HOSPIRA (HSP)

Administration

        The 2004 Stock Plan is administered by the compensation committee of our board of directors, which is composed entirely of non-employee directors who meet the criteria of "outside director" under Section 162(m) of the Internal Revenue Code and "non-employee director" in the rules adopted under Section 16 of the Securities Exchange Act of 1934. This committee selects the individuals who will receive options or other awards from among the eligible participants, and determines the form of those awards, the number of shares or dollar targets of the options or awards, and all terms and conditions of the options or awards. This committee is empowered to approve and certify the level of attainment of any performance targets established in connection with awards under the plan as may be required under Section 162(m) of the Internal Revenue Code. Our chief executive officer has the authority to make certain awards to employees who are not executive officers.

SECTION 2.    Administration

        2.1    General.    The Plan shall be administered by the Compensation Committee (the "Committee") of the Board of Directors of Hospira (the "Board").

        2.2    Authority of the Committee.    The Committee will have full authority to administer the Plan, including the authority to interpret and construe any provision of the Plan, and to establish and amend rules pertaining thereto. All rules, regulations and interpretations shall be conclusive and binding on all persons. The Committee has sole responsibility for selecting Participants, establishing performance objectives, setting award targets, and determining award amounts.

        2.3    Delegation by the Committee.    The Committee from time to time may delegate the performance of certain ministerial functions in connection with the Plan, such as the keeping of records, to such person or persons as the Committee may select. The cost of administration of the Plan will be paid by Hospira.

SECTION 2.    Administration

        2.1SIZE=2>    General.    The Plan shall be administered by the Compensation Committee (the "Committee") of the Board of
Directors of Hospira (the "Board").

        2.2SIZE=2>    Authority of the Committee.    The Committee will have full authority to administer the Plan, including the
authority to interpret and construe any provision of the Plan, and to establish and amend rules pertaining thereto. All rules, regulations and interpretations shall be conclusive and binding on all
persons. The Committee has sole responsibility for selecting Participants, establishing performance objectives, setting award targets, and determining award amounts.

        2.3SIZE=2>    Delegation by the Committee.    The Committee from time to time may delegate the performance of certain
ministerial functions in connection with the Plan, such as the keeping of records, to such person or persons as the Committee may select. The cost of administration of the Plan will be paid by
Hospira.

Administration

The compensation committee of our board of directors oversees our executive compensation program. In 2006, the former nominations and compensation committee of the board performed these responsibilities. References to the committee will refer to the current committee or the former committee as the context requires. The committee consists entirely of independent directors and makes compensation decisions involving our named executive officers. The independent members of our board of directors further review and approve compensation decisions involving our chief executive officer.

The committee has engaged an independent consultant, Watson Wyatt, to assist it in the performance of its duties. The consultant regularly provides the committee with analyses of competitive practice and compensation relevant to the company’s executive jobs and industry. In addition, the committee routinely requests and receives recommendations from the consultant with regard to executive officer pay, long-term incentive award levels and other executive compensation matters of concern to the committee. On matters relating to executive compensation, the consultant reports directly to the committee.

With the assistance of our compensation consultant, the committee benchmarks elements of our executive compensation against a peer group of companies selected from the medical device, generic pharmaceutical and hospital supply industries. The committee selects peer group companies to reflect Hospira’s size, technologies, product markets and the talent pool from which we recruit. In performing the competitive analysis for 2006 compensation, the committee included the following companies in the peer group:

Watson Wyatt’s competitive analyses also contained relevant published survey benchmark data from the healthcare and general industries which the committee uses as secondary sources of information to support the peer group analysis.

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SECTION 2.    ADMINISTRATION.

        2.1   General. The Plan shall be administered by the Compensation and Nominations Committee (the "Committee") of the Board of Directors of Hospira (the "Board").

        2.2   Authority of the Committee. The Committee will have full authority to administer the Plan, including the authority to interpret and construe any provision of the Plan, and to establish and amend rules pertaining thereto. All rules, regulations and interpretations shall be conclusive and binding on all persons. The Committee has sole responsibility for selecting Participants, establishing performance objectives, setting award targets, and determining award amounts.

        2.3   Delegation by the Committee. The Committee from time to time may delegate the performance of certain ministerial functions in connection with the Plan, such as the keeping of records, to such person or persons as the Committee may select. The cost of administration of the Plan will be paid by Hospira.