MOLX » Topics » 7.6 Performance Measures.

This excerpt taken from the MOLX DEF 14A filed Sep 10, 2007.

7.6        Performance Measures.


  a. General Rule.  The performance goals, upon which the payment or vesting of a Performance Share award to a Covered Employee that is intended to qualify as Performance-Based Compensation, shall be selected by the Committee in its complete and sole discretion but shall be limited to one or more of the following Performance Measures:


  (1) Net earnings or net income (before or after taxes);
  (2) Earnings per share;
  (3) Net sales or revenue growth;
  (4) Net operating profit;
  (5) Return measures (including, but not limited to, return on assets, return on net assets, capital, invested capital, equity, sales, or revenue);
  (6) Cash flow (including, but not limited to, operating cash flow, free cash flow, cash flow return on equity, and cash flow return on investment);
  (7) EBIT or earnings before or after taxes, interest, depreciation, and/or amortization;
  (8) Gross or operating margins;
  (9) Productivity ratios;
  (10) Share price (including, but not limited to, growth measures and total shareholder return);
  (11) Expense targets;
  (12) Margins;
  (13) Operating efficiency;
  (14) Market share;
  (15) Total shareholder return;
  (16) Customer satisfaction;
  (17) Working capital targets; and


Economic value added or EVA® (net operating profit after tax minus the sum of capital multiplied by the cost of capital).

Any Performance Measure(s) may be used to measure the performance of the Company, any subsidiary, and/or any affiliate, as the case may be, as a whole or any business unit of the Company, and subsidiary, and/or any affiliate, as the case may be, or any combination thereof, as the Committee may deem appropriate, or any of the above Performance Measures as compared to the performance of a group of comparator companies, or published or special index that the Committee, in its sole discretion, deems appropriate, or the Company may select Performance Measure (10) above as compared to various stock market indices. The Committee also has the authority to provide for accelerated vesting of any Performance Share award based on the achievement of performance goals pursuant to the Performance Measures specified in this Section 7.6.


  b. Evaluation of Performance.  The Committee may provide in any such Performance Share award that any evaluation of performance may include or exclude any of the following events that occurs during a Performance Period:


  (1) Asset write-downs;
  (2) Litigation or claim judgments or settlements;
  (3) The effect of changes in tax laws, accounting principles, or other laws or provisions affecting reported results;
  (4) Any reorganization and restructuring programs;
  (5) Extraordinary nonrecurring items as described in Accounting Principles Board Opinion No. 30 and/or in management’s discussion and analysis of financial condition and results of operations appearing in the Company’s annual report to shareholders for the applicable year;
  (6) Acquisitions or divestitures; and
  (7) Foreign exchange gains and losses.



Table of Contents

To the extent such inclusions or exclusions affect Performance Share awards to Covered Employees, they shall be prescribed in a form that meets the requirements of Code Section 162(m) for deductibility.


  c. Adjustment of Performance-Based Compensation.  Awards that are intended to qualify as Performance-Based Compensation may not be adjusted upward. The Committee shall retain the discretion to adjust such Performance Share awards downward, either on a formula or discretionary basis or any combination, as the Committee determines is necessary to reach an equitable result. For Performance Share awards that are not intended to qualify as Performance-Based Compensation, the Committee shall retain the discretion to adjust such Performance Share awards upward or downward, either on a formula or discretionary basis or any combination, as the Committee determines.


  d. Committee Discretion.  In the event that applicable tax and/or securities laws change to permit Committee discretion to alter the governing Performance Measures without obtaining shareholder approval of such changes, the Committee shall have sole discretion to make such changes without obtaining shareholder approval. In addition, in the event that the Committee determines that it is advisable to grant Performance Share awards that shall not qualify as Performance-Based Compensation, the Committee may make such grants without satisfying the requirements of Code Section 162(m) and base vesting on Performance Measures other than those set forth in paragraph (a) above.

7.7        Compliance with Code Section 162(m).  The Company intends that the Performance Share awards granted to Covered Employees shall satisfy the requirements of the performance-based exception under Code Section 162(m), unless otherwise determined by the Committee when the Performance Share award is granted. Accordingly, the terms of this Plan, including the definition of Covered Employee and other terms used therein, shall be interpreted in a manner consistent with Code Section 162(m) and regulations thereunder. Notwithstanding the foregoing, because the Committee cannot determine with certainty whether a given employee will be a Covered Employee with respect to a fiscal year that has not yet been completed, the term Covered Employee as used herein shall mean only a person designated by the Committee as likely to be a Covered Employee with respect to a fiscal year. If any provision of the Plan or any award agreement designated as intended to satisfy the performance-based exception under Code Section 162(m) does not comply or is inconsistent with the requirements of Code Section 162(m) or regulations thereunder, such provision shall be construed or deemed amended to the extent necessary to conform to such requirements, and no provision shall be deemed to confer upon the Committee or any other person sole discretion to increase the amount of compensation otherwise payable in connection with such Performance Share award upon attainment of the applicable performance objectives.

7.8        Transferability.  Performance Shares are not transferable until all conditions and restrictions applicable to such Performance Shares under the respective award agreement have been satisfied or lapse (including satisfaction of any applicable tax withholding obligations). In the event of the death of an employee while having unexpired outstanding Performance Shares, the personal representative of the estate of the employee may receive the distribution of vested Performance Shares in accordance with Section 7.5(b).

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