a reorganization, a
recapitalization, a reclassification, a stock dividend, a stock split, a reverse stock split, or
other similar distribution, the Committee may make such adjustment of outstanding Awards and their
terms, if any, as it, in its sole discretion, may deem equitable and appropriate in the
circumstances. In addition, the Committee may make adjustments in the terms and conditions of, and
the Performance Criteria included in Awards in recognition of unusual or nonrecurring events
(including, without limitation, the events described in this Section) affecting the Company or the
financial statements of the Company or of changes in applicable laws, regulations, or accounting
principles, whenever the Committee determines that such adjustments are appropriate in order to
prevent dilution or enlargement of the benefits or potential benefits intended to be made available
under the Plan.



     6.2. Related Matters. Any adjustment in Awards made pursuant to Section 6.1 shall be
determined and made, if at all, by the Committee, acting in its sole discretion, and shall include
any correlative modification of terms, including Performance Goals and other financial









 



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objectives which the Committee may deem necessary or appropriate so as to ensure the rights of
the Participants in their respective Awards are not substantially diminished nor enlarged as a
result of the adjustment and corporate action other than as expressly contemplated in this Section
6.




7. No Special Service Rights




     Nothing contained in the Plan or in any Award Agreement shall confer upon any Participant any
right with respect to the continuation of his or her employment with the Company (or any
Affiliate), or interfere in any way with the right of the Company (or any Affiliate), subject to
the terms of any separate employment agreement or provision of law or corporate articles or by-laws
to the contrary, at any time to terminate such employment relationship or to increase or decrease,
or otherwise adjust, the other terms and conditions of the Participant’s employment with the
Company and its Affiliates.



8. Section 409A; Unfunded Status of Plan




     This Plan is intended to be exempt from Section 409A of the Code and the rules and regulations
promulgated thereunder (collectively, “Section 409A”). By participating in the Plan, each
Participant acknowledges that he or she bears the entire risk of any adverse federal and State tax
consequences and penalty taxes in the event any payment pursuant to this Plan is deemed to be
subject to Section 409A and that no representations have been made to Participant relating to the
tax treatment of any payment pursuant to this Plan under Section 409A of the Code and the
corresponding provisions of any applicable State income tax laws.



     The Plan is intended to constitute an “unfunded” plan for incentive compensation, and the Plan
is not intended to constitute a plan subject to the provisions of the Employee Retirement Income
Security Act of 1974, as amended. With respect to any payments not yet made to a Participant by
the Company, nothing contained herein shall give any such Participant any rights that are greater
than those of a general creditor of the Company. In its sole discretion, the Committee may
authorize the creation of trusts or other arrangements to meet the obligations created under the
Plan, provided, however, that the existence of such trusts or other arrangements is consistent with
the unfunded status of the Plan.



9. Termination and Amendment of the Plan




     9.1. Termination or Amendment of the Plan. The Board may at any time terminate the Plan or
make such modifications of the Plan as it shall deem advisable. Unless the Board otherwise
expressly provides, no amendment of the Plan shall affect the terms of any Award outstanding on the
date of such amendment.



     9.2. Amendment of Outstanding Awards. The Committee may amend the terms of any Award
theretofore granted, prospectively or retroactively, provided that the Award as amended is
consistent with the terms of the Plan.



     9.3. Limitations on Amendments, Etc. Except as otherwise provided herein, no amendment or
modification of the Plan by the Board, or of an outstanding Award by the Committee, shall impair
the rights of the recipient of any Award outstanding on the date of such amendment or modification
of such Award, as the case may be, without the Participant’s consent; provided, however, that no
such consent shall be required if (i) the Board or Committee, as the









 



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case may be, determines in its sole discretion and prior to the date of any change of control
that such amendment or alteration either is required or advisable in order for the Company, the
Plan or the Award to satisfy any law or regulation, including without limitation the provisions of
Section 409A of the Code, or to meet the requirements of or avoid adverse financial accounting
consequences under any accounting standard, or (ii) the Board or Committee, as the case may be,
determines in its sole discretion and prior to the date of any change of control that such
amendment or alteration is not reasonably likely to significantly diminish the benefits provided
under the Award, or that any such diminution has been adequately compensated.




10. Notices and Other Communications




     Any notice, demand, request or other communication hereunder to any party shall be deemed to
be sufficient if contained in a written instrument delivered in person or duly sent by first class
registered, certified or overnight mail, postage prepaid, or telecopied with a confirmation copy by
regular, certified or overnight mail, addressed or telecopied, as the case may be, (i) if to a
Participant, at his or her residence address last filed with the Company and (ii) if to the
Company, at its principal place of business, addressed to the attention of its Treasurer, or to
such other address or telecopier number, as the case may be, as the addressee may have designated
by notice to the addressor. All such notices, requests, demands and other communications shall be
deemed to have been received: (i) in the case of personal delivery, on the date of such delivery;
(ii) in the case of mailing, when received by the addressee; and (iii) in the case of facsimile
transmission, when confirmed by facsimile machine report.



11. Governing Law




     The Plan and all Awards and actions taken thereunder shall be governed, interpreted and
enforced in accordance with the laws of the State of Delaware without regard to the conflict of
laws principles thereof.