Exhibit 10.9


 


HOSPIRA,
INC.


2004
PERFORMANCE INCENTIVE PLAN


 

















 


HOSPIRA,
INC.


2004
PERFORMANCE INCENTIVE PLAN


 


SECTION 1.    Establishment
and Purposes


 


1.1                                 Establishment
of the Plan.  Hospira, Inc.
(“Hospira”) hereby establishes the “Hospira, Inc. Performance Incentive Plan”
the (“Plan”), as set forth in this document. 
The Plan shall become effective as of April 30, 2004 (the
“Effective Date”) and shall remain in effect as provided in Section 6.1
hereof.


 


1.2                                 Purposes
of the Plan.  The purposes of the Plan
are to:


 


(a)                                  Provide
flexibility to Hospira in its ability to attract, motivate, and retain the
services of participants in the Plan (“Participants”) who make significant
contributions to Hospira’s success and to allow Participants to share in the
success of Hospira;


 


(b)                                 Optimize
the profitability and growth of Hospira through incentives which are consistent
with Hospira’s goals and which link the performance objectives of Participants
to those of Hospira’s shareholders; and


 


(c)                                  Provide
Participants with an incentive for excellence in individual performance.


 


SECTION 2.    Administration


 


2.1                                 General.  The Plan shall be administered by the
Compensation and Nominations Committee (the “Committee”) of the Board of
Directors of Hospira (the “Board”).


 


2.2                                 Authority
of the Committee.  The Committee
will have full authority to administer the Plan, including the authority to
interpret and construe any provision of the Plan, and to establish and amend
rules pertaining thereto.  All rules,
regulations and interpretations shall be conclusive and binding on all
persons.  The Committee has sole
responsibility for selecting Participants, establishing performance objectives,
setting award targets, and determining award amounts.


 


2.3                                 Delegation
by the Committee.  The Committee
from time to time may delegate the performance of certain ministerial functions
in connection with the Plan, such as the keeping of records, to such person or
persons as the Committee may select. 
The cost of administration of the Plan will be paid by Hospira.


 


SECTION 3.    Eligibility
and Participation


 


3.1                                 Eligibility
and Participation.  Eligibility for
participation in the Plan shall be limited to officers of Hospira and its
subsidiaries.  Participants in the Plan
will be determined annually by the Committee from those officers eligible to
participate in the Plan.


 


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SECTION 4.    Performance
Objectives.


 


4.1                                 Performance
Objectives.  The Plan’s performance
objectives (the “Performance Objectives”) shall be determined with reference to
Hospira’s Earnings Before Interest, Taxes, Depreciation and Amortization
(“EBITDA”) excluding  any special
items identified in the Company’s quarterly or annual earnings releases and
prepared in accordance with generally accepted accounting principles.


 


4.2                                 Individual
Base Award Allocation – Defined.


 


(a)                                  For
the performance period beginning on the Effective Date and ending on
December 31, 2004 (the “2004 Period”), the base award allocation for the
Chief Executive Officer, if a Participant for such period, shall be .020 of
Hospira’s EBITDA for the 2004 Period. 
The base award allocation for the Chief Operating Officer, if a
participant for such period, shall be .015 of Hospira’s EBITDA for the 2004
Period.  The base award allocation for
any other Participant shall be .010 of Hospira’s EBITDA for the 2004 Period.


 


(b)                                 For
all fiscal years beginning after December 31, 2004, the base award
allocation for the Chief Executive Officer, if a Participant for such fiscal
year, shall be .020 of Hospira’s EBITDA for that fiscal year.  The base award allocation for the Chief
Operating Officer, if a participant for such fiscal year, shall be .015 of
Hospira’s EBITDA for that fiscal year. 
The base award allocation for any other Participant shall be .010 of
Hospira’s EBITDA for that fiscal year


 


SECTION 5.    Final Awards


 


5.1                                 Final
Award Allocation.  As soon as
practical after the close of each fiscal year, a Participant’s final award
allocation will be determined solely on the basis of the Performance
Objectives.  In determining a
Participant’s final award allocation, the Committee will have the discretion to
reduce, but not increase, a Participant’s base award allocation, provided that
a Participant’s individual performance will be considered by the Committee in
exercising that discretion.


 


5.2                                 Payment
of Awards.  A Participant’s final
award allocation will be paid or deferred in the manner and at the time(s)
established by the Committee.


 


SECTION 6.    Duration,
Amendment and Termination


 


6.1                                 Duration
of the Plan.  The Plan shall
commence on the Effective Date, as described in Section 1.1 hereof, and
shall remain in effect until terminated by the Board.


 


6.2                                 Amendment
and Termination.  The Board, in its
sole discretion, may modify or amend any or all of the provisions of the Plan
at any time and, without notice, may suspend or terminate it entirely.  However, no such modification may, without
the consent of the Participant, reduce the right of a Participant to a payment
or distribution to which the Participant is entitled by reason of an
outstanding award allocation.


 


SECTION 7.    Successors


 


7.1                                 Obligations.  All obligations of Hospira under the Plan
with respect to awards granted hereunder shall be binding on any successor to
Hospira, whether the existence of such successor is the result of a direct or
indirect purchase, merger, consolidation, or otherwise, of all or substantially
all of the business and/or assets of Hospira.


 


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SECTION 8.    Grantor
Trusts


 


8.1                                 2004
Payments.  With respect to the final
award allocation for the 2004 Period, based on elections previously filed with
Abbott Laboratories for the 2004 calendar year, solely with respect to
participants who have grantor trusts that were established under a similar
Abbott Laboratories incentive program, Hospira shall distribute such 2004
Period award to the participant in a manner that facilitates the contribution
of such amounts to such participant’s grantor trust in a manner prescribed
under the 1986 Abbott Laboratories Management Incentive Plan.  Hospira shall have no obligation to maintain
or make any future contributions to such grantor trusts, other than as herein
provided.


 


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