EX-10(B)(2)



 





EXHIBIT 10(b)(2)




THE SCOTTS COMPANY LLC




AMENDED AND RESTATED

EXECUTIVE/MANAGEMENT INCENTIVE PLAN (THE “PLAN” or “EMIP”)

TERMS AND CONDITIONS





	1.	 	Objectives






	 	1.1	 	Provide meaningful financial incentives consistent with and supportive of
corporate strategies and objectives.
	 
	 	1.2	 	Encourage team effort toward achievement of corporate financial and strategic
goals aligned with shareholders of The Scotts Miracle-Gro Company and our customers.
	 
	 	1.3	 	Contribute toward a competitive compensation program for all associates
participating in the Plan (“Participants”).






	2.	 	Participation






	 	2.1	 	All managers and more senior level associates of The Scotts Company LLC (the
“Company”) and all “Affiliates” and “Subsidiaries” (as defined below) are eligible to
participate upon recommendation by management and in the case of covered employees (as
defined in Code §162(m)) approval by the Compensation and Organization Committee of The
Scotts Miracle-Gro Company (the “Committee”). For purposes of this Plan:






	 	(a)	 	“Code” means the Internal Revenue Code of 1986, as amended.
	 
	 	(b)	 	“Affiliates” and “Subsidiaries” mean all persons with whom the
Company would be considered a single employer under Code §§414(b) and (c).






	 	2.2	 	Except as otherwise provided by the Committee and, in the case of covered
employees, permitted under Code §162(m), Participants must be actively employed in an
eligible job/position for at least 13 consecutive weeks during the Plan Year (the
Company’s fiscal year).
	 
	 	2.3	 	Participant eligibility is based on active status during the Plan Year.
Periods of inactive status such as short-term disability and other leaves will be
reflected in the eligible earnings and payout calculation.
	 
	 	2.4	 	Except as otherwise provided by the Committee and, in the case of covered
employees, permitted under Code §162(m), Participants must be employed on the last day
of the Plan Year to be eligible for an incentive payment.
	 
	 	2.5	 	Except as otherwise provided by the Committee and, in the case of covered
employees, permitted under Code §162(m), participants whose employment terminates
during the Plan Year, except in cases of retirement, will not be eligible for an
incentive payment, prorated or otherwise.
	 
	 	2.6	 	Participants who retire during the Plan Year will be eligible for a prorated
incentive payment.
	 
	 	2.7	 	Participants who hold an eligible position on a part-time basis are eligible
for the EMIP. All other terms and conditions apply.





 









 






	 	2.8	 	Participants who move to a different EMIP eligible position or otherwise become
eligible for a different target percentage during the Plan Year will be pro-rated based
on new metrics/target (if applicable) only if the move is for an eligible period of at
least 13 weeks in the Plan Year.
	 
	 	2.9	 	Participants who move to a non-EMIP eligible position during the Plan Year will
be eligible for a pro-rated incentive payment (based on Plan Year earnings) provided
other eligibility requirements are met.
	 
	 	2.10	 	Participants shall not have any right with respect to any award until an award
shall, in fact, be paid to them.
	 
	 	2.11	 	The Plan confers no rights upon any associate to participate in the Plan or
remain in the employ of the Company or any Affiliate or Subsidiary. Neither the
adoption of the Plan nor its operation shall in any way affect the right of the
associate or the Company or any Affiliate or Subsidiary to terminate the employment
relationship at any time.






	3.	 	Plan Design, Performance Measures, and Payouts






	 	3.1	 	The Plan is designed to recognize and reward performance against established
financial targets. The Plan is comprised of:






	 	(a)	 	A corporate net income “funding trigger” below which no
incentives will be paid to any Participant;
	 
	 	(b)	 	Up to five standard Performance Measures from the list of
available Performance Measures, below;
	 
	 	(c)	 	An earnings “multiplier” that will reinforce the importance of
earnings by modifying the performance results against all of the other goals;
and
	 
	 	(d)	 	The ability to tailor incentive measure weights to each
particular group or unit reflecting the relative contribution that group or
unit can make to those results.






	 	3.2	 	Available Performance Measures under the Plan shall be measured over the
period established by the Committee and be limited to the following:






	 	(a)	 	Net earnings or net income (before or after taxes);
	 
	 	(b)	 	Earnings per share (basic or diluted);
	 
	 	(c)	 	Net sales or revenue growth;
	 
	 	(d)	 	Net operating profit;
	 
	 	(e)	 	Return measures (including, but not limited to, return on
assets, capital, invested capital, equity, sales, or revenue);
	 
	 	(f)	 	Cash flow (including, but not limited to, operating cash flow,
free cash flow, cash flow return on equity, and cash flow return on
investment);
	 
	 	(g)	 	Earnings before or after taxes, interest, depreciation, and/or amortization;
	 
	 	(h)	 	Gross or operating margins;




2









 





	 	(i)	 	Productivity ratios;
	 
	 	(j)	 	Share price (including, but not limited to, growth measures and
total shareholder return);
	 
	 	(k)	 	Expense targets;
	 
	 	(1)	 	Margins;
	 
	 	(m)	 	Operating efficiency;
	 
	 	(n)	 	Market share;
	 
	 	(o)	 	Customer satisfaction/service;
	 
	 	(p)	 	Product Fill Rate percent (% of orders filled on first
delivery) or All-In Fill Rate percent (% calculated dollar fill based on
potential) times Inventory Turns;
	 
	 	(q)	 	Working capital targets;
	 
	 	(r)	 	Economic value added or EVA(R)(net operating profit after tax
minus the sum of capital multiplied by the cost of capital);
	 
	 	(s)	 	Developing new products and lines of revenue;
	 
	 	(t)	 	Reducing operating expenses;
	 
	 	(u)	 	Developing new markets;
	 
	 	(v)	 	Meeting completion schedules;
	 
	 	(w)	 	Developing and managing relationships with regulatory and other
governmental agencies;
	 
	 	(x)	 	Managing cash;
	 
	 	(y)	 	Managing claims against the Company, including litigation; and
	 
	 	(z)	 	Identifying and completing strategic acquisitions.
	 
	 	(aa)	 	Any Performance Measure(s) may be used to measure the
performance of the Company, Subsidiary, and/or Affiliate as a whole or any
business unit of the Company, Subsidiary, and/or Affiliate or any combination
thereof, as the Committee may deem appropriate, or any of the above Performance
Measures as compared to the performance of a group of comparator companies, or
published or special index that the Committee, in its sole discretion, deems
appropriate.






	 	3.3	 	Performance above and below target performance goals will be incrementally
calculated so Participants will receive a payout calculated on a straight-line basis;
provided, however, that the Committee may determine, in its sole discretion, that no
payouts will be made for performance below target performance goals. Notwithstanding
the foregoing or any other provision in the Plan to the contrary, the Committee shall
have the right, in its sole discretion, to reduce the amount otherwise payable to a
Participant based on the Participant’s individual performance or any other factors that
the Committee deems appropriate.




3









 





	 	3.4	 	The maximum amount of compensation that could be paid to any Participant in any
Plan Year from this Plan is $2.5 million.
	 
	 	3.5	 	Unless a Participant has made a valid election under a deferred compensation
plan maintained by the Company, an Affiliate or a Subsidiary no later than the date
permitted under such plan, all awards under the Plan, including any prorated amounts
described in Section 2.6, will be paid by the 15th day of the third month following the
close of the applicable Plan Year.






	4.	 	Employee Agreement and Forfeiture of Payment






	 	4.1	 	Regardless of any other provision of this section and unless the Incentive
Review Committee (as defined in Section 5.2) specifies otherwise, in order to
participate in the Plan, a Participant must execute an Employee Confidentiality,
Noncompetition, Nonsolicitation Agreement.
	 
	 	4.2	 	Furthermore, regardless of any other provision of this section and unless the
Incentive Review Committee specifies otherwise, a Participant who breaches any part of
that Employee Confidentiality, Noncompetition, Nonsolicitation Agreement will forfeit
any future payment under the Plan and will also return to the Company or any Affiliate
or Subsidiary any monies paid out to Participant under this Plan within the three years
prior to said breach.
	 
	 	4.3	 	By participating in this Plan, a Participant hereby consents to a deduction
from any amount the Company or any Affiliate or Subsidiary may owe the Participant
(including amounts owed to the Participant as wages or other compensation, fringe
benefits, or vacation pay as well as any other amounts owed to the Participant by the
Company or any Affiliate or Subsidiary), to the extent of the amounts owed the Company,
Affiliate or Subsidiary under this Section 4, whether or not it elects to make any
set-off in whole or in part. If the Company or any Affiliate or Subsidiary does not
recover the full amount the Participant owes it by means of set-off, calculated as set
forth above in Section 4.2, the Participant agrees to pay immediately the unpaid
balance to the Company, Affiliate or Subsidiary, as applicable.






	5.	 	Administration






	 	5.1	 	The Plan is to be administered by the Vice President, Global Total Rewards or
the Committee designee, who will be responsible for:






	 	(a)	 	Recommending changes in the Plan as appropriate;
	 
	 	(b)	 	Recommending payout targets; and
	 
	 	(c)	 	Recommending additions or deletions to the list of eligible associates.






	 	5.2	 	The Incentive Review Committee (comprised of the Chief Executive Officer,
Executive Vice President, Human Resources and the Chief Financial Officer) is
responsible for:





4









 






	 	(a)	 	Approving the percentages by which financial measurements vary
from approved budgets and business unit financial performance results;
	 
	 	(b)	 	Adjudicating changes and adjustments; and
	 
	 	(c)	 	Recommending Plan payouts.






	 	5.3	 	The Committee approves:






	 	(a)	 	Changes in the Plan design;
	 
	 	(b)	 	The payout percentage;
	 
	 	(c)	 	Additions or deletions of eligible associates; and
	 
	 	(e)	 	Payouts to all Participants after written certification that
Performance Measures have been met.






	 	5.4	 	The Committee shall approve the Performance Measures within 90 days of the
beginning of the performance period but no later than 25% of the performance period.
Material terms of the Plan, including the Plan measures, were approved by shareholders
on January 26, 2006. The foregoing qualifies payments under the Plan as “qualified
performance-based compensation” under Treasury Regulation §1.162-27(e). The Plan is
amended and restated effective October 30, 2007 for purposes of Code §409A and to make
certain other changes.
	 
	 	5.5	 	The Committee shall review the operation of the Plan and (subject to
restrictions imposed in Code §162(m)), if at any time the continuation of the Plan or
any of its provisions becomes inappropriate or inadvisable, the Committee shall revise
or modify Plan provisions or recommend to the Board of Directors of The Scotts
Miracle-Gro Company (the “Board”) that the Plan be suspended or withdrawn. In
addition, the Committee reserves the right to modify incentive formulas to reflect
unusual circumstances.
	 
	 	5.6	 	The Board reserves to itself the right to suspend the Plan, to withdraw the
Plan, and, to the extent allowed without shareholder approval, make alterations in Plan
concept.
	 
	 	5.7	 	It is intended that this Plan comply with the short-term deferral requirements
under Treasury Regulation §1.409A-1(a)(4), and this Plan will be interpreted,
administered and operated in good faith accordingly. Nothing herein shall be construed
as an entitlement to or guarantee of any particular tax treatment to a Participant.






5