Exhibit 10.26





Executive Performance Incentive Plan


Effective January 1, 2007


Performance Period: January 1 – December 31, 2007













 


I.                                         Purpose
of the Plan


ev3 Inc.’s
compensation philosophy is to pay for performance.  The purpose of the ev3 Inc. Executive Performance Incentive Plan (the “Plan”) is
to align the interests of ev3 Inc.
and its subsidiaries (the “Company”), executive-level employees, and
stockholders by providing annual incentives for the achievement of key business
and individual performance measures that are critical to the success of the
Company and linking a significant portion of each executive employee’s annual
compensation to the achievement of such measures.


II.                                     Eligible
Participants


The Company will determine eligibility criteria for
the Plan on an annual basis and in its sole discretion.  For 2007, the Plan covers the following:  (i) all regular, salaried, exempt United
States employees in Levels 6 and above, and (ii) international and expatriate/inpatriate
employees in Levels 6 and above who are determined by the Company to be
eligible for participation (“Executives” or “Participants”).  Notwithstanding the foregoing, Participants
in positions covered by sales compensation plans are not eligible Participants
in the Plan.


The Plan year runs from January 1 - December 31 of
each year (the “Plan Year”).  Payouts
will be made on a quarterly basis (the “Plan Quarter”).  Participants with less than a full Plan
Quarter of service or whose incentive target percent has changed during a Plan
Quarter may be eligible to participate in the plan on a prorated basis,
determined by the percentage of time they were eligible to participate during
that Plan Quarter under applicable criteria. 
Participants with less than one full month of eligible service in a Plan
Quarter will not be eligible to receive an award under the Plan for that Plan
Quarter.


III.                                 Administration
of the Plan


The Compensation Committee of the Board of Directors
of the Company will administer the Plan. 
The Compensation Committee, in its sole discretion, may delegate to the
Company’s Chief Executive Officer activities relating to Plan administration
that are not required to be exercised by the Compensation Committee under
applicable laws, rules, regulations and the Compensation Committee Charter.  Non-delegable activities include, but are not
limited to, final approval of any payouts under the Plan to Executive Officer
level employees.  Delegable activities
include, but are not limited to, final approval of recommendations regarding payouts
under the Plan to Executive Officer level employees and to Participants that
are not Executive Officer level employees. 
All decisions of the Compensation Committee and Chief Executive Officer
will be final and binding upon all parties, including the Company and Plan
Participants.


IV.                                Incentive
Targets


Incentive targets have been approved by the
Compensation Committee, in the case of Participants that are Executive Officer
level employees, and by the Chief Executive Officer, for all other eligible
Plan Participants, in each case based upon their level of responsibility within
the Company and impact on the business. 
These incentive targets represent the incentive (as a percent of a Plan
Participant’s base salary) that a Participant is eligible to receive under the
Plan.  It is the Company’s intention to
provide significant incentive and reward opportunities to its Executives for
world-class performance achievement.



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V.                                    Individual
Performance Measures


Individual performance measures for a Plan Year are
established during the annual goal setting process.  Additionally, performance measures are
established for each of the four quarters of the Plan Year.  For each Plan Quarter, all Participants will
be assigned the Company’s quarterly goals as their individual objectives for
the Plan Quarter.  Individual objectives
for Executive Officer level employees other than the Company’s quarterly goals
must be agreed to and approved by the Compensation Committee.  Individual objectives for all other
Participants other than the Company’s quarterly goals must be agreed to and
approved by the Chief Executive Officer.


VI.                                Company
Performance Measures


For each Plan Quarter, the Compensation Committee,
together with input from the Company’s Chief Executive Officer, will identify
critical Company performance measures and determine the incentive pool funding
for the Plan based on achievement of such Company performance measures.  The 2007 Company performance measures are:


·                  Worldwide Revenue


·                  Worldwide Operating Expense
(Controllable) as a % of Revenue


·                  Worldwide Gross Margin


·                  Working
Capital


·                  Earnings Before
Interest, Taxes, Depreciation and Amortization, adjusted for Non-Cash, Stock-Based
Compensation (“EBITDA”)


The Compensation Committee, with input from the
Company’s Chief Executive Officer, will take into consideration the relative
performance by each division of the Company with regard to Divisional Revenue,
Operating Expenses, Gross Margin, and Working Capital.


VII.                            Incentive
Pool Funding


The incentive pool funding is the amount of money that
is available for distribution to Plan Participants under the Plan based on
achievement of the Company performance measures.  Appendix A describes in more detail
how the five Company performance measures will impact the incentive pool funding.
The incentive pool is funded quarterly on the following basis:  20% of the annual pool in Q1, 20% of the
annual pool in Q2, 20% of the annual pool in Q3 and 40% of the annual pool in
Q4.


VIII.                        Individual
Incentive Payment Criteria, Calculation, and Payout


A Plan Participant must be actively employed by the
Company on the last day of the month of the Plan Quarter to be eligible for an
incentive payment under the Plan for that Plan Quarter.


The incentive payment under the Plan for any eligible
Plan Participant for a particular Plan Quarter will vary depending upon the
approved incentive pool funding level for that Plan Quarter, the Participant’s
base salary as of the first day of the last month of the Plan Quarter, the
Participant’s incentive target for that Plan Quarter, and the Participant’s
overall individual performance during that Plan Quarter, relative performance
to other Executives and achievement of objectives relative to other eligible
Executives.  The total of incentive
payments to all eligible Plan Participants may not exceed the funding pool(s)
established by the Compensation Committee for each Plan Quarter.


As soon as practicable after the appropriate financial
and other data has been compiled after the end of each Plan Quarter, individual
incentive payments under the Plan will be determined as follows:  With respect to Participants that are Executive
Officer level employees, the Chief Executive Officer will recommend to the
Compensation Committee the amount of each incentive payment to be made



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to each such Plan Participant under the Plan and the
Compensation Committee will then approve the final amount of each incentive
payment to be made to each such Plan Participant, taking into account the
recommendation of the Chief Executive Officer and such other factors as the
Compensation Committee determines appropriate. 
With respect to all other Participants that are not Executive Officer
level employees, the Chief Executive Officer will approve the final amount of
each incentive payment to be made to each such Plan Participant.  All final individual incentive payouts under
the Plan to Participants that are Executive Officer level employees will be
certified in writing by the Compensation Committee and all final individual
incentive payouts under the Plan to other Participants that are not Executive
Officer level employees will be certified in writing by the Chief Executive
Officer.  Individual incentive payments
under the Plan will be made in a lump sum, less applicable withholding taxes,
as soon as reasonably practicable after the determination of such payments.


In approving final individual incentive payments under
the Plan, the Compensation Committee, in the case of payments to Executive
Officer level employees, and the Chief Executive Officer, in the case of all
other payments under the Plan, reserves the right to recognize individual
performance and to provide appropriate differential incentive compensation.


IX.                                Plan
Discretion


All benefits payable under the
Plan are discretionary and no Plan Participant shall have any right to payment
under the Plan until actually paid.


To the extent necessary with respect to any Plan
Quarter, in order to avoid any undue windfall or hardship due to external
causes, the Compensation Committee may, without the consent of any affected
Plan Participants, revise one or more of the Company performance measures or
otherwise make adjustments to payouts under the Plan to take into account any
acquisition or disposition by the Company not planned for at the time the
Company performance measures were established, any change in accounting
principles or standards, or any extraordinary or non-recurring event or item,
so as equitably to reflect such event or events, such that the criteria for
evaluat­ing whether a Company performance measure has been achieved will be
substantially the same (as determined by the Compensation Committee) following
such event as prior to such event.


X.                                    Termination,
Suspension, or Modification


The Company may terminate, suspend, modify and if
suspended, may reinstate or modify, all or part of the Plan at any time, with
or without notice to the Plan Participants. 
Exceptions to the eligibility of, or the extent to which the Plan
applies to, any particular Plan Participant must be approved, on a case-by-case
basis, by the Compensation Committee.


XI.                                Limitation
of Liability


No member of the Company’s Board
of Directors, the Compensation Committee, any officer, employee, or agent of
the Company, or any other person participating in any determination of any question
under the Plan, or in the interpretation, administration, or application of the
Plan, shall have any liability to any party for any action taken, or not taken,
in good faith under the Plan.


XII.                            No
Right to Employment


This document sets forth the terms of the Plan and it
is not intended to be a contract or employment agreement between any Plan
Participant and the Company.  Nothing contained in the Plan (or in any other
documents related to the Plan) shall confer upon any employee or Plan
Participant any right to continue in the employ or other service of the Company
or constitute any contract or limit in any way



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the right of the Company to
change such person’s compensation or other benefits or to terminate the
employment or other service of such person with or without cause or notice.


XIII.                        Non-Assignability


Except for the designation of a
beneficiary(ies) to receive payments of benefits for a particular Plan Quarter
following a Plan Participant’s death after the completion of such Plan Quarter,
no amount payable at any time under the Plan shall be subject to sale,
transfer, assignment, pledge, attachment, or other encumbrance of any
kind.  Any attempt to sell, transfer,
assign, pledge, attach, or otherwise encumber any such benefits, whether
currently or thereafter payable, shall be void.


XIV.                       Withholding
Taxes


The Company is entitled to withhold and deduct from
any payments made pursuant to the Plan or from future wages of a Plan
Participant (or from other amounts that may be due and owing to the Plan Participant
from the Company), or make other arrangements for the collection of, all
legally required amounts necessary to satisfy any and all federal, state, and
local withholding and employment-related tax requirements attributable to any
payment made pursuant to the Plan.


XV.                           Unfunded
Status of Plan


The Plan shall be unfunded.  No provisions of the Plan shall require the
Company, for the purpose of satisfying any obligations under the Plan, to
purchase assets or place any assets in a trust or other entity to which
contributions are made or otherwise to segregate any assets.  Plan Participants shall have no rights under
the Plan other than as unsecured general creditors of the Company.


XVI.                       Other


Except to the extent in connection with other matters
of corporate governance and authority (all of which shall be governed by the
laws of the Company’s jurisdiction of incorporation), the validity,
construction, interpretation, administration and effect of the Plan and any
rules, regulations, and actions relating to the Plan will be governed by and
construed exclusively in accordance with the internal, substantive laws of the
State of Minnesota, without regard to the conflict of law rules of the State of
Minnesota or any other jurisdiction.



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