exv10w7






Exhibit 10.7




AIRGAS, INC.

EXECUTIVE BONUS PLAN




Purpose of the Plan



Airgas, Inc. (the “Company”) believes in providing incentives to attract, retain and reward
Executive Officers who are responsible for providing leadership to the Company in attaining
established business objectives.



The purpose of the Airgas, Inc. Executive Bonus Plan (the “Plan”) is to align management’s efforts
with the strategic goals of the Company through competitive annual incentive opportunities. The
Plan will be effective from April 1, 2008 to March 31, 2009 (the “Plan Year”) and will
automatically renew upon the anniversary date of the Plan unless terminated by the Governance and
Compensation Committee of the Board of Airgas, Inc. (the “Committee”).



Eligibility



The Chief Executive Officer and Executive Officers (“Participants”) are eligible for participation
in the Plan provided that such officers are employed by the Company on the date Awards (as defined
below) are paid pursuant to the Plan (unless previously terminated due to retirement, disability or
death as more fully described herein). For purposes of the Plan, an Executive Officer is defined
as those employees who constitute “officers” for the purposes of Section 16 of the Securities
Exchange Act of 1934, and any other employee deemed to be a “covered employee” within the meaning
of Section 162(m) of the Internal Revenue Code of 1986, as amended, as such section may be amended.



Target Awards



Participants in the Executive Bonus Plan will be eligible for an annual cash incentive award (the
“Award”) based on the achievement of predetermined goals as set forth in the Performance
Measurement section of the Plan. Participants will have an assigned Award target equal to a
specific percentage of salary earned during the Plan Year. For this purpose, salary is defined as
the base pay an individual earns during the Plan Year. An annual Award target is determined based
on the Participant’s position in the organization. The maximum Award that may be paid in any
single year to any Participant is $1,500,000.



Performance Measurement



All Awards payable shall be based solely upon the achievement of specific performance targets based
on one or more of the following criteria:




	•	 	Earnings per share (EPS)
	 
	•	 	Return on capital (ROC)
	 
	•	 	Return on average capital employed (RACE)
	 
	•	 	Earnings before interest, taxes, depreciation and amortization (EBITDA)
	 
	•	 	Sales
	 
	•	 	Return on equity (ROE)
	 
	•	 	After tax cash flow (ATCF)
	 
	•	 	Free cash flow (FCF)
	 
	•	 	Operating expense as a percentage of sales
	 
	•	 	Gross profit
	 
	•	 	Days purchases outstanding (DPO)
	 
	•	 	Operating income (OI)
	 
	•	 	Days sales outstanding (DSO)




 









 






	•	 	Working capital





Final Award payments will vary based on the level of achievement measured against pre-determined
performance targets. Depending upon a Participant’s position and responsibilities, these various
performance measures, assessed based on different weightings, will determine the Award.



The Committee will establish the specific performance targets for the Plan within each of the above
criteria within 90 days after the beginning of the respective Plan Year.



Funding



The Plan will be self-funding, as profitability targets will be established net of target Award
payments under the Plan. Therefore, achievement of profitability targets will ensure that the Plan
has funded itself.



Executive Bonus Plan Payment



At the end of the Plan Year, after all financial results have been finalized, the actual Award
payment will be determined. The Award will be paid in cash no later than 75 days following the end
of the Plan Year.



Administration of the Plan



The Committee shall have full power to administer and interpret the Plan and, in its sole
discretion, may establish or amend rules of general application for the administration of the plan
and may amend or terminate the Plan at any time.



Partial Year Eligibility



Participants who are eligible for the Plan for a portion of the year will receive a prorated Award
based on the base salary earned while they are eligible for the Plan or such other arrangement as
agreed upon when hired.




	•	 	New hires
	 
	 	 	Newly hired Participants will immediately be eligible for the Plan.





Base salary will be accumulated from the date of hire to the end of the Plan Year, unless
eligibility ceases prior to that date.




	•	 	Transfers





For Participants who transfer from one job or employee status to another, eligibility will
depend on their award eligibility before and after transferring.



If a Participant transfers from a position that is not Plan eligible to a position that is
eligible for an Award under the Plan, the Award will be prorated based on the time in the Plan
eligible position. All calculations are done using Plan Year-end financial data.



If a Participant transfers from a position that is eligible for an Award under the Plan to a
position that is not Plan eligible, the Award will be prorated based on the length of time in
the Plan eligible position. All calculations are done using Plan Year-end financial data.



If a Participant transfers from one position that is eligible for an Award under the Plan to
another position that is eligible for an Award under the Plan, participation in the Plan will
continue
uninterrupted. However, if the transfer involves a move that will change the weightings used
to




 









 








determine a Participant’s Award, the Award calculation will be based on the pro-rated time
spent in each position. All calculations will be done using Plan Year-end data.
Accountabilities must be separately established and assessed for each position.




	•	 	Promotions





If a Participant is promoted during the Plan Year, new accountabilities must be established to
reflect the new position.




	•	 	Terminations





Employees who are not employed by the Company on the date the Award is paid are not deemed to
be Participants and therefore are ineligible to receive any Award under the Plan, except for
the following circumstances:



Participants who retire, become disabled or die during the Plan Year will be eligible for a
prorated Award. The Award will be calculated from the date when they become eligible,
normally the beginning of the Plan Year to the date of retirement, disability or death.




	•	 	Leave of absence





If a Participant is on a leave of absence at the end of the Plan Year, he or she will be
eligible for an Award provided that he or she returns to work as an active employee. Any
Award paid will be prorated based upon the length of time the Participant was actively working
during the Plan Year. The calculation will be made using Plan Year-end financial data. The
Award payment will be made in the next regularly scheduled payroll cycle at the end of the
Participant’s first month of employment following his or her return from leave of absence.



If a Participant is on a leave of absence during the Plan Year and returns during the Plan
Year, he or she will be eligible for an Award. Any Award paid will be prorated based upon the
length of time a Participant was actively working during the Plan Year. The calculation will
be made using Plan Year-end financial data.



Tax Considerations and Withholding



Participants will be required to report taxable income in the year the Award is received. The
Company will withhold taxes in the appropriate amount on all payouts.



Bankruptcy



In the event that The Company declares bankruptcy, the Committee, at its discretion, may
immediately discontinue the Plan. In the event that the Plan is discontinued, all participants
will forfeit the right to any payments under the Plan.



Future Employment



Payment of an Award under the Plan does not imply a contractual agreement to extend or continue
employment of a Participant beyond receipt of the Award.