Exhibit 10.25


 





 


Executive Quarterly


Performance
Incentive Plan


 


Effective January 1,
2006


 


Performance
Period: January 1 – December 31, 2006


 

















 


	
  

  	
  Executive
  Performance Incentive Plan

  
	
  Effective
  January 1, 2006

  
	
  Performance
  Period

  
	
   January 1
  - December 31, 2006

  



 


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 2006, the Plan covers the following:  (i) all regular, salaried, exempt United
States employees in Levels 7 and above, and (ii) international and
expatriate/inpatriate employees in Levels 7 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, any determination of the final
payouts under the Plan. All decisions of the Compensation Committee will be
final and binding upon all parties, including the Company and Plan
Participants.


 


IV.           Incentive
Targets


 


Incentive targets
have been established for all eligible Plan Participants 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.


 


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 other than the Company’s quarterly
goals must be must be agreed to and approved by the Compensation Committee.


 


2

















 


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 2006 Company performance measures are:


 


•      Worldwide
Revenue


•      Worldwide
Operating Expense


•      Worldwide
Gross Margin


•      EBITDA
Profitable


 


The
Compensation Committee also will take into consideration the relative
performance by each division of the Company with regard to Divisional Revenue,
Operating Expenses, and Gross Margin.


 


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 four 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 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 Compensation Committee has received the
appropriate financial and other data after the end of each Plan Quarter,
individual incentive payments under the Plan, the Compensation Committee will
certify in writing the amount of each incentive payment to be made to each Plan
Participant under the Plan. Individual incentive payments under the Plan will
be made in a lump sum, less applicable withholding taxes, as soon as reasonably
practicable thereafter.


 


The
Compensation Committee reserves the responsibility 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


 


3

















 


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 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.


 


4

















 


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.


 


5