H.B. Fuller Company Management Short-Term Incentive Plan



 Exhibit 10.1 

 

			
	



	 	  
 Rewards—Compensation

Management Short-Term Incentive—
 Executive Officers
 (STI) Plan



 

	 Purpose 
	The STI plan provides an annual performance-based cash bonus opportunity for eligible employees. This is intended to achieve a number of goals including: 


 

	 	•	 	 Emphasizing the Company’s commitment to competitive compensation practices; 



 

	 	•	 	 Driving a high performance culture; 


  

	 	•	 	 Assuring accountability; 


  

	 	•	 	 Focusing on results, not activity; and 


  

	 	•	 	 Reinforcing the importance of measurable and aligned goals and objectives. 



 

	 Eligibility 
	These guidelines apply to Executive Officers. 

  

	 	To receive payment under the STI Plan, the participant must be actively employed as of fiscal year-end. 


 

	 Plan Design 
	The plan design is based on the following financial metrics. 

  

	 	•	 	 Operating Income 



	 	•	 	 Organic Revenue 



	 	•	 	 Earnings Per Share 


  

	 	The following 2 design standards will apply, as follows: 

  

	 	•	 	 Region 



	 	•	 	 Corporate/Global 


  

	 	Participant’s plan design will be based on position. Details of the design are as follows: 


 

	 	•	 	 Region Standard 


  

									
	 	 	 	  	 Metric & Weighting Per
Metric

	 	 	 	  	 EPS
	  	 Region Organic

Revenue
	  	 Region Operating

Income ($)

		 	                    EC
Member
	  	30%	  	30%	  	40%

  

	 	•	 	 Corporate/Global 


  

							
	 	  	 Metric & Weighting Per
Metric

	 	  	 EPS
	  	 HBF Organic

Revenue
	  	 HBF Operating

Income ($)

		  	30%	  	30%	  	40%


  
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 Rewards—Compensation

Management Short-Term Incentive—
 Executive Officers
 (STI) Plan



 
  

	 	Target 


	 	•	 	 Each metric will have a target level of performance. Payout will be determined for each metric based on performance relative to target. The target
levels of performance will be established at the beginning of each fiscal year. 


  

	 	Threshold 


	 	•	 	 Threshold performance levels will be established for each metric as follows: 



	 	•	 	 Sales, Organic Revenue: 90% of target 



	 	•	 	 Operating Income: 80% of target 



	 	•	 	 EPS: 80% of target 


  

	 	•	 	 Payout at the threshold level of performance will be 50% of the target allocated to that metric. 



 

	 	Superior 


	 	•	 	 Superior performance levels will be established for each metric as follows: 



	 	•	 	 Sales, Organic Revenue: 110% of target 



	 	•	 	 Operating Income: 115% of target 



	 	•	 	 EPS: 115% of target 


  

	 	•	 	 Payout at the superior level of performance will be 150% of the target allocated to that metric. 



 

	 	See Appendix for payout schedule. 

  

	 	Superior Stretch Goal—Executive Committee 


	 	•	 	 Additional superior goals will be established for metrics for the EC members as follows: 



	 	•	 	 Organic Revenue: 115% of target 



	 	•	 	 Operating Income: 125% of target 



	 	•	 	 EPS: 125% of target 


  

	 	•	 	 Payout at the superior stretch goal will be 200% of the target allocated to that metric 



 

	 Payment 
	Payment will be made in cash, subject to taxes and deductions as applicable. 

  

	 	Payment will be made as close as possible to January 31 following the conclusion of the relevant Plan Year, but will be made no later than March 15th of the calendar year following the Plan Year.


  

	 Participant Status Changes 
	If a participant begins employment with the company during the Plan Year, bonus potential will be pro-rated for the time the participant was employed during the Plan Year.


  

	 	If a participant transfers jobs and changes plan design standards, potential bonus will be pro-rated for the time spent in each job. 


 

	 Administration 
	Participants may direct questions about the STI Plan to their local management or human resources representatives. 


 

	 	The Compensation Committee of the Board of Directors shall make a certification decision with respect to performance of financial metrics and consider extraordinary
circumstances that may have positively or negatively impacted the achievement of the objectives. The Board or management in their discretion, reserves the right at any time to enhance, diminish or terminate all or any portion of any compensation
plan or program, on a collective or individual basis. 


  
 Page 2 of 6










			
	



	 	  
 Rewards—Compensation

Management Short-Term Incentive—
 Executive Officers
 (STI) Plan



 

	 Relevant Terms 
	Actively Employed — A full-time or part-time employee on the Company payroll. It excludes any employee who has been terminated from employment with the Company—voluntarily or
involuntarily—in advance of fiscal year-end. 

  

	 	Company — H.B. Fuller Company and its wholly owned subsidiaries. 


 

	 	Eligible Earnings — To be determined by region/country. 

  

	 	Payment — The cash reward payable after conclusion of the Plan Year. 


 

	 	Plan Year — The relevant Company fiscal year. 

  

	 	Short Term Incentive (STI) Plan — The program described herein. May also be referred to as “STIP” or “STI Plan”.



  
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 Rewards—Compensation

Management Short-Term Incentive—
 Executive Officers
 (STI) Plan



 

									
	 Appendix
	  		  		  		  	
		  		  		  		  	
	 	  	
STIP Payment Schedule for EPS,
Operating Income
	  	
STIP Payment schedule for
Organic Revenue

	 	  	 Metric
Performance
	  	
Payout (as % of
target)
	  	 Metric
Performance
	  	
Payout (as % of
target)

		  	125%	  	200.0%	  	115%	  	200.0%
		  	124%	  	195.0%	  	114%	  	190.0%
		  	123%	  	190.0%	  	113%	  	180.0%
		  	122%	  	185.0%	  	112%	  	170.0%
		  	121%	  	180.0%	  	111%	  	160.0%
		  	120%	  	175.0%	  	110%	  	150.0%*
		  	119%	  	170.0%	  	109%	  	145.0%
		  	118%	  	165.0%	  	108%	  	140.0%
		  	117%	  	160.0%	  	107%	  	135.0%
		  	116%	  	155.0%	  	106%	  	130.0%
		  	115%	  	150.0%*	  	105%	  	125.0%
		  	114%	  	146.7%	  	104%	  	120.0%
		  	113%	  	143.3%	  	103%	  	115.0%
		  	112%	  	140.0%	  	102%	  	110.0%
		  	111%	  	136.7%	  	101%	  	105.0%
		  	110%	  	133.3%	  	100%	  	100.0%
		  	109%	  	130.0%	  	99%	  	95.0%
		  	108%	  	126.7%	  	98%	  	90.0%
		  	107%	  	123.3%	  	97%	  	85.0%
		  	106%	  	120.0%	  	96%	  	80.0%
		  	105%	  	116.7%	  	95%	  	75.0%
		  	104%	  	113.3%	  	94%	  	70.0%
		  	103%	  	110.0%	  	93%	  	65.0%
		  	102%	  	106.7%	  	92%	  	60.0%
		  	101%	  	103.3%	  	91%	  	55.0%
		  	100%	  	100.0%	  	90%	  	50.0%
		  	99%	  	97.5%	  		  	
		  	98%	  	95.0%	  		  	
		  	97%	  	92.5%	  		  	
		  	96%	  	90.0%	  		  	
		  	95%	  	87.5%	  		  	
		  	94%	  	85.0%	  		  	
		  	93%	  	82.5%	  		  	
		  	92%	  	80.0%	  		  	
		  	91%	  	77.5%	  		  	
		  	90%	  	75.0%	  		  	
		  	89%	  	72.5%	  		  	
		  	88%	  	70.0%	  		  	
		  	87%	  	67.5%	  		  	
		  	86%	  	65.0%	  		  	
		  	85%	  	62.5%	  		  	
		  	84%	  	60.0%	  		  	
		  	83%	  	57.5%	  		  	
		  	82%	  	55.0%	  		  	
		  	81%	  	52.5%	  		  	
		  	80%	  	50.0%	  		  	

  

	 	*	Executive Committee members have a maximum opportunity of 200%. The VP, Corporate Controller has a maximum opportunity of 150%. 


 

	 	•	 	 Payout is calculated for each incremental increase in performance (straight line interpolation). 



  
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 Rewards—Compensation

Management Short-Term Incentive—
 Executive Officers
 (STI) Plan



 
 Calculation Guidelines 

 

	 	1.	Company EPS. As reported adjusted for STIP & UPB accruals (see below). 


 

	 	2.	Organic Revenue. The reported revenue is adjusted for the following: 


 

	 	a.	Currency impact compared to budgeted exchange rates for Europe and Asia Pacific regions. 


 

	 	3.	HBF Operating Income. The reported operating income is adjusted for the following: 


 

	 	a.	STIP & UPB accruals (see below). 

  

	 	b.	Currency impact compared to budgeted exchange rates for the Europe and Asia Pacific regions. 


 

	 	4.	Fully allocated regional operating income. 

  

	 	a.	Regional operating income targets include corporate governance allocation at budget. 


 

	 	b.	For evaluating performance against target, the actual corporate governance allocation is adjusted to reflect Corporate STIP and UPB accruals at target.


  

	 	c.	At the region level and one level below, corporate governance allocations will be included in determining targets and performance. Below these levels, the corporate
governance allocation is not to be included in determining targets or performance. 

  

	 	5.	Impact of STIP & UPB accruals. For income related metrics, performance is evaluated assuming the STIP and UPB accruals are at target.


  

	 	6.	North America. Basis of targets is US dollars. For purposes of determining performance against targets, there is to be no adjustment back to budgeted exchange
rates for Canada. 

  

	 	7.	Europe. 

  

	 	a.	Revenue and operating income are in Euros. 

  

	 	b.	The actual corporate governance allocation will be converted to Euros at the budgeted exchange rate for determining performance against the operating income target.


  

	 	8.	Latin America. Basis of targets is the US dollar. For purposes of determining performance against targets, there is to be no adjustment back to budgeted exchange
rates for individual countries. 

  

	 	9.	Asia Pacific. For revenue and income metrics expressed in US dollars, the budgeted exchange rates will be used to assess performance. 


 

	 	10.	Region/Business Composites. The region composite is the combined results of Organic Revenue and Operating Income. Performance for each of these metrics is
assessed, and a payment percent is determined for each metric (per the Payment Schedule). These payment percents are applied, based on the metric weighting, to determine the overall payment percent for the composite. 


  
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 Rewards—Compensation

Management Short-Term Incentive—
 Executive Officers
 (STI) Plan



 
  

	 	11.	In calculating the results, the following adjustments will be made: 

  

	 	a.	Individual legal settlements (payments or receipts) with a value (net of insurance) of $3 million or greater will not be included in metric calculations.


  

	 	b.	Any unbudgeted reorganization or restructuring-related items which cannot be offset by related benefits in the fiscal year will not be included in metric calculations.


  

	 	c.	Unbudgeted acquisitions and divestitures will be excluded from all actual and target metric calculations, as applicable. 


 

	 	d.	Any unbudgeted asset write-downs in excess of $2 million will not be included in metric calculations. 


  
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