EXHIBIT 10(e)
BECTON DICKINSON AND COMPANY
EXECUTIVE BONUS PLANS
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Table of Contents
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1.0 PURPOSE
2.0 EXECUTIVE BONUS COMMITTEE
3.0 ELIGIBILITY
4.0 PARTICIPATION LEVELS
5.0 THEORETICAL BONUS AMOUNTS
6.0 PERFORMANCE RATING
6.1 Business Unit
a. Financial
b. Strategic
6.2 Corporate
a. Financial
b. Strategic
6.3 Factor Scales and Multipliers
7.0 DETERMINATION OF DIVISION AND CORPORATE BONUS POTS
a. Unit Theoretical Bonus
b. Unit Performance Ratings
8.0 BONUS FACTORS
a. Minimum Earnings Requirements
b. Communication
c. Bonus Recommendations
9.0 FINAL REVIEW AND APPROVAL
a. Adjustments
b. Maximum Payout Guideline
c. Payment
d. Deferral Options
e. Exceptions
10.0 EXHIBITS
Exhibit 1 Financial Thresholds
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Exhibit 2 Bonus Plan Formula
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Exhibit 3 Bonus % Ranges
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As Amended
December, 1994
BECTON DICKINSON AND COMPANY
EXECUTIVE BONUS PLANS
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1.0 PURPOSE
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Annual incentive bonuses are intended to provide key members of management
with financial incentives geared to annual performance on three levels:
. The overall financial performance of the company, sector, or division, as
appropriate.
. The attainment of world-wide business team or function strategic
objectives.
. The performance of the individual executive.
THE PAYMENT OF SUCH ANNUAL INCENTIVE BONUSES IS SOLELY WITHIN THE DISCRETION OF
MANAGEMENT, WITHIN THESE GUIDELINES. NO EMPLOYEE HAS ANY VESTED RIGHT TO ANY
SUCH PAYMENT.
2.0 EXECUTIVE BONUS COMMITTEE
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An Executive Bonus Committee will be responsible for administering this plan.
The committee will consist of the Chairman, President and Chief Executive
Officer and other senior executives as designated by the Chairman, President
and Chief Executive Officer, from time to time.
3.0 ELIGIBILITY
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Participation is extended to employees in all operating units, Corporate
staff groups (departments) and subsidiaries world-wide. Acquisitions which
have pre-existing executive bonus, profit sharing, or similar programs will
not participate in this plan until and unless those plans are superseded by
this plan.
Participation in any particular fiscal year is restricted to employees in
exempt (or management) grade 9 and above (other than those covered under
Sales Incentive Plans), who are actively employed on October 1st (the
beginning of the fiscal year). Current employees promoted to grade 9 and
above positions in bonus Level 5 between October 1st and April 1st may be
considered for pro-rata bonus. New employees will be considered for bonus
participation commencing the fiscal year following employment.
Employees who retire, become disabled or die during the fiscal year are
eligible for pro-rata bonus consideration.
4.0 PARTICIPATION LEVELS
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There are five levels of participation. Assignments to each level will be
reviewed annually by the Executive Bonus Committee based on recommendations
from unit heads. Applicable assignments must be approved each year by the
Executive Bonus Committee.
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PARTICIPATION TARGET BONUS PARTICIPANTS
LEVEL PERCENTAGE
(% OF OCTOBER 1ST
SALARY)
- ---------------------------------------------------------------------------------------------------
1 70 Chairman, President and Chief Executive
Officer
- ---------------------------------------------------------------------------------------------------
2 50 Vice Chairman and General Counsel
Sector Presidents
Corporate Executive Officers*
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3 35 Other Corporate Officers
Division Presidents
Vice President/General Managers
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4 25 Key Reporting Staff
Division and Staff Function Management
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5 10 Other employees grade 9 and above approved
for participation
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Levels 1, 2 and 3 constitute the Company's "Executive Bonus Plan". Levels 4 and 5 constitute the
Company's "Management Bonus Plan".
*Certain individual participants are grandfathered at 40%.
5.0 THEORETICAL BONUS AMOUNTS
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On or about January 15th of each year, a theoretical bonus pot for all
participating units will be developed for interim accruals and reporting. The
theoretical bonus is established by multiplying the total October 1st
salaries for approved participants in a participation level by the
appropriate Target Bonus Percentages (above).
6.0 PERFORMANCE RATING
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6.1 Business Unit (Division, Sector)
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(a) Financial Rating: Financial ratings will be based upon the units FX
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neutral OIBT (operating income before taxes) compared to the approved
budget for the fiscal year. Any significant unplanned internal or
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external factors which, in the aggregate, offset financial results in
either direction by more than 5% of Plan can be recommended by the
Sector President to the Executive Bonus Committee for its
consideration. Smaller or startup divisions may be evaluated on a
qualitative basis, with the prior approval of the Executive Bonus
Committee.
(b) Strategic Rating: Strategic ratings will be based upon the evaluation
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of the performance of each World-wide Business Team. This evaluation
will be done each
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year by the respective Sector President and submitted to the Executive
Bonus Committee for review and approval. Each division and sector
will be assigned a composite strategic rating, based upon its
participation in and contribution to the performance of the various
world-wide teams.
6.2 Corporate
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(a) Financial Rating: The corporate financial rating is based upon after-
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tax Earnings-per-Share compared to the target approved by the Board of
Directors. Normally all operating results will be included in the
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calculation. Gains or losses from non-operating items such as
divestitures or accounting charges will be excluded. Participants at
Levels 1 and 2 are evaluated on EPS as reported, others on EPS on an
FX neutral basis.
(b) Strategic Rating: The Company's strategic performance will be
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evaluated against achievement of its long term strategic goals. Each
corporate staff function will be evaluated versus strategic objectives
and contributions by a special committee consisting of the Chairman,
President and CEO, the Vice Chairman and General Counsel and the
Sector Presidents. Strategic ratings are based upon the following
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scale:
RATING INTERPRETATION
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110 & above Competitive advantage CREATED or improved
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105 Competitive advantage MAINTAINED, with directional
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progress evident
100 Competitive advantage MAINTAINED
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95 Competitive advantage MAINTAINED, but additional progress
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needed to prevent competitive risk
90 & below Competitive position DECLINED
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6.3 Factor Scales and Multipliers:
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Financial factors are based upon financial ratings as described above, and
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shall be subject to a 5:1 multiplier for performance above 100, up to a
maximum score of 150. Ratings below 100 are subject to a 2:1 penalty, and
fall to zero if below the applicable threshold.
Strategic factors are computed using a multiplier or penalty, as above,
except that no penalty applies to a rating of 95 and a rating below 75
results in a factor of zero.
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7.0 DETERMINATION OF DIVISION AND CORPORATE BONUS POTS
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(a) Unit Theoretical Bonus
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On or about October 15th following the close of each fiscal year, Division
Presidents and Corporate Officers will be provided with a list of approved
participants for their unit, showing base salaries as of the October 1
start of the fiscal year and target bonuses. All such employees will be
included on the bonus listing even if their individual performance rating
is below the level required to qualify for a bonus award.
(b) Unit Performance Ratings
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On or about October 15th following the close of each fiscal year, the
Executive Bonus Committee will determine the final unit and company
performance ratings used to determine bonus factors for the fiscal year.
The bonus pot is determined by applying the bonus factors to the
theoretical bonus.
8.0 BONUS FACTORS
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Bonus factors for each bonus level will be established as a composite of
unit, sector, corporate and individual performance ratings. Weighting of
factors will be determined in accordance with the distribution in Exhibit 2.
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(a) Minimum Earnings Requirement
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If the financial performance of a unit is below a minimum level the bonus
payout will be restricted as follows. These thresholds are illustrated in
Exhibit 1.
Corporate Factor
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If the EPS of the corporation is less than 80% of target;
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1. The corporate factor will be zero in all Corporate, Sector and Unit
bonus formulas.
2. No bonus will be paid to Corporate Officers.
Sector Factor
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If the Sector OIBT is less than 80% of plan then;
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1. The sector factor will be zero in all bonus formulas for that sector.
2. The individual factor will be zero for Sector Staff (Level 4).
3. No bonus will be paid to Sector Presidents.
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Unit Factor
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If the unit OIBT is less than 75% of plan then;
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1. The unit factor will be zero in all bonus formulas for that unit.
2. The unit and individual factors will be zero for the Division
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President and Key Staff (Levels 3 and 4).
(b) Communication
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The operating unit and Corporate ratings will be communicated to the
Division Presidents by the Sector Presidents and to the Corporate staff by
the Chairman, President and Chief Executive Officer, respectively.
(c) Bonus Recommendations
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The Sector Presidents, Division Presidents and Corporate Officers will
apply the final unit factors to the individual bonus targets to develop
the recommended bonus amounts. They will have discretion to recommend
bonuses that differ from the formula with the provision that no individual
may receive a bonus that will exceed the bonus range for the participation
level. (See Exhibit 3)
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The recommendations will be made by completing the bonus listings and
submitting a copy to the appropriate level of supervision (Sector
President, Corporate Executive Officer, or Chief Executive Officer).
9.0 FINAL REVIEW AND APPROVAL
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The recommendations for all bonus payments will be reviewed and approved by
the Sector Presidents and Corporate Executive Officers, and Chief Executive
Officer for their respective areas of responsibility. In the case of
participants at Levels 1, 2 and 3, recommendations will be subject to final
review and approval by the Compensation and Benefits Committee of the Board
of Directors.
(a) Adjustments
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If the overall performance of the Company will not support the total bonus
produced by the plan formula, or if such bonus is subject to government
regulation or other external or internal limitations, any required
adjustment will be determined by the Executive Bonus Committee and applied
across the board to all units as a final step in the bonus calculation.
(b) Maximum Payout Guideline
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Total bonus payments to participants in Levels 1, 2 and 3 should not,
barring special
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circumstances, exceed 3% of the Company's after tax net income, as
reported, for the fiscal year.
(c) Payment
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Bonuses will normally be paid in January of the calendar year following
the year in which they are awarded. An employee may elect, in writing
prior to October 31st, to accelerate any bonus payable under this Plan to
December. Except as provided in Section 3, no bonus payments will be made
to individuals who are not active employees on the final day of the fiscal
year. Employees who are terminated for cause prior to the distribution
date will forfeit their bonuses.
Bonuses awarded to any employee who dies prior to the distribution date
may be made, at the discretion of management, to the survivors of the
employee.
(d) Deferral Options
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Certain participants are eligible to defer receipt of their bonus in
accordance with the Company's Salary and Bonus Deferral Plan. Eligibility
to defer, and terms and conditions of deferral, are governed by that
plan.
(e) Exceptions
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Any recommendations for exceptions to the provisions of the Plan must be
submitted to the Executive Bonus Committee for review and are subject to
final approval by the Chief Executive Officer in the case of employees at
Levels 4 and 5. Any exceptions applicable to participants at Levels 1, 2
and 3 is further subject to approval by the Compensation and Benefits
Committee of the Board of Directors.
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EXHIBIT 1
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(pg 1 of 2)
FINANCIAL THRESHOLDS
EXECUTIVE PLAN
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Company Company Sector Division
Reported FX Neutral FX Neutral FX Neutral
EPS EPS OIBT OIBT
(less than)80% of Budget (less than)80% of Budget (less than)80% of Budget (less than)75% of Budget
------------------------ ------------------------ ------------------------ ------------------------
Senior Corporate
Executives No Bonus
Sector Presidents
No Bonus No Bonus
Corporate Officers
No Bonus No Company
Factor (75%)
Divison Presidents and
Others No Bonus No Sector No Division/WW
Factors (25%) Factors (75%)
OVERALL LIMIT
. TOTAL PAYOUT MAY NOT EXCEED 3% OF COMPANY NET INCOME (AFTER-TAX)
EXHIBIT 1
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(pg 2 of 2)
FINANCIAL THRESHOLDS
MANAGEMENT PLAN
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Company Company Sector Division
Reported FX Neutral FX Neutral FX Neutral
EPS EPS OIBT OIBT
(less than)80% of Budget (less than)80% of Budget (less than)80% of Budget (less than)75% of Budget
------------------------ ------------------------ ------------------------ ------------------------
Director or V.P./
Operating Committee/
or Equivalent
- ----------------------
(LEVEL IV)
. Corporate No Company No Company
Factor (75%) Factor (75%)
. Sector No Company No Company No Sector
Factor (25%) Factor (25%) Factors (75%)
. Division No Sector No Division/WW
Factors (25%) Factors (75%)
Manager/
or Equivalent
- ----------------------
(LEVEL V)
. Corporate No Company No Company
Factor (50%) Factor (50%)
. Sector No Sector
Factors (50%)
. Division No Division/WW
Factors (50%)
Exhibit 2
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(page 1 of 2)
BONUS PLAN FORMULA
SECTOR PRESIDENTS
COMPANY
25% (EPS vs Budget)
SECTOR FINANCIAL
50% (OIBT vs Budget)
25% SECTOR STRATEGIC
CORPORATE OFFICERS
COMPANY
75% EPS vs Budget
25% UNIT STRATEGIC
DIVISION PRESIDENTS
SECTOR
25% (65% OIBT vs Budget,
35% Strategic)
UNIT FINANCIAL
50% (OIBT vs Budget)
UNIT STRATEGIC
25% (Blend of WW Team Ratings)
EXHIBIT 2
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(pg 2 of 2)
BONUS PLAN FORMULAS
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LEVELS III, IV LEVEL V
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DIVISION
25% Sector
(65% OIBT vs Budget,
35% Strategic)
50% Unit Financial 50% Unit
(OIBT vs Budget) (65% OIBT vs Budget,
35% Strategic)
25% Unit Strategic
(WW Teams) 50% Individual
SECTOR
25% Company
EPS vs Budget
75% Sector 50% Sector
(65% OIBT vs Budget, (65% OIBT vs Budget,
35% Strategic) 35% Strategic)
50% Individual
CORPORATE
75% Company 50% Company
EPS vs Budget EPS vs Budget
25% Unit Strategic 25% Unit Strategic
25% Individual
*ALL FINANCIAL RATINGS BASED UPON FX NEUTRAL PERFORMANCE VERSUS BUDGET
EXHIBIT 3
BONUS % RANGES
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Participation Level Minimum Target Bonus Maximum
- ------------------- ------- ------------- -------
(Theoretical)
1 35 70 110
2 25 50 80
20 40 70
3 15 35 60
4 10 25 40
5 5 10 20