Exhibit (10)Q


 


DESCRIPTION OF ECOLAB INC. 

MANAGEMENT INCENTIVE PLAN


 


Ecolab Inc. (the “Company”) maintains annual cash
incentive plans for executives that are designed to
motivate executives to achieve annual business and individual goals.  These plans are referred to as the Management Incentive Plan (“MIP”) and the Management
Performance Incentive Plan (the “MPIP”). 
The MPIP is a stockholder-approved plan designed and administered in a
manner intended to preserve the Company’s federal income tax deductions.  It is set forth in a plan document filed with
other management agreements as an exhibit to the Company’s Annual Report on Form 10-K.  The MIP is not set forth in a formal plan
document. Set forth below is a summary of the MIP as it applies to the executive
officers of the Company who do not otherwise receive awards under the MPIP.


 


Target
Award Opportunities —
Under the MIP, the Compensation Committee of the Company’s Board of Directors
establishes the annual target award opportunities expressed as a percentage of
base salary paid during the fiscal year, and threshold and maximum award
payment limits expressed as a percentage of the target award for each executive
officer.


 


Performance
Measures — Under the
MIP, performance is measured using a mix of overall corporate, business unit,
and individual measures to foster cross-divisional cooperation and to assure
that executives have a reasonable measure of control over the factors that
affect their awards. This performance measure mix varies by executive position.


 


Performance
Goals — Under the
MIP, overall corporate performance is based on pro forma diluted earnings per
share goals.  In establishing the goals
the Company takes into consideration prior year results, expected economic and
market influences, other large companies’ performance expectations and
anticipated business opportunities, investment requirements and competitive
situation.


 


Under
the MIP, business unit performance is generally measured based on, but not
limited to, the achievement of revenue and operating income goals.  In establishing these goals the Company takes
into consideration prior year results and growth opportunities, investment
requirements and market influences. Generally, the Compensation Committee sets
the threshold, target and maximum levels under the MIP such that the intended
relative difficulty of achieving the target level is consistent from year to
year.


 


Under
the MIP, individual performance goals are specific, qualitative, achievable
with significant effort and, if achieved, provide benefit to the Company.


 


Payout
Approval — As soon as
practicable after the end of the plan year and after the Compensation Committee
has received the appropriate financial and other data, the Compensation
Committee will, for each executive officer, approve the achievement of
performance goals and the corresponding amount of the award earned.  The Compensation Committee reviews and approves all
adjustments to the Company’s overall corporate and business unit performance
results.


 


Discretionary
Adjustments — To
recognize individual performance, the Compensation Committee also may increase
or decrease an executive officer’s MIP award, with input from the principal
executive officer, based on the individual performance of the executive
officer. This is done to recognize either inferior or superior individual
performance in cases where this performance is not fully represented by the
performance measures.