Document:

Exhibit 10.1

Exhibit 10.1

TRICO INCENTIVE BONUS PLAN

2009

This Trico Marine Services, Inc. Annual Incentive Plan (the “Plan”) is adopted by Trico Marine
Services, Inc., a Delaware corporation (the “Company”). The terms of the Plan have been approved
by the Company’s Board of Directors and are as follows:

I. Purpose

The Plan is designed to increase shareholder value through effective use of performance-based
bonus awards. The Plan is intended to advance the best interests of the Company and its
subsidiaries by providing key employees with additional incentives through the grant of cash awards
based on the performance of the Company, the business segment and the employee, thereby increasing
the personal stake of such employees in the continued success and growth of the Company and
encouraging them to remain in the employ of the Company.

II. Term

The effective date of this Plan is January 1, 2006. The Plan will remain in effect for
successive fiscal years beginning on January 1, 2006 (each, a “Plan Year”).

III. Eligibility

The participants in this Plan shall be those employees of the Company who have been selected
by the CEO, and are approved by the Compensation Committee of the Company’s Board of Directors (the
“Compensation Committee”). Notwithstanding the foregoing, eligible employees must have been
full-time employees with the Company or any of its subsidiaries for at least three months of the
Plan Year and remain employed on a full-time basis through the bonus payment date for such Plan
Year. Directors who are not employees of the Company shall not be eligible to participate in the
Plan.

IV. Change in Eligibility Status

In making decisions regarding employees’ participation in the Plan, the CEO may consider any
factors that he or she may consider relevant. The following guidelines are provided as general
information regarding employee status changes upon the occurrence of the events described below,
provided that recommendation to include an employee in the Plan originates from the CEO:

	 	(a)	 	New hire, Transfer, Promotion. A newly hired, transferred or
promoted employee selected and approved as a Participant in the Plan after March 1
of the Plan Year may participate in the Plan on a pro rata basis as of the date the
Participant was approved into the Plan. A newly hired, transferred or promoted
employee selected and approved as a Participant in the Plan prior to March 1 of the
Plan Year may participate based on a full Plan Year.

	 	(b)	 	Demotion. An Incentive Award will generally not be made to an
employee who has been demoted during the Plan Year because of performance.

 

 

 

	 	(c)	 	Termination. An Incentive Award will generally not be made to
any Participant whose services are terminated prior to the payment of the Incentive
Award for reasons of misconduct, failure to perform or other cause.

	 	(d)	 	Resignation. An Incentive Award will generally not be made to
any Participant who resigns for any reason, including retirement, before the
Incentive Award is made. However, if the Participant has voluntarily terminated
his or her employment with the Company’s consent, the Participant may be considered
for a full year or pro rata Incentive Award, provided the Participant otherwise
qualifies for the Incentive Award.

	 	(e)	 	Death and Disability. A Participant whose status as an active
employee is changed prior to the payment of the Incentive Award for any reason
other than the reasons cited above may be considered for a pro rata Incentive
Award, provided the Participant otherwise qualifies for the Incentive Award. In
the event that an Incentive Award is made on behalf of an employee who has
terminated employment by reason of death, any such payments or other amounts due
will generally be paid to the Participant’s estate.

The above guidelines are subject to the terms of any applicable employment, severance or
similar agreements. Nothing in the Plan shall confer any right to any employee to continue in the
employ of the Company.

V. Performance-Based Bonus Awards

Subject to the following provisions, the CEO will determine, and recommend for approval by the
Compensation Committee, a Performance-Based Bonus Award (the “Award”) for selected employees. Each
grant of an Award shall specify the amount and nature of the Award to be received by the employee
subject to satisfaction of specified “Incentive Opportunities” within a specified “Performance
Period.”

(a) Performance Period. The Performance Period with respect to each Award shall be
the period of time within which the Incentive Opportunities relating to the Award are to be
achieved. Unless otherwise specified, the Performance Period shall be the then-current Plan
Year relating to the granting of the Award.

(b) Incentive Opportunities. The CEO will determine, and recommend for approval by
the Compensation Committee, Incentive Opportunities for each Participant. The Incentive
Opportunities will be defined as Incentive Opportunity Zones that represent a range of
threshold, target and maximum performance outcomes for which incremental proportional
increases in performance will result in incremental proportional increases in the Award.
Each Incentive Opportunity Zone will include threshold, target and maximum incentive
opportunities. The Participant’s target incentive opportunity will be based on the
Participant’s role and responsibilities, and will be expressed as a percentage of the
Participant’s base salary. The Participant’s threshold and maximum incentive opportunities
will be expressed as a Payout Multiple of the target incentive opportunity and will also be
based on the Participant’s role and responsibilities. The tables set forth on Exhibit
A outline the target Payout Multiples for certain Participant categories.

The target incentive opportunity as a multiple of base salary, and the resulting threshold
and maximum opportunities will be determined and approved in writing and kept on file for
each Participant.

 

2

 

(c) Performance Goals. Each Participant shall have specific performance goals (the
“Performance Goals”) determined for his or her position for the Plan Year. These
Performance Goals will be based on certain financial and non-financial performance measures
that support the approved business plan of the Company, and should identify how the
Participant will support the achievement of such goals.

Several performance categories will be used for each Participant:

	 	1.	 	Financial Performance 3⁄4 There will be one or more
performance measures with equal or different weights that may be used within
this category, including without limitation any one or more of the performance
criteria described below:

	 	•	 	Corporate EBITDA versus Plan;

	 	•	 	Division and Region EBITDA versus Plan expenses and the General and
Administrative Costs.

The Performance Goals for these financial measures will generally be based on
the Company’s financial plan for the relevant Plan Year as approved by the Board
of Directors.

	 	2.	 	Individual Performance 3⁄4 The Individual Performance Goals
will generally be based on those established using the Company’s annual
performance appraisal program and review of the general performance of the
individual by the employee’s supervisor. While the interpretation of how well
the Individual Performance Goals are met will be more subjective than for
financial measures, the following descriptions will be used to interpret
individual performance and are based on the measures as defined by the
performance appraisal process:

	 	•	 	Exceptional Performance — Performance and competency demonstration were
at an extraordinary level.

	 	•	 	Strong Performance — Performance and competency demonstration were above
expectations.

	 	•	 	Fully Met Performance Expectation — Performance and competency
demonstration fully met expectation.

	 	•	 	Acceptable Performance — Performance and competency demonstration met
most expectations but development or improvement is necessary in some
areas.

	 	•	 	Performance Requires Improvements — Performance and competency
demonstration were below expectations.

	 	3.	 	Safety — Refer to Exhibit C for a detailed explanation
of the components of this measure.

	 	4.	 	Vessel reliability, overall vessel costs and delivery of
newbuild and refurbished vessels — The measures will be defined by processes
and practices to eliminate any unplanned events by reducing down time that
results in lost revenue, maintaining the schedule of delivery of owned and time
chartered vessels and planned classification costs.

 

3

 

The target mix and weighting of the Performance Goals for each Participant will vary
depending on the Participant’s role and responsibilities, as set forth on Exhibit B.

For the financial performance measures, threshold, target and maximum Performance Goals will
be established and aligned within the Participant’s applicable Incentive Opportunity Zone as
defined above. Straight line (“proportional”) interpolation shall be used to determine the
actual performance of each financial measure. The threshold, target and maximum Performance
Goals for these financial measures, based on the Company’s plan for 2008 are set forth on
Exhibit C.

(d) Minimum Performance Requirements. For 2009, the minimum performance requirement
in order to receive an Award in accordance with the Plan is as follows:

	 	1.	 	Individual Performance at “Fully Met Performance Expectation”
or better.

(e) Distributions. To the extent it has been earned, an Award shall be distributed
in cash, and shall be paid in lump sum to the employee following approval by the Board of
Directors of the Company’s Plan Year financial statements. The payment of such Award shall
not be assigned, transferred, mortgaged or otherwise disposed of prior to actual receipt,
and any such attempt shall be null and void.

VI. Administration of the Plan

This Plan shall be administered by the Compensation Committee with oversight by the Board of
Directors. The Compensation Committee shall have the authority to interpret the provisions of this
Plan and make final decisions with respect to the entitlement of any employee to an Award. The
Committee shall also have the authority to review and approve any proposed amendments to the Plan
throughout the Plan Year. The Committee retains the right to discontinue or amend this Plan at any
time. The Committee may use discretion to adjust the Award levels to account for events that
impact the ability to meet the Incentive Opportunities described in Section V. The CEO will be
responsible for the interpretation and the day-to-day management of the Plan. The CEO shall also
make recommendations to the Committee for review and approval.

Nothing in this Plan is to be considered a guarantee of an Award. Any decisions by the
Compensation Committee, on behalf of the Board of Directors, are final and binding on all parties.

 

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VII. Exemption from Liability; Indemnification

The members of the Compensation Committee and the persons acting on behalf of the Compensation
Committee shall be free from liability for their acts, omissions, and conduct in the administration
of the Plan, except for those acts, omissions and conduct resulting from willful misconduct or lack
of good faith.

The Company shall indemnify each member of the Compensation Committee, the persons acting on
behalf of the Compensation Committee and any other employee, officer or director of the Company
against any claims, loss, damage, expense and liability, by insurance or otherwise, reasonably
incurred by the individual in connection with any action or failure to act by reason of performance
of an authorized duty or responsibility for or on behalf of the Company pursuant to the Plan unless
the same is judicially determined to be the result of the individual’s gross negligence or willful
misconduct. The foregoing right shall be in addition to any other rights to which such person may
be entitled to as a matter of law.

VIII. Additional Provisions

(a) Amendments. The Board of Directors may, in its sole discretion, discontinue
the Plan at any time, or amend it from time to time. The Compensation Committee shall have
the authority to amend any grant to include any provision which, at the time of such
amendment, is authorized under the terms of the Plan; however, after the end of any plan
year, no award that has been earned and not paid may be revoked.

(b) No Guaranty of Employment. The grant of an Award under the Plan shall not
constitute an assurance of continued employment during the Performance Period.

(c) Withholding. Payments under the Plan shall be net of an amount sufficient to
satisfy any federal, state or local withholding tax liability.

(d) Governing Law. This Plan shall be governed and construed under the laws of the
State of Texas.

 

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Exhibit A

Target Payout Multiples

The following tables set forth the target Payout Multiples for certain Participant categories
(where “X” equals the target incentive opportunity as a percentage of base salary):

	•	 	Chief Executive Officer — responsible for overall financial performance of the Company:

	 	 	 	 	 
	Threshold Multiple of Target	 	Target	 	Maximum Multiple of Target
	.50X
	 	1.00X
	 	2.00X

	•	 	Chief Financial and Administrative Officers —  includes executives with direct profit and
loss or overall financial responsibilities for the Company at the corporate level:

	 	 	 	 	 
	Threshold Multiple of Target	 	Target	 	Maximum Multiple of Target
	0.25X
	 	.60X
	 	1.20X

	•	 	Other Named Executive Officers — includes executives with direct profit and loss or
overall financial responsibilities for the Company at the corporate level:

	 	 	 	 	 
	Threshold Multiple of Target	 	Target	 	Maximum Multiple of Target
	0.25X
	 	.50X
	 	.100X

	•	 	Other Senior Management — includes senior corporate managers, profit center managers and
others with direct profit and loss or overall financial responsibilities for the Company:

	 	 	 	 	 
	Threshold Multiple of Target	 	Target	 	Maximum Multiple of Target
	0.20X
	 	.40X
	 	.80X

	•	 	Other Management — includes management level employees with direct or indirect profit and
loss at the divisional or regional level:

	 	 	 	 	 
	Threshold Multiple of Target	 	Target	 	Maximum Multiple of Target
	0.15X
	 	.30X
	 	.60X

	•	 	Key Employees — includes employees with management responsibilities and indirect profit
and loss responsibilities:

	 	 	 	 	 
	Threshold Multiple of Target	 	Target	 	Maximum Multiple of Target
	0.10X
	 	.20X
	 	.40X

 

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Exhibit B

Target Mix and Weighting of Performance Goals

Target mix and weighting of the Performance Goals for certain Plan Participants:

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	Corporate	 	 	Division	 	 	Region	 	 	New	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	EBITDA	 	 	EBITDA	 	 	EBITDA	 	 	Vessel	 	 	Vessel	 	 	 	 	 	 	 	 	 	 
	Group	 	Vs. Plan	 	 	vs. Plan	 	 	Vs. Plan	 	 	Delivery	 	 	Reliability	 	 	Safety	 	 	Individual	 	 	Total	 
	Senior Corporate
Management
	 	 	70	%	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	10	%	 	 	20	%	 	 	100	%
	Profit Center Managers
	 	 	35	%	 	 	35	%	 	 	 	 	 	 	 	 	 	 	 	 	 	 	10	%	 	 	20	%	 	 	100	%
	Country Managers
	 	 	15	%	 	 	25	%	 	 	25	%	 	 	 	 	 	 	 	 	 	 	15	%	 	 	20	%	 	 	100	%
	Corporate Support
	 	 	50	%	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	10	%	 	 	40	%	 	 	100	%
	Technical Services
	 	 	20	%	 	 	 	 	 	 	 	 	 	 	30	%	 	 	30	%	 	 	10	%	 	 	10	%	 	 	100	%

 

7

 

Exhibit C

Target Performance Goals

The following are threshold, target and maximum Performance Goals for financial measures to be
utilized in connection with the Plan:

	 	 	 	 	 	 	 
	 	 	Performance Goals
	 	 	Threshold	 	Target (Budget)	 	Maximum
	Performance Measure	 	Rate	 	Rate	 	Rate
	Safety — ESQS (1)
	 	 	 	 	 	 
	• Environment

	 	Increase in number of
incidents from prior year by
20%
	 	Same number of incidents as in
prior year
	 	Reduction by 20% of incidents
from prior year
	• Safety (TRIR)

	 	10% increase from Target TRIR
	 	Target TRIR
	 	10% reduction from Target TRIR
	• Safety (Operations)

	 	Increase in number of
incidents from prior year by
20%
	 	Same number of incidents as in
prior year
	 	Reduction by 20% of incidents
from prior year
	• Quality

	 	N/A
	 	No major non-conformities
	 	N/A
	• Security

	 	N/A
	 	No recordable security incidents
	 	N/A

	 	 	 
	(1)	 	Safety bonus would be forfeited in the event of a vessel related accidental death.

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	Threshold	 	 	Target (Budget)	 	 	Maximum	 
	 	 	 	 	% of	 	 	$	 	% of	 	 	$	 	% of	 
	Performance Measure	 	$ (millions)	 	Target	 	 	(millions)	 	Target	 	 	(millions)	 	Target	 
	Corporate EBITDA
	 	Threshold of Plan Target	 	 	75	%	 	Plan Target	 	 	100	%	 	Maximum of Plan Target	 	 	125	%

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	Threshold	 	 	Target (Budget)	 	 	Maximum	 
	 	 	 	 	% of	 	 	$	 	% of	 	 	$	 	% of	 
	Performance Measure	 	$ (millions)	 	Target	 	 	(millions)	 	Target	 	 	(millions)	 	Target	 
	Division EBITDA — CTC
	 	Threshold of Plan Target	 	 	75	%	 	Plan Target	 	 	100	%	 	Maximum of Plan Target	 	 	125	%
	Division EBITDA — DeepOcean
	 	Threshold of Plan Target	 	 	75	%	 	Plan Target	 	 	100	%	 	Maximum of Plan Target	 	 	125	%

 

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	 	 	Threshold	 	 	Target (Budget)	 	 	Maximum	 
	 	 	 	 	% of	 	 	$	 	% of	 	 	$	 	% of	 
	Performance Measure	 	$ (millions)	 	Target	 	 	(millions)	 	Target	 	 	(millions)	 	Target	 
	T&S Region EBITDA — North Sea
	 	Threshold of Plan Target	 	 	75	%	 	Plan Target	 	 	100	%	 	Maximum of Plan Target	 	 	125	%
	T&S Region EBITDA — US GoM
	 	Threshold of Plan Target	 	 	75	%	 	Plan Target	 	 	100	%	 	Maximum of Plan Target	 	 	125	%
	T&S Region EBITDA — Mexico
	 	Threshold of Plan Target	 	 	75	%	 	Plan Target	 	 	100	%	 	Maximum of Plan Target	 	 	125	%
	T&S Region EBITDA — Brazil
	 	Threshold of Plan Target	 	 	75	%	 	Plan Target	 	 	100	%	 	Maximum of Plan Target	 	 	125	%
	T&S Region EBITDA — W Africa
	 	Threshold of Plan Target	 	 	75	%	 	Plan Target	 	 	100	%	 	Maximum of Plan Target	 	 	125	%
	T&S Region EBITDA — SE Asia
	 	Threshold of Plan Target	 	 	75	%	 	Plan Target	 	 	100	%	 	Maximum of Plan Target	 	 	125	%

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	Threshold	 	 	Target (Budget)	 	 	Maximum	 
	 	 	 	 	% of	 	 	 	 	% of	 	 	 	 	% of	 
	Performance Measure	 	Measure	 	Target	 	 	Measure	 	Target	 	 	Measure	 	Target	 
	Vessel Reliability
	 	Reduce down time by 10%	 	 	75	%	 	Reduce down time by 20%	 	 	100	%	 	Reduce down time by 30%	 	 	125	%

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	Threshold	 	 	Target (Budget)	 	 	Maximum	 
	 	 	 	 	 	 	% of	 	 	 	 	 	 	% of	 	 	 	 	 	 	% of	 
	Performance Measure	 	Measure	 	 	Target	 	 	Measure	 	 	Target	 	 	Measure	 	 	Target	 
	Vessel Delivery
	 	 	N/A	 	 	 	75	%	 	Target vessel deliveries for 2009 per Plan	 	 	100	%	 	Vessels delivered 15 days prior to projected delivery dates	 	 	125	%

 

9Exhibit 10.1

EXHIBIT 10.1

HILL-ROM HOLDINGS, INC.

Amended and Restated Short-Term Incentive Compensation Program

ARTICLE I

PURPOSE AND DEFINITIONS

	1.1	 	Purpose. The purpose of this Program is to provide performance-based incentive awards, in
addition to regular salary, to eligible employees of Hill-Rom Holdings, Inc. and its
Subsidiaries. The Program provides the mechanism to pay amounts above the average total cash
compensation when the Company experiences above average financial success. The Program is
designed to encourage high individual and group performance and is based on the philosophy
that employees should share in the success of the Company if above average value is created
for Company shareholders.

1.2 Definitions:

	 	(a)	 	“Achievement Percentage” means a percentage determined in writing by the
Committee.

	 	(b)	 	“Base Incentive Compensation” means the amount determined in accordance with
Section 4.3.

	 	(c)	 	“Base Salary” means the annual calendar earnings of a Participant including
wages and salary as reported for federal income tax purposes, but excluding all bonus
payments of any kind, commissions, incentive compensation, equity based compensation,
long term performance compensation, perquisites and other forms of additional
compensation.

	 	(d)	 	“Board of Directors” or “Board” means the Board of Directors of Hill-Rom
Holdings, Inc.

	 	(e)	 	“Business Criteria” means one or more of the following financial indexes of the
Company or a Subsidiary for a Plan Year determined in accordance with the Company’s
accounting principles less certain non-reoccurring and/or non-expected events happening
in any Plan Year, as determined by the Committee: revenue, earnings per share, net
income, shareholder value growth, return on equity, cash flow, comparisons against
Standard & Poor’s indices and/or other indices, criteria or comparator groups, as
selected and approved by the Committee. The Business Criteria may include both
financial and non-financial
measures and may reflect achievement of tactical and strategic plans of a
Subsidiary.

 

 

 

	 	(f)	 	“Business Criteria Achievement” means the actual final result of a Business
Criteria for a Plan Year.

	 	(g)	 	“Cause” shall mean the Committee’s good faith determination that a Participant
has:

	 	(i)	 	Failed or refused to fully and timely comply with any
reasonable instructions or orders issued by the Employer, provided such
noncompliance is not based primarily on the Participant’s compliance with
applicable legal or ethical standards;

	 	(ii)	 	Acquiesced or participated in any conduct that is dishonest,
fraudulent, illegal (at the felony level), unethical, involves moral turpitude
or is otherwise illegal and involves conduct that has the potential, in the
Employer’s reasonable opinion, to cause the Employer, its related companies or
any of their respective officers or its directors embarrassment or ridicule;

	 	(iii)	 	Violated any Employer policy or procedure, specifically
including a violation of Hill-Rom Holdings, Inc.’s Code of Ethical Business
Conduct; or

	 	(iv)	 	Engaged in any act, which is contrary to its best interests or
would hold the Employer, its related businesses or any of their respective
officers or directors up to probable civil or criminal liability, excluding the
Participant’s actions in compliance with applicable legal or ethical standards.

	 	(h)	 	“CEO” means the Chief Executive Officer of the Company.

	 	(i)	 	A “Change in Control” means:

	 	(i)	 	the date that both of the following occur:

	 	(A)	 	any person, corporation, partnership,
syndicate, trust, estate or other group acting with a view to the
acquisition, holding or disposition of securities of the Company,
becomes, directly or indirectly, the beneficial owner, as defined in
Rule 13d-3 under the Securities Exchange Act of 1934 (“Beneficial
Owner”), of securities of the Company representing 35% or more of the
voting power of all securities of the Company having the right under
ordinary circumstances to vote at an election of the Board (“Voting
Securities”), other than by reason of (x) the acquisition of
securities of the Company by the Company or any Subsidiaries or any
employee benefit plan of the Company or any Subsidiaries, (y) the
acquisition of securities of the Company directly from the Company,
or (z) the acquisition of securities of the Company by one or more
members of the Hillenbrand Family (which term shall mean descendants
of John A. Hillenbrand and their spouses, trusts primarily for their
benefit or entities controlled by them), and

 

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	 	(B)	 	members of the Hillenbrand Family cease to be,
directly or indirectly, the Beneficial Owners of Voting Securities
having a voting power equal to or greater than that of such person,
corporation, partnership, syndicate, trust, estate or group;

	 	(ii)	 	the consummation of a merger or consolidation of the Company
with another corporation unless

	 	(A)	 	the shareholders of the Company, immediately
prior to the merger or consolidation, beneficially own, immediately
after the merger or consolidation, shares entitling such shareholders
to 50% or more of the voting power of all securities of the corporation
surviving the merger or consolidation having the right under ordinary
circumstances to vote at an election of directors in substantially the
same proportions as their ownership, immediately prior to such merger
or consolidation, of Voting Securities of the Company;

	 	(B)	 	no person, corporation, partnership, syndicate,
trust, estate or other group beneficially owns, directly or indirectly,
35% or more of the voting power of the outstanding voting securities of
the corporation resulting from such merger or consolidation except to
the extent that such ownership existed prior to such merger or
consolidation; and

	 	(C)	 	the members of the Board, immediately prior to
the merger or consolidation, constitute, immediately after the merger
or consolidation, a majority of the board of directors of the
corporation issuing cash or securities in the merger;

	 	(iii)	 	the date on which a majority of the members of the Board
consist of persons other than Current Directors (which term shall mean any
member of the Board on the date hereof and any member whose nomination or
election has been approved by a majority of Current Directors then on the
Board);

	 	(iv)	 	the consummation of a sale or other disposition of all or
substantially all of the assets of the Company; or

	 	(v)	 	the date of approval by the shareholders of Corporate of a plan
of complete liquidation of the Company.

 

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	 	(j)	 	“Committee” means the Compensation and Management Development Committee of the
Board appointed to administer the Program under Article II. Each Committee member
shall be an outside director for purposes of Section 162(m)(4) of the Internal Revenue
Code of 1986, as amended.

	 	(k)	 	“Company” means Hill-Rom Holdings, Inc. as a corporate holding company and does
not include Subsidiaries.

	 	(l)	 	“Disability” means a physical or mental disability by reason of which a
Participant is determined by the Office of the President or its delegate, to be
eligible (except for the waiting period) for permanent disability benefits under Title
II of the Federal Social Security Act.

	 	(m)	 	“Employer” means Hill-Rom Holdings, Inc., an Indiana Corporation, and its
Subsidiaries.

	 	(n)	 	“Executive Management Team” means the officers of the Corporation who report
directly to the CEO.

	 	(o)	 	“Incentive Compensation” means the Incentive Compensation as provided for in
Article IV.

	 	(p)	 	“Incentive Compensation Pool” means the aggregate amount of Base Incentive
Compensation for all Participants for any Plan Year.

	 	(q)	 	“Incentive Compensation Opportunity” means the percentage of Base Salary as
determined in accordance with Section 4.2.

	 	(r)	 	“Participant” means any individual who is a non-bargained for, full-time or
regular part-time employee of the Employer and is selected for participation in the
Program pursuant to Article III.

	 	(s)	 	“Percentage of Target One Achievement” means a percentage determined as of the
end of each Plan Year as follows:

(Business Criteria Achievement — Performance Base)  ̧ (Target One — Performance
Base.)

 

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	 	(t)	 	“Percentage of Target Two Achievement” means a percentage determined as of the
end of each Plan Year as follows:

(Business Criteria Achievement — Target One)  ̧ (Target Two — Target One)

	 	(u)	 	“Performance Base” means the base level of achievement of the Company or a
Subsidiary with respect to the Business Criteria, as determined in accordance with
Section 4.1.

	 	(v)	 	“Plan Year” means the fiscal year beginning on October 1st and ending on
September 30th. The first Plan Year shall begin on October 1, 2003.

	 	(w)	 	“Program” means the Hill-Rom Holdings, Inc. Short-Term Incentive Compensation
Program.

	 	(x)	 	“Subsidiary” means an operating company unit of which a majority equity
interest is owned directly or indirectly by the Company.

	 	(y)	 	“Target One” means a certain level of achievement of the Company or a
Subsidiary with respect to the Business Criteria, as determined in accordance with
Section 4.1.

	 	(z)	 	“Target Two” means a certain level of achievement of the Company or a
Subsidiary with respect to the Business Criteria which is greater than Target One as
determined in accordance with Section 4.1.

ARTICLE II

ADMINISTRATION

Full power and authority to construe, interpret, and administer the Program, including power
to establish, administer and certify performance goals related to Incentive Compensation is vested
in the Committee. Decisions of the Committee are final, conclusive and binding upon all parties,
including the Employer, the Company and its shareholders and the Participants. The Committee may
rely upon recommendations of the CEO, the Executive Management Team, or persons designated by the
Committee, in approving financial and non-financial goals recommended to it.

ARTICLE III

PARTICIPANTS

Participation in this Program by members of the Executive Management Team or any Company
corporate officer elected to such position by the Board shall be determined by the
Committee. Other Participants in this Program shall be determined by the CEO or if an
eligible employee is employed by a Subsidiary, then the Chief Executive Officer of such Subsidiary.

 

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ARTICLE IV

INCENTIVE COMPENSATION

	4.1	 	Establishment of Performance Base and Target. A Performance Base, Target One and Target Two
for the Company Vice Presidents as a group shall be recommended by the CEO and approved by the
Committee. The Performance Base, Target One and Target Two of a Participant who is otherwise
employed by the Company shall be established and approved by the CEO. The Performance Base,
Target One and Target Two of a Participant who is employed by a Subsidiary shall be
established and approved by the CEO and the Chief Executive Officer of each Subsidiary,
respectively. The Performance Base, Target One and Target Two shall be established annually
for the Company and each Subsidiary and will be communicated to each Participant.

	4.2	 	Base Salary as a Part Incentive Compensation. Incentive Compensation Opportunity is
established in writing annually by the Committee (within ninety (90) days of the start of each
Plan Year) in percentages up to but not exceeding the following:

	 	 	 	 	 
	Class of Participant	 	Incentive Compensation Opportunities	 
	 
	 	 	 	 
	Chief Executive Officer of the Company
	 	100% of Base Salary
	 
	 	 	 	 
	Chief Executive Officer of a Subsidiary
	 	75% of Base Salary
	 
	 	 	 	 
	Company Chief Financial Officer
	 	50% of Base Salary
	 
	 	 	 	 
	Company or Subsidiary Senior Executives
	 	50% of Base Salary
	 
	 	 	 	 
	Company or Subsidiary Executives
	 	40% of Base Salary
	 
	 	 	 	 
	Other Key Executives
	 	30% of Base Salary

	4.3	 	Base Incentive Compensation Calculation. Except as set forth in Section 4.5, attainment of
the Performance Base or below for a Plan Year shall result in Base Incentive Compensation of
0% of the Incentive Compensation Opportunity as set forth in Section 4.2 above. If Target Two
is met or exceeded for a Plan Year, Base Incentive Compensation shall be equal to the
Achievement Percentage multiplied by the amount of a Participant’s Incentive Compensation
Opportunity as set forth in Section 4.2 above. If Business Criteria Achievement is between
the Performance Base and Target One for a Plan Year, the Base Incentive Compensation shall be
equal to the Percentage of Target One Achievement multiplied by both (i) the amount of a
Participant’s Incentive Compensation Opportunity as set forth in Section 4.2 above and (ii) a
percentage equal to
one-half of the Achievement Percentage. If the Business Criteria Achievement is between
Target One and Target Two for a Plan Year, the Base Incentive Compensation shall be equal to
the amount of a Participant’s Incentive Compensation Opportunities set forth in Section 4.2
above multiplied by a percentage as determined under the following formula:

[1/2 Achievement Percentage plus (Percentage of Target Two Achievement times 1/2 Achievement
Percentage)]

 

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	4.4	 	Incentive Compensation. After the Business Criteria Achievement and Base Incentive
Compensation has been determined for each Plan Year, the Committee shall evaluate each
Participant on his or her individual performance goals. The Committee shall determine each
Participant’s Incentive Compensation based on individual financial and non-financial goals for
each Participant. The aggregate amount of Incentive Compensation that can be paid to all
Participants for any Plan Year shall not exceed the Incentive Compensation Pool for such Plan
Year. The Committee may create or authorize, with the assistance of the CEO, sub-pools for
Participants based on which Subsidiary they are employed by or any other criteria the
Committee deems appropriate, provided that the aggregate amount of all sub-pools cannot exceed
the Incentive Compensation Pool for any Plan Year. The aggregate amount of Incentive
Compensation that can be paid to all Participants in a sub-pool or combination of sub pools is
the aggregate amount of Base Incentive Compensation allocated by the Committee to such
sub-pool or combination of sub-pools.

	4.5	 	Non-Business Criteria Based Incentive Compensation. The Committee may establish a
“Non-Business Criteria Pool”. Once such a Non-Business Criteria Pool is established, the CEO
may, in his or her discretion (with approval from the Committee for Company Vice Presidents),
allocate all or some of the Non-Business Criteria Pool to all or some Participants and the
amount allocated to any Participants shall be the Participant’s Incentive Compensation under
the Program for the Plan Year.

	4.6	 	Payment of Incentive Compensation. Incentive Compensation shall be due and payable in cash
after forty (40) days but not later than seventy-five (75) days after the end of the Plan
Year.

	4.7	 	Election to Defer Compensation — Deferral Period. A Participant may elect to defer all or
any portion of his or her Incentive Compensation. A Participant’s written election to defer
any compensation must be made in the year before the beginning of the period of service,
ordinarily a Plan Year, during which such compensation would otherwise be paid.

	4.8	 	Termination of Employment. Subject to Section 4.9 below and the last sentence of this
section, termination of Participant’s employment prior to the last day of the Plan Year for
any reasons other than death, Disability or normal or early retirement (as determined under
the Company’s Pension Plan or Savings Plan) shall terminate a Participant’s right to any
non-deferred Incentive Compensation. Termination of employment because of
death, Disability or normal or early retirement shall result in a pro-ration of Incentive
Compensation based on the number of months employed during the Plan Year of a Participant’s
termination of employment. Upon a termination of employment for Cause at any time, a
Participant shall forfeit any and all payments due under this Program.

 

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	4.9	 	Change in Control. Upon a Change in Control, a Participant’s unpaid Incentive Compensation
for a Plan Year ending prior to the Change in Control shall in all events be paid in
accordance with Section 4.6. In addition, a Participant’s Incentive Compensation for the Plan
Year during which the Change in Control occurred shall in no event be less than the amount
calculated pursuant to Sections 4.2, 4.3, 4.4 and 4.5 above as if the Target (at 100%) had
been achieved. For purposes of such calculation, Base Salary shall mean such Participant’s
annualized Base Salary for the calendar year in which the Change in Control occurred times a
fraction, the numerator of which is the number of months from the start of the Plan Year up to
and including the month during which the Change in Control occurred and the denominator of
which is 12. Following a Change in Control, the Incentive Compensation under the Program
shall be paid out at the time specified in Section 4.6 above, provided, however, and
notwithstanding Section 4.8 above, that in the case of a Participant whose employment is
terminated prior to payout (for any reason other than on account of termination of employment
by the Company for Cause) the Incentive Compensation shall be paid out within 30 days of such
termination of employment. In the event of termination for Cause, the Incentive Compensation
shall be forfeited.

ARTICLE V

FINALITY OF DETERMINATION

Each determination made by the Committee and the CEO shall be final, binding and conclusive
for all purposes and upon all persons. The Committee may rely conclusively on the determinations
made by and information received from the Company’s independent public accountants or the Employer
employees with respect to action of the Committee.

ARTICLE VI

LIMITATIONS

No employee of the Employer or any other persons shall have any claim or right (legal,
equitable or other) to be granted any award under the Program, and no director, officer or employee
of the Employer, or any other person, shall have the authority to enter into any agreement with any
person for the making or payment of any award under the Program or to make any representation or
warranty with respect thereto.

Neither the action of the Company in establishing the Program nor any action taken by the
Company, the Committee, the Board of Directors, CEO, Executive Management Team, or any persons
designated by them to administer the Program, nor any provision of the Program, shall be construed
as giving to any Participant or employee of the Employer the right to be retained in the employ of
the Employer.

 

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ARTICLE VII

AMENDMENTS, SUSPENSION OR TERMINATION

The Board may discontinue the Program in whole or in part at any time and may from time to
time amend or revise the terms as permitted by applicable statute; provided, however, that no such
discontinuance, amendment, or revision shall effect adversely any right or obligation with respect
to any award theretofore made. No amendment shall require shareholder approval unless such
approval is otherwise required by law.

ARTICLE VIII

MISCELLANEOUS

	8.1	 	Effective Date. This Program was approved by the Board of Directors on August 18, 2003, and
became effective October 1, 2003.

	8.2	 	Governing Law. This Program shall be governed by and construed in accordance with the laws
of the State of Indiana.

 

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