EX-10.b






MANAGEMENT INCENTIVE PLAN DOCUMENT

Fiscal Year 2006




Plan Name and Effective Date



The name of this Plan is the ADC Telecommunications, Inc. Management Incentive Plan. The plan is
effective from November 1, 2005 through October 31, 2006.



Purpose



The purpose of the Plan is to provide, with full regard to the protection of shareholder’s
investments, a direct financial incentive for eligible managers and individual contributors to make
a significant contribution to ADC’s established goals.



Eligibility



Eligibility for Fiscal Year 2006 is limited to full or part-time regular employees in the U.S. and
in such other countries where ADC has specifically notified employees of eligibility for
participation in the Plan. Eligibility for participation in this Plan is limited to such employees
who hold executive, certain management and higher-level individual contributor positions.
Temporary employees and independent contractors are not eligible for participation in this plan.
In order to be eligible, an employee cannot participate in any other ADC incentive plan, except as
approved by the Compensation and Organization Committee of the Board of Directors or the CEO, and
must be employed in an eligible position on or before October 1, 2006.



Timing of Payment



Payments that become due under this Plan are made as soon as administratively feasible following
the close of ADC’s fiscal year, generally in late December or early January. All payments are
subject to appropriate withholdings.



Plan Goals



The Plan reinforces the key goals that support ADC’s long-term strategic plans. The key factors in
ADC’s FY06 corporate success are net sales, pro forma operating income and free cash flow. The
key factors in ADC’s FY06 regional success are net sales, pro forma operating income and cash
conversion cycles. For global business units, excluding APS, the key factors for FY06 are net
sales, global contribution margin and inventory turns. For APS U.S., the key factors for FY06 are
net sales with product pull-through, net sales without product pull-through, contribution margin
with product pull-through, and contribution margin without product pull-through. For APS France
and APS Germany, the key factors for FY06 are net sales with product pull-through, net sales
without product pull-through, contribution margin and cash conversion cycle. These goals are set at
the ADC, regional, and global business unit levels. Accounting methodology changes may dictate
corresponding goal modifications during the plan year.



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Following is a description of the plan components:



	 	 	 
	Plan Goal	 	Definition
	Net Sales / Revenue

	 	The amount ADC can recognize in accordance with General Accepted Accounting

Principles (GAAP) for goods shipped or services provided to third party customers,

net of returns received and discounts.
	 

	 	 
	 
	 	 
	Pro Forma Operating

Income

	 	Net sales less the everyday expenses of doing business, including cost of incentive

payments. It does not take into account interest income, interest expense, or

other income/loss or income tax. It also excludes restructuring and other one-time

expenses that are not reflective of the ongoing business. For FY06, any stock

option expense will be excluded from pro forma operating income for incentive

calculation.
	
 
	 	 
	 
	 	 
	Free Cash Flow

	 	ADC Cash from Operations including restructuring charges less capital expenditures.
	 

	 	 
	 
	 	 
	Cash Conversion

Cycle (Days)*

	 	Days Sales Outstanding (DSO) plus Days of Inventory Supply (DoS) less Days Payables

Outstanding (DPO).

Above metrics are based upon 3rd party sales, net of reserves and

calculated based upon the average monthly balances of inventory, receivables, and

payables. Days of Inventory Supply = 360 / Inventory Turns
	 

	 	 
	 
	 	 
	Inventory Turns**

	 	3rd party cost of sales divided by average monthly net inventory balance.
	 

	 	 
	 
	 	 
	Product Pull Through

	 	ADC divisional product sales that are sold through ADC Professional Services

channels.
	 

	 	 
	 
	 	 
	Business Unit

Contribution Margin

	 	Net sales less the cost to produce the products or services sold and less certain

costs directly associated with that business unit including but not limited to

engineering, product management, and administrative expenses. It does not take

into account operating expenses deemed regional during the budgeting process,

corporate allocations, interest income, interest expense, other income/loss or

income tax. It also excludes restructuring and other one-time expenses that are

not reflective of the ongoing business. For FY06, any stock option expense will be

excluded from business unit contribution margin for incentive calculation.
	
 
	 	 






*For APS, the Cash Conversion Cycle calculation only includes Furnish Cost of Goods Sold.



**For Global Connectivity Solutions the measure is Adjusted Inventory Turns: (Inventory Turns x
Percent Ship-to-Request). Percent Ship-to-Request is based on only Americas deliveries since the
metric is not available elsewhere.



NOTE: For the regions and business units, revenue, contribution margin, and operating income are
measured on Plan foreign exchange rates.



Goal Weightings



Employees serving multiple business units and multiple regions have 100% of their incentive plan
based on ADC goals and results. Employees in the U.S. dedicated to only one business unit have
portion of their incentive based on ADC results and a portion on global business unit results.
Employees outside of the U.S. dedicated to only one business unit (excluding APS) have a portion of
their incentive based on ADC results and the remaining portion equally split between global
business unit results and regional results. Employees serving only one region have a portion of
their incentive based on ADC results and a portion on regional results. Employees in APS will not
be subject to a regional metric; instead APS participants will be subject to the APS business
metrics for their country. Each participant will be notified of their applicable business unit or
region, if any. The weightings for business unit or regional participation are as follows:



	 	 	 	 	 	 	 	 	 
	Grade	 	ADC	Weighting	BU or Regional Weighting
	Grade 19+

	 	 	50	%	 	 	50	%
	 

	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	Grades 15-18

	 	 	30	%	 	 	70	%
	 

	 	 	 	 	 	 	 	 






Individual Performance



Exceptional individual performance can be recognized in the MIP program. An ADC-wide award pool is
available to supplement the financial-based awards for outstanding performers.



ADC Performance Gate



To ensure protection of shareholder interest, an established level of ADC pro forma operating
income must be achieved before an incentive payment can be generated.



Calculation of Payment



Prior to making any payment under this Plan, the Board of Directors must determine that the claimed
business performance levels have been achieved. The Board of Directors has complete authority and
discretion to determine whether performance levels have been achieved, including without limitation
the authority and discretion to properly calculate pro forma operating income. The size of an
incentive award will be based on three factors:




	 	1.	 	Target Incentive Opportunity – Determined on the basis of the ADC salary grade
associated with an individual’s job and country of work. It is expressed as a
percentage of an individual’s FY 2006 eligible base salary earnings.






	 	2.	 	FY2006 Eligible Base Salary – This is the amount paid to the participant during
the fiscal year in Base Salary.






	 	3.	 	Business Performance in comparison with the established goals.





While each goal has a threshold of 0% of target incentive opportunity, the minimum individual
payment is a total payment of 10% of an employee’s target. If incentives earned total less than
10% of target, no payout will be made. The maximum award attributable to each performance factor
is 200% of its target. The maximum total individual award is 200% of the target payout. This
maximum includes any MIP award also provided for exceptional individual performance. Specific
financial goals have been established for 0%, 100%, and 200% of target. Results between these
specific points are interpolated for each goal.



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Here is an example of a hypothetical award calculation.



Assume a Regional Plan participant with the following facts, in a scenario where the ADC
performance gate has been met:



	 	 	 
	Target Opportunity:

	 	15% of base salary earnings
	 
	 	 
	FY06 Eligible Base Salary:

	 	70,000 EUR
	 
	 	 
	Business Performance Percentages:

	 	Hypothetical ADC and regional

results shown in the following

table






	 	 	 	 	 	 	 	 	 	 	 	 	 
	Metrics	 	Measure Weighting	 	Performance	 	Wtd. Perf.
	ADC Level Metrics	 	 	 	 	 	 	 	 	 	 	 	 
	Net Sales
	 	 	40	%	 	 	107	%	 	 	42.8	%
	Pro Forma Operating Income
	 	 	40	%	 	 	95	%	 	 	38.0	%
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	Free Cash Flow
	 	 	20	%	 	 	102	%	 	 	20.4	%
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	101.2	%
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	Regional Level Metrics
	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	Net Sales
	 	 	40	%	 	 	110	%	 	 	44.0	%
	Proforma Operating Income
	 	 	40	%	 	 	95	%	 	 	38.0	%
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	Cash Conversion Cycle
	 	 	20	%	 	 	108	%	 	 	21.6	%
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	103.6	%
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	Overall Weighted Performance
	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	ADC Metrics
	 	 	30	%	 	 	101.2	%	 	 	30.4	%
	Regional Metrics
	 	 	70	%	 	 	103.6	%	 	 	72.5	%
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	102.9	%
	 
	 	 	 	 	 	 	 	 	 	 	 	 






Payment Calculation: 70,000 (base salary) * 15% (incentive target) * 102.9% (business
performance) = 10,805 EUR



Effect of Change in Employment Status



Termination of Employment. If employment with ADC is terminated for any reason other than
death and if the Employment Termination Date occurs prior to the end of the Fiscal Year, a
participant will not receive an award under the Plan. For purposes of this Plan, the “Employment
Termination Date” is the date that the participant ceases to be an employee of ADC (as determined
by the company). In the case of termination of employment by ADC, the Employment Termination Date
shall be determined without regard to whether such termination is with or without cause or with or
without reasonable notice.



Transfer, Promotion or Demotion to another position with a different ADC incentive plan, target
incentive opportunity or business goals. A participant, who transfers, is promoted or demoted
to another position with a different plan, target incentive opportunity or business goals will
receive a prorated calculation of payment based upon the number of months served in each position.
The participant must be in the new position by the first of the month in order to receive credit
for that month under the new plan, target or goals. For example, a participant transferring from
Wireless to Connectivity on June 10 would receive eight months payment under the Wireless plan
(November 1 — June 30) and four months under Connectivity (July 1 – October 31). In order to
receive payment under MIP, a participant must have completed one full month of service under the
plan during that plan year.



Death. If a participant dies during the fiscal year, a pro-rated payment will be made to
the participant’s estate after the end of the fiscal year. The payment will be based upon the time
the participant served in the eligible position during the fiscal year.



Administration


A Management Incentive Plan Committee (“Committee”), appointed and authorized by the Compensation
Committee of the Company’s Board of Directors, will administer this Plan. Subject to the complete
and full discretion of the Compensation Committee of the Board of Directors, the Committee is
authorized to make all decisions as required in administration of the Plan and to exercise its
discretion to define, interpret, construe, apply, approve, administer, withdraw and make any
exceptions to the terms of the Plan.



Right to Modify


ADC reserves the right to modify or adjust the Plan at any time in its sole discretion either in
whole or with respect to a particular business unit. The Participant explicitly agrees with this
modification right of ADC.



Governing Law


The Plan is made and shall be construed in accordance with the laws of the State of Minnesota,
U.S.A. without regard to conflicts of law principles thereof, or those of any other state of the
U.S.A. or of any other country, province or city.



Severability


If any provision of this Plan is held invalid, illegal or unenforceable by a court or tribunal of a
competent jurisdiction, this Plan shall be deemed severable and such invalidity, illegality or
unenforceability shall not affect any other provision of this Plan which shall be enforced in
accordance with the intent of this Plan.



Assignment


The Company shall have the right to assign this Plan to its successors and assigns and this Plan
shall inure to the benefit of and be enforceable by said successors and assigns. Participant may
not assign this Plan or any rights hereunder.



Entire Understanding


This Plan constitutes the entire understanding between the parties regarding the payment of
incentive compensation under this Plan, and it supercedes any and all prior agreements or
understandings, whether oral or written, express or implied, on such subject matter.



No Acquired Rights or Entitlements/Plan Amendment or Termination


The Plan shall not entitle Participants to any future compensation. The Plan is not an element of
the employees’ salary or base compensation and shall not be considered as part of such in the event
of severance, redundancy, or resignation. ADC has no obligation to offer incentive plans to
Participants in the future, and the plan shall be effective only for the time period specified in
the plan and shall not be deemed to renew year over year. The Participant understands and accepts
that the incentive payments made under the Plan are entirely at the sole discretion of ADC.
Specifically, ADC assumes no obligation to the Participant under this Plan with respect to any
doctrine or principle of acquired rights or similar concept. Subject to the provisions of the Plan,
ADC may amend or terminate the Plan or discontinue the payment of incentives under the Plan at any
time, at its sole discretion and without advance notice.




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