NORDSON CORPORATION 2004 MANAGEMENT INCENTIVE COMPENSATION PLAN (Amended and Restated as of February 19, 2008)
Exhibit 10.1
NORDSON CORPORATION
2004 MANAGEMENT
INCENTIVE COMPENSATION PLAN
(Amended and Restated as of February 19, 2008)
1. PLAN OBJECTIVES
The objectives of the Plan are to enhance the Corporation’s ability to attract and retain qualified employees and to provide incentives that motivate employees to achieve challenging strategic and operating objectives.
2. DEFINITIONS
For purposes of the Plan, the following definitions will control:
| a. | “Corporation” - Nordson Corporation, its divisions and subsidiaries. |
| b. | “Board” - The Board of Directors of Nordson Corporation. |
| c. | “Committee” – A subcommittee of the Compensation Committee of the Board constituted in a manner consistent with the “outside director” standard of Section 162(m) of the Internal Revenue Code. |
| d. | “Incentive Award’” - Awards made by the Committee under this Plan. All awards will be paid in cash unless otherwise determined by the Committee. |
| e. | “Operating Cash Flow” means operating income plus depreciation, amortization and other non-cash charges such as write-downs to the acquired or carrying value of assets and charges for the impairment of goodwill and other intangible assets during such period, adjusted to eliminate the effects of expenses for restructuring or productivity initiatives and any expenses or write-offs in connection with acquisitions or divestitures, each as defined by generally accepted accounting principles or identified in the Company’s financial statements, notes to financial statements or management’s discussion and analysis. |
| e. | “Plan” - This 2004 Management Incentive Compensation Plan, as amended from time to time. |
| f. | “Plan Year” - The Corporation’s fiscal year. |
3. ADMINISTRATION OF THE PLAN
The Plan will be administered by the Committee. The Committee is authorized to interpret the Plan and to establish and amend guidelines necessary for Plan administration. Decisions and determinations of the Committee will be binding on all persons claiming rights under the Plan.
The Committee can amend the Plan to the extent necessary to treat the compensation payable under the Plan as qualified performance-based compensation exempt from the non-deductible limitation of Section 162(m) of the Internal Revenue Code.
4. DESCRIPTION OF THE PLAN
At the beginning of each Plan Year, the Chief Executive Officer will submit to the Committee recommendations for the Plan Year with respect to proposed participants and Incentive Awards, and the Committee may approve or modify these recommendations.
5. PARTICIPANTS
Participants will be selected by the Committee each Plan Year from among the executive officers of the Corporation. Directors who are employees of the Corporation will be eligible for participation.
| a. | Awards under the Plan may be made only to officers of the Corporation who are in a position to make significant contributions to the financial success of the Corporation. |
| b. | In the event of termination of employment during a Plan Year by reason of disability, retirement within the provisions of the Retirement Plan or other policies of the Corporation, plant closing or divestiture of a business unit, the participant will earn a pro-rata amount of his or her Incentive Award based on the time employed prior to termination during the Plan Year and upon the Corporation’s actual performance during the entire Plan Year. |
| c. | In the event of a death of a participant during the Plan Year, the participant’s beneficiary under the Corporation’s pension plan will receive a pro-rata amount based on the time employed prior to death during the Plan Year and upon the Corporation’s actual performance during the entire Plan Year. |
| d. | In the event of termination of employment during a Plan Year for any other reason, participation in the Plan will be as determined by the Committee. |
6. CALCULATION OF INCENTIVE AWARDS
The Incentive Award payable under the Plan for a Plan Year is equal to 1.5% of the Company’s operating cash flow for the Plan Year, but in no event shall the incentive award exceed $2,000,000.
The Committee may not increase the amount payable under the Plan or with respect to an Incentive Award, but retains the discretionary authority to reduce the amount. The Committee may also establish factors to take into consideration in implementing its discretion, including but not limited to performance against designated performance criteria for the Plan Year, such as return on net assets, return on capital employed, economic value added, sales, revenue, earnings per share, operating income, net income, earnings before interest and taxes, return on equity, total shareholder return, market valuation, cash flow, completion of acquisitions, product and market development, inventory management, working capital management and customer satisfaction. Any of the foregoing performance criteria may apply to a participant’s Incentive Award for any period in its entirety or to any designated portion of the award opportunity, as the Committee may specify.
7. PAYMENTS OF AWARDS
Following the end of the each Plan Year, the Committee will confirm the calculation of each participant’s Incentive Award, if any, based on the applicable formula or standard and will certify achievement of the applicable business criteria prior to payment of any award. Payment of Incentive Awards, if any, will be made, subject to deferral, following the Plan Year in which the Incentive Award was earned, but in no event later than March 15 of the calendar year next following the calendar year in which the Plan Year ends.
8. COMMUNICATION OF THE PLAN
After performance results are known and the Committee certifies achievement, the Chief Executive Officer, or his designee, will communicate to each participant the specific performance factors, the Incentive Award levels, and the manner in which awards will be paid.
9. TERM OF THE PLAN
The Plan will remain in effect until terminated by the Committee.
