THOMAS & BETTS CORPORATION
EXECUTIVE INCENTIVE PLAN
1. PURPOSE
The purpose of the Thomas & Betts Corporation Executive Incentive Plan
(the "Plan") is to provide an incentive for corporate officers and other key
employees who are in a position to contribute materially to the success of the
Corporation and its subsidiaries.
2. DEFINITIONS
The following terms, as used herein, will have the meaning specified:
(a) "Award" means an incentive payment made pursuant to the Plan.
(b) "Board" means the Board of Directors of the Corporation as it may be
comprised from time to time.
(c) "Cause" means (i) a felony conviction of a Participant; (ii) the
commission by a Participant of an act of fraud or embezzlement against the
Corporation and/or a Subsidiary; (iii) willful misconduct or gross negligence
materially detrimental to the Corporation and/or a Subsidiary; (iv) the
Participant's continued failure to implement reasonable requests or directions
arising from actions of the Board after thirty (30) days' written notice to the
Participant; (v) the Participant's wrongful dissemination or use of confidential
or proprietary information; (vi) the intentional and habitual neglect by the
Participant of his or her duties to the Corporation and/or a Subsidiary; or
(vii) any other reasons consistent with the Corporation's and/or a Subsidiary's
policies and procedures regarding dismissals as they are adopted and implemented
from time to time.
(d) "Code" means the Internal Revenue Code of 1986, as amended, and any
successor statute, and the regulations promulgated thereunder.
(e) "Committee" means the Committee appointed to administer the Plan, as
provided in Section 4.
(f) "Corporation" means Thomas & Betts Corporation, or any successor
corporation.
(g) "Covered Employee" means a covered employee within the meaning of
Code Section 162(m)(3).
(h) "Employee" means executives and other key employees of the
Corporation and its Subsidiaries.
(i) "Participant" means an Employee selected from time to time by the
Committee to participate in the Plan.
(j) "Performance Adjustment" means a factor (or factors), as determined
by a schedule established by the Committee, that will, when multiplied by a
Participant's Target Award, determine the amount of a Participant's Award.
(k) "Performance Criterion or Criteria" means the business criteria
selected by the Committee to measure Corporation, group, division or Subsidiary
performance from one or more of the following:
(i) Corporate, group, division or Subsidiary sales;
(ii) Corporate, group, division or Subsidiary return on
sales--operating profit divided by sales;
(iii) Corporate, group, division or Subsidiary economic value
added, net operating profit after taxes, return on net assets or return on
capital;
(iv) Cash flow-corporate--the change in the Corporation's net
invested position;
(v) Cash flow- corporate, group, division or Subsidiary--group,
division or Subsidiary contribution adjusted for certain changes in balance
sheet accounts;
(vi) Earnings per share;
(vii) Productivity--standard direct labor hours divided by direct
and indirect labor hours incurred;
(viii) Quality--demerits per thousand pieces audited;
(ix) Group, division or Subsidiary operating profit or
contribution income;
(x) Investment turnover--net sales divided by certain assets, e.g.
net receivables and inventory, less certain liabilities, e.g. accounts payable
and accrued liabilities;
(xi) Return on equity--net income of the Corporation divided by
average shareholders' equity;
(xii) Net asset investment--certain assets, e.g. accounts
receivable and goodwill, less certain liabilities, e.g. accounts payable and
dividends payable, divided by sales;
(xiii) Inventory turns; and
(ix) Customer service indices, e.g. fill rates, request index, and
performance to promise.
The Committee shall establish the weighting of each Performance Criterion,
for use in determining awards under the Plan, within 90 days of the beginning of
the fiscal year to which the Performance Criterion relates.
(l) "Maximum Award" means the level of performance on each Performance
Criterion, as approved by the Committee, that will result in a 100 percent
Performance Adjustment to a Participant's Target Award.
(m) "Subsidiary" means any corporation in which the Corporation, directly
or indirectly, controls 50 percent or more of the total combined voting power of
all classes of such corporation's stock.
(n) "Target Award" means, with respect to a Participant in any year, the
Participant's annual base salary multiplied by the percentage of salary
established by the Committee for that Participant.
3. AWARDS
(a) TARGET AWARD. A Target Award will be established by the Committee
for each Participant. A prorated Target Award will be assigned to a Participant
with less than twelve months of service. In the event a Participant's Target
Award is changed during the year, the Participant's higher Target Award will be
the basis
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for determining the Participant's Award for the year.
(b) PERFORMANCE CRITERIA. One or more Performance Criteria will be
established by the Committee for the Corporation and for each group, division or
Subsidiary each year. The Committee may use the same Performance Criteria each
year or may use different Performance Criteria from year to year.
(c) PERFORMANCE TARGET. One or more Performance Targets will be
established by the Committee for each Performance Criterion selected for each
year.
(d) PERFORMANCE ADJUSTMENT. The Award payable to any Participant will
vary from the Target Award depending upon whether, or the extent to which,
Performance Targets have been achieved. All such determinations regarding the
achievement of any Performance Target will be made by the Committee in its sole
and absolute discretion. The Committee may not increase the amount of
compensation that would otherwise be payable upon achievement of the Performance
Target or Targets, but it may reduce a Participant's award if it believes such
action would be in the best interest of the Corporation and its shareholders.
(i) Schedules. At the beginning of the year, the Committee will
establish a range for each Performance Criterion that correlates the percentage
of Target Award to specified levels of Corporation, group, division or
Subsidiary performance.
(ii) Award Determination. The Award for a Participant for a given
year will be calculated by multiplying the Participant's Target Award by the
Corporation, group, division or Subsidiary Performance Adjustments,
respectively.
(iii) Maximum Award. The maximum award payable to any Participant
in any year is $2.0 million, anything in this Plan to the contrary
notwithstanding.
(e) PAYMENT OF AWARDS. Awards will be paid in cash, stock, or a
combination of cash and stock after the Committee has certified the extent to
which the Performance Target or Targets have been met and as soon as practicable
after the close of the year for which they are made. If a Participant is
disabled for more than four months of the year, the Participant may be granted a
prorated Award as and to the extent determined by the Committee. If disability
lasts four months or less, there will be no reduction in the amount of the
Award. No Award will be payable to any Participant who is not an Employee on the
last day of the year, except that if, during the last eight months of the year,
the Participant dies, or becomes disabled, the Participant may be granted a
prorated Award as and to the extent determined by the Committee, and further
provided that if the Participant retires or is involuntarily terminated other
than for Cause, the Participant may be granted a prorated Award as and to the
extent determined by the Committee, provided that Performance Targets have been
met.
4. ADMINISTRATION
(a) COMMITTEE. The Plan and all Awards will be administered by the Human
Resources Committee of the Board of Directors (the "Committee"), which Committee
shall consist of not less than three members of such Board of Directors, and
shall be constituted so as to enable the Plan to comply with the administration
requirements of Code Section 162(m)(4)(C). The members of the Committee shall be
designated by the Board of Directors. A majority of the members of the Committee
shall constitute a quorum. The vote of a majority of a quorum shall constitute
action by the Committee.
(b) AUTHORITY. The Committee will have full and complete authority, in
its sole and absolute discretion,
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(i) to exercise all of the powers granted to it under the Plan, (ii) to
construe, interpret and implement the Plan and any related document, (iii) to
prescribe, amend and rescind rules relating to the Plan, (iv) to make all
determinations necessary or advisable in administering the Plan, and (v) to
correct any defect, supply any omission and reconcile any inconsistency in
the Plan.
The Committee may delegate to the officers or employees of the Corporation
and/or a Subsidiary the authority to execute and deliver such instruments and
documents, to do all such acts and things, and to take all such other steps
deemed necessary, advisable or convenient for the effective administration of
the Plan in accordance with its terms and purpose, except that the Committee may
not delegate any authority with respect to decisions regarding timing,
eligibility, amount or other material terms of any Awards.
(c) DETERMINATIONS. The actions and determinations of the Committee on
all matters relating to the Plan and any Awards will be final and conclusive.
(d) LIABILITY. No member of the Committee or the Board will be liable
for any action taken or determination made in good faith with respect to the
Plan or any Award thereunder, and the Corporation will defend Committee and
Board members for any actions taken or decisions made in good faith under the
Plan.
(e) PARTICIPANTS. The Committee will designate the corporate officers
who shall be Participants in the Plan, and it may designate group, division or
Subsidiary officers to be Participants.
(f) AWARDS. Subject to the terms of the Plan, the Committee will have
full and complete authority to determine, among other things, the Employees to
whom, and the time or times at which, Awards will be made and the requisite
conditions thereof.
(g) CODE SECTION 162(m). It is the intent of the Corporation that this
Plan and Awards hereunder satisfy, and be interpreted in a manner that, in the
case of Participants who are or may be Covered Employees, satisfies the
applicable requirements of Code Section 162(m) so that the Corporation's tax
deduction for remuneration in respect of this Plan for services performed by
such Covered Employees is not disallowed in whole or in part by the operation of
such Code Section. If any provision of this Plan or if any Award would otherwise
frustrate or conflict with the intent expressed in this Section 4(g), that
provision shall be interpreted and deemed amended so as to avoid such conflict.
To the extent of any remaining irreconcilable conflict with such intent, such
provision shall be deemed void as applicable to Covered Employees.
5. MISCELLANEOUS
(a) NONASSIGNABILITY. No Award will be assignable or transferable
(including pursuant to a pledge or security interest) other than by will or by
the laws of descent and distribution.
(b) WITHHOLDING TAXES. Whenever payments under the Plan are to be made,
the Corporation and/or the Subsidiary will withhold therefrom an amount
sufficient to satisfy any applicable governmental withholding tax requirements
related thereto.
(c) AMENDMENT OR TERMINATION OF THE PLAN. The Board may from time to
time suspend or discontinue the Plan or revise, amend or terminate the Plan.
(d) NON-UNIFORM DETERMINATIONS. The Committee's determinations under the
Plan need not be uniform and may be made by it selectively among persons who
receive, or are eligible to receive, Awards under the
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Plan, whether or not such persons are similarly situated. Without limiting
the generality of the foregoing, the Committee will be entitled, among other
things, to make non-uniform and selective determinations and to establish
non-uniform and selective Target Awards; provided, however, that the
Committee may not increase the amount of compensation that would otherwise be
payable upon achievement of the Performance Target or Targets.
(e) OTHER PAYMENTS OR AWARDS. Nothing contained in the Plan will be
deemed in any way to limit or restrict the Corporation, its Subsidiaries, or the
Committee from making any award or payment to any person under any other plan,
arrangement or understanding, whether now existing or hereafter in effect.
(f) PAYMENTS TO OTHER PERSONS. If payments are legally required to be
made to any person other than the person to whom any amount is available under
the Plan, payments will be made to the person to whom the Committee, or its
delegate, believes to be legally entitled to the payment. Any such payment will
be a complete discharge of the liability of the Committee.
(g) UNFUNDED PLAN. No provision of the Plan will require the Corporation
or its Subsidiaries, for the purpose of satisfying any obligations under the
Plan, to purchase assets or place any assets in a trust or other entity to which
contributions are made or otherwise to segregate any assets; nor will the
Corporation or its Subsidiaries maintain separate bank accounts, books, records
or other evidence of the existence of a segregated or separately maintained or
administered fund for such purposes. Participants will have no rights under the
Plan other than as unsecured general creditors of the Corporation and its
Subsidiaries, except that insofar as they may have become entitled to payment of
additional compensation by performance of services, they will have the same
rights as other employees under generally applicable law.
(h) LIMITS OF LIABILITY. Neither the Corporation or a Subsidiary, nor
any member of the Board, the Committee, or any other person participating in the
interpretation, administration or application of the Plan shall have any
liability to any party for any action taken, or not taken, in good faith under
the Plan.
(i) RIGHTS OF EMPLOYEES. Nothing contained in this Plan will confer upon
any Employee or Participant any right to continue in the employ or other service
of the Corporation or a Subsidiary, or constitute any contract or limit in any
way the right of the Corporation or a Subsidiary to change such person's
compensation or other benefits, or to terminate the employment or other service
of such person with or without Cause.
(j) SECTION HEADINGS. The section headings contained herein are for
convenience only, and in the event of any conflict, the text of the Plan, rather
than the section headings, will control.
(k) INVALIDITY. If any term or provision contained herein will to any
extent be invalid or unenforceable, such invalidity or unenforceability will not
affect any other provision or part hereof.
(l) APPLICABLE LAW. The Plan will be governed by the laws of the
jurisdiction in which the Corporation is incorporated as determined without
regard to the conflict of law principles thereof.
(m) EFFECTIVE DATE. The Plan shall be effective as of May 5, 1994 and,
as amended, from time to time thereafter.
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