Incentive Plan



 Exhibit 10.3 
 IPC THE HOSPITALIST COMPANY, INC. 
 INCENTIVE PLAN 

I. Purposes 
 The purposes of the IPC The Hospitalist Company, Inc. Incentive Plan (the “Plan”) are to retain and motivate the officers and other employees of IPC The Hospitalist Company, Inc. and its
subsidiaries who have been designated by the Committee to participate in the Plan for a specified Performance Period by providing them with the opportunity to earn incentive payments based upon the extent to which specified performance goals have
been achieved or exceeded for the Performance Period. It is intended that all amounts payable to Participants who are “covered employees” within the meaning of Section 162(m) of the Code will constitute “qualified
performance-based compensation” within the meaning of U.S. Treasury regulations promulgated thereunder, and the Plan and the terms of any Awards hereunder shall be so interpreted and construed to the maximum extent possible. 

II. Definitions 
 “Annual Base Salary” shall mean for any Participant an amount equal to the rate of annual base salary in effect or approved by the Committee or other authorized
person at the time or immediately before performance goals are established for a Performance Period, including any base salary that otherwise would be payable to the Participant during the Performance Period but for his or her election to defer
receipt thereof. 
 “Applicable Period” shall mean, with respect to
any Performance Period, a period commencing on or before the first day of the Performance Period and ending not later than the earlier of (a) the 90th day after the commencement of the Performance Period and (b) the date on which twenty-five percent (25%) of
the Performance Period has been completed. Any action required to be taken within an Applicable Period may be taken at a later date if permissible under Section 162(m) of the Code or U.S. Treasury regulations promulgated thereunder. 

“Award” shall mean an award to which a Participant may be entitled under the Plan if the
performance goals for a Performance Period are satisfied. An Award may be expressed in U.S. dollars or pursuant to a formula that is consistent with the provisions of the Plan. 

“Board” shall mean the Board of Directors of the Company. 

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

“Committee” shall mean the Compensation Committee of the Board or a subcommittee thereof comprised
of members of the Board that are “outside directors” within the meaning of Section 162(m) of the Code, or such other committee designated by the Board that satisfies any then applicable requirements of the principal national stock
exchange on which the common stock of the Company is then traded to constitute a compensation committee, and which consists of two or more members of the Board, each of whom is an “outside director” within the meaning of
Section 162(m) of the Code. 







 “Company” shall mean IPC The Hospitalist Company,
Inc., a Delaware corporation, and any successor thereto. 
 “Participant” shall mean an
officer or other employee of the Company or any of its subsidiaries who is designated by the Committee to participate in the Plan for a Performance Period, in accordance with Article III. 

“Performance Period” shall mean any period commencing on or after January 1, 2012 for which
performance goals are established pursuant to Article IV. A Performance Period may be coincident with one or more fiscal years of the Company or a portion of any fiscal year of the Company. 

“Plan” shall mean the IPC The Hospitalist Company, Inc. Incentive Plan as set forth herein, as it
may be amended from time to time. 
 III. Administration 

3.1. General. The Plan shall be administered by the Committee, which shall have the full power and authority
to interpret, construe and administer the Plan and Awards granted hereunder (including in each case reconciling any inconsistencies, correcting any defaults and addressing any omissions). The Committee’s interpretation, construction and
administration of the Plan and all its determinations hereunder shall be final, conclusive and binding on all persons for all purposes. 
 3.2. Powers and Responsibilities. The Committee shall have the following discretionary powers, rights and responsibilities in addition to those described in
Section 3.1. 
  

	 	(a)	to designate within the Applicable Period the Participants for a Performance Period; 


 

	 	(b)	to establish within the Applicable Period the performance goals and targets and other terms and conditions that are to apply to each Participant’s Award;


  

	 	(c)	to certify in writing prior to the payment with respect to any Award that the performance goals for a Performance Period and other material terms applicable to the
Award have been satisfied; 

  

	 	(d)	subject to Section 409A of the Code, to determine whether, and under what circumstances and subject to what terms, an Award is to be paid on a deferred basis,
including whether such a deferred payment shall be made solely at the Committee’s discretion or whether a Participant may elect deferred payment; and 

  


	 	(e)	to adopt, revise, suspend, waive or repeal, when and as appropriate, in its sole and absolute discretion, such administrative rules, guidelines and procedures for the
Plan as it deems necessary or advisable to implement the terms and conditions of the Plan. 


  
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 3.3. Delegation of Power. The Committee may delegate some or all
of its power and authority hereunder to the Chief Executive Officer or other executive officer of the Company as the Committee deems appropriate; provided, however, that with respect to any person who is a “covered employee”
within the meaning of Section 162(m) of the Code or who, in the Committee’s judgment, is likely to be a covered employee at any time during the applicable Performance Period or during any period in which an Award may be paid following a
Performance Period, only the Committee shall be permitted to (a) designate such person to participate in the Plan for such Performance Period, (b) establish performance goals and Awards for such person, and (c) certify the achievement
of such performance goals. 
 IV. Performance Goals 

The Committee shall establish within the Applicable Period of each Performance Period one or more objective performance goals (the
outcome of which, when established, shall be substantially uncertain) for each Participant or for any group of Participants (or both). To the extent necessary for an award to be qualified performance-based compensation under Section 162(m) of
the Code and the regulations thereunder, performance goals shall be based exclusively on one or more of the following objective corporate-wide or subsidiary, division, operating unit or individual measures: share price (including growth measures and
total stockholder return or attainment by a share of Common Stock of a specified Fair Market Value for a specified period of time), earnings (either in the aggregate or on a per-share basis), return to stockholders (including dividends), return on
assets, return on investments, return on equity, return on sales, earnings of the Company before or after taxes and/or interest, EBITDA (actual and adjusted and either in the aggregate or on a per-share basis), revenues, market share, cash flow or
cost reduction goals, interest expense after taxes, return on investment capital, economic value created, gross margin, operating margin, net income before or after taxes, pretax earnings before interest, depreciation and amortization, pretax
operating earnings after interest expense and before incentives and/or extraordinary or special items, operating earnings, net cash provided by operations, costs, aggregate product unit and pricing targets, achievement of business or operational
goals relating to business development, achievement of diversity objectives, results of customer or employee satisfaction surveys, debt ratings, debt leverage and debt service, and strategic business criteria, consisting of one or more objectives
based on meeting specified market penetration, geographic business expansion goals, cost targets, customer satisfaction, reductions in errors and omissions, reductions in lost business, management of employment practices and employee benefits,
supervision of litigation and information technology, quality and quality audit scores, operating and maintenance cost management, employee or provider productivity, number of employees or providers either on a headcount or equivalency basis,
efficiency, objectively identified project milestones, production volume levels, and goals relating to acquisitions or divestitures, achievement of a clinical quality goal, or any combination of the foregoing. With respect to Participants who are
not “covered employees” within the meaning of Section 162(m) of the Code and who, in the Committee’s judgment, are not likely to be covered employees at any time during the applicable Performance Period or during any period in
which an Award may be paid following a Performance Period, the performance goals established for the Performance Period may consist of any objective or subjective corporate-wide or subsidiary, division, operating unit or individual measures, whether
or not listed herein. Performance goals shall be subject to such other special rules and conditions as the Committee may establish at any time within the Applicable Period; provided, however, that to the extent such goals relate to


  
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Awards to “covered employees” within the meaning of Section 162(m) of the Code, such special rules and conditions shall not be inconsistent with the provisions of Treasury
regulation Section 1.162-27(e) or any successor regulation describing “qualified performance-based compensation.” In the sole discretion of the Committee, but subject to Section 162(m) of the Code, the Committee may amend or
adjust the performance goals or other terms and conditions of an outstanding award in recognition of unusual, nonrecurring or one-time events affecting the Company or its financial statements or changes in law or accounting principles. 

V. Terms of Awards 
 5.1. Performance Goals and Targets. At the time performance goals are established for a Performance Period, the Committee also shall establish an Award opportunity for each
Participant or group of Participants, which shall be based on the achievement of one or more specified targets of performance goals. The targets shall be expressed in terms of an objective formula or standard which may be based upon the
Participant’s Annual Base Salary or a multiple thereof. In all cases the Committee shall have the sole and absolute discretion to reduce the amount of any payment with respect to any Award that would otherwise be made to any Participant or to
decide that no payment shall be made. With respect to each Award, the Committee may establish terms regarding the circumstances in which a Participant will be entitled to payment notwithstanding the failure to achieve the applicable performance
goals or targets (e.g., where the Participant’s employment terminates due to death or disability or where a change in control of the Company occurs); provided, however, that with respect to any Participant who is a
“covered employee” within the meaning of Section 162(m) of the Code, the Committee shall not establish any such terms that would cause an Award payable upon the achievement of the performance goals not to satisfy the conditions of
Treasury regulation Section 1.162-27(e) or any successor regulation describing the “qualified performance-based compensation.” 
 5.2. Payments. At the time the Committee determines an Award opportunity for a Participant, the Committee shall also establish the payment terms applicable to such Award. Such
terms shall include when such payments will be made; provided, however, that the timing of such payments shall in all instances either (A) satisfy the conditions of an exception from Section 409A of the Code (e.g., the
short-term deferrals exception described in Treasury Regulation Section 1.409A-1(b)(4)), or (B) comply with Section 409A of the Code and provided, further, that in the absence of such terms regarding the timing of
payments, such payments shall occur no later than the 15th
day of the third month of the calendar year following the calendar year in which the Participant’s right to payment ceased being subject to a substantial risk of forfeiture. 

5.3. Maximum Awards. No Participant shall receive a payment under the Plan with respect to any Performance
Period having a value in excess of $3,000,000, which maximum amount shall be proportionately adjusted with respect to Performance Periods that are less than or greater than one year in duration. 

  
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 VI. General 
 6.1. Effective Date. The Plan shall be submitted to the shareholders of the Company for approval at the 2012 annual meeting of shareholders and, if approved by the affirmative
vote of a majority of the shares of common stock present in person or represented by proxy at such meeting, shall become effective for Performance Periods beginning on and after January 1, 2012. In the event that the Plan is not approved by the
shareholders of the Company, the Plan shall be null and void with respect to Participants who are “covered employees” within the meaning of Section 162(m) of the Code. 

6.2. Amendments and Termination. The Board may amend the Plan as it shall deem advisable, subject to any
requirement of shareholder approval required by applicable law, rule or regulation, including Section 162(m) of the Code. The Board may terminate the Plan at any time. 
 6.3. Non-Transferability of Awards. No award under the Plan shall be transferable other than by will, the laws of descent and distribution or pursuant to beneficiary
designation procedures approved by the Company. Except to the extent permitted by the foregoing sentence, no award may be sold, transferred, assigned, pledged, hypothecated, encumbered or otherwise disposed of (whether by operation of law or
otherwise) or be subject to execution, attachment or similar process. Upon any attempt to sell, transfer, assign, pledge, hypothecate, encumber or otherwise dispose of any such award, such award and all rights thereunder shall immediately become
null and void. 
 6.4. Tax Withholding. The Company shall have the right to require, prior to the
payment of any amount pursuant to an award made hereunder, payment by the Participant (or withhold from any payment hereunder) of any Federal, state, local or other taxes which may be required to be withheld or paid in connection with such award.

 6.5. No Right of Participation or Employment. No person shall have any right to participate in
the Plan. Neither the Plan nor any award made hereunder shall confer upon any person any right to continued employment by the Company or any subsidiary or affiliate of the Company or affect in any manner the right of the Company or any subsidiary or
affiliate of the Company to terminate the employment of any person at any time without liability hereunder. 
 6.6.
Designation of Beneficiary. If permitted by the Company, a Participant may file with the Committee a written designation of one or more persons as such Participant’s beneficiary or beneficiaries (both primary and
contingent) in the event of the Participant’s death. Each beneficiary designation shall become effective only when filed in writing with the Committee during the Participant’s lifetime on a form prescribed by the Committee. The spouse of a
married Participant domiciled in a community property jurisdiction shall join in any designation of a beneficiary other than such spouse. The filing with the Committee of a new beneficiary designation shall cancel all previously filed beneficiary
designations. If a Participant fails to designate a beneficiary, or if all designated beneficiaries of a Participant predecease the Participant, then each outstanding award shall be payable to the Participant’s executor, administrator, legal
representative or similar person. 
 6.7. Governing Law. The Plan and each award hereunder, and all
determinations made and actions taken pursuant thereto, to the extent not otherwise governed by the Code or the laws of the United States, shall be governed by the laws of the State of Delaware and construed in accordance therewith without giving
effect to principles of conflicts of laws. 

  
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 6.8. Other Plans. Payments pursuant to the Plan shall not be
treated as compensation for purposes of any other compensation or benefit plan, program or arrangement of the Company or any of its subsidiaries, unless either (a) such other plan provides that compensation such as payments made pursuant to the
Plan are to be considered as compensation thereunder or (b) the Board or the Committee so determines in writing. Neither the adoption of the Plan nor the submission of the Plan to the Company’s shareholders for their approval shall be
construed as limiting the power of the Board or the Committee to adopt such other incentive arrangements as it may otherwise deem appropriate. 
 6.9. Binding Effect. The Plan shall be binding upon the Company and its successors and assigns and the Participants and their beneficiaries, personal representatives and heirs.
If the Company becomes a party to any merger, consolidation or reorganization, then the Plan shall remain in full force and effect as an obligation of the Company or its successors in interest, unless the Plan is amended or terminated pursuant to
Section 6.2. 
 6.10. Unfunded Arrangement. The Plan shall at all times be entirely unfunded
and no provision shall at any time be made with respect to segregating assets of the Company for payment of any benefit hereunder. No Participant shall have any interest in any particular assets of the Company or any of its affiliates by reason of
the right to receive a benefit under the Plan and any such Participant shall have only the rights of an unsecured creditor of the Company with respect to any rights under the Plan. 

  
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