Exhibit 10A
NORDSON CORPORATION
1995 MANAGEMENT
INCENTIVE COMPENSATION PLAN
AS AMENDED (FY 1997)
1. PLAN OBJECTIVES
The objectives of the Plan are to advance the interests of the corporation
and its shareholders by providing executive officers incentive
opportunities and to attract, retain and motivate outstanding personnel by:
a. Providing compensation opportunities that are competitive with those
of other corporations of comparable size and value in similar
businesses.
b. Focusing key executives' attention on the accomplishment of
specifically identified Corporate objectives.
c. Establishing incentive pay opportunities appropriate for various
levels of individual performance.
2. DEFINITIONS
For purposes of the Plan, the following definitions shall control:
a. "CORPORATION" - Nordson Corporation, its Divisions and subsidiaries.
b. "BOARD" - The Board of Directors of Nordson Corporation.
c. "COMMITTEE" - The Compensation Committee appointed by the Board
consisting of non-employee Directors.
d. "INCENTIVE AWARD" - Awards made by the Committee under this Plan. All
awards will be paid in cash.
e. "PLAN" - The 1995 Management Incentive Compensation Plan as adopted by
the Board.
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 shall be
binding on all persons claiming rights
under the Plan.
The Committee can amend the 1995 Bonus Plan to the extent necessary to
treat the compensation payable pursuant to the 1995 Bonus 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 end of each fiscal year the Committee establishes the base salary
for executive officers ("Officers") of the Corporation to be in effect the
following fiscal year, taking into consideration individual performance,
competitive position and salary practices of "peer group" companies. The
Committee may also adjust base salaries of Officers from time to time to
reflect bona fide promotions or changes in responsibilities. In addition to
their base salary, the Officers are also eligible for a cash bonus, the
amount of which is established in accordance with the Plan.
The Plan provides for the establishment by the Committee of target award
levels of Incentive Awards based on the Corporation's performance against
specific predetermined performance goals. Performance goals are established
on a consolidated basis for Corporate performance for each Plan Year.
At the beginning of each Plan Year, the Chief Executive Officer shall
submit to the Committee recommendations for the Plan Year which shall
include proposed participants and target award levels, and the Committee
shall approve or modify these recommendations on or before the 90th day of
such Plan Year.
As soon as practicable after the end of the Plan Year, each participant's
Incentive Award will be determined based on performance against the
pre-established performance objectives, and the Committee will certify
achievement and approve the awards before payment is made.
5. PARTICIPANTS
Participants will be selected by the Committee each year from among the
Officers of the Corporation. Directors who are employees of the Corporation
will be eligible for inclusion.
a. Awards under this 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. The Chief Executive Officer of the Corporation shall
recommend to the Committee, in writing, the Officers who are to be
participants under the Plan for each Plan Year.
c. Participants for each Plan Year shall be those Officers occupying
eligible positions as set forth in Exhibit 1, which exhibit may be
amended from time to time with approval of the Committee.
d. Employees who are promoted or hired into an eligible position set
forth on Exhibit 1 (as amended from time to time) will participate in
the Plan for such first year based on their base pay earnings
(pro-rated) at the Corporation for the Plan Year and at the target
award level associated with the position.
e. If, during the Plan Year, a participant shifts between eligible
positions set forth on Exhibit 1 (as amended from time to time), the
target award level for such participant for such Plan Year will be the
average of the target award levels associated with each position held
by the participant during the Plan Year based on the number of days in
the year that the participant held each position.
f. 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 shall earn a pro-rata amount based on
the time employed prior to termination during the Plan Year and upon
the Corporation's actual performance against established targets
during the entire Plan Year.
g. In the event of a death of a participant during the Plan Year, the
participant's beneficiary under the Corporation's Pension Plan shall
receive a pro-rata amount based on the time employed prior to death
during the Plan Year and upon the Corporation's actual performance
against established targets during the entire Plan Year.
h. 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. TARGET AWARD LEVELS
a. The target award levels of annual Incentive Awards, expressed as
percentages (not to exceed 150%) of each participant's base salary
earnings during the Plan Year, will be recommended by the CEO to the
Committee for approval, provided that the maximum
annual dollar award to any participant for the Plan Year which began
on October 31, 1994 will be $950,000 and the maximum dollar award for
each subsequent Plan Year will be 107% of the immediately preceding
Plan Year. For example, the maximum annual dollar award for the 1996
Plan Year is $1,016,500, and for the 1997 Plan Year is $1,087,655.
Carrying this example forward, the maximum award for the 2005 Plan
Year would be $1,868,794.
b. Target award levels shall be established by the Committee for each
Plan Year as stated in Section 4.
7. PERFORMANCE FACTORS
For each Plan Year, two Company performance goals have been established,
and are used in a formula for calculating individual Incentive Awards.
These are as follows-
a. Return on Average Invested Capital (ROAIC), comprising a 50% weighting
in the award calculation, with 8% ROAIC meriting a 0% performance
factor, 12% ROAIC meriting a 75% performance factor, 16% ROAIC and
above meriting a 150% performance factor; and
b. Profitability, measured by Earnings Per Share (EPS), comprising a 50%
weighting in the award calculation, with an EPS equal to or less than
the previous year meriting a 0% performance factor, a 7.5% increase in
EPS meriting a 50% performance factor, a 15% increase in EPS meriting
a 100% performance factor, and a 20% or higher increase in Earnings
Per Share over the previous year meriting a 150% performance factor.
Weighted average performance factors will be determined for participants by
the extent of the Corporation's achievement of each of the performance
goals for the year. Intermediate points will be determined by
interpolation.
8. CALCULATION OF AWARDS
The Incentive Award of a participant for any Plan Year shall be calculated
by multiplying the base salary earnings of the participant for the Plan
Year (B) times the target award level (TA, expressed as a % of base salary)
times the sum of the Return on Average Invested Capital performance factor
(ROAIC-PF) multiplied by .5 and the Profitability performance factor
(EPS-PF), multiplied by .5. Otherwise expressed:
Incentive Award = B x TA x (ROAIC-PFx.5 + EPS-PFx.5)
9. PAYMENTS OF AWARDS
a. Incentive Awards shall be earned and payable in the local currency of
the participants and shall be paid in cash not later than the first
payroll date in January following the Plan Year in which the Incentive
Award was earned.
b. The Committee will have the authority and responsibility to reduce the
actual Incentive Award payable to a participant by up to a maximum of
20% of the calculated Incentive Award, based upon an individual
participant's performance.
c. In the event of the death of a participant, any amounts shall be paid
as soon as practicable after the end of the Plan Year to the
participant's designated beneficiary as provided in Article 5g.
d. If termination is by reason of disability or retirement within the
provisions of the Retirement Plan or other policies of the
Corporation, the date of payment shall be made as determined by the
Chief Executive Officer.
10. COMMUNICATION OF THE PLAN
After performance results are known and the Committee certifies
achievement, the Chief Executive Officer, or his designee, shall
communicate to each participant the specific performance factors, the
Incentive Award levels, and the manner in which awards will be paid.
11. TERM OF THE PLAN
The Plan will remain in effect until terminated by the Committee.