exv10w4






Exhibit 10.4









Employee Performance Incentive

Compensation Plan




(2008 Revised)




Effective January 1, 2008




Performance Period: January 1 — December 31, 2008














 





	 	 	 
	

	 	Employee Performance Incentive Comp Plan

Effective January 1, 2008

Performance Period

January 1 — December 31, 2008







	I.	 	Philosophy/Purpose of the Plan
	 
	 	 	The purpose of the ev3, Inc. Performance Incentive Compensation Plan (the “Plan”) is to
provide financial reward in addition to base salary, based on achievement of specific
performance, to those who significantly impact the growth and success of the company. The
plan is designed to reward employees for achieving stretch annual goals and to closely align
their accomplishments with the interests of the company’s shareholders. This is done by
providing annual incentives for the achievement of key business and individual performance
measures that are critical to the success of the Company while linking a significant portion
of an 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 2008, the Plan covers the following: (i) all regular, salaried,
exempt United States employees in Levels 2 and above, inclusive, and (ii) international and
expatriate/inpatriate employees who are determined by the Company to be eligible for
participation. Notwithstanding the foregoing, employees 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 an annual basis during the period beginning on the first day of the calendar
year following the performance year and ending on March 15th of such calendar year.
Participants with less than a full year of service or whose incentive target percent has
changed during a Plan Year 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 Year
under applicable criteria. Plan Participants with less than four (4) full months of
eligible service on December 31 of a particular Plan Year will not be eligible to receive an
award under the Plan for that Plan Year.
	 
	 	 	To be eligible, employees must have established and approved annual individual performance
goals by the end of the first quarter of each Plan Year (or, for new employees, within two
(2) months of the employee’s start date). Managers are responsible for meeting this
deadline. Employees and Managers who do not complete the annual individual performance
goal setting process by such deadlines may become ineligible to participate in the Plan for
that Plan Year.
	 
	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. Delegable activities include, but are not limited to,
establishing any policies under the Plan, interpreting provisions of the Plan, determining
eligibility to participate in the Plan, and approving any final payouts under the Plan that
do not affect Executive Officer level employees. All decisions of the Compensation
Committee and the Chief Executive Officer will be final and binding upon all parties,
including the Company and Plan participants.




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	 	Employee Performance Incentive Comp Plan

Effective January 1, 2008

Performance Period

January 1 — December 31, 2008







	IV.	 	Incentive Targets
	 
	 	 	Incentive targets have been approved by the Compensation Committee 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 Plan Participant is eligible to receive under the Plan.
It is the Company’s intention to provide significant incentive and reward opportunities to
its employees for world-class performance achievement.
	 
	 	 	Each position level (2-11) has an established target bonus, expressed as a percentage of
base salary, as illustrated below and in the attached Target Bonus Table.





	 	 	 	 	 
	 	 	Salary Level	 	Standard % of Base Salary Earned
	CEO
	 	11	 	100%
	WW President
	 	10	 	65%
	Business Unit President
	 	9	 	60%
	CFO
	 	9	 	60%
	OC Members
	 	8	 	50%
	VP
	 	7	 	40%
	Director
	 	6	 	30%
	Managers, Principals
	 	5	 	25%
	Supervisors/Sr. Level Contributors
	 	4	 	15%
	Intermediate level
	 	3	 	10%
	Entry Level Individuals Contributors
	 	2	 	  8%
	Non-exempt
	 	1	 	Not eligible







	 	 	The actual incentive is capped at 150% standard, or may result in 0 bonus based on
achievement. In unusual circumstances, modifications may be made if, in the Compensation
Committee’s final judgment the calculations does not accurately reflect performance.
	 
	V.	 	Individual Performance Measures
	 
	 	 	Individual performance measures for a Plan Year are established during the annual goal
setting process. Each Plan Year, all Plan participants are required to develop three to
five written, measurable and specific Management By Objectives (MBO’s), which must be agreed
to and approved by each participant’s direct manager by the end of the first quarter. up.
For Executives in Grade Level 8 and up, each MBO and targeted achievement levels must be
approved by the President and CEO and the Compensation Committee. All objectives are
weighted by agreement, with areas of critical importance or critical focus weighted most
heavily. A rating of 1 to 5 is agreed upon, providing specific achievement levels for each
rating. A rating of 3 will always equal “on plan” performance.
	 
	VI.	 	Company Performance Measures
	 
	 	 	For each Plan Year, the Compensation Committee, together with input from the Company’s Chief
Executive Officer, will identify critical Company performance measures. The 2008 Company
performance measures are:






	 	•	 	Worldwide Revenue
	 
	 	•	 	Operating Profit




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	 	Employee Performance Incentive Comp Plan

Effective January 1, 2008

Performance Period

January 1 — December 31, 2008







	 	•	 	Daily Sales Outstanding — “DSO”
	 
	 	•	 	Days on Hand “Inventory DOH”






	 	 	The finance team will work with each operating unit to establish specific financial
objectives for the Incentive Plan Company performance measures, which will be tied to the
company’s approved operating plan. All objectives are weighted by agreement, with areas of
critical importance or critical focus weighted most heavily. In addition, for each performance measure, targets
have been established for each rating level 1 to 5. A rating of 3 will always equal “on
plan” performance.
	 
	VII.	 	Bonus Calculation
	 
	 	 	An aggregate average for the corporate, divisions and individuals goals must meet at least a
2.0 to meet the minimum 75% payout threshold. There are no awards if final overall rating
is below a 2.0. A scale for calculating actual achievement percentage will be used as
follows:





	 	 	 
	Overall Rating	 	Percentage Achievement
	5
	 	150%
	4
	 	125%
	3
	 	100%
	2
	 	75%
	1
	 	  0%







	 	 	All Plan performance measures and objectives are rated (based on the achievement grid) and
weighted based on relative importance in order to obtain a weighted performance rating for
each objective.
	 
	 	 	All weighted performance ratings are then added together to obtain an overall rating for
each participant.
	 
	 	 	Increments between rating levels will be interpolated as closely as possible to determine an
actual incentive percentage, e.g. an overall rating of 3.5 equals a 112.5% incentive
percentage.
	 
	 	 	For each participant the actual incentive percentage is multiplied by the target bonus
percentage to calculate the award, e.g. 112.5% actual incentive percentage times 20% target
bonus equals an award of 28% of earned base salary.
	 
	 	 	For new or newly eligible participants who join the plan during the plan year, the award may
be calculated either by using base salary or pro-rated salary depending on the terms and
conditions of the job offer, as documented in the offer letter and approved in advance by
the Compensation Committee.
	 
	VIII.	 	Individual Incentive Payment Criteria, Calculation, and Payout
	 
	 	 	A Plan participant must remain actively employed by the Company past December
31st of the Plan Year to be eligible for an incentive payment under the Plan for
that Plan Year. 






	 	 	The incentive payment under the Plan for any eligible Plan participant for a particular Plan
Year will vary depending upon the approved individual objectives and company performance
measures, the Plan participant’s base salary as of November 1 of that Plan Year, and the
Plan participant’s incentive target for that Plan Year..




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	 	Employee Performance Incentive Comp Plan

Effective January 1, 2008

Performance Period

January 1 — December 31, 2008







	 	 	In the following cases, the final incentive payout will be prorated. If the Plan participant
was on a Leave of Absence for part of the Plan Year, their bonus will be pro-rated based
upon the number of days they were actively working within the year. If the Plan participant
works less than a full-time schedule (40 hours/week), the incentive payout will be prorated
for the hours worked or if the Plan participant has a change to their full-time status
throughout the year, their incentive payout will likewise be prorated for the portion of the
year in which they worked a part time schedule. If the Plan participant received a promotion
during the year prior to November 1 with a change in target incentive, the final payout will
be prorated for the time spent at each incentive target.
	 
	 	 	At the end of the plan year, each participant will review their MBO’s and results with their
direct manager to determine the rating earned for each MBO objective. Each MBO objective
rating will be combined to calculate an overall rating for the individual objectives. In addition, as soon
as practicable after the appropriate financial and other data has been compiled, the finance
department will calculate the ratings for the overall ev3 and each business unit financial
goals. These ratings will be combined together per the applicable weighting factors to
determine the final payout for each individual Plan participant. 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, during the period
beginning on the first day of the calendar year following the performance year and ending on
March 15 of such calendar year.
	 
	 	 	In all cases, recommendations for final incentive awards are submitted to the Chief
Executive Officer for approval, with final approval by the Compensation Committee.
	 
	 	 	The CEO and/or the Compensation Committee may make a recommendation to modify an award by
plus/minus 20% if, in its subjective judgment, the participant has not been equitably
treated by the mechanics of the incentive plan. Such modifications of awards should only be
used in truly exceptional cases.
	 
	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 Year, in order to avoid any undue windfall
or hardship due to external causes, the Compensation Committee may without the consent of
any affected Plan participant, 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




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	 	Employee Performance Incentive Comp Plan

Effective January 1, 2008

Performance Period

January 1 — December 31, 2008







	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 year following a Plan participant’s death after the completion of such Plan
Year, 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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