NOVEON, INC.
MANAGEMENT INCENTIVE PLAN
PURPOSE
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The Noveon, Inc. Management Incentive Plan (referred to herein as "MIP," or
the "Plan") has been established to provide opportunities for certain
selected management employees to receive incentive compensation as a reward
for high levels of personal performance above the ordinary performance
standards compensated by base salary. While the amount of compensation at
risk may vary by position level or work country, the purpose of the MIP is
to more closely align compensation of key employees to Company performance.
ELIGIBILITY
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Participation in MIP will be limited to management employees who have the
potential to influence the performance of the Company or the Global
Business Unit (GBU) to which they are assigned. Participants will be
selected and approved by the President & CEO annually. Inclusion in the MIP
does not assure that an individual will receive an incentive award nor does
it guarantee an individual participation in the MIP in future years. Any
incentive award under this Plan is entirely discretionary. Employees must
be on the payroll before September 1 of the applicable calendar year to
participate in the MIP.
PARTICIPATION CATEGORIES
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Each participant in the MIP will be assigned an incentive opportunity
level. The target incentive percentage will be based upon the assigned
level of the position and the country where the participant works.
In the United States, changes to the assigned MIP target percentages for
executive officers will be recommended by President & CEO and will be
approved by the Compensation Committee of the Board of Directors. Other US
participants will have target percentages between 20% and 45% depending on
assigned pay level. In other countries, the assigned MIP target percentages
will range from 4% to 25% depending on position. Individual target
percentages will be assigned based upon local practice and each
participant's pay level. The CEO will have overall responsibility for
approving the target MIP percentages for all participants, other than
executive officers and other direct reports to the President & CEO.
PERFORMANCE MEASURES
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The MIP performance measures will be established annually by the
Compensation Committee and will be annexed as an attachment hereto.
DETERMINATION OF FINANCIAL/PERFORMANCE AWARDS
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The calculation of MIP awards will be based on the weighting and
percentages established annually by the Compensation Committee and will be
annexed as an attachment hereto.
Linear interpolation shall be used to determine the MIP award to the extent
that the actual EBITDA or Working Capital amounts fall between or exceed
the amounts shown in the tables or charts set forth in the attachments.
Any MIP awards will be calculated based upon the actual base salary
(excluding any other bonuses, awards, or other types of supplemental
compensation) of the participant as in effect on the last day of the Plan
year.
PAYMENT OF INCENTIVE AWARDS
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Payment of any incentive awards will be based upon accomplishment of the
established MIP performance measures.
Within approximately ninety (90) days of the close of the financial year,
overall results will be calculated and any incentive awards will be
determined and paid to the participant in a single cash bonus payment
through the Company's regular payroll process, subject to payroll taxes and
other appropriate withholdings.
In order to receive an incentive award, a participant must be on the
payroll on the date that any incentive awards are paid. Any unpaid
incentive award previously communicated shall be forfeited upon termination
of employment before the incentive award payment date unless such
termination is due to retirement, disability or death.
Payment of MIP awards is discretionary and the Compensation Committee has
the right to modify or revise financial/operational performance goals to
recognize unusual business conditions including, but not limited to,
acquisitions, mergers or divestiture of GBUs.
Final determination of any incentive awards under the MIP will be made by
the President and CEO and approved by the Compensation Committee prior to
communication to participants.
ADMINISTRATIVE PROVISIONS
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1. Individuals who are selected for participation in the MIP after March
1st of any Plan year will have any incentive awards for that year
prorated by the number of months they were participants in the Plan.
2. Individuals who are not participants in the MIP prior to September 1
of the applicable calendar year will not be eligible to participate in
the MIP for such year.
3. Because of the discretionary nature of the MIP, participants who
terminate (other than retirement, disability or death) from the
Company prior to payment of any incentive awards will not be eligible
to receive an award from the MIP.
4. Individual participants (or their heirs) who either elect normal
retirement, or are totally disabled (as defined in Section 6 below) or
die will be eligible to receive a prorated incentive award if an award
is paid. The amount of any incentive award will be based upon the
number of months that the individual was an active participant in the
MIP.
5. Retirement, for purposes of this Plan, shall involve the same
determinations and eligibility requirements set forth for a Retirement
Benefit as provided in the Noveon Pension Plan for Salaried Employees.
6. Totally disabled, for purposes of this Plan, shall involve the same
determinations and eligibility requirements for a Disability Benefit
as provided in the Noveon Pension Plan for Salaried Employees.
7. In the case of a participant's death before payment of a previously
announced incentive award, the incentive award payment shall be paid
in a lump sum to the participant's estate.
8. Participants who change positions or assigned business unit will have
any MIP award pro-rated taking into consideration the number of months
during the Plan year they were assigned to different business units or
at different MIP target incentive levels.
9. Individual participants whose employment with Noveon is terminated as
a result of the sale of their assigned business unit will be handled
on a case-by-case basis and a decision on any MIP award will be made
by the Compensation Committee for executive officers, or by the CEO
for all other participants.
10. Participation in the Plan is discretionary and inclusion in the MIP or
payment of any incentive awards is no promise of future participation
in the MIP nor is it a promise of future employment with Noveon.
Participation in the MIP does not diminish the Company's right to
discharge any participant regardless of the effect that such discharge
may have upon him/her as a participant in this MIP. No member of the
Company's Board of Directors, the NLT, nor any officer or employee
shall be liable to any person for any action taken or omitted in
connection with the administration of this Plan.
11. Plan year means the Company's fiscal year as now established or as it
may be changed from time to time hereafter.
12. Prior to the actual payment of any incentive award under this Plan, no
interest of any participant in this Plan shall be subject in any
manner to sale, transfer, assignment, pledge, attachment, garnishment,
or other alienation or encumbrances of any kind; nor may such interest
in any incentive award prior to its payment be taken, either
voluntarily or involuntarily for the satisfaction of the debts of, or
other obligations or claims against, such participant, including
claims for alimony, support, separate maintenance, and claims in
bankruptcy proceedings.
13. At all times, this Plan shall be entirely unfunded and no provision
shall at any time be made with respect to segregating any assets of
the Company for payment of any awards hereunder. With respect to any
claim for an unpaid but previously communicated incentive award under
this Plan, a participant is a general unsecured creditor of the
Company.
BINDING EFFECT
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This Plan shall be binding upon the beneficiaries, heirs, executors, and
administrators of the participant. Nothing contained in this Plan shall
constitute a guaranty by the Company or any other person or entity that the
assets of the Company will be sufficient to pay any incentive award
hereunder.
AMENDMENT AND TERMINATION
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The Company's Compensation Committee may at any time terminate this Plan,
in whole or in part, or amend it from time to time. Any such termination or
amendment may be made retroactively.
PLAN GOVERNANCE
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The Compensation Committee maintains the right to modify or terminate the
MIP at any future date. The Compensation Committee of the Board of
Directors will resolve any disputes or questions regarding the
administration of the MIP (including the interpretation of ambiguous terms)
and their decisions will be final and binding on all parties. A participant
shall not have any right to receive a payment of benefits under this Plan
except in accordance with the terms of the Plan. In the event that any
provisions of the Plan shall be held to be invalid by any competent court,
this Plan shall be interpreted as if such provision was not contained
herein.
Adopted on the 24th day of February, 2003.
NOVEON, INC.
By: /s/ Christopher R. Clegg
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Christopher R. Clegg, Senior Vice
President, General Counsel
and Secretary