EX-10.4






Exhibit 10.4




Lincoln Electric Holdings, Inc.




2007 Management Incentive Compensation Plan

(as amended and restated as of December 31, 2008)




     1. Purpose. The purpose of the Lincoln Electric Holdings, Inc. 2007 Management
Incentive Compensation Plan is to reinforce corporate, organizational and business-development
goals, to promote the achievement of year-to-year financial and other business objectives and to
reward the performance of eligible employees in fulfilling their personal responsibilities.



     2. Definitions. The following terms, as used herein, shall have the following
meanings:




     (a) “Affiliate” shall mean, with respect to the Company or any of its subsidiaries, any
other Person directly or indirectly controlling or controlled by or under direct or indirect
common control with the Company.




     (b) “Award” shall mean an incentive compensation award, granted pursuant to the Plan,
that is contingent upon the attainment of Performance Goals with respect to a Performance
Period. An Award shall be designated as either an “Annual Award” or a “Long-Term Award.”




     (c) “Board” shall mean the Board of Directors of the Company.




     (d) “Change in Control” shall mean (i) for the purposes of vesting of any Award, the
occurrence of a Change in Control as defined in the Company’s 2006 Equity and Performance
Incentive Plan (or as set forth in the applicable award agreement under such plan); and (ii)
for purposes of payment of any Award that would be deferred compensation within the meaning
of Section 409A of the Code, a change in the ownership or effective control of the Company,
or in the ownership of a substantial portion of the Company’s assets, within the meaning of
Section 409A of the Code.




     (e) “Code” shall mean the U.S. Internal Revenue Code of 1986, as amended.




     (f) “Committee” shall mean the Compensation and Executive Development Committee of the
Board of Directors, the composition of which shall at all times consist solely of two or
more “outside directors” within the meaning of Section 162(m) of the Code.




     (g) “Company” shall mean Lincoln Electric Holdings, Inc. and its successors.




     (h) “Covered Employee” shall have the meaning set forth in Section 162(m)(3) of the
Code.




     (i) “Disability” means a disability covered under the Company’s long-term disability
program.



 









 






     (j) “Exchange Act” shall mean the Securities Exchange Act of 1934, as amended.




     (k) “Negative Discretion” shall mean discretion exercised by the Committee to cancel or
reduce the amount of payment under an Award; provided that the exercise of such discretion
shall not cause the affected Award to fail to qualify as “performance-based compensation”
under Section 162(m) of the Code.




     (l) “Participant” shall mean any employee of the Company or an Affiliate who is,
pursuant to Section 4 of the Plan, selected to participate in the Plan.




     (m) “Performance Goals” shall mean performance goals based on one or more of the
following criteria, where applicable: (i) pre-tax income or after-tax income, adjusted or
pro forma net income; (ii) earnings including operating income, earnings before or after
taxes, earnings before or after interest, and/or earnings before or after bonus,
depreciation, amortization, and/or extraordinary or special items or earnings before
interest, taxes and bonus or regional basis earnings before interest, taxes and bonus; (iii)
net income excluding amortization of intangible assets, depreciation and impairment of
goodwill and intangible assets; (iv) operating income; (v) earnings or book value per share
(basic or diluted); (vi) return on assets (gross or net), return on investment, return on
capital, or return on equity; (vii) return on revenues; (viii) net tangible assets (working
capital plus property, plants and equipment) or return on net tangible assets (operating
income divided by average net tangible assets) or working capital or average operating
working capital or average operating working capital to sales (average operating working
capital divided by sales); (ix) operating cash flow (operating income plus or minus changes
in working capital less capital expenditures); (x) cash flow, free cash flow, cash flow
return on investment (discounted or otherwise), net cash provided by operations, or cash
flow in excess of cost of capital; (xi) sales or sales growth; (xii) operating margin or
profit margin; (xiii) share price or total shareholder return; (xiv) earnings from
continuing operations; (xv) cost targets, reductions or savings, productivity or
efficiencies; (xvi) economic value added; and (xvii) strategic business criteria, consisting
of one or more objectives based on meeting specified market penetration or market share,
geographic business expansion, customer satisfaction, employee satisfaction, human resources
management, financial management, project management, supervision of litigation, information
technology, or goals relating to divestitures, joint ventures or similar transactions.
Where applicable, the Performance Goals may be expressed in terms of attaining a specified
level of the particular criterion or the attainment of a percentage increase or decrease in
the particular criterion, and may be applied to one or more of the Company or a subsidiary
of the Company, or a division or strategic business unit of the Company, all as determined
by the Committee. The Performance Goals may include a threshold level of performance below
which no payment will be made (or no vesting will occur), levels of performance at which
specified payments will be paid (or specified vesting will occur) and a maximum level of
performance above which no additional payment will be made (or at which full vesting will
occur).



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     (n) “Performance Period” shall mean, unless the Committee determines otherwise, a
period of no longer than (i) 12 months with respect to an Annual Award and (ii) 36 months
with respect to a Long-Term Award.




     (o) “Person” shall have the meaning given in Section 3(a)(9) of the Exchange Act, as
modified and used in Sections 13(d) and 14(d) thereof.




     (p) “Plan” shall mean Lincoln Electric Holdings, Inc. 2007 Management Incentive
Compensation Plan, as amended from time to time.




     (q) “Retirement” means a Participant’s retirement from active employment with the
Company and each of its Affiliates pursuant to which the Participant is entitled to receive
a normal retirement pension under The Lincoln Electric Company Retirement Annuity Program.



     3. Administration. The Plan shall be administered by the Committee. The Committee
shall have the authority in its sole discretion, subject to and not inconsistent with the express
provisions of the Plan, to administer the Plan and to exercise all the powers and authorities
either specifically granted to it under the Plan or necessary or advisable in the administration of
the Plan, including, without limitation, the authority to grant Awards; to determine the persons to
whom and the time or times at which Awards shall be granted; to determine the terms, conditions,
restrictions and performance criteria, including Performance Goals, relating to any Award; to
determine whether, to what extent, and under what circumstances an Award may be settled, cancelled,
forfeited, or surrendered; to construe and interpret the Plan and any Award; to prescribe, amend
and rescind rules and regulations relating to the Plan; to determine the terms and provisions of
Awards; and to make all other determinations deemed necessary or advisable for the administration
of the Plan. The Committee shall have the authority to make equitable adjustments to the
Performance Goals in recognition of unusual or non-recurring events affecting the Company or any
parent or subsidiary of the Company or the financial statements of the Company or any parent or
subsidiary of the Company, in response to changes in applicable laws or regulations or to account
for items of gain, loss or expense determined to be extraordinary or unusual in nature or
infrequent in occurrence or related to the disposal of a segment of a business or related to a
change in accounting principles.



     All decisions, determinations and interpretations of the Committee shall be final and binding
on all persons, including the Company and the Participant (or any person claiming any rights under
the Plan from or through any Participant).



     Subject to Section 162(m) of the Code or as otherwise required for compliance with other
applicable law, the Committee may delegate all or any part of its authority under the Plan to any
officer or officers of the Company.



     4. Eligibility. Awards may be granted to Participants in the sole discretion of the
Committee. In determining the persons to whom Awards shall be granted and the Performance Goals
relating to each Award, the Committee shall take into account such factors as the Committee shall
deem relevant in connection with accomplishing the purposes of the Plan.



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     5. Terms of Awards. Awards granted pursuant to the Plan shall be communicated to
Participants in such form as the Committee shall from time to time approve and the terms and
conditions of such Awards shall be set forth therein.




     (a) In General. On or prior to the earlier of the 90th day after the commencement of a
Performance Period or the date on which 25% of a Performance Period has elapsed, the
Committee shall specify in writing, by resolution of the Committee or other appropriate
action, the Participants for such Performance Period and the Performance Goals applicable to
each Award for each Participant with respect to such Performance Period. Unless otherwise
provided by the Committee in connection with specified terminations of employment, payment
in respect of Awards shall be made only if and to the extent the Performance Goals with
respect to such Performance Period are attained.




     (b) Special Provisions Regarding Awards. Notwithstanding anything to the contrary
contained in this Section 5, the maximum amount that may be paid to a Covered Employee under
the Plan with respect to an Annual Award is $4 million and the maximum amount that may be
paid to a Covered Employee under the Plan with respect to a Long-Term Award is $4 million.
Notwithstanding anything to the contrary herein, in determining the amount of payment under
an Award in respect of a Performance Period, the Committee may cancel an Award or reduce the
amount payable under an Award that was otherwise earned during a Performance Period through
the use of Negative Discretion if, in the Committee’s sole discretion, such cancellation or
reduction is appropriate. In no event shall any discretionary authority granted to the
Committee by the Plan including, but not limited to, Negative Discretion, be used to (i)
grant or provide payment in respect of Awards for a Performance Period if the Performance
Goals for such Performance Period have not been attained or (b) increase an Award above the
maximum amount payable under this Section 5(b).




     (c) Time and Form of Payment. All payments in respect of Awards granted under this
Plan shall be made in cash on March 14th of the year following the year in which
the Performance Period ends.



     6. Section 409A of the Code. Awards under the Plan are intended to comply with
Section 409A of the Code and all Awards shall be interpreted in accordance with Section 409A of the
Code and Department of Treasury regulations and other interpretive guidance issued thereunder,
including without limitation any such regulations or other guidance that may be issued after the
effective date of the Plan. Notwithstanding any provision of the Plan or any Award to the
contrary, in the event that the Committee determines that any Award may or does not comply with
Section 409A of the Code, the Company may adopt such amendments to the Plan and the affected Award
(without Participant consent) or adopt other policies and procedures (including amendments,
policies and procedures with retroactive effect), or take any other actions, that the Committee
determines are necessary or appropriate to (i) exempt the Plan and any Award from the application
of Section 409A of the Code and/or preserve the intended tax treatment of the benefits provided
with respect to Award, or (ii) comply with the requirements of Section 409A of the Code.



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     Notwithstanding any provisions of this Plan to the contrary, if a Participant is a “specified
employee” (within the meaning of Section 409A of the Code and determined pursuant to policies
adopted by the Company) on his date of separation from service and if any portion of an Award to be
received by the Participant upon his or her separation from service would be considered deferred
compensation under Section 409A of the Code, amounts of deferred compensation that would otherwise
be payable pursuant to this Plan during the six-month period immediately following the
Participant’s separation from service will instead be paid or made available on the earlier of (i)
the first day of the seventh month following the date of the Participant’s separation from service
and (ii) the Participant’s death.



     7. General Provisions.




     (a) Compliance with Legal Requirements. The Plan and the granting and payment of
Awards, and the other obligations of the Company under the Plan shall be subject to all
applicable federal and state laws, rules and regulations, and to such approvals by any
regulatory or governmental agency as may be required.




     (b) Nontransferability. Awards shall not be transferable by a Participant except upon
the Participant’s death following the end of the Performance Period but prior to the date
payment is made, in which case the Award shall be transferable in accordance with any
beneficiary designation made by the Participant in accordance with Section 7(l) below or, in
the absence thereof, by will or the laws of descent and distribution.




     (c) No Right To Continued Employment. Nothing in the Plan or in any Award granted
pursuant hereto shall confer upon any Participant the right to continue in the employ of the
Company or to be entitled to any remuneration or benefits not set forth in the Plan or to
interfere with or limit in any way whatever rights otherwise exist of the Company to
terminate such Participant’s employment or change such Participant’s remuneration.




     (d) Withholding Taxes. Where a Participant or other person is entitled to receive a
payment pursuant to an Award hereunder, the Company shall have the right either to deduct
from the payment, or to require the Participant or such other person to pay to the Company
prior to delivery of such payment, an amount sufficient to satisfy any federal, state, local
or other withholding tax requirements related thereto.




     (e) Amendment, Termination and Duration of the Plan. The Board or the Committee may at
any time and from time to time alter, amend, suspend, or terminate the Plan in whole or in
part; provided that, no amendment that requires shareholder approval in order for the Plan
to continue to comply with Section 162(m) of the Code shall be effective unless the same
shall be approved by the requisite vote of the shareholders of the Company. Notwithstanding
the foregoing, no amendment shall affect adversely any of the rights of any Participant
under any Award following the end of the Performance Period to which such Award relates,
provided that the exercise of the Committee’s discretion pursuant to Section 5(b) to reduce
the amount of an Award shall not be deemed an amendment of the Plan.



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     (f) Participant Rights. No Participant shall have any claim to be granted any Award
under the Plan, and there is no obligation for uniformity of treatment for Participants.




     (g) Termination of Employment.




     (i) Unless otherwise provided by the Committee, and except as set forth in
subparagraph (ii) of this Section 7(g), a Participant must be actively employed by
the Company or one of its Affiliates at the end of the Performance Period in order
to be eligible to receive payment in respect of such Award.




     (ii) Unless otherwise provided by the Committee, if a Participant’s employment
is terminated as result of death, Disability or Retirement prior to the end of the
Performance Period, the Participant’s Award shall be cancelled and in respect of his
or her cancelled Award the Participant shall receive a pro rata portion of the Award
as determined by the Committee.




     (h) Change in Control. If any Award which a Participant earned under the Plan during
any Performance Period which ended prior to a Change in Control has neither been paid to the
Participant nor credited to such Participant under a deferred compensation plan maintained
or sponsored by the Company or an Affiliate prior to the Change in Control, such Award shall
be paid to the Participant within thirty (30) days following such Change in Control and in
no event later than the date specified in Section 5(c).




     (i) Unfunded Status of Awards. The Plan is intended to constitute an “unfunded” plan
for incentive and deferred compensation. With respect to any payments not yet made to a
Participant pursuant to an Award, nothing contained in the Plan or any Award shall give any
such Participant any rights that are greater than those of a general creditor of the
Company.




     (j) Governing Law. The Plan and all determinations made and actions taken pursuant
hereto shall be governed by the laws of the State of Ohio without giving effect to the
conflict of laws principles thereof.




     (k) Effective Date. The Plan shall take effect upon its adoption by the Board;
provided, however, that the Plan shall be subject to the requisite approval of the
shareholders of the Company in order to comply with Section 162(m) of the Code. In the
absence of such approval, the Plan (and any Awards made pursuant to the Plan prior to the
date of such approval) shall be null and void.




     (l) Beneficiary. A Participant may file with the Committee a written designation of a
beneficiary on such form as may be prescribed by the Committee and may, from time to time,
amend or revoke such designation; provided, that, in the event the Participant does not
designate a beneficiary with respect to a particular Award, the Participant’s most recent
beneficiary designation form on file with the Company shall control. If no designated
beneficiary survives the Participant and an Award is payable to



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the Participant’s beneficiary pursuant to Section 7(b), the Participant’s estate shall
be deemed to be the grantee’s beneficiary.




     (m) Interpretation. The Plan is designed and intended to comply, to the extent
applicable, with Section 162(m) of the Code, and all provisions hereof shall be construed in
a manner to so comply.



     IN WITNESS WHEREOF, Lincoln Electric Holdings, Inc. has caused this Lincoln Electric Holdings,
Inc. 2007 Management Incentive Compensation Plan to be executed in its name as of December 31,
2008.



	 	 	 	 	 
	 	LINCOLN ELECTRIC HOLDINGS, INC.:

 	 
	 	By:  	/s/ Gretchen A. Farrell
 	 
	 	 	Vice President, Human Resources 	 
	 	 	 	 



Date: December 31, 2008





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