1
Exhibit 10(g)
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The Scotts Company 1997 Executive Annual Incentive Plan
2
[SCOTTS LOGO]
1997 SCOTTS EXECUTIVE AND MANAGEMENT
INCENTIVE PLAN
CORPORATE PARTICIPANTS
3
GENERAL PLAN PROVISIONS
OBJECTIVE: To provide a strong financial incentive which is consistent with and
supportive of business strategy and to encourage a team effort towards the
achievement of corporate goals.
TARGET AWARDS: Each participant will be assigned a 1997 "Bonus Target Percent of
Salary."
RESTRICTIONS: Participants must be actively employed in an eligible position for
at least 13 consecutive weeks during the plan year. Participants must be
employed on the last day of the fiscal year to be eligible for a payout.
Participants who terminate their employment during the plan year, except in
cases of retirement, will not be eligible for an incentive payment, prorated or
otherwise.
Plan eligibility and payout calculation will not be impacted for associates on
short term disability at any time during the plan year. However, if an associate
is on long term disability, the payout will be prorated to compensate only for
periods of active employment or short term disability.
The Plan confers no rights upon any associate to participate in the Plan or
remain in the employ of the Company. Neither the adoption of the Plan nor its
operation shall in any way affect the right of the associate or the Company to
terminate the employment relationship at any time.
The Company reserves the right to suspend the Plan, to withdraw the Plan, and to
make substantial alterations in Plan concept.
4
CORPORATE PARTICIPANTS
EXECUTIVE & MANAGEMENT LEVEL
Finance
Human Resources
Research
Information Systems
Legal/Corporate Communications
MEASUREMENTS:
- -------------
===============================================================================
PARTICIPANTS CORPORATE EARNINGS MAJOR GOAL ATTAINMENT
PER SHARE
("E.P.S.")
===============================================================================
Finance 80% 20%
- -------------------------------------------------------------------------------
Human Resources 80% 20%
- -------------------------------------------------------------------------------
Research 80% 20%
- -------------------------------------------------------------------------------
Information Systems 80% 20%
- -------------------------------------------------------------------------------
Legal/Corporate Communications 80% 20%
===============================================================================
EARNED AWARDS:
- --------------
CORPORATE EARNINGS PER SHARE: As reported in public financial statements.
===============================================================================
CORPORATE PERFORMANCE EARNINGS PER SHARE INCENTIVE PAYOUT
AWARD PERCENTAGE
===============================================================================
Minimum 80% - $1.06 25%
- -------------------------------------------------------------------------------
Target 100% - $1.32 100%
- -------------------------------------------------------------------------------
Maximum 120% - $1.56 250%
===============================================================================
Results between performance levels will be incrementally calculated so that
participants will receive a prorated payout (calculated on a straight line
basis, rounded to the nearest percentile).
For results below the "Minimum": No incentive payout will be made.
For results between "Minimum" and "Target": For each $.01 increase in E.P.S.
above the "Minimum", the award percentage increases by 2.88%.
For results between "Target" and "Maximum": For each $.01 increase in E.P.S.
above the "Target", the award percentage increases by 6.25%.
For results above the "Maximum": An incentive payout of 250% will be calculated.
5
MAJOR GOAL ATTAINMENT: Based on the performance and achievement of specific
quantifiable goals within the participant's area of responsibility, as
established and measured by the CEO and/or the participant's manager.
===============================================================================
PERSONAL PERFORMANCE LEVELS GOAL ATTAINMENT INCENTIVE PAYOUT
AWARD PERCENTAGE
===============================================================================
Minimum Did not achieve goals 0%
- -------------------------------------------------------------------------------
Target Achieved goals on average 100%
- -------------------------------------------------------------------------------
Maximum Exceeded goals on average 200%
===============================================================================
Results between performance levels will be rewarded on a payout percentage
determined by the CEO and/or the participant's manager (with CEO approval).
SAMPLE CALCULATION:
- -------------------
Salary: $80,000
1997 Target Percentage: 20%
Results:
Earnings Per Share: $1.34
Major Goal Attainment: Accomplished all major goals satisfactorily.
1997 Target x 80% x Corporate Earnings Per Share Award Percentage
20% x 80% x 112.5% = 18.0%
+
1997 Target x 20% x Major Goal Attainment Award Percentage
20% x 20% x 100% = 4.0%
=Award of 22.0% of pay
FINAL PAYOUT = $80,000 X 22.0% = $17,600
=======
6
[SCOTTS LOGO]
1997 SCOTTS EXECUTIVE AND MANAGEMENT
INCENTIVE PLAN
BUSINESS GROUP PARTICIPANTS
EXECUTIVE LEVEL
7
GENERAL PLAN PROVISIONS
OBJECTIVE: To provide a strong financial incentive which is consistent with and
supportive of business strategy and to encourage a team effort towards the
achievement of corporate goals.
TARGET AWARDS: Each participant will be assigned a 1997 "Bonus Target Percent of
Salary."
RESTRICTIONS: Participants must be actively employed in an eligible position for
at least 13 consecutive weeks during the plan year. Participants must be
employed on the last day of the fiscal year to be eligible for a payout.
Participants who terminate their employment during the plan year, except in
cases of retirement, will not be eligible for an incentive payment, prorated or
otherwise.
Plan eligibility and payout calculation will not be impacted for associates on
short term disability at any time during the plan year. However, if an associate
is on long term disability, the payout will be prorated to compensate only for
periods of active employment or short term disability.
The Plan confers no rights upon any associate to participate in the Plan or
remain in the employ of the Company. Neither the adoption of the Plan nor its
operation shall in any way affect the right of the associate or the Company to
terminate the employment relationship at any time.
The Company reserves the right to suspend the Plan, to withdraw the Plan, and to
make substantial alterations in Plan concept.
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BUSINESS GROUP PARTICIPANTS
EXECUTIVE LEVEL
(EXECUTIVES AND THEIR DIRECT REPORTS)
Consumer Lawns
Consumer Gardens
Professional
Organics
International
MEASUREMENTS
- ------------
===============================================================================
BUSINESS GROUP BUSINESS GROUP CORPORATE MAJOR GOAL
ADJUSTED CONTRIBUTION EARNINGS ATTAINMENT
MARGIN PER SHARE
("A.C.M.") ("E.P.S.")
===============================================================================
Consumer Lawns 50% 30% 20%
- -------------------------------------------------------------------------------
Consumer Gardens 50% 30% 20%
- -------------------------------------------------------------------------------
Professional 50% 30% 20%
- -------------------------------------------------------------------------------
Organics 50% 30% 20%
- -------------------------------------------------------------------------------
International 50% 30% 20%
===============================================================================
EARNED AWARDS:
- --------------
BUSINESS GROUP A.C.M.: Defined by the attached schedule.
===============================================================================
GROUP PERFORMANCE LEVELS BUSINESS GROUP A.C.M. INCENTIVE PAYOUT
PERFORMANCE PERCENTAGE AWARD PERCENTAGE
===============================================================================
Minimum 80% 25%
- -------------------------------------------------------------------------------
Target 100% 100%
- -------------------------------------------------------------------------------
Maximum 120% 250%
===============================================================================
Results between performance levels will be incrementally calculated so that
participants will receive a prorated payout (calculated on a straight line
basis, rounded to the nearest percentile).
For results below the "Minimum": No incentive payout will be made.
For results between "Minimum" and "Target": For each 1% increase in performance
percentage above the "Minimum", the award percentage increases by 3.75%.
For results between "Target" and "Maximum": For each 1% increase in performance
percentage above the "Target", the award percentage increases by 7.5%.
For results above the "Maximum": An incentive payout of 250% will be calculated.
9
CORPORATE EARNINGS PER SHARE: As reported in public financial statements.
===============================================================================
CORPORATE PERFORMANCE EARNINGS PER SHARE INCENTIVE PAYOUT
AWARD PERCENTAGE
===============================================================================
Minimum 80% - $1.06 25%
- -------------------------------------------------------------------------------
Target 100% - $1.32 100%
- -------------------------------------------------------------------------------
Maximum 120% - $1.56 250%
===============================================================================
Results between performance levels will be incrementally calculated so that
participants will receive a prorated payout (calculated on a straight line
basis, rounded to the nearest percentile).
For results below the "Minimum": No incentive payout will be made.
For results between "Minimum" and "Target": For each $.01 increase in E.P.S.
above the "Minimum", the award percentage increases by 2.88%.
For results between "Target" and "Maximum": For each $.01 increase in E.P.S.
above the "Target", the award percentage increases by 6.25%.
For results above the "Maximum": An incentive payout of 250% will be calculated.
MAJOR GOAL ATTAINMENT: Based on the performance and achievement of specific
quantifiable goals within the participant's area of responsibility, as
established and measured by the CEO, Executive Vice President and/or the
participant's manager.
===============================================================================
PERSONAL PERFORMANCE LEVELS GOAL ATTAINMENT INCENTIVE PAYOUT
AWARD PERCENTAGE
===============================================================================
Minimum Did not achieve goals 0%
- -------------------------------------------------------------------------------
Target Achieved goals on average 100%
- -------------------------------------------------------------------------------
Maximum Exceeded goals on average 200%
===============================================================================
Results between performance levels will be rewarded on a payout percentage
determined by the CEO and/or the participant's manager (with CEO approval).
10
SAMPLE CALCULATION:
- -------------------
Salary: $80,000
1997 Target Percentage: 20%
Results:
Business Group A.C.M.:
Actual $21,000,000
Budget $20,000,000
Earnings Per Share: $1.34
Major Goal Attainment: Accomplished all major goals satisfactorily on average.
Calculation:
Business Group A.C.M. = $21,000,000 = 105%
-----------
Performance Percentage $20,000,000
(5% Performance Percentage above "target" x 7.5%) + 100% = 137.5% Business Group
A.C.M. Award
Percentage
1997 Target x 50% x Business Group A.C.M. Award Percentage
20% x 50% x 137.5% = 13.75%
+
1997 Target x 30% x Corporate Earnings Per Share Award Percentage
20% x 30% x 112.5% = 6.75%
+
1997 Target x 20% x Major Goal Attainment Award Percentage
20% x 20% x 100% = 4.0%
=Award of 24.5% of pay
FINAL PAYOUT = $80,000 X 24.5% = $19,600
=======
11
[SCOTTS LOGO]
1997 SCOTTS EXECUTIVE AND MANAGEMENT
INCENTIVE PLAN
OPERATIONS PARTICIPANTS LEVEL
EXECUTIVE LEVEL
12
GENERAL PLAN PROVISIONS
OBJECTIVE: To provide a strong financial incentive which is consistent with and
supportive of business strategy and to encourage a team effort towards the
achievement of corporate goals.
TARGET AWARDS: Each participant will be assigned a 1997 "Bonus Target Percent of
Salary."
RESTRICTIONS: Participants must be actively employed in an eligible position for
at least 13 consecutive weeks during the plan year. Participants must be
employed on the last day of the fiscal year to be eligible for a payout.
Participants who terminate their employment during the plan year, except in
cases of retirement, will not be eligible for an incentive payment, prorated or
otherwise.
Plan eligibility and payout calculation will not be impacted for associates on
short term disability at any time during the plan year. However, if an associate
is on long term disability, the payout will be prorated to compensate only for
periods of active employment or short term disability.
The Plan confers no rights upon any associate to participate in the Plan or
remain in the employ of the Company. Neither the adoption of the Plan nor its
operation shall in any way affect the right of the associate or the Company to
terminate the employment relationship at any time.
The Company reserves the right to suspend the Plan, to withdraw the Plan, and to
make substantial alterations in Plan concept.
13
OPERATIONS PARTICIPANTS
EXECUTIVE LEVEL
(EXECUTIVES AND THEIR DIRECT REPORTS)
MEASUREMENTS
- ------------
===============================================================================
BUSINESS OPERATING CORPORATE INDIVIDUAL AREA OF MAJOR GOAL
GROUP COSTS EARNINGS PER RESPONSIBILITY ATTAINMENT
SHARE ("I.A.O.R.")
===============================================================================
Operations Range: Range: Range: 20%
20% - 50% 20% - 30% 0% - 40%
===============================================================================
EARNED AWARDS
- -------------
OPERATING COSTS: Defined by the sum of the following:
1. Total manufacturing variances to budget
2. Total material price variances to budget
3. Total distribution variances to flex budget
===============================================================================
CORPORATE PERFORMANCE OPERATING COSTS INCENTIVE PAYOUT
AWARD PERCENTAGE
===============================================================================
Minimum $2 MM (U) 25%
- -------------------------------------------------------------------------------
Target Budget 100%
- -------------------------------------------------------------------------------
Maximum $1 MM (F) 250%
===============================================================================
Results between performance levels will be incrementally calculated so that
participants will receive a prorated payout (calculated on a straight line
basis, rounded to the nearest percentile).
For results below the "Minimum": No incentive payout will be made.
For results between "Minimum" and "Target": For each $26,667 below the "Target",
the award percentage decreases by 1.00%.
For results between "Target" and "Maximum": For each $6,667 above the "Target",
the award percentage increases by 1.00%.
For results above the "Maximum": An incentive payout of 250% will be calculated.
CORPORATE EARNINGS PER SHARE: As reported in public financial statements.
===============================================================================
CORPORATE PERFORMANCE EARNINGS PER SHARE INCENTIVE PAYOUT
AWARD PERCENTAGE
===============================================================================
Minimum 80% - $1.06 25%
- -------------------------------------------------------------------------------
Target 100% - $1.32 100%
- -------------------------------------------------------------------------------
Maximum 120% - $1.56 250%
===============================================================================
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Results between performance levels will be incrementally calculated so that
participants will receive a prorated payout (calculated on a straight line
basis, rounded to the nearest percentile).
For results below the "Minimum": No incentive payout will be made.
For results above the "Maximum": An incentive payout of 250% will be calculated.
INDIVIDUAL AREA OF RESPONSIBILITY: Defined according to the participant.
===============================================================================
I.A.O.R. AREA OF RESPONSIBILITY INCENTIVE PAYOUT
PERFORMANCE LEVELS MEASURE(S) AWARD PERCENTAGE
===============================================================================
Minimum Defined according to the I.A.O.R. 25%
- -------------------------------------------------------------------------------
Target Budget 100%
- -------------------------------------------------------------------------------
Maximum Defined according to the I.A.O.R. 250%
===============================================================================
Results between performance levels will be incrementally calculated so that
participants will receive a prorated payout (calculated on a straight line
basis, rounded to the nearest percentile).
For results below the "Minimum": No incentive payout will be made.
For results above the "Maximum": An incentive payout of 250% will be calculated.
MAJOR GOAL ATTAINMENT: Based on the performance and achievement of specific
quantifiable goals within the participants area of responsibility, as
established and measured by the CEO, Executive Vice President and/or the
participant's manager.
===============================================================================
PERSONAL PERFORMANCE LEVELS GOAL ATTAINMENT INCENTIVE PAYOUT
===============================================================================
Minimum Did not achieve goals 0%
- -------------------------------------------------------------------------------
Target Achieved goals on average 100%
- -------------------------------------------------------------------------------
Maximum Exceeded goals on average 200%
===============================================================================
Results between performance levels will be rewarded on a payout percentage
determined by the CEO and/or the participant's manager (with CEO approval).
15
SAMPLE CALCULATION:
- -------------------
Salary: $80,000
1997 Target Percentage: 20%
Incentive Measurements
===============================================================================
BUSINESS OPERATING CORPORATE INDIVIDUAL AREA OF MAJOR GOAL
GROUP COSTS EARNINGS PER RESPONSIBILITY ATTAINMENT
SHARE ("I.A.O.R.")
===============================================================================
Operations 20% 20% 40% 20%
===============================================================================
Results:
Operating Costs: $20,000 (F)
Corporate Earnings per Share: $1.34
Individual Area of Responsibility: Attains budget
Major Goal Attainment: Accomplished all major goals satisfactorily on average.
Calculation:
Operating Costs = $20,000 = 3.0 + 100% = 103%
-------
Award Percentage $6,667
1997 Target x 20% x Operations Cost Award Percentage
20% x 20% x 103% = 4.12%
+
1997 Target x 20% x Corporate Earnings per Share Award Percentage
20% x 20% x 112.5% = 4.50%
+
1997 Target x 40% x Individual Area of Responsibility Award Percentage
20% x 40% x 100% = 8.00%
+
1997 Target x 20% x Major Goal Attainment Award Percentage
20% x 20% x 100% = 4.00%
= Award of 20.62% of pay
FINAL PAYOUT = $80,000 X 20.62% = $16,496
=======
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OPERATIONS/ORGANICS ADDENDUM
EXECUTIVE LEVEL
MEASUREMENTS:
- -------------
===============================================================================
BUSINESS ORGANICS OPERATING ORGANICS CORPORATE MAJOR GOAL
GROUP COSTS ADJUSTED CONTRIBUTION EARNINGS ATTAINMENT
MARGIN ("A.C.M.") PER SHARE
===============================================================================
Organics 30% 30% 20% 20%
===============================================================================
EARNED AWARDS:
- --------------
ORGANICS OPERATING COSTS: Defined by the following:
===============================================================================
ORGANICS OPERATING COST ORGANICS A.C.M. INCENTIVE PAYOUT
PERFORMANCE LEVELS MEASURE(S) AWARD PERCENTAGE
===============================================================================
Minimum $500M (U) 25%
- -------------------------------------------------------------------------------
Target Budget 100%
- -------------------------------------------------------------------------------
Maximum $250M (F) 250%
===============================================================================
Results between performance levels will be incrementally calculated so that
participants will receive a prorated payout (calculated on a straight line
basis, rounded to the nearest percentile).
For results below the "Minimum": No incentive payout will be made.
For results above the "Maximum": An incentive payout of 250% will be calculated.
BUSINESS GROUP A.C.M.: Defined by the attached schedule.
===============================================================================
GROUP PERFORMANCE LEVELS BUSINESS GROUP A.C.M. INCENTIVE PAYOUT
PERFORMANCE PERCENTAGE AWARD PERCENTAGE
===============================================================================
Minimum 80% 25%
- -------------------------------------------------------------------------------
Target 100% 100%
- -------------------------------------------------------------------------------
Maximum 120% 250%
===============================================================================
Results between performance levels will be incrementally calculated so that
participants will receive a prorated payout (calculated on a straight line
basis, rounded to the nearest percentile).
For results below the "Minimum": No incentive payout will be made.
For results between "Minimum" and "Target": For each 1% increase in performance
percentage above the "Minimum", the award percentage increases by 3.75%.
17
For results between "Target" and "Maximum": For each 1% increase in performance
percentage above the "Target", the award percentage increases by 7.5%.
For results above the "Maximum": An incentive payout of 250% will be calculated.
CORPORATE EARNINGS PER SHARE: Refer to the Plan Document.
MAJOR GOAL ATTAINMENT: Refer to the Plan Document.