LEXMARK INTERNATIONAL, INC.
SENIOR EXECUTIVE INCENTIVE COMPENSATION PLAN
The purpose of the Lexmark International, Inc. Senior Executive Incentive
Compensation Plan is to permit Lexmark International, Inc. (the "Company"),
through awards of annual incentive compensation which satisfy the requirements
for performance-based compensation under Section 162(m) of the Internal Revenue
Code, to attract and retain executives and to motivate these executives to
promote the profitability and growth of the Company.
"AWARD" shall mean the amount granted to a Participant by the Committee for
a Performance Period.
"BOARD" shall mean the Board of Directors of the Company.
"CODE" shall mean the Internal Revenue Code of 1986, as amended.
"COMMITTEE" shall mean the Compensation and Pension Committee of the Board
or any subcommittee thereof which meets the requirements of Section 162(m)(4)(C)
of the Code.
"EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as amended.
"MAXIMUM AWARD" shall mean for each Participant, six-tenths of one percent
of Operating Income.
"OPERATING INCOME" shall mean operating income or such accounting
equivalent as defined by accounting principles generally accepted in the United
States ("GAAP") from time to time, and reported in the Company's income
statement for the full fiscal year covered by the Performance Period, adjusted
to eliminate the effect of any unusual nonrecurring items.
"PARTICIPANT" shall mean, for each Performance Period, each executive
officer of the Company who is a "covered employee" (as defined in Section 162(m)
of the Code) for that Performance Period, unless otherwise determined by the
Committee in its sole discretion.
"PERFORMANCE PERIOD" shall mean the Company's fiscal year or any other
shorter period designated by the Committee with respect to which an Award may be
"PLAN" shall mean the Lexmark International, Inc. Senior Executive
Incentive Compensation Plan, as amended from time to time.
"STOCK PLANS" shall mean the Lexmark International, Inc. Stock Incentive
Plan, as amended and restated April 30, 2003, and as further amended from time
to time, and/or any prior and successor stock plans adopted or assumed by the
The Plan shall be administered by the Committee, which shall have full
authority to interpret the Plan, to establish rules and regulations relating to
the operation of the Plan, to select Participants, to determine any reduction in
the amounts of any Awards and to make all determinations and take all other
actions necessary or appropriate for the proper administration of the Plan. The
Committee's interpretation of the Plan, and all actions taken within the scope
of its authority, shall be final and binding on the Company, its stockholders
and the Participants and their respective successors and assigns. No member of
the Committee shall be eligible to participate in the Plan.
4. DETERMINATION OF AWARDS
(a) The Maximum Award for the Performance Period shall be equal to
six-tenths of one percent of Operating Income. For Performance Periods shorter
than 12 months, the Maximum Award shall be equal to six-tenths of one percent of
Operating Income multiplied by a fraction, the numerator of which is equal to
the number of full and partial months in the Performance Period and the
denominator of which is equal to 12.
(b) Following the end of each Performance Period, the Committee may
determine to grant to any Participant an Award, which may not exceed the Maximum
Award specified in paragraph (a) of this section for such Participant.
(c) The Committee, in its sole discretion, based on any factors the
Committee deems appropriate, may reduce, but may not increase, the Maximum Award
to any Participant for any Performance Period (including reduction to zero if
the Committee so determines). The Committee shall make a determination of
whether and to what extent to reduce Awards under the Plan for each Performance
Period at such time or times following the close of the Performance Period as
the Committee shall deem appropriate. The reduction in the amount of an Award to
any Participant for a Performance Period shall have no effect on the amount of
the Award to any other Participant for such Performance Period.
5. PAYMENT OF AWARDS
Prior to the payment of any Awards under the Plan, the Committee must
certify in writing the Maximum Award payable to a Participant and the actual
amount of the individual's Award. Each Participant shall be eligible to receive,
as soon as practicable after the amount of such Participant's Award for a
Performance Period has been determined, payment of all or a portion of that
Award. Awards may be paid immediately or deferred following the Committee
certification, in cash, stock, restricted stock, stock options, other
stock-based or stock-denominated units or any combination thereof determined by
the Committee. Equity or equity-based awards may be granted under the terms and
conditions of the applicable Stock Plan. Payment of the Award may be deferred in
accordance with a written election by the Participant pursuant to procedures
established by the Committee.
The Committee may amend the terms and conditions of the Plan at any time
and from time to time, provided that no such amendment that would require the
consent of the stockholders of the Company pursuant to Section 162(m) of the
Code, the Exchange Act, the listing standards of the New York Stock Exchange or
any other applicable law, rule or regulation, shall be effective without such
consent. No such amendment which adversely affects a Participant's rights to, or
interest in, an Award granted prior to the date of the amendment shall be
effective unless the Participant shall have agreed thereto in writing. No such
amendment shall increase the Maximum Award of any Participant above the amount
described in Section 4 above.
The Committee may terminate this Plan at any time. In such event, and
notwithstanding any provision of the Plan to the contrary, payment of deferred
amounts plus any earnings may be accelerated with respect to any affected
Participant in the discretion of the Committee and paid as soon as practicable;
but in no event shall the termination of the Plan adversely affect the rights of
any Participant to deferred amounts previously awarded such Participant, plus
any earnings thereon.
8. OTHER PROVISIONS
No Participant or other person shall have any claim or right to receive an
Award under this Plan until such Award is actually received. Neither the
establishment of this Plan, nor any action taken hereunder, shall be construed
as giving any Executive any right to be retained in the employ of the Company.
Nothing contained in this Plan shall limit the ability of the Company to make
payments or awards to its executive officers under any other plan, agreement or
(b) The rights and benefits of a Participant hereunder are personal to the
Participant and, except for payments made following a Participant's death, shall
not be subject to any voluntary or involuntary alienation, assignment, pledge,
transfer, encumbrance, attachment, garnishment or other disposition.
(c) The Company shall have the right to deduct from Awards any taxes or
other amounts required to be withheld by law or due and payable to the Company
by the Participant.
(d) All questions pertaining to the construction, regulation, validity and
effect of the provisions of the Plan shall be determined in accordance with the
laws of the State of Delaware without regard to principles of conflict of laws.
(e) If any provision of this Plan would cause Awards not to constitute
"qualified performance-based compensation" under Section 162(m) of the Code,
that provision shall be severed from, and shall be deemed not to be a part of,
the Plan, but the other provisions hereof shall remain in full force and effect.
(f) No member of the Committee or the Board, and no officer, employee or
agent of the Company shall be liable for any act or action hereunder, whether of
commission or omission, taken by any other member, or by any officer, agent, or
employee, or, except in circumstances involving bad faith, for anything done or
omitted to be done in the administration of the Plan.
(g) The Company shall not be required to fund or otherwise segregate any
cash or any other assets which may at any time be paid to Participants under the
Plan. The Plan shall constitute an "unfunded" plan of the Company. The Company
shall not, by any provisions of the Plan, be deemed to be a trustee of any
property, and any obligations of the Company to any Participant under the Plan
shall be those of a debtor and any rights of any Participant shall be limited to
those of a general unsecured creditor.
9. EFFECTIVE DATE
The Plan shall be effective as of January 1, 2005, subject to approval by
the stockholders of the Company in accordance with Section 162(m) of the Code.