Document:

Exhibit 10.1

Exhibit 10.1

BRADY CORPORATION

INCENTIVE COMPENSATION PLAN

FOR ELECTED CORPORATE OFFICERS

I. THE PLAN

The name of this Plan is the Brady Corporation Incentive Compensation Plan for Elected
Corporate Officers. The purpose of this Plan is to promote the interests of the shareholders and to
provide incentive to the President, Chief Executive Officer, Chief Financial Officer, Vice
Presidents, Treasurer, and the officers elected by the Board of Directors (“elected corporate
officers”) of the Corporation for contributions to the profitability of the Corporation. It is
separate and distinct from the other Brady incentive plans currently in effect. It is intended that
Bonus Awards paid under this Plan constitute “qualified performance-based compensation” under
Section 162(m) of the Internal Revenue Code.

II. DEFINITIONS

In this Plan, the following terms used will have the following definitions:

A. “Board of Directors” means the Board of Directors of Brady Corporation.

B. “Bonus Award” means an award, either paid currently or paid on a deferred basis, as the
result of the operation of this Plan.

C. “Code” means the Internal Revenue Code of 1986, as amended and in effect from time to
time.

D. “Committee” means the committee provided for in Section III.

E. “Corporation” means Brady Corporation.

F. “Fiscal Year Salary” of any Participant means the base pay earned by such Participant
during the relevant fiscal year of the Corporation, exclusive of any incentive compensation or
supplemental payments by the Corporation.

G. “Independent Auditors” means, with respect to any fiscal year, the independent public
accountants appointed by the Board of Directors to certify to the Board of Directors the financial
statements of the Corporation.

H. “Participant” means any elected corporate officer of the Corporation.

I. “Performance Goals” means one or more of the following criteria, as determined by the
Committee: (i) corporate net income; (ii) earnings per share; (iii) sales; (iv) return on equity;
(v) return on invested capital; (vi) return on assets; (vii) revenue growth; (viii) earnings before
interest, taxes, depreciation and amortization; (vii) earnings before interest, taxes and
amortization; (ix) operating income; (x) pre- or after-tax income; (xi) cash flow; (xii) cash flow
per share; (xiii) net earnings; (xiv) economic value added (or an equivalent metric); (xv) share
price performance; (xvi) total shareholder return; (xvii) improvement in or attainment of expense
levels; (xviii) improvement in or attainment of working capital levels; (xix) debt reduction; or
(xx) strategic and leadership goals (provided, however, that strategic and leadership goals must be
(a) able to be objectively determined for each participant such that an award based in whole or
part on strategic and leadership goals would not fail to qualify as “qualified performance based
compensation” under Treas. Reg. 1.162-27(e) promulgated under Section 162(m) of the Code, or (b)
such goals are used solely by the Committee for the purposes of exercising its negative discretion
pursuant to Section VI.B. hereof).

J. “Plan” means the Brady Corporation Incentive Compensation Plan for Elected Corporate
Officers.

K. “Regulations” means the final, temporary and/or proposed Treasury Regulations
promulgated under Section 162(m) of the Code and any other rulings or interpretative pronouncements
promulgated by the Internal Revenue Service with respect to Section 162(m) of the Code, as in
effect from time to time.

 

 

 

III. COMMITTEE

A. The Board of Directors has appointed and shall continue to appoint and keep in existence
a Compensation Committee composed of at least three members of the Corporation’s Board of
Directors, each of whom constitutes an “outside director” within the meaning of Section 162(m) of
the Code and the Regulations. This Committee shall be known as the “Committee” and shall have full
power and authority to interpret and administer the Plan in accordance with its terms (provided
that, except as provided in Sections V.B. and VI.B. hereof, the Committee shall have no authority
or discretion to establish the amount of any Bonus Award pursuant to this Plan in any amount other
than the “Planned Amount” (as hereinafter defined)). Determinations, interpretations or other
actions made or taken by the Committee pursuant to the provisions hereof shall be final, binding
and conclusive for all purposes and upon all persons. The Committee’s decisions need not be uniform
and may be made selectively among Participants, whether or not they are similarly situated.

B. The Board of Directors may, from time to time, remove members from the Committee or add
members thereto, and vacancies on the Committee, however caused, shall be filled by action of the
Board of Directors; provided, that no person shall be appointed to the Committee who does not
qualify as an “outside director” (as defined in the preceding paragraph A).

IV. ESTABLISHMENT OF PERFORMANCE GOALS

A. Not later than the 90th day of each fiscal year of the Corporation, the Committee shall
establish and adopt Performance Goals for such fiscal year. Such Performance Goals shall include:
(a) a percent of Fiscal Year Salary that may be paid to a Participant as a Bonus Award under this
Plan and (b) the amount of such percent of Fiscal Year Salary that is to be paid to a Participant
as a Bonus Award under this Plan based on the relative or comparative achievement of the
Performance Goals.

B. Following the 90th day of each fiscal year of the Corporation, the Performance Goals
that have been established for the applicable fiscal year in accordance with the foregoing
paragraph shall not be subject to modification or adjustment for any reason, except certain
extraordinary events, as described in Paragraph VI.A.

V. PLAN PARTICIPATION; PARTIAL YEAR PARTICIPATION

A. Subject to Section VI.E. below, the persons entitled to participate in this Plan for any
fiscal year of the Corporation are those persons who, at any time during such fiscal year, held a
position as an elected corporate officer of the Corporation.

B. If any person serves as an elected corporate officer, and therefore is eligible to be a
Participant, for less than 100% of any fiscal year, then any Bonus Award otherwise payable to such
person hereunder for such fiscal year shall nonetheless be payable in full (subject to Section
VI.E. below), unless the Committee in its discretion determines that the amount of such Bonus Award
should be reduced to reflect such officer’s service for less than the entire fiscal year, in which
event the Bonus Award payable to such Participant shall be reduced to the extent so determined by
the Committee. The amount of such reduction shall not be subject to the limitations on
discretionary reductions imposed under Section VI.B. below.

VI. DETERMINATION AND PAYMENT OF BONUS AWARDS

A. Subject to the following sentence of this Paragraph A and to Paragraphs B, C and E of
this Section VI, the amount of the Bonus Award payable to a Participant for any fiscal year under
this Plan shall be an amount equal to the percentage of the specified percent of such Participant’s
Fiscal Year Salary for such fiscal year that corresponds to the relative or comparative achievement
of the Performance Goals for such fiscal year, as established by the Committee in accordance with
Section IV.A. In comparing actual performance against the Performance Goals, the Committee may
exclude from or include in such comparison any extraordinary gains, losses, charges, or credits
which appear on the Corporation’s books and records as the Committee deems appropriate, provided
that such exclusion does not cause any Bonus Award to fail to constitute “performance-based
compensation” under Section 162(m) of the Code. An extraordinary item may include, but shall not be
limited to, an item in the Corporation’s financial statements reflecting a change in an accounting
rule, tax law, or major legislation not taken into consideration in the establishment of the
Performance Goals. In addition, the impact of a material dislocation in the U.S. economy or a
substantive change in the Corporation’s business plans also may be deemed to be such an
extraordinary item. The dollar amount of any Bonus Award determined under this Paragraph A. is
referred to herein as the “Planned Amount.”

 

 

 

B. The Committee may in its discretion reduce the Bonus Award for any Participant or
Participants for any fiscal year to an amount less than the Planned Amount if the Committee, in its
discretion, determines such reduction to be appropriate, taking into consideration such factors as
the Committee deems appropriate. In no event, however, shall any Bonus Award be reduced under this
Section VI.B. to less than eighty percent (80%) of the Planned Amount. Discretionary reductions in
Bonus Awards under this Paragraph B. may be made in different amounts or percentages for different
Participants, and may be based on considerations unique to a particular Participant and/or
considerations affecting the Corporation or all Participants generally. Under no circumstances
shall the Committee have any discretion to increase any Bonus Award to an amount greater than the
Planned Amount.

C. Notwithstanding the Performance Goals and the Planned Amounts, in no event shall any
Bonus Award payable to any one Participant under this Plan for any fiscal year exceed $2,000,000.

D. All Bonus Awards for any fiscal year shall be paid no later than thirty (30) days after
the Corporation files its Form 10-K with the Securities and Exchange Commission for such year.

E. No Bonus Award for a fiscal year shall be paid to a Participant whose employment with
the Corporation terminates (regardless of the reason for or circumstances of that termination)
prior to the time that Bonus Awards for such year are paid.

VII. SHAREHOLDER APPROVAL OF THE PLAN

This Plan shall become effective only after it has been submitted to and approved by a
separate vote of the shareholders of voting shares of the Corporation, by the affirmative vote of a
majority of the votes cast thereon. Until such approval has been obtained, no Participant shall be
entitled to be paid any Bonus Award hereunder. The particular Performance Goals established for any
fiscal year need not be approved by the shareholders. Once such shareholder approval is obtained,
no further shareholder approval shall be required in any subsequent fiscal year until and unless
required by the Code or the Regulations. If any material term of the Plan is changed, such that
reapproval by the shareholders is required under the Code or the Regulations, then no Bonus Awards
shall be payable to any Participant hereunder until such reapproval has been duly obtained.

VIII. SUCCESSORS AND ASSIGNS

A. If the Corporation sells, assigns or transfers all or substantially all of its business
and assets to any person, excluding affiliates of the Corporation, or if the Corporation merges
into or consolidates or otherwise combines with any person which is a continuing or successor
entity, then the Corporation shall assign all of its right, title and interest in this Plan as of
the date of such event to the person which is the acquiring or successor corporation, and such
person(s) shall assume and perform from and after the date of such assignment all of the terms,
conditions and provisions imposed by this Plan upon the Corporation.

B. In the case of such an assignment and assumption, all further rights, as well as all
other obligations of the Corporation under this Agreement, thenceforth shall cease and terminate
and thereafter the expression “the Corporation” wherever used herein shall be deemed to mean such
successor person(s).

IX. PLAN AMENDMENTS, DISCONTINUANCE

The Board of Directors may amend, suspend or discontinue this Plan at any time, provided that
the Performance Goals and the method by which the amount of Bonus Award is determined may not be
altered for any fiscal year after the Performance Goals for such year have been established except
in accordance with Section IV.B. of the Plan; and provided further, that the Plan may not be
suspended or discontinued for any fiscal year after the Performance Goals have been established for
such year.Exhibit 10.2

EXHIBIT 10.2

BRADY CORPORATION

INCENTIVE COMPENSATION PLAN

FOR SENIOR EXECUTIVES

I. THE PLAN

The name of this Plan is the Brady Corporation Incentive Compensation Plan for Senior
Executives. The purpose of this Plan is to promote the interests of the shareholders and to provide
incentive to the President, Chief Executive Officer, Chief Financial Officer, Group Presidents, Sr.
Vice President of Human Resources, Chief Technology Officer, Chief Information Officer and Vice
President of Corporate and Business Development and other officers selected by the Board of
Directors of the Corporation for contributions to the profitability of the Corporation. It is
separate and distinct from the other Brady incentive plans currently in effect. It is intended that
Bonus Awards paid under this Plan constitute “qualified performance-based compensation” under
Section 162(m) of the Internal Revenue Code.

II. DEFINITIONS

In this Plan, the following terms used will have the following definitions:

A. “Board of Directors” means the Board of Directors of Brady Corporation.

B. “Bonus Award” means an award, either paid currently or paid on a deferred basis, as the
result of the operation of this Plan.

C. “Code” means the Internal Revenue Code of 1986, as amended and in effect from time to
time.

D. “Committee” means the committee provided for in Section III.

E. “Corporation” means Brady Corporation.

F. “Fiscal Year Salary” of any Participant means the base pay earned by such Participant
during the relevant fiscal year of the Corporation, exclusive of any incentive compensation or
supplemental payments by the Corporation.

G. “Independent Auditors” means, with respect to any fiscal year, the independent public
accountants appointed by the Board of Directors to certify to the Board of Directors the financial
statements of the Corporation.

H. “Participant” means any elected corporate officer of the Corporation.

I. “Performance Goals” means one or more of the following criteria, as determined by the
Committee: (i) corporate net income; (ii) earnings per share; (iii) sales; (iv) return on equity;
(v) return on invested capital; (vi) return on assets; (vii) revenue growth; (viii) earnings before
interest, taxes, depreciation and amortization; (vii) earnings before interest, taxes and
amortization; (ix) operating income; (x) pre- or after-tax income; (xi) cash flow; (xii) cash flow
per share; (xiii) net earnings; (xiv) economic value added (or an equivalent metric); (xv) share
price performance; (xvi) total shareholder return; (xvii) improvement in or attainment of expense
levels; (xviii) improvement in or attainment of working capital levels; (xix) debt reduction; or
(xx) strategic and leadership goals (provided, however, that strategic and leadership goals must be
(a) able to be objectively determined for each participant such that an award based in whole or
part on strategic and leadership goals would not fail to qualify as “qualified performance based
compensation” under Treas. Reg. 1.162-27(e) promulgated under Section 162(m) of the Code, or (b)
such
goals are used solely by the Committee for the purposes of exercising its negative discretion
pursuant to Section VI.B. hereof).

J. “Plan” means the Brady Corporation Incentive Compensation Plan for Senior Executives.

 

 

 

K. “Regulations” means the final, temporary and/or proposed Treasury Regulations
promulgated under Section 162(m) of the Code and any other rulings or interpretative pronouncements
promulgated by the Internal Revenue Service with respect to Section 162(m) of the Code, as in
effect from time to time.

III. COMMITTEE

A. The Board of Directors has appointed and shall continue to appoint and keep in existence
a Compensation Committee composed of at least three members of the Corporation’s Board of
Directors, each of whom constitutes an “outside director” within the meaning of Section 162(m) of
the Code and the Regulations. This Committee shall be known as the “Committee” and shall have full
power and authority to interpret and administer the Plan in accordance with its terms (provided
that, except as provided in Sections V.B. and VI.B. hereof, the Committee shall have no authority
or discretion to establish the amount of any Bonus Award pursuant to this Plan in any amount other
than the “Planned Amount” (as hereinafter defined)). Determinations, interpretations or other
actions made or taken by the Committee pursuant to the provisions hereof shall be final, binding
and conclusive for all purposes and upon all persons. The Committee’s decisions need not be uniform
and may be made selectively among Participants, whether or not they are similarly situated.

B. The Board of Directors may, from time to time, remove members from the Committee or add
members thereto, and vacancies on the Committee, however caused, shall be filled by action of the
Board of Directors; provided, that no person shall be appointed to the Committee who does not
qualify as an “outside director” (as defined in the preceding paragraph A).

IV. ESTABLISHMENT OF PERFORMANCE GOALS

A. Not later than the 90th day of each fiscal year of the Corporation, the Committee shall
establish and adopt Performance Goals for such fiscal year. Such Performance Goals shall include:
(a) a percent of Fiscal Year Salary that may be paid to a Participant as a Bonus Award under this
Plan and (b) the amount of such percent of Fiscal Year Salary that is to be paid to a Participant
as a Bonus Award under this Plan based on the relative or comparative achievement of the
Performance Goals.

B. Following the 90th day of each fiscal year of the Corporation, the Performance Goals
that have been established for the applicable fiscal year in accordance with the foregoing
paragraph shall not be subject to modification or adjustment for any reason, except certain unusual
and unforeseen events, as described in Paragraph VI.A.

V. PLAN PARTICIPATION; PARTIAL YEAR PARTICIPATION

A. Subject to Section VI.E. below, for any fiscal year of the Corporation, the President,
Chief Executive Officer, Chief Financial Officer, Group Presidents, Sr. Vice President of Human
Resources, Chief Technology Officer, Chief Information Officer and Vice President of Corporate and
Business Development and other officers selected by the Board of Directors of the Corporation shall
be eligible to participant in the Plan.

B. A person who changes his or her corporate position during the fiscal year, but remains
an employee of the Corporation, shall nonetheless shall be entitled to receive the full Bonus Award
(subject to Section VI.E. below), unless the Committee in its discretion determines that the amount
of such Bonus Award should be reduced to reflect such change in position, in which event the Bonus
Award payable to such Participant shall be reduced to the extent so determined by the Committee.
The amount of such
reduction shall not be subject to the limitations on discretionary reductions imposed under
Section VI.B. below.

 

 

 

VI. DETERMINATION AND PAYMENT OF BONUS AWARDS

A. Subject to the following sentence of this Paragraph A and to Paragraphs B, C and E of
this Section VI, the amount of the Bonus Award payable to a Participant for any fiscal year under
this Plan shall be an amount equal to the percentage of the specified percent of such Participant’s
Fiscal Year Salary for such fiscal year that corresponds to the relative or comparative achievement
of the Performance Goals for such fiscal year, as established by the Committee in accordance with
Section IV.A. In comparing actual performance against the Performance Goals, the Committee may
exclude from or include in such comparison any unusual and unforeseen gains, losses, charges, or
credits which appear on the Corporation’s books and records as the Committee deems appropriate,
provided that such exclusion or inclusion does not cause any Bonus Award to fail to constitute
“performance-based compensation” under Section 162(m) of the Code. An unusual and unforeseen item
may include, but shall not be limited to, major restructuring expenses, an item in the
Corporation’s financial statements reflecting a change in an accounting rule, tax law, or major
legislation not taken into consideration in the establishment of the Performance Goals. In
addition, the impact of a material dislocation in the U.S. economy or a substantive change in the
Corporation’s business plans also may be deemed to be such an extraordinary item. The dollar amount
of any Bonus Award determined under this Paragraph A. is referred to herein as the “Planned
Amount.”

B. The Committee may in its discretion reduce the Bonus Award for any Participant or
Participants for any fiscal year to an amount less than the Planned Amount if the Committee, in its
discretion, determines such reduction to be appropriate, taking into consideration such factors as
the Committee deems appropriate. In no event, however, shall any Bonus Award be reduced under this
Section VI.B. to less than eighty percent (80%) of the Planned Amount. Discretionary reductions in
Bonus Awards under this Paragraph B. may be made in different amounts or percentages for different
Participants, and may be based on considerations unique to a particular Participant and/or
considerations affecting the Corporation or all Participants generally. Under no circumstances
shall the Committee have any discretion to increase any Bonus Award to an amount greater than the
Planned Amount.

C. Notwithstanding the Performance Goals and the Planned Amounts, in no event shall any
Bonus Award payable to any one Participant under this Plan for any fiscal year exceed $2,500,000.

D. All Bonus Awards for any fiscal year shall be paid no later than thirty (30) days after
the Corporation files its Form 10-K with the Securities and Exchange Commission for such year.

E. No Bonus Award for a fiscal year shall be paid to a Participant whose employment with
the Corporation terminates (regardless of the reason for or circumstances of that termination)
prior to the last day of the fiscal year.

VII. SHAREHOLDER APPROVAL OF THE PLAN

This Plan shall become effective only after it has been submitted to and approved by a
separate vote of the shareholders of voting shares of the Corporation, by the affirmative vote of a
majority of the votes cast thereon. Until such approval has been obtained, no Participant shall be
entitled to be paid any Bonus Award hereunder. The particular Performance Goals established for any
fiscal year need not be approved by the shareholders. Once such shareholder approval is obtained,
no further shareholder approval shall be required in any subsequent fiscal year until and unless
required by the Code or the Regulations. If any material term of the Plan is changed, such that
reapproval by the shareholders is required under the Code or the Regulations, then no Bonus Awards
shall be payable to any Participant hereunder until such reapproval has been duly obtained.

 

 

 

VIII. SUCCESSORS AND ASSIGNS

A. If the Corporation sells, assigns or transfers all or substantially all of its business
and assets to any person, excluding affiliates of the Corporation, or if the Corporation merges
into or consolidates or otherwise combines with any person which is a continuing or successor
entity, then the Corporation shall assign all of its right, title and interest in this Plan as of
the date of such event to the person which is the acquiring or successor corporation, and such
person(s) shall assume and perform from and after the date of such assignment all of the terms,
conditions and provisions imposed by this Plan upon the Corporation.

B. In the case of such an assignment and assumption, all further rights, as well as all
other obligations of the Corporation under this Agreement, thenceforth shall cease and terminate
and thereafter the expression “the Corporation” wherever used herein shall be deemed to mean such
successor person(s).

IX. PLAN AMENDMENTS, DISCONTINUANCE

The Board of Directors may amend, suspend or discontinue this Plan at any time, provided that
the Performance Goals and the method by which the amount of Bonus Award is determined may not be
altered for any fiscal year after the Performance Goals for such year have been established except
in accordance with Section IV.B. of the Plan; and provided further, that the Plan may not be
suspended or discontinued for any fiscal year after the Performance Goals have been established for
such year.

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