Document:

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                                                                    EXHIBIT 10.6

                      ELI LILLY AND COMPANY EVA BONUS PLAN

               (As amended and restated effective January 1, 2002)

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                                TABLE OF CONTENTS

<S>                   <C>                                                       <C>
ARTICLE I             BONUS PLAN STATEMENT OF PURPOSE AND SUMMARY............   1

ARTICLE II            DEFINITIONS OF CERTAIN TERMS...........................   1

ARTICLE III           DEFINITION AND COMPONENTS OF EVA.......................   2

ARTICLE IV            DEFINITION AND COMPUTATION OF THE EVA BONUS............   3

ARTICLE V             PLAN ADMINISTRATION....................................   5

ARTICLE VI            GENERAL PROVISIONS.....................................   7

ARTICLE VII           LIMITATIONS............................................   8

ARTICLE VIII          COMMITTEE AUTHORITY....................................   8

ARTICLE IX            NOTICE.................................................   9

ARTICLE X             EFFECTIVE DATE.........................................   9

ARTICLE XI            AMENDMENTS AND TERMINATION.............................  10

ARTICLE XII           APPLICABLE LAW.........................................  10
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                                    ARTICLE I

                   BONUS PLAN STATEMENT OF PURPOSE AND SUMMARY

1.1      The purpose of the Plan is to provide a system of bonus compensation
         for selected employees of Eli Lilly and Company and subsidiaries which
         will promote the maximization of shareholder value over the long term,
         by linking performance incentives to increases in shareholder value.
         The Plan ties bonus compensation to Economic Value Added ("EVA"), and
         thereby rewards employees for long-term, sustained improvement in
         shareholder value. The Plan is intended to satisfy the requirements for
         providing "performance-based" compensation under Section 162(m) of the
         Internal Revenue Code.

1.2      EVA will be used as the performance measure of value creation. EVA
         reflects the benefits and costs of capital employment. Employees create
         economic value when the operating profits from a business exceed the
         capital charge associated with the capital assets employed.

                                   ARTICLE II

                          DEFINITIONS OF CERTAIN TERMS

Unless the context requires a different meaning, the following terms shall have
the following meanings:

2.1      "Company" means Eli Lilly and Company and its subsidiaries.

2.2      "Committee" means the Compensation Committee, the members of which
         shall be selected by the Board of Directors of Eli Lilly and Company
         from among its members. Each Committee member shall, at all times while
         serving, satisfy the requirements of an "outside director" within the
         meaning of Section 162(m).

2.3      "Participant" means any employee of the Company designated by the
         Committee as a participant in the Plan with respect to any Plan Year.
         In its discretion, the Committee may designate Participants either on
         an individual basis or by determining that all employees in specified
         job categories, classifications or levels shall be Participants.

2.4      "Plan" means this Eli Lilly and Company EVA Bonus Plan.

2.5      "Plan Year" means the applicable calendar year.

2.6      "Retirement" means the cessation of employment upon the attainment of
         at least eighty age and benefit years of service points, as determined
         by the provisions of The Lilly Retirement Plan as amended from time to
         time, assuming eligibility to participate in that plan.

2.7      "Disability" means the time at which a Participant becomes eligible for
         a payment under The Lilly Extended Disability Plan, assuming
         eligibility to participate in that plan.

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2.8      "Section 162(m)" means Section 162(m) of the Internal Revenue Code of
         1986, as amended.

2.9      "Section 162(m) Participant" means a Participant who, in the
         determination of the Committee, is or may in the future become a
         "covered employee" under Section 162(m).

                                   ARTICLE III

                        DEFINITION AND COMPONENTS OF EVA

The following terms set forth the calculation of EVA and the components of
calculating EVA. The calculation of EVA for a Plan Year is used in determining
the bonuses earned by Participants under the Plan, as set forth in Article IV.

3.1      "Economic Value Added" or "EVA" means the excess NOPAT that remains
         after subtracting the Capital Charge.

3.2      "Net Operating Profit After Tax" or "NOPAT" means the after tax
         operating earnings of the Company for the Plan Year. NOPAT is
         determined by adding net sales plus other net income and subtracting
         the following: cost of goods sold, marketing and administrative
         expenses (excluding goodwill amortization and interest expense),
         amortization of research and development, taxes (excluding the tax
         benefit of interest expense) and amounts associated with discontinued
         operations.

3.3      "Capital Charge" means the deemed opportunity cost of employing capital
         for the Company. The Capital Charge is calculated by multiplying
         Operating Capital times Operating Cost of Capital (OC*) and Cash
         Capital times Non-operating Cost of Capital (NOC*), then summing the
         two products.

3.4      "Operating Capital" means the net investment employed in the operations
         of the Company produced by operations. Operating Capital is calculated
         by adding together current assets (excluding cash and short-term
         marketable securities), net property, plant and equipment, gross
         goodwill, net intangibles, other assets, and capitalized research and
         development, and the present value of operating leases, and subtracting
         the following: non-interest bearing liabilities and capital associated
         with discontinued operations.

3.5      "Cash Capital" means the aggregate balances of any cash plus short-term
         marketable securities.

3.6      "Cost of Operating Capital" or "OC*" is the percentage calculated from
         the weighted average of Cost of Debt and Cost of Equity. Cost of
         Operating Capital for each Plan Year is determined by the Chief
         Financial Officer and approved by the Committee.

3.7       "Cost of Non-operating Capital" or "NOC*" is the after-tax opportunity
          cost of capital associated with Cash Capital, as deemed appropriate
          for Cash Capital by the Chief Financial Officer and approved by the
          Committee.

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3.8      "Cost of Debt" capital is the marginal long-term borrowing rate
         adjusted for the credit rating of the Company times (one minus the tax
         rate).

3.9      "Cost of Equity" capital is the risk-free rate plus (beta times the
         market risk premium). For this purpose, the risk-free rate, the beta
         and the market risk premium are determined by the Chief Financial
         Officer and approved by the Committee.

                                   ARTICLE IV

                   DEFINITION AND COMPUTATION OF THE EVA BONUS

Bonuses earned under the Plan for a Plan Year are determined based on a
comparison of actual EVA to the "Target EVA" for the year, which is established
as described below to motivate improvement in EVA from year to year. The result
of this comparison is adjusted by a "Leverage Factor" measuring the volatility
of industry EVA returns. The factor produced is referred to as the "Bonus
Multiple," which is multiplied by the Participant's applicable "Target Bonus"
amount established for the year to produce the actual bonus earned. This amount,
referred to as the "Declared Bonus," is credited to the Participant's "Bonus
Bank" balance and paid out in the manner provided below.

4.1      Target Bonus. The Target Bonus Award will be determined by the
         Committee on a basis that takes into consideration a Participant's
         salary grade level, job responsibilities as well as past and expected
         future job performance. Target Bonus Awards for a particular Plan Year
         are expressed as a percentage of annual base salary as in effect on the
         fixed annual merit date in that Plan Year or on the first day of the
         Plan Year if there is no merit date in a given Plan Year. Early in the
         Plan Year, each Participant (except executive officers and Section
         162(m) Participants) will receive three Target Bonus Awards to
         correspond with each of the three performance ratings. The actual
         Target Bonus used to calculate the Declared Bonus will be determined by
         the individual's performance rating for the given Plan Year as
         determined by the individual's supervision, except as otherwise
         provided in Article V. Executive officers (as determined in accordance
         with regulations under the Securities Exchange Act of 1934) and Section
         162(m) Participants shall receive a single Target Bonus Award.

         The Target Bonus will be based on the currency in which the highest
         portion of base pay is regularly paid. The Committee shall determine
         the appropriate foreign exchange conversion methodology in its
         discretion.

4.2      Declared Bonus.  A Declared Bonus is the applicable Target Bonus times
         the Bonus Multiple.

4.3      Bonus Multiple. The Bonus Multiple is Actual EVA less Target EVA
         (positive or negative), divided by the Leverage Factor, plus one. In
         years in which the Bonus Multiple is equal to or less than zero, the
         Target Bonus used to calculate the Declared Bonus will be the Target
         Bonus associated with the "Successful" or middle performance rating.

4.4      Bonus Bank. All bonus payments are made from the Bonus Bank. Each
         Participant's beginning Bonus Bank balance in his/her first year of
         participation is zero. The Bonus Bank

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         is increased or decreased for any Plan Year by the amount of Declared
         Bonus. If the available Bonus Bank balance after the inclusion of the
         Declared Bonus is positive, the Participant will be paid from such
         balance up to the applicable Target Bonus Award, plus one third of any
         such balance that remains after subtracting the Target Bonus Award from
         the available Bonus Bank balance. If the available Bonus Bank balance
         is zero or negative, no payment will occur. After any payment as
         calculated above, the beginning Bonus Bank balance for the subsequent
         Plan Year shall be as follows:

         (a)      Any positive balance shall be carried forward as the new
                  beginning Bonus Bank balance.

         (b)      Any negative balance resulting from a negative Bonus Multiple
                  shall be carried forward as the new beginning (negative) Bonus
                  Bank balance; provided, however, that not later than 90 days
                  after the commencement of a Plan Year, the Committee may
                  determine in its discretion that, with respect to that
                  particular Plan Year, in the event a Declared Bonus for the
                  Plan Year would result in a negative beginning Bonus Bank
                  balance for the subsequent Plan Year, such Bonus Bank balance
                  would be reset at zero.

         (c)      If the Bonus Bank balance has been completely depleted because
                  of a Bonus Multiple between zero and 1.0, the new beginning
                  Bonus Bank balance shall be zero.

4.5      Target EVA. The Target EVA for each year will be calculated as follows:

         Target EVA = Prior Year's Actual EVA + Expected Improvement

4.6      Expected Improvement. The Expected Improvement is the additional EVA
         amount determined by the Committee that is used to assure that a
         minimum level of improvement is achieved in order to earn target
         awards.

4.7      Leverage Factor. The Leverage Factor determines the rate of change in
         bonuses as EVA surpasses or falls short of Target EVA, determined by
         the Committee from an evaluation of the long term volatility of
         industry returns.

4.8      Section 162(m) Requirements, Bonus Maximum. In the case of Section
         162(m) Participants, all determinations necessary for computing
         Declared Bonuses for a Plan Year, including establishment of all
         components of the EVA calculation and of the Target Bonus percentages,
         shall be made by the Committee not later than 90 days after the
         commencement of the Plan Year. As and to the extent required by Section
         162(m), the terms of a Declared Bonus for a Section 162(m) Participant
         must state, in terms of an objective formula or standard, the method of
         computing the amount of compensation payable to the Section 162(m)
         Participant, and must preclude discretion to increase the amount of
         compensation payable that would otherwise be due under the terms of the
         award. Notwithstanding anything elsewhere in the Plan to the contrary,
         the maximum amount of the Declared Bonus that may be paid from the
         Bonus Bank to a Section 162(m) Participant during any one calendar year
         shall be $5 million.

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                                    ARTICLE V

                               PLAN ADMINISTRATION

5.1      Time of Payment. Payment from the Bonus Bank will be made before April
         1 of the year following the Plan Year.

5.2      Certification of Results. Before any amount is paid under the Plan, the
         Committee shall certify in writing the calculation of EVA for the Plan
         Year and the satisfaction of all other material terms of the
         calculation of the Declared Bonus.

5.3      New Hires and New Participants. New hires or individuals promoted who
         are first selected for participation by the Committee effective on a
         date other than January 1 will participate on a pro-rata basis in their
         first year of participation, based on the Declared Bonus determined for
         the Plan Year, pro-rated for that period of the year during which the
         Participant was selected for participation in the Plan. Any such
         Participant's Target Bonus Award for that Plan Year will be determined,
         as applicable, based on his or her annual base salary as in effect on
         (i) the fixed annual merit date in that Plan Year, (ii) January 1 in
         years when there is no merit date in that Plan Year, or (iii) on the
         date of hire or promotion if hired or promoted after the fixed annual
         merit date in that Plan Year. For purposes of pro-rating, the
         individual's performance rating at the end of the Plan Year will apply
         to the entire Plan Year. Notwithstanding the foregoing, in the case of
         any Section 162(m) Participant who is first selected by the Committee
         to participate in the Plan after January 1 of a Plan Year, such
         Participant's Declared Bonus may be determined, at the discretion of
         the Committee exercised at the time such participation begins, in a
         manner that complies with the requirements for "performance-based
         compensation" under Section 162(m).

5.4      Promotions of Existing Participants. If an existing Participant is
         promoted effective on a date other than January 1 to a position that is
         rated global job level ("G-level") G-6 or above but is not an executive
         officer or Section 162(m) Participant, he/she will receive a Declared
         Bonus that is pro-rated based on a proration calculation methodology to
         be determined by the vice president responsible for human resources in
         his or her discretion. Such methodology will address the date of the
         promotion, base salary(ies), Target Bonus percentage(s), and
         performance rating(s). Such vice president will also have discretion to
         pro-rate, using the same or a different methodology, in the case of
         promotions of existing Participants to positions with a G-level lower
         than G-6. If an existing Participant is promoted effective on a date
         other than January 1 to an executive officer and/or Section 162(m)
         Participant position, he/she will receive a Declared Bonus that is
         pro-rated according to time based on the date of promotion and the
         Target Bonus percentage and base salary applicable to each such
         position.

5.5      Termination of Employment. If a Participant ceases employment with the
         Company on or before the last day of a Plan Year for reasons other than
         Retirement, Disability or death, the Participant shall receive no
         Declared Bonus for that Plan Year, and his/her Bonus Bank balance shall
         be forfeited. The Committee may make complete or partial exceptions to
         this rule, in its sole discretion, and, with respect to employees other
         than executive officers, may delegate to the vice president responsible
         for human resources the authority to make such

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         exceptions. Notwithstanding the foregoing, with respect to the Declared
         Bonus for a Section 162(m) Participant, any such termination of
         employment shall result in payment of a bonus based on the Declared
         Bonus determined for the Plan Year but pro-rated for the period of the
         year prior to such event, subject to the Committee's discretion to
         forfeit all or any portion of such bonus, and the Bonus Bank balance
         shall be forfeited as well.

5.6      Demotions. If an existing Participant who is not an executive officer
         or Section 162(m) participant is demoted to a non-global job level ("G
         level") position or to a lower G-level position on a date other than
         January 1, he/she will receive a Declared Bonus that may be pro-rated
         based on a proration calculation methodology to be determined by the
         vice president responsible for human resources in his or her
         discretion. Such methodology will address the date of the demotion,
         base salary(ies), Target Bonus percentage(s), and performance
         rating(s). If an executive officer and/or Section 162(m) Participant is
         demoted to a lower G-level position on a date other than January 1,
         he/she will receive a Declared Bonus that is pro-rated according to
         time based on the date of demotion and the Target Bonus percentage and
         base salary applicable to each such position.

5.7      Leave of Absence. If a Participant is on an approved leave of absence
         from employment during part of a Plan Year, the Participant shall
         receive a Declared Bonus for the Plan Year based on the Declared Bonus
         determined for the full Plan Year but pro-rated for the period of the
         year that the Participant was actively employed by the Company, subject
         to the Committee's discretion to forfeit all or any portion of such
         bonus. For purposes of pro-rating, the Participant's last performance
         rating (interim or annual) before commencement of the leave will be
         used to determine the Declared Bonus. A Participant who is on an
         approved leave of absence for an entire Plan Year will not receive a
         Declared Bonus for that Plan Year. The Participant will retain his
         Bonus Bank balance if he returns to employment immediately following
         the approved period of leave of absence.

5.8      Retirement, Disability or Death. If a Participant ceases employment
         with the Company on or before the last day of the Plan Year because of
         Retirement, Disability or death, the Participant or personal
         representative, as the case may be, shall receive into his or her Bonus
         Bank before April 1 of the next year a Declared Bonus based on the
         Declared Bonus determined for the Plan Year but pro-rated for that
         period of the Plan Year during which the Participant was an active
         employee of the Company. For purposes of pro-rating, the Participant's
         last performance rating (interim or annual) before termination of
         employment will be used to determine the Declared Bonus. Following
         payment of such bonus in accordance with Section 4.4, any remaining
         positive Bonus Bank balance shall be paid.

5.9      Plan Participation. A Participant may not participate in this Plan for
         any portion of a Plan Year for which he/she is entitled to receive
         payment under the Eli Lilly and Company Contingent Compensation Plan,
         The Eli Lilly and Company Premier Rewards Plan, or such other bonus
         program of the Company or a subsidiary or affiliate of the Company as
         may be specifically designated by the Committee or its designee. Such
         Participants will participate in this Plan on a pro-rata basis, based
         on the Declared Bonus for the Plan Year, pro-rated for that period of
         the year during which the Participant participated in this Plan.
         Alternatively, the Committee or its designee may determine that the
         Participant who is eligible to

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         participate in such other plan may continue to participate in this Plan
         but with reduced Target Bonus Awards for any period during which the
         Participant is also participating in such other plan.

5.10     Forfeiture Events. Notwithstanding any other provision of this Plan to
         the contrary, the Committee may, in its sole discretion, upon the
         occurrence of a Forfeiture Event (as defined below), forfeit all or any
         portion of a Participant's Declared Bonus and Bonus Bank balance and
         terminate such Participant's future participation in the Plan. For
         purposes hereof, a "Forfeiture Event" shall mean the occurrence of one
         or more of the following events with respect to a Participant: (i) the
         termination or forced resignation from employment of the Participant
         for "misconduct" (as defined in the Company's Employee Information
         Handbook), (ii) any violation by the Participant of The Red Book:
         Standards of Business Conduct that is detrimental to the Company, (iii)
         any breach of a noncompetition, nonsolicitation, nondisclosure or other
         restrictive covenant that may apply by written agreement between the
         Company and the Participant or (iv) Participant's having engaged in any
         other activity that, in the judgment of the Committee, is detrimental
         to the business, affairs or reputation of the Company (including,
         without limitation, engaging in any criminal activity). Except with
         respect to executive officers, the Committee may delegate the authority
         granted under this section to the vice president responsible for human
         resources.

                                   ARTICLE VI

                               GENERAL PROVISIONS

6.1      Withholding of Taxes. The Company shall have the right to withhold the
         amount of taxes which in the sole determination of the Company are
         required to be withheld under law with respect to any amount due or
         payable under the Plan.

6.2      Expenses. All expenses and costs in connection with the adoption and
         administration of the Plan shall be borne by the Company.

6.3      No Prior Right or Offer, No Right to Future Participation.
         Participation in the Plan for Plan Years is determined from
         year-to-year by the Committee in its sole discretion. Except and until
         expressly granted pursuant to the Plan, nothing in the Plan shall be
         deemed to give any employee any contractual or other right to
         participate in the benefits of the Plan. No award to any such
         Participant in any Plan Year shall be deemed to create a right to
         receive any award or to participate in the benefits of the Plan in any
         subsequent Plan Year.

6.4      Rights Personal to Employee. Any rights provided to an employee under
         the Plan shall be personal to such employee, shall not be transferable,
         except by will or pursuant to the laws of descent or distribution, and
         shall be exercisable during his/her lifetime, only by such employee, or
         a court-appointed guardian for the employee.

6.5      Non-Allocation of Award. In the event of a suspension of the Plan in
         any Plan Year, as described in Section 11.1, no awards under the Plan
         for the Plan Year during which such

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         suspension occurs shall affect the calculation of awards for any
         subsequent period in which the Plan is continued.

                                   ARTICLE VII

                                   LIMITATIONS

7.1      No Continued Employment. Neither the establishment of the Plan nor the
         grant of an award thereunder shall be deemed to constitute an express
         or implied contract of employment of any Participant for any period of
         time or in any way abridge the rights of the Company to determine the
         terms and conditions of employment or to terminate the employment of
         any employee with or without notice or cause at any time.

7.2      No Vested Rights. Except as expressly provided herein, no employee or
         other person shall have any claim of right (legal, equitable, or
         otherwise) to any award, allocation, or distribution or any right,
         title, or vested interest in any amounts in his/her Target Bonus or
         Bonus Bank and no officer or employee of the Company or any other
         person shall have any authority to make representations or agreements
         to the contrary.

7.3      Non-alienation. No interest conferred herein to a Participant shall be
         assignable or subject to claim by a Participant's creditors. Except as
         provided in Subsection 6.1, no Participant or other person shall have
         any right or power, by draft, assignment, or otherwise, to mortgage,
         pledge or otherwise encumber in advance any payment under the Plan, and
         every attempted draft, assignment, or other disposition of any interest
         or payment under this Plan shall be absolutely void.

                                  ARTICLE VIII

                               COMMITTEE AUTHORITY

8.1      Authority to Interpret and Administer. Except as otherwise expressly
         provided herein, full power and authority to interpret and administer
         this Plan shall be vested in the Committee. The Committee may from time
         to time make such decisions and adopt such rules and regulations for
         implementing the Plan as it deems appropriate for any Participant under
         the Plan. Except as to Participants who are treated by the Company as
         executive officers of the Company for federal securities law reporting
         purposes (including any Section 162(m) Participant), the Committee may
         delegate in writing to officers or employees of the Company the power
         and authority granted by this Section 8.1 to interpret and administer
         this Plan. Any decision taken by the Committee or officer or employee
         to whom authority has been delegated, arising out of or in connection
         with the construction, administration, interpretation and effect of the
         Plan shall be final, conclusive and binding upon all Participants and
         any person claiming under or through Participants.

8.2      Adjustments for Significant Events. Prior to the beginning of a Plan
         Year, the Committee may specify with respect to Declared Bonuses for
         the Plan Year that EVA will be

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<PAGE>

         determined before the effects of acquisitions, divestitures,
         restructurings or changes in corporate capitalization, accounting
         changes, and/or events that are treated as extraordinary items for
         accounting purposes; provided that such adjustments shall be made only
         to the extent permitted by Section 162(m) in the case of Section 162(m)
         Participants.

8.3      Financial And Accounting Terms. Except as otherwise provided, financial
         and accounting terms, including terms defined herein, shall be
         determined by the Committee in accordance with generally accepted
         accounting principles and as derived from the audited consolidated
         financial statements of the Company, prepared in the ordinary course of
         business.

8.4      Section 162(m) Deferrals. To the extent that, notwithstanding the terms
         of the Plan, the Company's tax deduction for remuneration in respect of
         the payment of bonuses under the Plan to a Section 162(m) Participant
         would be disallowed under Section 162(m) by reason of the fact that
         such Participant's applicable employee remuneration, as defined in
         Section 162(m), either exceeds or, if such bonus were paid, would
         exceed the $1,000,000 limitation in Section 162(m), any such excess (as
         determined by the Committee in its sole discretion) shall be
         automatically deferred under the terms of The Lilly Deferred
         Compensation Plan. Payment of any deferred amounts shall be made to the
         Participant in the first year thereafter that the Company's tax
         deduction in respect of the payment would not be disallowed under
         Section 162(m).

                                   ARTICLE IX

                                     NOTICE

9.1      Any notice to be given to the Company or Committee pursuant to the
         provisions of the Plan shall be in writing and directed to Secretary,
         Eli Lilly and Company, Lilly Corporate Center, Indianapolis, IN 46285.

                                    ARTICLE X

                                 EFFECTIVE DATE

10.1     This Plan, as amended and restated herein, shall be effective for the
         Plan Year commencing January 1, 2002. The terms of this restated plan
         shall apply to Declared Bonuses earned in 2002 and future Plan Years.
         All Declared Bonuses earned in Plan Years prior to 2002 shall be
         payable in accordance with the terms of the Plan as in effect for the
         year to which the Declared Bonus relates. The final Plan Year of this
         Plan, unless amended or terminated by the Board (or the Committee) and
         approved by the stockholders to the extent provided in Article XI,
         shall be the 2007 Plan Year.

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<PAGE>

                                   ARTICLE XI

                           AMENDMENTS AND TERMINATION

11.1     This Plan may be amended, suspended or terminated at any time at the
         discretion of the Board of Directors of Eli Lilly and Company, and may,
         except for this Section 11.1, be amended at any time by the Committee.
         Solely to the extent deemed necessary or advisable by the Board (or the
         Committee) for purposes of complying with Section 162(m), the Board (or
         the Committee) may seek the approval of any such amendment by the
         Company's stockholders. Any such approval shall be by the affirmative
         votes of a majority of the stockholders of the Company present, or
         represented, and entitled to vote at a meeting duly held in accordance
         with applicable state law and the Articles of Incorporation and By-laws
         of the Company. The material terms of EVA must be disclosed to and
         reapproved by the stockholders of the Company no later than the
         Company's annual meeting of stockholders that occurs in the year 2003.

                                   ARTICLE XII

                                 APPLICABLE LAW

12.1     This Plan shall be governed by and construed in accordance with the
         provisions of the laws of the State of Indiana without regard to the
         conflicts-of-law principles of Indiana.

                                      -10-Summary of Long Term Incentive Plan

 

Exhibit 10.13

Summary of Butler Manufacturing Long Term Incentive Plan

     The Long Term Incentive Plan (“LTIP” or “Plan”) is an additional component in
our executive compensation package. It is designed to reward efforts for good
financial results while enhancing the ability to earn long-term rewards. The
objective of this Plan is to improve overall results, to balance short-term and
long-term goals, tie pay to performance, pay competitively, and focus the senior
management team on creating shareholder value.

     The LTIP is a long-term incentive plan. It is designed to reward with both stock
ownership and cash to executives whose leadership create value and generate
returns for shareholders. The Plan contemplates:

	 	•	 	Annual stock option grants;
	 
	 	•	 	A performance measurement based on total business return; and
	 
	 	•	 	Three year performance period.

     Corporate Officers and Division Presidents are eligible to participate in the
Plan. Participants who become eligible during a performance cycle will receive a
prorated share of the awards.

PLAN COMPONENTS

     The LTIP has two components, annual stock option grants and a Long Term Cash
Performance Plan (LTCPP).

     Annual Stock Option Grants

     Subject to stockholder approval of our 2002 Stock Incentive Plan at our annual
meeting being held in April 2002, the Plan contemplates annual grants of stock
options in order to promote stock ownership by executives. All stock option
grants are subject to Board discretion and approval. Stock options will have a
10-year term.

     Long Term Cash Performance Plan (“LTCPP”)

     The goal of the LTCPP is to reward executives for value creation with Butler. We
chose “total business return” on company wide results to be our method of
measuring value creation. Total business return is a function of three
variables: investment, NOPAT (net operating profit after tax), and the cost of
capital. We calculate total business return by (i) dividing changes in net
operating profit after taxes by the weighted average cost of capital (ii) adding
free cash flow for the three year period and (iii) dividing the result by
beginning investment levels. As a benchmark, our total business return for the
three years ended December 31, 2000 was 32%.

     The LTCPP contemplates three year performance cycles, each cycle commencing at
the beginning of each year, the first of which began on January 1, 2001. At the
beginning of each cycle, the Board’s Compensation Committee will establish
threshold, target and maximum total business return performance standards upon
which awards will be based and the dollar amount of the award to be paid at the
target level for each executive officer participating in the LTCPP. At the end
of each three year performance period, actual awards will be determined as a
percentage of the target awards, based on Butler’s

1

 

three year total business return. Awards will be paid in cash, subject to
withholding, and we expect executives to use one third of any award to purchase
Company stock.

     If a participant’s employment ends due to:

	 	•	 	Death, retirement, permanent disability — The executive and his or her
beneficiary may be paid the portion of the LTCPP award covering the time of
the performance period that he or she was actively employed, at the
discretion of the Board Compensation and Benefits Committee.
	 
	 	•	 	Termination (voluntary or involuntary) — The executive forfeits any
unpaid LTCPP award amounts.

2

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