Document:

Exhibit (10)Q

 

DESCRIPTION OF ECOLAB INC. 

MANAGEMENT INCENTIVE PLAN

 

Ecolab Inc. (the “Company”) maintains annual cash
incentive plans for executives that are designed to
motivate executives to achieve annual business and individual goals.  These plans are referred to as the Management Incentive Plan (“MIP”) and the Management
Performance Incentive Plan (the “MPIP”). 
The MPIP is a stockholder-approved plan designed and administered in a
manner intended to preserve the Company’s federal income tax deductions.  It is set forth in a plan document filed with
other management agreements as an exhibit to the Company’s Annual Report on Form 10-K.  The MIP is not set forth in a formal plan
document. Set forth below is a summary of the MIP as it applies to the executive
officers of the Company who do not otherwise receive awards under the MPIP.

 

Target
Award Opportunities —
Under the MIP, the Compensation Committee of the Company’s Board of Directors
establishes the annual target award opportunities expressed as a percentage of
base salary paid during the fiscal year, and threshold and maximum award
payment limits expressed as a percentage of the target award for each executive
officer.

 

Performance
Measures — Under the
MIP, performance is measured using a mix of overall corporate, business unit,
and individual measures to foster cross-divisional cooperation and to assure
that executives have a reasonable measure of control over the factors that
affect their awards. This performance measure mix varies by executive position.

 

Performance
Goals — Under the
MIP, overall corporate performance is based on pro forma diluted earnings per
share goals.  In establishing the goals
the Company takes into consideration prior year results, expected economic and
market influences, other large companies’ performance expectations and
anticipated business opportunities, investment requirements and competitive
situation.

 

Under
the MIP, business unit performance is generally measured based on, but not
limited to, the achievement of revenue and operating income goals.  In establishing these goals the Company takes
into consideration prior year results and growth opportunities, investment
requirements and market influences. Generally, the Compensation Committee sets
the threshold, target and maximum levels under the MIP such that the intended
relative difficulty of achieving the target level is consistent from year to
year.

 

Under
the MIP, individual performance goals are specific, qualitative, achievable
with significant effort and, if achieved, provide benefit to the Company.

 

Payout
Approval — As soon as
practicable after the end of the plan year and after the Compensation Committee
has received the appropriate financial and other data, the Compensation
Committee will, for each executive officer, approve the achievement of
performance goals and the corresponding amount of the award earned.  The Compensation Committee reviews and approves all
adjustments to the Company’s overall corporate and business unit performance
results.

 

Discretionary
Adjustments — To
recognize individual performance, the Compensation Committee also may increase
or decrease an executive officer’s MIP award, with input from the principal
executive officer, based on the individual performance of the executive
officer. This is done to recognize either inferior or superior individual
performance in cases where this performance is not fully represented by the
performance measures.EXHIBIT (10)T

 

2009 NAMED EXECUTIVE OFFICER

SUMMARY OF BASE SALARY, BONUS AWARD
OPPORTUNITIES,

AND EXECUTIVE
BENEFITS AND PERQUISITES

 

Base
Salary

 

The table below sets forth the base salaries established for the 2009
fiscal year for the Company’s Principal Executive Officer and Principal
Financial Officer and the next three most-highly compensated executive officers
who were serving in those capacities at December 31, 2008 (the “NEOs”).

 

	
  Name and Principal Position

  	
   

  	
  Amount

  	
   

  
	
  Douglas M. Baker, Jr. 

  Chairman of the Board, President and 

  Chief Executive Officer

  	
   

  	
  $

  	
  1,000,000

  	
   

  
	
  Steven L. Fritze 

  Chief Financial Officer

  	
   

  	
  $

  	
  500,000

  	
   

  
	
  James A. Miller 

  President Institutional 

  North America Sector

  	
   

  	
  $

  	
  437,500

  	
   

  
	
  Thomas W. Handley 

  President Industrial and Services 

  North America Sector

  	
   

  	
  $

  	
  425,000

  	
   

  
	
  Lawrence T. Bell 

  General Counsel and Secretary

  	
   

  	
  $

  	
  400,000

  	
   

  

 

Bonus Award Opportunities

 

The Company maintains annual cash incentive programs
for executives referred to as the Management Incentive Plan or MIP and Management
Performance Incentive Plan or MPIP.  The
Company’s stockholders approved the current version of the MPIP in 2004, an
annual incentive plan under which awards should qualify as performance based
under Internal Revenue Code Section 162(m).  The Company is asking its shareholders to
re-approve the MPIP at the 2009 Annual Meeting of Shareholders.  On February 25, 2009, as required under
the terms of the MPIP, the Compensation Committee of the Board (“Committee”) selected
each of the NEOs to participate in the MPIP for 2009 and established the 2009
performance goal based upon the performance criteria of diluted earnings per
share (“EPS”), and EPS performance target of a designated earnings per share,
and a cash award of 300% of the base salary of each such officer for 2009 to
the extent the goal is achieved.  The
award is subject to and interpreted in accordance with the terms and conditions
of the MPIP and no amount will be paid under the MPIP unless and until the
Committee has determined the extent to which the performance goal has been met
and the corresponding amount of the award earned by the participant.  The MPIP permits the Committee to exercise
downward discretion so as to pay an amount which is less than the amount of the
award earned by the participant.  In
applying this downward discretion, the Committee considers underlying operable
metrics communicated to the participant, which are noted in the table
below.  Although the chart below
indicates a threshold payment, a named executive officer may receive no 

 

 

payment as determined by results and approved
by the Compensation Committee.

 

	
   

  	
   

  	
  Target 

  Award 

  Opportunity 

  (% of base

  salary)

  	
   

  	
  Potential Award Payouts at Different 

  Levels of Performance 

  (% of Target Award)

  	
   

  	
  Performance Measure Mix

  	
   

  
	
  Name

  	
   

  	
   

  	
  Threshold

  	
   

  	
  Target

  	
   

  	
  Max

  	
   

  	
  EPS

  	
   

  	
  Business

  Unit

  	
   

  	
  Individual

  	
   

  
	
  Douglas
  M. Baker, Jr.

  	
   

  	
  130

  	
  %

  	
  40

  	
  %

  	
  100

  	
  %

  	
  200

  	
  %

  	
  100

  	
  %

  	
  0

  	
  %

  	
  0

  	
  %

  
	
  Steven
  L. Fritze

  	
   

  	
  70

  	
  %

  	
  40

  	
  %

  	
  100

  	
  %

  	
  200

  	
  %

  	
  70

  	
  %

  	
  0

  	
  %

  	
  30

  	
  %

  
	
  James
  A. Miller

  	
   

  	
  70

  	
  %

  	
  40

  	
  %

  	
  100

  	
  %

  	
  200

  	
  %

  	
  30

  	
  %

  	
  70

  	
  %

  	
  0

  	
  %

  
	
  Lawrence
  T. Bell

  	
   

  	
  60

  	
  %

  	
  40

  	
  %

  	
  100

  	
  %

  	
  200

  	
  %

  	
  70

  	
  %

  	
  0

  	
  %

  	
  30

  	
  %

  
	
  Thomas
  W. Handley

  	
   

  	
  70

  	
  %

  	
  40

  	
  %

  	
  100

  	
  %

  	
  200

  	
  %

  	
  30

  	
  %

  	
  70

  	
  %

  	
  0

  	
  %

  

 

Executive
Benefits and Perquisites

 

The
Company’s named executive officers participate in all the same health care,
disability, life insurance, pension, and 401(k) benefit plans made
available generally to the Company’s U.S. Employees.  In addition, the Company’s named executive
officers are eligible to participate in a deferred compensation program,
restoration plans for the qualified 401(k) and pension plans, a supplement
retirement benefit and an executive disability and life benefit.  Our named executive officers receive the
following perquisites: an executive cash allowance in lieu of a company
automobile, executive physical examinations, financial planning, spousal travel
in limited circumstances.EXHIBIT (10)U

 

NON-EMPLOYEE DIRECTOR COMPENSATION AND
BENEFITS SUMMARY

 

COMPENSATION

 

Annual Payments

 

	
  Annual Retainer

  	
   

  	
  $

  	
  70,000

  	
   

  
	
  Committee Chair Fee

  	
   

  	
   

  	
   

  
	
  ·
  Audit

  	
   

  	
  $

  	
  15,000

  	
   / 7,500 (for other members)

  
	
  ·
  Compensation and Finance

  	
   

  	
  $

  	
  10,000

  	
   

  
	
  ·
  Governance / Presiding Director

  	
   

  	
  $

  	
  15,000

  	
   

  

 

In addition, a number of shares of stock units are credited annually to
each director’s deferred stock unit account. The Board has fixed the annual
value of the stock units to one-half the value of the annual retainer, or $35,000.

 

All reasonable travel, telephone and other expenses incurred on behalf
of Ecolab are reimbursable.

 

Directors may choose, at the time of initial election to the Board and
annually thereafter, to have the portions of their compensation which are paid
in cash deferred into an interest bearing deferred account or the stock unit
account.

 

Deferred Accounts

 

Deferred accounts are of two types: (i) stock unit accounts which
are comprised of stock equivalents, which increase/decrease with Ecolab’s stock
price and are credited with dividend equivalents; and (ii) interest-bearing
accounts, which are credited with interest at the prime rate.

 

Deferred accounts for a director are tax deferred until the director
ceases Board service. At that time, the proceeds are paid in a lump sum or in
equal annual installments for up to 10 years depending on the director’s
election, which can be made, generally, as late as one year prior to leaving
the Board for amounts deferred before 2005. Amounts deferred in 2005 or later
must be paid in a lump sum. Amounts deferred to the interest-bearing account,
are paid in cash. Amounts in the stock unit account are paid in Ecolab stock. Upon
death, a lump sum of any remaining amounts will be paid to the director’s beneficiary.

 

BENEFITS

 

Stock Option Plan

 

Directors receive a non-qualified option to purchase a number of shares
of Common Stock, as fixed from time-to-time by the fair market value on such
date. The right to exercise the option vests 25% at the end of each three-month
period following the grant date. Currently, the Board has fixed the value of
the annual stock option grant at $55,000.

 

 

Options may be exercised for a period of 10 years from grant. However,
in the event a director ceases to be a director, the exercise period is
shortened to the lesser of five years from the date the director terminates
director status or the remaining term of the original option period.

 

Matching Gifts

 

Ecolab will match, up to $1,000 per fiscal year, a director’s
contributions to accredited U.S. educational institutions and an additional
$100 for contributions to qualifying U.S. public radio and television stations.

 

Eligibility for this program continues through the calendar year in
which a director ceases to be a director.

 

Travel Insurance

 

Directors are covered by $150,000 business travel accident coverage
while traveling on Ecolab business.

 

Director Liability Protection

 

·                  The current
D&O coverage is $75 million. There is no individual deductible.

 

·                  Ecolab’s
Certificate of Incorporation eliminates the ability of Ecolab or its
stockholders to recover monetary damages resulting from good-faith breaches of
certain fiduciary duties by a director.

 

·                  Directors are
entitled to indemnification by Ecolab for actions as a director taken in good
faith and in a manner reasonably believed to be in, or not opposed to, the best
interests of Ecolab.

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