1
EXHIBIT 10.17
[LOGO]ALLERGAN
1998
MANAGEMENT BONUS PLAN
JANUARY 1998
2
_____________________________________________________________________________
PURPOSE OF THE PLAN
The Allergan, Inc. Management Bonus Plan (the "Plan") is designed to reward
eligible management-level employees for their contributions to providing
Allergan's shareholders increased value for their investment through the
successful accomplishment of specific financial objectives and individual
performance objectives.
_____________________________________________________________________________
PLAN YEAR
The Plan year runs from January 1, 1998 through December 31, 1998 for all
locations that have a fiscal year beginning January 1 and ending December 31.
For the international locations with fiscal years beginning December 1 and
ending November 1, the Plan year is December 1, 1997 to November 30, 1998.
_____________________________________________________________________________
ELIGIBILITY
All regular full-time and part-time employees scheduled to work 20 or more hours
per week in salary grades 7E and above who are not covered by any other bonus or
sales incentive plan are eligible to participate in the Plan. For the locations
where the Plan year is January 1, 1998 through December 31, 1998, the
participants must be employed on or before June 30, 1998; for the locations
where the Plan year is December 1, 1997 through November 30, 1998, the
participants must be employed on or before May 31, 1998. Participants must be
actively employed by Allergan on the date bonuses are paid in order to be
eligible to receive a bonus. Participants who resign or are terminated for
reasons other than those noted below will receive no bonus.
Bonuses, if any, for participants who become eligible after the beginning of the
plan year, retire (defined as age 55 or over with at least 5 years of service),
become disabled, die or transfer into a position covered by another incentive
plan will be prorated. Bonuses, if any, for participants who are laid-off will
be prorated provided the participant was eligible for at least six months of the
Plan year. All proration will be based on the number of months of participation
in the Plan during the Plan year.
_____________________________________________________________________________
PERFORMANCE OBJECTIVES
Bonuses for Plan participants are based on both corporate performance and
individual performance in relation to pre-established objectives, as follows:
- - CORPORATE OBJECTIVES -- Corporate performance is measured in terms of
Allergan, Inc.'s Earnings Per Share (EPS) compared to objective. EPS is
defined as net earnings divided by the weighted average number of common
and common equivalent shares.
- - INDIVIDUAL OBJECTIVES -- MBOs are prepared by each participant and his
or her supervisor at the beginning of the Plan year and may be modified
throughout the year as necessary. Objectives should reflect major
results and accomplishments to be achieved in order to meet short- and
long-term business goals which contribute to increased shareholder
value. MBOs are expressed as specific, quantifiable measures of
performance in relation to key operating decisions for the participant's
business unit, such as managing inventory levels, receivables, expenses,
or payables; increasing sales; eliminating unnecessary capital
expenditures, etc.
At the end of the Plan year, the supervisor evaluates the participant's
performance in relation to his or her objectives in order to determine
the size of the bonus award, if any. A more detailed description of how
the award is calculated is provided under "Individual Bonus Award
Calculation."
3
_____________________________________________________________________________
BONUS POOL CALCULATION
The two components of this calculation are:
1. Individual objectives; and,
2. Corporate financial objectives.
INDIVIDUAL OBJECTIVES -- This component is funded at 75% of target awards for
non-officers (grade 7E - 12E) and at 50% for officers (grade 13E+).
CORPORATE FINANCIAL OBJECTIVES -- This component is funded according to the
following table if corporate eps performance is within 1998 EPS range.
% OF TARGET BONUS
1998 EPS RANGE 7E - 12E 13E+
- --------------- ----------- ------------
- -$0.10 2.5% 5%
- -$0.08 7% 14%
- -$0.06 11.5% 23%
- -$0.04 16% 32%
- -$0.02 20.5% 41%
Target 25% 50%
Above Target 50% of incremental earnings will be added to the
bonus pool; 50% returned to the company.
If actual EPS results fall between the performance levels shown above, bonuses
will be prorated accordingly. At the end of the year, the President and Chief
Executive Officer of Allergan, Inc. may recommend adjustments to the bonus
funding levels to the Organization and Compensation Committee after
consideration of key operating results.
_____________________________________________________________________________
INDIVIDUAL BONUS AWARD CALCULATION
Target bonus awards are expressed as a percentage of the participant's year-end
base salary. For U.S. participants, year-end is December 31, 1998; for
international participants, year-end is November 30, 1998. The target
percentages vary by salary grade (see addendum). If a participant changes grades
during the plan year, his or her bonus will be prorated to reflect the amount of
time in each grade, the participant's salary at the time of grade change and at
year-end, and the bonus percentage relating to each grade.
A participant's actual bonus award may vary above or below the targeted level
based on the supervisor's evaluation of his or her performance in relation to
the predetermined MBOs. The bonus can be modified between 0%-150% of the
targeted bonus. However, the total of all bonus awards given within each
business unit must total no more than 100% of the total bonus pool dollars
allocated to that business unit.
4
_____________________________________________________________________________
METHOD OF PAYMENT
Cash awards are paid following the review and authorization of bonuses by the
Board of Directors, usually in late February following the close of the Plan
year. Bonuses will be paid within 30 days following management communication of
the award, through the participant's normal payroll channel.
_____________________________________________________________________________
CHANGE-IN-CONTROL
If a change-in-control occurs after the close of the Plan year but prior to
payment and Company performance supports bonus pool funding, participants will
be eligible for a bonus based on performance in relation to predetermined
objectives.
If the change-in-control occurs during the Plan year, participants will be
eligible for a bonus based on performance of corporate objectives and individual
objectives. The bonus will be prorated to reflect the number of months prior to
the change-in-control. For purposes of determining achievement of corporate EPS
objective, the Company will utilize its monthly EPS target.
_____________________________________________________________________________
CONFIDENTIALITY
This plan document contains confidential, non-public information about
Allergan's Management Bonus Plan. The information is intended solely for
Allergan's management and is not to be disclosed to persons outside of Allergan
or to non-management personnel who don't have a need to know
_____________________________________________________________________________
GENERAL
Management reserves the right to define corporate performance and individual
performance and to review, alter, amend, or terminate the Plan at any time. This
Plan does not constitute a contract of employment and cannot be relied upon as
such. Any questions regarding this Plan should be directed to the Human
Resources department or the Director, Compensation. This Management Bonus Plan
document supersedes any previous document you may have received.