exv10w14



 





EXHIBIT
10.14




HILLENBRAND, INC.




Short-Term Incentive Compensation Program




R E C I T A L S




          WHEREAS, in accordance with the Distribution Agreement (defined below), Hillenbrand
Industries, Inc. (to be re-named Hill-Rom Holdings, Inc. prior to or effective upon the
Distribution referred to below and hereinafter referred to in these recitals as “RemainCo” or
“Hill-Rom Holdings, Inc.”) proposes to distribute its entire ownership interest in Batesville
Holdings, Inc. (to be re-named Hillenbrand, Inc. prior to or effective upon the Distribution and
hereinafter referred to in these recitals as “SpinCo” or “Hillenbrand, Inc.”) through a pro-rata
distribution of all of the outstanding shares of SpinCo common stock then owned by RemainCo to the
holders of RemainCo common stock (“Distribution”); and




     WHEREAS, RemainCo and SpinCo have entered into the Employee Matters Agreement (defined below)
for the purpose of continuing benefits for the pre-Distribution directors, employees and
consultants of RemainCo and its subsidiaries; and



     WHEREAS, in accordance with Section 8.1(c) of the Employee Matters Agreement, SpinCo is to
adopt and implement an annual incentive plan which shall permit the issuance of annual incentive
awards on terms and conditions substantially comparable to those under the Hillenbrand Industries,
Inc. Short-Term Incentive Compensation Plan, as amended, to be effective as of the date of the
consummation of the transactions contemplated by the Distribution Agreement.



ARTICLE I

PURPOSE AND DEFINITIONS





	1.1	 	Purpose. The purpose of this Program is to provide performance-based incentive awards, in
addition to regular salary, to eligible employees of Hillenbrand, Inc. and its Subsidiaries.
The Program provides the mechanism to pay amounts above the average total cash compensation
when the Company experiences above average financial success. The Program is designed to
encourage high individual and group performance and is based on the philosophy that employees
should share in the success of the Company if above average value is created for Company
shareholders.




 









 






	1.2	 	Definitions:






	 	(a)	 	“Achievement Percentage” means a percentage determined in writing by the
Committee.
	 
	 	(b)	 	“Base Incentive Compensation” means the amount determined in accordance with
Section 4.3.
	 
	 	(c)	 	“Base Salary” means the annual calendar earnings of a Participant including
wages and salary as reported for federal income tax purposes, but excluding all bonus
payments of any kind, commissions, incentive compensation, equity based compensation,
long term performance compensation, perquisites and other forms of additional
compensation.
	 
	 	(d)	 	“Board of Directors” or “Board” means the Board of Directors of Hillenbrand,
Inc.
	 
	 	(e)	 	“Business Criteria” means one or more of the following financial indexes of the
Company or a Subsidiary for a Plan Year determined in accordance with the Company’s
accounting principles less certain non-reoccurring and/or non-expected events happening
in any Plan Year, as determined by the Committee: revenue, earnings per share, net
income, shareholder value growth, return on equity, cash flow, comparisons against
Standard & Poor’s indices and/or other indices, criteria or comparator groups, as
selected and approved by the Committee. The Business Criteria may include both
financial and non-financial measures and may reflect achievement of tactical and
strategic plans of a Subsidiary.
	 
	 	(f)	 	“Business Criteria Achievement” means the actual final result of a Business
Criteria for a Plan Year.
	 
	 	(g)	 	“Cause” shall mean the Committee’s good faith determination that a Participant
has:






	 	(i)	 	Failed or refused to fully and timely comply with any
reasonable instructions or orders issued by the Employer, provided such
noncompliance is not based primarily on the Participant’s compliance with
applicable legal or ethical standards;




-2-









 






	 	(ii)	 	Acquiesced or participated in any conduct that is dishonest,
fraudulent, illegal (at the felony level), unethical, involves moral turpitude
or is otherwise illegal and involves conduct that has the potential, in the
Employer’s reasonable opinion, to cause the Employer, its related companies or
any of their respective officers or its directors embarrassment or ridicule;
	 
	 	(iii)	 	Violated any Employer policy or procedure, specifically
including a violation of Hillenbrand, Inc.’s Code of Ethical Business Conduct;
or
	 
	 	(iv)	 	Engaged in any act, which is contrary to its best interests or
would hold the Employer, its related businesses or any of their respective
officers or directors up to probable civil or criminal liability, excluding the
Participant’s actions in compliance with applicable legal or ethical standards
        .






	 	(h)	 	“CEO” means the Chief Executive Officer of the Company.
	 
	 	(i)	 	A “Change in Control” means:






	 	(i)	 	the date that any person, corporation, partnership, syndicate,
trust, estate or other group acting with a view to the acquisition, holding or
disposition of securities of the Company, becomes, directly or indirectly, the
beneficial owner, as defined in Rule 13d-3 under the Securities Exchange Act of
1934 (“Beneficial Owner”), of securities of the Company representing 35% or
more of the voting power of all securities of the Company having the right
under ordinary circumstances to vote at an election of the Board (“Voting
Securities”), other than by reason of (x) the acquisition of securities of the
Company by the Company or any Subsidiaries or any employee benefit plan of the
Company or any Subsidiaries, (y) the acquisition of securities of the Company
directly from the Company, or (z) the acquisition of securities of the Company
by one or more members of the Hillenbrand Family (which term shall mean
descendants of John A. Hillenbrand and their spouses, trusts primarily for
their benefit or entities controlled by them);
	 
	 	(ii)	 	the consummation of a merger or consolidation of the Company
with another corporation unless




-3-









 












	 	(A)	 	the shareholders of the Company, immediately
prior to the merger or consolidation, beneficially own, immediately
after the merger or consolidation, shares entitling such shareholders
to 50% or more of the voting power of all securities of the corporation
surviving the merger or consolidation having the right under ordinary
circumstances to vote at an election of directors in substantially the
same proportions as their ownership, immediately prior to such merger
or consolidation, of Voting Securities of the Company;
	 
	 	(B)	 	no person, corporation, partnership, syndicate,
trust, estate or other group beneficially owns, directly or indirectly,
35% or more of the voting power of the outstanding voting securities of
the corporation resulting from such merger or consolidation except to
the extent that such ownership existed prior to such merger or
consolidation; and
	 
	 	(C)	 	the members of the Board, immediately prior to
the merger or consolidation, constitute, immediately after the merger
or consolidation, a majority of the board of directors of the
corporation issuing cash or securities in the merger;






	 	(iii)	 	the date on which a majority of the members of the Board
consist of persons other than Current Directors (which term shall mean any
member of the Board on the date hereof and any member whose nomination or
election has been approved by a majority of Current Directors then on the
Board);
	 
	 	(iv)	 	the consummation of a sale or other disposition of all or
substantially all of the assets of the Company; or
	 
	 	(v)	 	the date of approval by the shareholders of Corporate of a plan
of complete liquidation of the Company.






	 	(j)	 	“Committee” means the Compensation and Management Development Committee of the
Board appointed to administer the Program under Article II. Each Committee member
shall be an outside director for purposes of Section 162(m)(4) of the Internal Revenue
Code of 1986, as amended.




-4-









 






	 	(k)	 	“Company” means Hillenbrand, Inc. as a corporate holding company and does not
include Subsidiaries.
	 
	 	(l)	 	“Disability” means a physical or mental disability by reason of which a
Participant is determined by the Office of the President or its delegate, to be
eligible (except for the waiting period) for permanent disability benefits under Title
II of the Federal Social Security Act.
	 
	 	(m)	 	“Distribution Agreement” means the Distribution Agreement by and between
Hillenbrand Industries, Inc. and Batesville Holdings, Inc. dated as of March                     ,
2008.
	 
	 	(n)	 	“Employee Matters Agreement” means the Employee Matters Agreement by and
between Hillenbrand Industries, Inc. and Batesville Holdings, Inc. dated as of March
                    , 2008.
	 
	 	(o)	 	“Employer” means Hillenbrand, Inc., an Indiana Corporation, and its
Subsidiaries.
	 
	 	(p)	 	“Executive Management Team” means the officers of the Corporation who report
directly to the CEO.
	 
	 	(q)	 	“Incentive Compensation” means the Incentive Compensation as provided for in
Article IV.
	 
	 	(r)	 	“Incentive Compensation Pool” means the aggregate amount of Base Incentive
Compensation for all Participants for any Plan Year.
	 
	 	(s)	 	“Incentive Compensation Opportunity” means the percentage of Base Salary as
determined in accordance with Section 4.2.
	 
	 	(t)	 	“Participant” means any individual who is a non-bargained for, full-time or
regular part-time employee of the Employer and is selected for participation in the
Program pursuant to Article III.






-5-












 






	(u)	 	“Percentage of Target One Achievement” means a percentage determined as of the
end of each Plan Year as follows:
	 
	 	 	(Business Criteria Achievement – Performance Base)  ̧ (Target One – Performance
Base.)
	 
	(v)	 	“Percentage of Target Two Achievement” means a percentage determined as of the
end of each Plan Year as follows:
	 
	 	 	(Business Criteria Achievement – Target One)  ̧ (Target Two – Target One)
	 
	(w)	 	“Performance Base” means the base level of achievement of the Company or a
Subsidiary with respect to the Business Criteria, as determined in accordance with
Section 4.1.
	 
	(x)	 	“Plan Year” means the fiscal year beginning on October 1st and ending on
September 30th. The first Plan Year shall be a short Plan Year beginning on
                    , 2008.
	 
	(y)	 	“Program” means the Hillenbrand, Inc. Short-Term Incentive Compensation
Program.
	 
	(z)	 	“Subsidiary” means an operating company unit of which a majority equity
interest is owned directly or indirectly by the Company.
	 
	(aa)	 	“Target One” means a certain level of achievement of the Company or a
Subsidiary with respect to the Business Criteria, as determined in accordance with
Section 4.1.
	 
	(bb)	 	“Target Two” means a certain level of achievement of the Company or a
Subsidiary with respect to the Business Criteria which is greater than Target One as
determined in accordance with Section 4.1.




-6-









 











ARTICLE II

ADMINISTRATION




     Full power and authority to construe, interpret, and administer the Program, including power
to establish, administer and certify performance goals related to Incentive Compensation is vested
in the Committee. Decisions of the Committee are final, conclusive and binding upon all parties,
including the Employer, the Company and its shareholders and the Participants. The Committee may
rely upon recommendations of the CEO, the Executive Management Team, or persons designated by the
Committee, in approving financial and non-financial goals recommended to it.



ARTICLE III

PARTICIPANTS




     Participation in this Program by members of the Executive Management Team or any Company
corporate officer elected to such position by the Board shall be determined by the Committee.
Other Participants in this Program shall be determined by the CEO or if an eligible employee is
employed by a Subsidiary, then the Chief Executive Officer of such Subsidiary.



ARTICLE IV

INCENTIVE COMPENSATION





	4.1	 	Establishment of Performance Base and Target. A Performance Base, Target One and Target Two
for the Company Vice Presidents as a group shall be recommended by the CEO and approved by the
Committee. The Performance Base, Target One and Target Two of a Participant who is otherwise
employed by the Company shall be established and approved by the CEO. The Performance Base,
Target One and Target Two of a Participant who is employed by a Subsidiary shall be
established and approved by the CEO and the Chief Executive Officer of each Subsidiary,
respectively. The Performance Base, Target One and Target Two shall be established annually
for the Company and each Subsidiary and will be communicated to each Participant.
	 
	4.2	 	Base Salary as a Part Incentive Compensation. Incentive Compensation Opportunity is
established in writing annually by the Committee (within ninety (90) days of the start of each
Plan Year) in percentages up to but not exceeding the following:





	 	 	 
	Class of Participant	 	Incentive Compensation Opportunities
	Chief Executive Officer of the Company

	 	90% of Base Salary
	 
	 	 
	Chief Executive Officer of a Subsidiary

	 	75% of Base Salary






-7-









 






	 	 	 
	Class of Participant	 	Incentive Compensation Opportunities
	Company Chief Financial Officer

	 	50% of Base Salary
	 
	 	 
	Company or Subsidiary Senior Executives

	 	50% of Base Salary
	 
	 	 
	Company or Subsidiary Executives

	 	40% of Base Salary
	 
	 	 
	Other Key Executives

	 	30% of Base Salary







	4.3	 	Base Incentive Compensation Calculation. Except as set forth in Section 4.5, attainment of
the Performance Base or below for a Plan Year shall result in Base Incentive Compensation of
0% of the Incentive Compensation Opportunity as set forth in Section 4.2 above. If Target Two
is met or exceeded for a Plan Year, Base Incentive Compensation shall be equal to the
Achievement Percentage multiplied by the amount of a Participant’s Incentive Compensation
Opportunity as set forth in Section 4.2 above. If Business Criteria Achievement is between
the Performance Base and Target One for a Plan Year, the Base Incentive Compensation shall be
equal to the Percentage of Target One Achievement multiplied by both (i) the amount of a
Participant’s Incentive Compensation Opportunity as set forth in Section 4.2 above and (ii) a
percentage equal to one-half of the Achievement Percentage. If the Business Criteria
Achievement is between Target One and Target Two for a Plan Year, the Base Incentive
Compensation shall be equal to the amount of a Participant’s Incentive Compensation
Opportunities set forth in Section 4.2 above multiplied by a percentage as determined under
the following formula:
	 
	 	 	[1/2 Achievement Percentage plus (Percentage of Target Two Achievement times 1/2 Achievement
Percentage)]
	 
	4.4	 	Incentive Compensation. After the Business Criteria Achievement and Base Incentive
Compensation has been determined for each Plan Year, the Committee shall evaluate each
Participant on his or her individual performance goals. The Committee shall determine each
Participant’s Incentive Compensation based on individual financial and non-financial goals for
each Participant. The aggregate amount of Incentive Compensation that can be paid to all
Participants for any Plan Year shall not exceed the Incentive Compensation Pool for such Plan
Year. The Committee may create or authorize, with the assistance of the CEO, sub-pools for
Participants based on which Subsidiary they are employed by or any other criteria the
Committee deems appropriate, provided that the aggregate amount of all sub-pools cannot exceed
the Incentive Compensation Pool for any Plan Year. The aggregate amount of Incentive
Compensation that can be paid to all Participants in a sub-pool or combination of sub pools is
the aggregate amount of Base Incentive Compensation allocated by the Committee to such
sub-pool or combination of sub-pools.




-8-









 






	4.5	 	Non-Business Criteria Based Incentive Compensation. The Committee may establish a
“Non-Business Criteria Pool”. Once such a Non-Business Criteria Pool is established, the CEO
may, in his or her discretion (with approval from the Committee for Company Vice Presidents),
allocate all or some of the Non-Business Criteria Pool to all or some Participants and the
amount allocated to any Participants shall be the Participant’s Incentive Compensation under
the Program for the Plan Year.
	 
	4.6	 	Payment of Incentive Compensation. Incentive Compensation shall be due and payable in cash
after forty (40) days but not later than seventy-five (75) days after the end of the Plan
Year.
	 
	4.7	 	Election to Defer Compensation – Deferral Period. A Participant may elect to defer all or
any portion of his or her Incentive Compensation. A Participant’s written election to defer
any compensation must be made before the end of the Plan Year immediately preceding the Plan
Year during which services are performed for which such compensation would otherwise be paid.
Upon making a deferral election as set forth herein, such deferral thereafter shall be
subject to the Hillenbrand, Inc. Executive Deferred Compensation Program, as amended from time
to time.
	 
	4.8	 	Termination of Employment. Subject to Section 4.9 below and the last sentence of this
section, termination of Participant’s employment prior to the last day of the Plan Year for
any reasons other than death, Disability or normal or early retirement (as determined under
the Company’s Pension Plan or Savings Plan) shall terminate a Participant’s right to any
non-deferred Incentive Compensation. Termination of employment because of death, Disability
or normal or early retirement shall result in a pro-ration of Incentive Compensation based on
the number of months employed during the Plan Year of a Participant’s termination of
employment. Upon a termination of employment for Cause at any time, a Participant shall
forfeit any and all payments due under this Program.
	 
	4.9	 	Change in Control. Upon a Change in Control, a Participant’s unpaid Incentive Compensation
for a Plan Year ending prior to the Change in Control shall in all events be paid in
accordance with Section 4.6. In addition, a Participant’s Incentive Compensation for the Plan
Year during which the Change in Control occurred shall in no event be less than the amount
calculated pursuant to Sections 4.2, 4.3, 4.4 and 4.5 above as if the Target (at 100%) had
been achieved. For purposes of such calculation, Base Salary shall mean such Participant’s
annualized Base Salary for the calendar year in which the Change in Control occurred times a
fraction, the numerator of which is the number of months from the start of the Plan Year up to
and including the month during which the Change in Control occurred and the denominator of
which is 12. Following a Change in Control, the Incentive Compensation under the Program
shall be paid out at the time specified in Section 4.6 above, provided, however, and
notwithstanding Section 4.8 above, that in the case of a Participant whose employment is
terminated prior to payout




-9-









 






	 	 	(for any reason other than on account of termination of employment by the Company for Cause)
the Incentive Compensation shall be paid out within 30 days of such termination of
employment. In the event of termination for Cause, the Incentive Compensation shall be
forfeited.





ARTICLE V

FINALITY OF DETERMINATION




     Each determination made by the Committee and the CEO shall be final, binding and conclusive
for all purposes and upon all persons. The Committee may rely conclusively on the determinations
made by and information received from the Company’s independent public accountants or the Employer
employees with respect to action of the Committee.



ARTICLE VI

LIMITATIONS




     No employee of the Employer or any other persons shall have any claim or right (legal,
equitable or other) to be granted any award under the Program, and no director, officer or employee
of the Employer, or any other person, shall have the authority to enter into any agreement with any
person for the making or payment of any award under the Program or to make any representation or
warranty with respect thereto.



     Neither the action of the Company in establishing the Program nor any action taken by the
Company, the Committee, the Board of Directors, CEO, Executive Management Team, or any persons
designated by them to administer the Program, nor any provision of the Program, shall be construed
as giving to any Participant or employee of the Employer the right to be retained in the employ of
the Employer.



ARTICLE VII

AMENDMENTS, SUSPENSION OR TERMINATION




     The Board may discontinue the Program in whole or in part at any time and may from time to
time amend or revise the terms as permitted by applicable statute; provided, however, that no such
discontinuance, amendment, or revision shall effect adversely any right or obligation with respect
to any award theretofore made. No amendment shall require shareholder approval unless such
approval is otherwise required by law.



-10-









 





ARTICLE VIII

MISCELLANEOUS





	8.1	 	Effective Date. This Program was approved by the Board of Directors on February 8, 2008, and
shall become effective as of the date of the consummation of the transactions contemplated by
the Distribution Agreement.
	 
	8.2	 	Governing Law. This Program shall be governed by and construed in accordance with the laws
of the State of Indiana.






-11-