<DOCUMENT>
<TYPE>EX-10.3
<SEQUENCE>15
<FILENAME>c56667a2ex10-3.txt
<DESCRIPTION>SENIOR EXECUTIVE INCENTIVE COMPENSATION PLAN
<TEXT>
 
<PAGE>   1
                                                                    EXHIBIT 10.3
 
                         SYBRON DENTAL SPECIALTIES, INC.
                  SENIOR EXECUTIVE INCENTIVE COMPENSATION PLAN
 
                                POLICY STATEMENT
 
1.     OBJECTIVES
 
       The Sybron Dental Specialties, Inc. Senior Executive Incentive
       Compensation Plan (the "Incentive Plan") is designed to:
 
       -      Focus the efforts of the organization on improving shareholder
              value.
 
       -      Effectively motivate and reward key employees according to their
              contributions to organizational success.
 
       -      Serve as a management tool in directing the energies of key
              employees towards the achievement of agreed upon operating goals
              for Sybron Dental Specialties, Inc. (the "Corporation") and
              its subsidiaries.
 
       -      Equate personal financial success with organizational financial
              success.
 
       -      Assist in retaining and attracting qualified, managerial employees
              by providing a total compensation opportunity competitive with the
              marketplace.
 
2.     ADMINISTRATION
 
       The Incentive Plan shall be administered by the Compensation Committee of
the board of directors (the "Committee"). No member of the Committee shall be
eligible for awards under the Incentive Plan.
 
       The Committee shall interpret the Incentive Plan, establish rules and
regulations for the administration thereof, and make all determinations deemed
necessary or advisable for the administration of the Incentive Plan. The
Committee shall be assisted by the Corporation's Human Resources Department
staff in fulfilling its administrative responsibilities.
 
3.     ELIGIBILITY
 
       Key executives whom the Committee has identified as having the ability to
directly influence the financial results of the Corporation or its subsidiaries
shall constitute the employees eligible for participation in the Incentive Plan.
 
       An individual's eligibility to participate in the Incentive Plan shall be
determined annually by the Committee. Participation in the Incentive Plan during
a fiscal year shall not imply the right of participation in any following year.
 
4.     DETERMINATION OF INCENTIVE AWARDS
 
       A participant's Incentive Award will be determined by multiplying the
participant's total Target Bonus Amount by a Success Factor.
 
5.     TARGET BONUS AMOUNTS
 
       Target Bonus Amounts for all participants shall be a percentage of the
participant's actual annual base salary as of the end of each fiscal year for
which an Incentive Award is payable. The percentage shall be determined from the
salary grade to which the participant is assigned as of the end of the fiscal
year, all as set forth in the Administrative Guidelines for the Incentive Plan
which are included by reference herein.
 
 
 
 
 
<PAGE>   2
6.     SUCCESS FACTOR
 
       The Success Factor is the aggregate of two different components of
financial performance; namely, net income compared with budget and growth in net
income over prior year. The budgeted net income component cannot exceed 100%.
 
       Composition of the Success Factor is as follows:
 
<TABLE>
<S>                                                                       <C>
          Net income performance vs. budget (capped at 100%)              =   a
 
          Growth in net income performance                                =   b
                                                                          -----
          Success Factor                                                  = a+b
                                                                          =====
</TABLE>
 
       Section 3 of the Administrative Guidelines defines the components of the
Success Factor in detail and a rather complete example of how an individual's
Incentive Award is computed can be found in Section 6 of the Administrative
Guidelines.
 
       Notwithstanding any other provision of this Incentive Plan, in no event
shall the Incentive Award for a fiscal year for any participant exceed
$2,000,000 (the "Maximum Dollar Amount").
 
7.     CHANGE IN EMPLOYMENT STATUS
 
       Participants who terminate employment (except for termination due to
retirement, disability or death) with the Corporation or a subsidiary of the
Corporation, or whose employment is terminated by the Corporation or one of its
subsidiaries, at any time during a fiscal year, or before award payments for a
fiscal year are made, shall not be entitled to receive any award under the
Incentive Plan for that fiscal year, unless an award is specifically approved by
the Committee.
 
       Participants (or their beneficiaries or legal representatives) who
retire, become disabled or die during a fiscal year shall receive a prorated
Incentive Award that is calculated by multiplying the participant's calculated
Incentive Award by a percent equal to the percent of the fiscal year for which
the participant was actively employed.
 
8.     METHOD OF PAYMENT
 
       Awards under the Incentive Plan shall be paid in cash as soon as
practicable after financial results for the fiscal year have been determined and
verified.
 
9.     COMMITTEE DISCRETION
 
       In the event of special circumstances of an unusual or significant nature
outside the course of normal business operations, the Committee may adjust
previously approved financial objectives of the Corporation or any of its
subsidiaries or the amount of the Incentive Awards earned, when it believes the
integrity, purpose and fairness of the Incentive Plan will be better served. Any
such adjustment made after the beginning of the period in which the awards are
earned shall not, however, permit Incentive Awards, either to any person or in
the aggregate, to be greater than they otherwise would have been under the
financial objectives approved prior to the beginning of such period.
 
10.    AMENDMENT, SUSPENSION OR TERMINATION OF THE INCENTIVE PLAN
 
       The Committee may, at any time, amend, suspend or terminate the Incentive
Plan.
 
 
                                       2
<PAGE>   3
                            ADMINISTRATIVE GUIDELINES
 
       These Administrative Guidelines ("Guidelines") have been approved by the
Compensation Committee (the "Committee") of the board of directors, and shall
remain in effect until changed by the Committee. These Guidelines, combined with
the Sybron Dental Specialties, Inc. Senior Executive Compensation Incentive Plan
Policy Statement shall govern the amounts and terms of Incentive Awards payable
to eligible participants under the Incentive Plan.
 
1.     INCENTIVE AWARDS
 
       A participant's Incentive Award will be determined by multiplying the
participant's total Target Bonus amount by a Success Factor, provided that no
Incentive Award for any fiscal year for any participant shall exceed the
Maximum Dollar Amount.
 
2.     TARGET BONUS AMOUNTS
 
       Target Bonus Amounts shall be determined from a participant's salary
grade. Current salary grades and Target Bonus Amount percentages for U.S. and
non-U.S. participants are included in Section 5 below. The Target Bonus Amount
for all participants shall be the pre-determined percentage for the
participant's salary grade applied against the base salary of the participant as
of the end of each fiscal year.
 
3.     SUCCESS FACTOR
 
       The Success Factor is calculated by totaling the percentages determined
from a comparison of actual performance with respect to certain financial
measurement components to the goals set for such components. The financial
measurement components of the success factor are as follows:
 
       (i)    Actual net income compared with budget.*
 
              This component will be zero until 90% of budgeted net income
              is achieved. Maximum award will be equal to 100% when budgeted
              net income is achieved. Performance between 90% and 100% of
              budgeted net income would result in a proportional award
              being earned.
 
              NET INCOME
 
<TABLE>
              <S>                   <C>   <C>   <C>   <C>   <C>   <C>   <C>   <C>   <C>   <C>   <C>
              Budget
              Amount ($000)
 
              Percent Achievement    90    91    92    93    94    95    96    97    98    99   100
</TABLE>
 
       (ii)   Actual rate of growth in net income over prior year.*
 
              -      This component will be zero until 6% growth in net
                     income over prior year is achieved. At a growth level of
                     6%, this component will be equal to 80%.
 
              -      At 8% growth, this component will be equal to 100%. For
                     each percentage point of growth beyond 8% there is an
                     increase in this component of 12.5 percentage points.
                     Thus, at 10% growth, this component will equal 125%, at 12%
                     growth this component will equal 150%, at 14% growth this
                     component will equal 175%, continuing on a linear basis, in
                     an unlimited fashion.
 
NET INCOME GROWTH
 
<TABLE>
<S>                          <C>    <C>   <C>    <C>    <C>    <C>    <C>    <C>    <C>   <C>
Percent Growth Achieved        6      8     10     12     14     16     18     20     22    24
----------------------------------------------------------------------------------------------
 
Percent Achievement           80    100    125    150    175    200    225    250    275   300
----------------------------------------------------------------------------------------------
</TABLE>
 
                     *Earnings from acquired businesses will also be included.
 
 
                                       3
<PAGE>   4
4.     DEFINITION OF NET INCOME
 
       For purposes of this Incentive Plan, net income is net income as
adjusted, which means net income as reported on management accounting
statements, but prior to any restructuring charges.
 
                                       4
<PAGE>   5
5.   SALARY GRADES/TARGET BONUS AMOUNT PERCENTAGES
 
                                 SALARY GRADES/
                         TARGET BONUS AMOUNT PERCENTAGES
 
<TABLE>
<CAPTION>
                       U.S.                               NON-U.S.
          --------------------------------------------------------------------
 
               Salary         TARGET BONUS        Salary        TARGET BONUS
               Grade            AMOUNT %          Grade            AMOUNT %
          --------------------------------------------------------------------
 
<S>                           <C>                 <C>           <C>
                    3             16%                   3            11%
                    4             18%                   4            13%
                    5             20%                   5            15%
                    6             22%                   6            17%
                    7             24%                   7            19%
                    8             26%                   8            21%
                    9             28%                   9            23%
                   10             30%                  10            25%
                   11             33%
                   12             36%
                   13             39%
                   14             42%
                   15             45%
                   16             48%
                   17             50%
                   18             52%
                   19             53%
                   20             54%
                   21             55%
</TABLE>
 
 
6.     FORMULA FOR CALCULATION OF INCENTIVE AWARD
 
       Target Bonus Amount
 
             Base Salary at 9/30 x  Salary Grade Target   =  Target Bonus Amount
                              Bonus Amount Percent
 
       Success Factor Components
 
             Net Income Percent Achieved (capped at 100%)
       +     Net Income Growth Percent Achieved
             ----------------------------------
       =     Success Factor
 
       Incentive Award
 
             Target Bonus Award x Success Factor = Incentive Award
 
 
                                       5
<PAGE>   6
       EXAMPLE
 
              Assumptions:
 
                1.  U.S. executive - Grade 12
                2.  Base Salary - $150,000
                3.  Budgeted operating income - $112,000,000
                4.  Actual operating income - $112,000,000
                5.  Prior year's operating income - $100,000,000
                6.  Operating income growth - 12%
 
              Determination of Success Factor
 
                (i)   Net Income Achievement
 
<TABLE>
<S>                                            <C>
                      Actual                   $112,000,000
                      -------------------------------------
                      Budget                   $112,000,000
</TABLE>
 
                      Performance equals 100%, therefore,
                      component is equal to the maximum of 100%
 
                (ii)  Net Income Growth
 
                      Actual growth = 12%
                      Component therefore equals 150%
 
<TABLE>
<S>                                                                   <C>
                      Net Income Percent Achieved                     =  100%
                    + Net Income Growth Percent Achieved              =  150%
                                                                         ----
                      Success Factor                                     250%
                                                                         ===
</TABLE>
 
             Target Bonus Amount
 
                  Grade 12 Target Bonus Award % = 36%
 
                  0.36  x  $150,000 = $54,000
 
             Incentive Award
 
                  Success Factor x Target Bonus Amount = Incentive Award (not to
                                                         exceed Maximum Dollar
                                                         Amount.)
                  250%    x    $54,000    =     $135,000
 
 
                                       6
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