Document:

EX-10(DD)

 

Exhibit 10(DD)

FIFTH AMENDMENT TO

THE SCOTTS COMPANY

EXECUTIVE RETIREMENT PLAN

     WHEREAS, The Scotts Company (“Scotts”) previously adopted The Scotts Company Incentive Pay
Deferral Plan, subsequently amended and restated effective January 1, 1999 as The Scotts Company
Executive Retirement Plan (the “Plan”); and

     WHEREAS, on March 18, 2005 (the “Effective Time”), Scotts consummated the restructuring of
Scotts’ corporate structure into a holding company structure by merging Scotts into a wholly-owned
second-tier Ohio limited liability company subsidiary, The Scotts Company LLC (the “Company”),
pursuant to the Agreement and Plan of Merger, dated as of December 13, 2004 (the “Merger
Agreement”), by and among Scotts, The Scotts Miracle-Gro Company (“Scotts Miracle-Gro”) and the
Company; and

     WHEREAS, in connection with and as a result of the merger of Scotts into the Company, the
Company assumed, as of the Effective Time, the Plan and all obligations and liabilities of Scotts
thereunder; and

     WHEREAS, Section XI of the Plan provides that the Administrative Committee for the Plan may
amend, modify or terminate the Plan;

     NOW, THEREFORE, effective as of March 18, 2005, the Plan is amended as follows to reflect the
Company’s assumption of the Plan:

     1. The title of the Plan is amended to be “The Scotts Company LLC Executive Retirement Plan.”

     2. Section I of the Plan is amended and restated to read, in its entirety, as follows: The
Scotts Company LLC Executive Retirement Plan provides Eligible Employees with the opportunity to
defer bonuses (under the Executive Annual Incentive Plan) and compensation, and supplements the
benefits of Eligible Employees under The Scotts Company LLC Retirement Savings Plan. The benefits
under the Plan are to be provided from the Plan on an unfunded basis. It is intended that the Plan
be exempt from the funding, participation, vesting and fiduciary provisions of Title I of ERISA.

     3. The definition of “Administrative Committee” contained in Section II of the Plan is amended
and restated to read, in its entirety, as follows: “Administrative Committee” means (a) the
administrative committee appointed to administer the tax qualified retirement plans which are also
sponsored by the Employer or (b) any person or entity to which the Administrative Committee
delegates any of the administrative or ministerial duties assigned to it in this Plan.

     4. The definition of “Board” contained in Section II of the Plan is deleted in its entirety.

     5. The definition of “Company Stock Fund” contained in Section II of the Plan is amended and
restated to read, in its entirety, as follows: “Company Stock Fund” means a fund consisting of
common shares of The Scotts Miracle-Gro Company and cash or cash equivalents needed to meet
obligations of such fund or for the purchase of common shares of The Scotts Miracle-Gro Company.

     6. The definition of “Employer” contained in Section II of the Plan is amended and restated to
read, in its entirety, as follows: “Employer” means The Scotts Company LLC and affiliates of The
Scotts Company LLC.

 

 

     7. The definition of “Plan” contained in Section II of the Plan is amended and restated to
read, in its entirety, as follows: “Plan” means The Scotts Company LLC Executive Retirement Plan,
as reflected in this document, as the same may be amended from time to time after the Effective
Date.

     8. The definition of “Qualified Plan” contained in Section II of the Plan is amended and
restated to read, in its entirety, as follows: “Qualified Plan” means The Scotts Company LLC
Retirement Savings Plan and any amendments made thereto.

     9. Section V, Part B – Method of Distribution is amended and restated to read, in its
entirety, as follows:

Amounts credited to a Participant’s Account shall be distributed to the Participant either
in a single lump sum payment or in substantially equal annual installments over a period
less than ten (10) years. To the extent that an Account is distributed in installment
payments, the undisbursed portions of such Account shall continue to be credited with
Additions in accordance with the applicable provisions of Section IV.H. In addition, if, as
of any business day after the date described in Section V.A., the amount allocated to a
Participant’s Account is less than $5,000, the Administrative Committee shall pay such
amount to the Participant and reduce the balance of his Account to zero. The method of
distribution shall be elected by the Participant in the Executive Incentive Pay Deferral
Election and Compensation Deferral Election delivered to the Administrative Committee at the
time the applicable deferral election is made. Distributions of amounts credited to
Investment Funds other than the Company Stock Fund shall be made in cash. Distributions of
amounts credited to the Company Stock Fund shall be distributed in the greatest whole number
of common shares of The Scotts Miracle-Gro Company which can be distributed based on the
amount credited to the Company Stock Fund (after any applicable withholding), plus cash for
any fractional share.

     IN WITNESS WHEREOF, the Administrative Committee, acting on behalf of the Company, has caused
this Amendment to be executed on this 6th day of May, 2005, to be effective as of March 18, 2005.

	 	 	 
	

	 	THE SCOTTS COMPANY LLC
	 
	 	 
	

	 	By: /s/ Christopher L. Nagel
	 
	 	 
	

	 	Print Name: Christopher L. Nagel
	 
	 	 
	

	 	Title: Member of the Administrative Committee

2Exhibit 10(a)

Exhibit
10(a)

OVERVIEW
OF

LONG
TERM INCENTIVE AWARD PROGRAM (LTIP) 

Award
Program Intent

The
intent of this award program is to:

	a)  	
      Foster
      increased returns to shareholders.

	b)  	
      Tie
      pay to measures that drive shareowner return.

	c)  	
      Serve
      as a guideline for the Compensation Committee to follow when determining
      the financial award. The Committee may utilize discretion above or below
      the guideline to accommodate extraordinary events or
      circumstances.

Payout
Philosophy

The
LTIP is intended to provide compensation relative to market compensation
consistent with LNC’s compensation philosophy. The LTIP is performance
leveraged. Performance below the 60th
percentile is rewarded with below market compensation. Similarly, performance
above the 60th
percentile is rewarded with compensation greater than that achieved within our
comparison market for the same performance achievement. 

Maximum
award will be paid when performance is in the upper quartile. The minimum payout
will be awarded at the equivalent of the 25th
percentile. Market compensation (or target payout) will be awarded at the
equivalent of performance at the 60th
percentile. The minimum award will be 25% of target and the maximum award will
be 200% of target. 

For
those performance measures which are absolute, an analysis will be made when
setting the performance targets to make sure they are set consistently with the
above philosophy. 

Cycle
Duration

Three-year
cycles will be established on a calendar year basis. 

Cycle
Frequency

A
new cycle will start each year upon approval by the Committee and run
concurrently with other cycles. Three cycles will be in effect at the same time.

Performance
Measures 

Performance
measures will be absolute return on equity (ROE) and EPS growth, both based on
income from operations, and relative total shareholder return (TSR). At the
beginning of the cycle, usually at its March meeting, the Compensation Committee
will set minimum, targets, and maximum performance levels for each
measure.

	·  	
      ROE
      will be weighted 40% and expressed as a weighted average of the
      performance cycle, with year one weighted 20%, year two 30%, and year
      three 50%.

	·  	
      EPS
      growth will be weighted 40% and expressed as a compound average annual
      growth rate, based on the point-to-point difference between EPS at the end
      of the year prior to the beginning of the cycle and the EPS of the final
      year of the cycle.

	·  	
      TSR
      weighted 20% represents share price change plus total shareholder
      dividends paid during the performance cycle. The shareowner return
      calculation will be based on the average of the closing stock prices of
      LNC for each trading day in the month of December preceding the beginning
      of a cycle and the average of the closing prices for each trading day in
      the last December of the cycle. 

 

 

 

 

LNC
TSR performance will be compared to that of the S&P 500. The minimum award
will be paid for performance at the 25th
percentile, target at the 60th
percentile, and maximum at the 75th
percentile. Only those companies included in the index at the beginning of the
cycle will be included for determination of LNC’s percentile
ranking.

Payout
Adjustments

The
Compensation Committee retains the right to modify payouts at the end of the
cycle based on extraordinary circumstances during the cycle.

The
Committee can consider factors impacting results such as changing economic and
market conditions, mergers or acquisitions, sale of a business, restructuring
charges, reserve strengthening or release. 

In
making adjustments, the Committee may consider investor reaction, stock price
performance, performance of peers and the CEO’s recommendation. The guiding
principle in making adjustments should be to encourage and reward management for
consistently high financial and shareholder return performance relative to
peers.

Form
of Compensation

At
the beginning of each performance cycle, the Compensation Committee (no later
than its March meeting) will designate both the award target and range for each
participant. LTIP compensation will be paid in cash, shares, options or a
combination of these. Seven defined mix combinations will be offered to
participants; the participant will select one at the beginning of the cycle.

The
relative dollar values for stock options, stock and cash are as
follows:

 

	-  	
      Options
      valued at 100%, no discount.

	-  	
      Shares
      valued at 100%, no discount.

	-  	
      Cash
      up to 33% of target valued at 100%, no discount. Higher percentages of
      cash are discounted and valued at 67%.

The
seven combinations from which participants may select are the
following:

1.
All options (100% of target, no discount)

2.
50% shares, 50% options (100% of target, no discount)

3.
All shares (100% of target, no discount)

4.
33% cash, 33.5% shares, 33.5% options (100% of target, no discount)

5.
33% cash, 67% options (100% of target, no discount)

6.
33% cash, 67% shares (100% of target, no discount)

        7.
All cash (78% of target) 

All
Cash is an alternative only for those who meet their full, five-year, share
ownership requirement.

The
company retains the right to restrict the number of options in order to limit
dilution. If the pool of options designated for the cycle is exceeded, each
participant’s share of the pool will be reduced proportionately on an equal
basis. They will be asked to select an alternative replacement for the portion
reduced, shares or cash, at the above-designated ratios.

Participants
make their selections at the beginning of the cycle, no later than March of the
first year of the cycle. All forms of compensation selected will cliff vest
(100% at the completion of the three-year performance cycle) based on LTIP
performance. The value of shares and stock options is calculated based on their
value the day the target award is made by the Compensation Committee not later
than March. Changes in stock prices during the performance cycle will be to the
participant’s advantage or disadvantage. No adjustments are made at the end of
the cycle for stock price changes. If shares are selected, dividends will
accumulate on these shares during the performance cycle and vest based on LTIP
performance. The award range is from 25% of target to 200% of
target.

 

 

 

For
those selecting options, payouts for performance above target will be in shares.
The calculation of the amount of shares will be based on the price in effect at
the beginning of the cycle when share values were determined and will include
dividends earned. Options have a ten-year life from date of grant (not
vesting).

Participants

All
individuals designated by the CEO and approved by the Compensation Committee
will participate in the award program. 

	1.  	
      Individuals
      who are promoted or demoted (to positions of greater or lesser
      responsibility) during a particular performance cycle may have their award
      targets pro-rated to reflect the effective date of the new target award
      amount.

	2.  	
      Individuals
      who are removed from the award program because of a change in
      responsibilities, death, Total Disability or Retirement, or because of
      involuntary termination other than for Cause (all capitalized terms shall
      have the definitions set forth in the applicable Award Agreement) will
      receive an award pro-rated award based on the ratio of days of employment
      during the three-year performance cycle (3 x 365 days =
      1,095).

	3.  	
      Individuals
      who voluntarily terminate employment forfeit all incomplete cycles
      regardless of how many months they completed in the
  cycle.

	4.  	
      Awards
      for individuals who are “covered employees” under IRC Section 162(m) may
      not exceed the specified maximum amounts payable established by the
      Compensation Committee for the applicable long-term performance
      cycle.

Note:
During the term of the cycle, shares selected will be in the form of performance
stock units. Actual shares of stock will be issued for all vested units upon
completion of the cycle. EPS is defined as operating income per diluted
share.

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