COMMERCIAL METALS COMPANY LONG-TERM CASH AND EQUITY AWARD AGREEMENT _______________________ (the “Participant”)
Exhibit 10.1
COMMERCIAL METALS COMPANY
_______________________
(the “Participant”)
(the “Participant”)
has been granted a Restricted Stock Unit Award and a Performance Stock Unit Award, both of which
are described in this Award Agreement (the “Agreement”) in accordance with Article 6 of the
Commercial Metals Company (the “Company”) 2006 Long-Term Equity Incentive Plan (the “Plan”). The
“Date of Grant” is January 18, 2011. The Performance Period is three years, being calendar years
2011 through 2013 (the “Performance Period”).
This Agreement is subject to the terms of the Plan, and the terms of the Plan shall control in
the event any provision of this Agreement is inconsistent with the provisions of the Plan. The
capitalized terms used but not defined in this Agreement that are defined in the Plan shall have
the meanings assigned to them in the Plan. The RSU Award (as defined in Section 1 below)
and the PSU Award (as defined in Section 2 below), together, are referred to herein as the
“Awards.”
1. Restricted Stock Unit Award. The number of shares of Common Stock that may be
delivered is __________ (the “RSU Award”).
a. Vesting; Timing of Delivery of Shares.
(i) Subject to special vesting and forfeiture rules in this Agreement, provided
the Participant is employed by or providing services to the Company or a Subsidiary
on the applicable vesting date, the RSU Award shall vest in the form of shares of
Company Common Stock and become payable as follows:
(A) First anniversary of the Date of Grant: One-Third of the total RSU
Award.
(B) Second anniversary of the Date of Grant: One-Third of the total RSU
Award.
(C) Third anniversary of the Date of Grant: One-Third of the total RSU
Award.
Each of the periods described in Section 1.a.(i)(A), (B), and (C) above is a
“Vesting Year.”
(ii) Upon (A) the Participant’s death; (B) the Participant’s Termination of
Service as a result of Total and Permanent Disability; or (C) the Participant’s
Qualifying Retirement, a pro rata portion of the unvested RSU Award shall
automatically become vested and payable equal to the portion of the RSU Award that
would have become vested pursuant to Section 1.a.(i) at the end of the
then-current Vesting Year multiplied by a fraction, the numerator of which is the
number of days during the then-current Vesting Year prior to the date of such event,
and the denominator of which is 365.
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(iii) Notwithstanding Section 1.a.(i), 100% of the as-yet unvested RSU
Award shall automatically become fully vested and payable upon the occurrence of a
Change in Control.
(iv) In the event of vesting of an RSU Award pursuant to reaching one of the
following: a Vesting Year, the Participant’s death, or the occurrence of a Change in
Control, the Company shall deliver to the Participant (or the Participant’s personal
representative) the number of shares of Common Stock equal to the number of units of
the RSU Award which have become vested either ratably, or due to death or a Change
in Control upon the earliest of: (A) the date of a Vesting Year has been reached, or
(B) as soon as practical after (i) the Participant’s death or (ii) when the Change
in Control occurs, but in no event later than 60 days following such date.
(v) Subject to Section 15.b., in the event of vesting of the RSU Award
pursuant to Section 1.a.(ii)(B) (Termination of Service due to Disability)
or Section 1.a.(ii)(C) (Qualifying Retirement), the Company shall deliver to
the Participant (or the Participant’s personal representative) a number of shares of
Common Stock equal to the appropriate pro rata vested RSU Award credited to the
Participant, upon, or as soon as practical following, but in no event later than 60
days after the occurrence of either accelerating event.
b. Forfeiture of RSU Award. Any portion of the RSU Award that does not become
vested and payable in shares of Common Stock in accordance with this Section 1 shall
be forfeited on the date of the Participant’s Termination of Service.
2. Performance Cash and Equity Award. This Performance Stock Unit Award is composed
of (i) a cash award based on achievement of the Target level of the performance goals and
objectives set forth in this Agreement, equal to the value of _____________ Restricted Stock Units
based on the closing price per share of Common Stock on the day of vesting (as defined in Section
7.6 of the Plan), and (ii) an award of shares of Common Stock based on achievement of the Target
level of the performance goals and objectives set forth in this Agreement, measured by
_____________ Restricted Stock Units. Together, the total of ______________ Restricted Stock Units
awarded in this Section 2 are referred to as the “PSU Award.”
a. Vesting; Timing of Delivery of Shares.
(i) Performance Vesting. Subject to special vesting and forfeiture
rules in this Agreement, the PSU Award shall vest upon achievement of the
requirements/targets during the Performance Period as described on the Schedule
attached hereto, which is by this reference made a part hereof.
Notwithstanding the above, the Committee may reduce the PSU Award, in its sole
discretion. Further, if at vesting the Company ranks below the 40th
percentile on a Total Stockholder Return basis as compared to its Peer Group with
the Total Stockholder Return based on the average of the closing prices on the
Principal Market for each Trading Day for the Performance Period, then the Committee
shall consider whether to reduce the PSU Award and/or modify the form in which any
vested units are paid (i.e., cash vs. shares of Common Stock).
In the event of vesting of the PSU Award pursuant to this Section
2.a.(i), the Company shall deliver to the Participant (or the Participant’s
personal representative) as
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soon as practical after such vesting, but in no event later than 60 days
following such date:
| (x) | cash in an amount equal to the value of the number of shares of Common Stock equal to the 50% of the aggregate number of vested units in the PSU Award credited to the Participant, with such value based on the closing price of Company Common Stock on the last day of the Performance Period, and | ||
| (y) | the number of shares of Common Stock equal to the 50% of the aggregate number of vested PSU Award units credited to the Participant. |
(ii) Accelerated Vesting Upon Death, Disability or Qualifying
Retirement. Notwithstanding Section 2.a.(i), in the event of the
Participant’s (A) death; (B) Termination of Service as a result of Total and
Permanent Disability; or (C) Qualifying Retirement, the PSU Award shall vest, with
the vested value to be determined at the end of the Performance Period by
multiplying the total PSU Award that would be vested based on Section
2.a.(i) above, by a fraction, the numerator of which is the number of days from
the Date of Grant to the date of such event, and the denominator of which is the
number of days in the full Performance Period. Such pro rata vested PSU Award shall
be payable not later than 60 days following the end of the Performance Period.
Notwithstanding the foregoing paragraph, the Compensation Committee shall have the
sole authority to determine whether a retirement is a Qualified Retirement for the
purposes of triggering an acceleration of the vesting of a PSU Award.
(iii) Accelerated Vesting Upon Change in Control. Notwithstanding
Section 2.a.(i), the PSU Award shall automatically and immediately become
vested as of the occurrence of a Change in Control in accordance with this
paragraph. The number of units in the PSU Award vesting as the result of a Change
in Control shall be equal to the number determined in accordance with the attached
Schedule A, assuming achievement of the performance goals at the Target level
through the end of the Performance Period. The vested PSU Award shall be payable
not later than 60 days following the effective date of the Change in Control.
(iv) Delivery of Cash After Vesting Due to Death, Disability or Qualifying
Retirement. In the event of vesting of the PSU Award pursuant to Section
2.a.(ii), the Company shall deliver to the Participant (or the Participant’s
personal representative): cash in an amount equal to the value of the number of
shares of Common Stock equal to the aggregate number of units in the vested PSU
Award, with such value based on the closing price of Company Common Stock on the
last day of the Performance Period. Such delivery shall occur not later than 60
days following the last day of the Performance Period.
(v) Delivery of Cash and Shares After Vesting Due to Change in Control.
Subject to Section 15.b., in the event of vesting of PSU Award pursuant
Section 2.a.(iii), the Company shall deliver to the Participant:
| (x) | cash in an amount equal to the value of the number of shares of Common Stock equal to the 50% of the aggregate number of vested units in the Participant’s PSU Award, with such value |
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| based on the closing price of Company Common Stock on the effective date of the Change in Control; and | |||
| (y) | the number of shares of Common Stock equal to the 50% of the aggregate number of vested units in the Participant’s PSU Award. |
Such delivery shall occur as soon as practical following the occurrence of a Change
in Control, but in no event later than 60 days after such date.
b. Forfeiture of PSU Award. Any portion of the PSU Award that does not become
vested and payable in shares of Common Stock in accordance with Section 2 shall be
forfeited on the earlier of the date of the Participant’s Termination of Service or January
18, 2014.
3. Definitions. For purposes of this Agreement, the following terms shall have the
meanings set forth below:
“EBITDA” means, for the Company or any Subsidiary, the net earnings of that
entity before deductions by the entity for interest, income taxes, depreciation and
amortization expenses.
“Peer Group” means the companies set forth in the Company’s proxy statement
filed in December 2010. If between the Date of Grant and December 31, 2013, any
member of the Peer Group ceases to be a public company with common stock listed for
trading, then such member shall be removed from the Peer Group for any calculations
related to this Agreement. If 25% or more of the companies that constitute the
original Peer Group are removed from the Peer Group under the preceding sentence,
the Committee may add additional companies to the Peer Group; but the Peer Group
shall never consist of more than eleven companies.
“Principal Market” means the New York Stock Exchange, or if the Common Stock is
not traded on the New York Stock Exchange, the NASDAQ Global Select Market, the
NASDAQ Global Market, the NASDAQ Capital Market, the NYSE AMEX or any successor
exchanges.
“Qualifying Retirement” means that the Committee, in its sole discretion,
determines that the sole reason for the Participant’s Termination of Service is
retirement. The following thresholds shall act as triggers for an analysis by the
Committee of whether a retirement event is a Qualified Retirement: (x) a Retirement
(as defined in the Plan) or (y) a qualified retirement under the terms of this
Agreement, as follows: (A) Termination of Service as a result of retirement on or
after attaining age sixty-two (62); (B) Termination of Service as a result of
retirement following the attainment of age fifty-five (55) and ten (10) years of
employment with the Company or any Subsidiary; or (C) Termination of Service as a
result of retirement following the attainment of age fifty (50) and fifteen (15)
years of employment with the Company or any Subsidiary, or for other reasons as
determined by the Compensation Committee.
“Return on Invested Capital” means FIFO Net Earnings before interest expense
divided by the sum of commercial paper, notes payable (excluding any parent company
guarantee), current maturities of long-term debt and stockholders equity. “FIFO Net
Earnings” means net earnings calculated using the first in, first out inventory
costing principle for all inventories.
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“Total Stockholder Return” is a per share price at the beginning of the period
compared to a per share price at the end of the period with cash dividends assumed
to purchase additional fractional shares at the closing price as of the ex-dividend
date.
“Trading Day” means any day on which the Common Stock is traded on the
Principal Market.
4. Restrictions on Awards and Rights of a Stockholder. The Participant will not be
treated as a stockholder with respect to any shares of Common Stock covered by this Agreement until
the shares are entered by book entry registration in the Company’s direct registration services or
issuance of a certificate or certificates to the Participant for the shares. Article 11 of the
Plan shall cover any adjustments for dividends or other rights for which the record date is prior
to the issuance of such certificate or certificates. Subject to the provisions of the Plan, until
the date shares of Common Stock are delivered to the Participant under the Awards (the “Restriction
Period”), the Participant shall not be permitted to sell, transfer, pledge or assign any of the
Awards or any shares of Common Stock that may be delivered under the Awards. All of the rights of
the Participant in the Awards and the Common Stock issued upon vesting of the Awards are subject to
Section 16 of this Agreement.
5. Book Entry or Certificate Issuance of Shares and Legend. All shares of Common
Stock delivered shall be represented by, at the option of the Company, either book entry
registration in the Company’s direct registration services or by a certificate. If the Common
Stock was not issued in a transaction registered under the federal and state securities laws, all
shares of Common Stock delivered under the Awards that are issued in certificate form shall bear a
restrictive legend and shall be held indefinitely, unless they are subsequently registered under
the federal and state securities laws or the Participant obtains an opinion of counsel,
satisfactory to the Company, that registration is not required. All shares of Common Stock
delivered that are issued in book entry direct registration services form shall be subject to the
same restrictions described in a restrictive legend.
6. Specific Performance. The parties acknowledge that remedies at law will be
inadequate remedies for breach of this Agreement and consequently agree that this Agreement shall
be enforceable by specific performance. The remedy of specific performance shall be cumulative of
all of the rights and remedies at law or in equity of the parties under this Agreement.
7. Investment Representation. Unless the Common Stock is issued to him in a
transaction registered under federal and state securities laws, the Participant represents and
warrants that all Common Stock which may be acquired hereunder will be acquired by the Participant
for investment purposes for his own account and not with any intent for resale or distribution in
violation of federal or state securities laws.
8. Participant’s Acknowledgments. The Participant acknowledges that a copy of the
Plan has been made available for his review by the Company, and represents that he is familiar with
the terms of the Plan, and accepts this Award subject to all the terms of the Plan. The Participant
agrees to accept as binding, conclusive, and final all decisions or interpretations of the
Committee or the Board, as appropriate, upon any questions arising under the Plan or this
Agreement.
9. Law Governing; Venue. This Agreement shall be governed by, construed, and enforced
in accordance with the laws of the State of Texas (excluding any conflict of laws rule or principle
of Texas law that might refer the governance, construction, or interpretation of this agreement to
the laws of another state). Any action or proceeding seeking to enforce any provision of, or based
on any right arising out of, this Agreement shall be brought in the courts of the State of Texas,
County of Dallas, or, if
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it has or can acquire jurisdiction, in the United States District Court for the Northern
District of Texas, and each of the parties irrevocably submits to the exclusive jurisdiction of
each such court in any such proceeding, waives any objection it may now or hereafter have to venue
or convenience of forum, agrees that all claims in respect of the proceedings shall be heard and
determined only in any such court and agrees not to bring any proceeding arising out of or relating
to this Agreement in any other court.
10. Legal Construction. In the event that any term of this Agreement is
held by a court to be invalid in any respect, the invalid term shall not affect any other term that
is contained in this Agreement and this Agreement shall be construed in all respects as if the
invalid term had never been contained herein.
11. Entire Agreement. This Agreement together with the Plan supersede any and all
other prior understandings and agreements, either oral or in writing, between the parties with
respect to the subject matter of this Agreement and constitute the sole agreements between the
parties with respect to the subject matter.
12. Parties Bound. The terms that are contained in this Agreement shall apply to, be
binding upon, and inure to the benefit of the parties and their respective heirs, executors,
administrators, legal representatives, and permitted successors and assigns, subject to the
limitation on assignment set forth in this Agreement.
13. Modification. No change or modification of this Agreement shall be valid unless
the change or modification is in writing and signed by the parties. However, the Company may
change or modify the terms of this Agreement without the Participant’s consent or signature if the
Company determines that such change or modification is necessary to comply with or be exempt from
the requirements of Section 409A of the Code. In any event, the Company may amend the Plan or
revoke the Awards to the extent permitted by the Plan.
14. Tax Requirements. The Participant should consult immediately with his own tax
advisor regarding the tax consequences of this Agreement. The Company (or a Subsidiary that is the
Participant’s employer) (for purposes of this Section 14 “Company” includes any applicable
Subsidiary), shall have the right to deduct from all amounts paid in stock, cash or any other form,
any taxes required by law to be withheld in connection with this Award. The Company may also
require the Participant receiving shares of Common Stock to pay the Company the amount of any taxes
that the Company is required to withhold in connection with this Award. Such payments shall be
made when requested by Company and may be required prior to the delivery of any certificate
representing shares of Common Stock. Such payment may be made at the election of the Participant
(i) by the delivery of cash to the Company in an amount that equals (or exceeds, to the extent
necessary to avoid the issuance of fractional shares under (iii) below) the required tax
withholding obligations of the Company; (ii) if the Company, in its sole discretion, so consents in
writing, the actual delivery by the Participant to the Company of shares of Common Stock that the
Participant has not acquired from the Company within six (6) months, with an aggregate Fair Market
Value that equals or exceeds (to avoid the issuance of fractional shares under (iii) below) the
required tax withholding payment; (iii) if the Company, in its sole discretion, so consents in
writing, the Company’s withholding of a number of shares to be delivered upon the vesting of this
Award, with an aggregate Fair Market Value that equals (but does not exceed) the required tax
withholding payment (the “Share Retention Method”); or (iv) any combination of (i), (ii), or (iii).
However, if the Participant is subject to Section 16 of the Securities Exchange Act of 1934, his
withholding obligation under this Section 14 shall be satisfied by the Share Retention
Method, and neither the Company nor the Committee shall have any discretion to permit the
satisfaction of such withholding obligation by any other means.
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15. Section 409A; Delay of Payment.
a. It is intended that the payments and benefits provided under this Agreement will be
exempt from the application of, or comply with, the requirements of Section 409A of the
Code. The Agreement shall be interpreted, construed, administered, and governed in a manner
that effects such intent, and the Company shall not take any action that would be
inconsistent with such intent. Without limiting the foregoing, the payments and benefits
provided under this Agreement may not be deferred, accelerated, extended, paid out or
modified in a manner that would result in the imposition of an additional tax upon the
Participant under Section 409A of the Code.
b. To the extent (i) any payment to which the Participant becomes entitled under this
Agreement, upon the Participant’s Termination of Service constitutes deferred compensation
subject to Section 409A of the Code, (ii) the Participant is deemed at the time of such
Termination of Service to be a “specified employee” under Section 409A of the Code, (iii)
the Company is publicly traded (as defined in Section 409A of the Code), and (iv) such
payment is subject to the delay provided for herein, then such payment will not be made or
commence until the earlier of (x) the expiration of the six (6) month period measured from
the date of the Participant’s Termination of Service; and (y) the date of the Participant’s
death following such Termination of Service.
16. Forfeiture or Recovery. Notwithstanding anything to the contrary in the Plan, if
the Committee determines, in its sole discretion, that the Participant has engaged in fraud or
misconduct that relates to, in whole or in part, the need for a required restatement of the
Company’s financial statements filed with the Securities and Exchange Commission, the Committee
will review all incentive compensation awarded to or earned by the Participant, including, without
limitation, any Award under the Plan, with respect to fiscal periods materially affected by the
restatement and may cause to be forfeited any vested or unvested Awards and may recover from the
Participant all incentive compensation to the extent that the Committee deems appropriate after
taking into account the relevant facts and circumstances. Any recoupment hereunder may be in
addition to any other remedies that may be available to the Company under any other agreement or
applicable law, including disciplinary action up to and including termination of employment.
* * * * * * * * * * * *
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IN WITNESS WHEREOF, this Agreement has been executed by a duly authorized officer of the
Company, and the Participant, to evidence his consent and approval of all the terms of this
Agreement, has duly executed this Agreement, as of the date specified in Section 1 of this
Agreement.
| COMPANY: | ||||||
| COMMERCIAL METALS COMPANY | ||||||
| By: | ||||||
| Name: | ||||||
| Title: | ||||||
| PARTICIPANT: | ||||||
| Signature | ||||||
| Name: | ||||||
| Address: | ||||||
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SCHEDULE A
GOALS, LEVELS OF ACHIEVEMENT, AND VESTING
GOALS, LEVELS OF ACHIEVEMENT, AND VESTING
| Weighting | Threshold: | Target: | Maximum: | |||||||||||||
| — | % | — | % | — | % | |||||||||||
ROIC: |
— | % | — | % | — | % | — | % | ||||||||
EBITDA: |
— | % | $ | — | $ | — | $ | — | ||||||||
Achievement of Target performance results in 100% vesting of that Goal; achievement of Threshold
performance results in ___% vesting of that Goal; achievement of Maximum performance results in
___% vesting of that Goal. After determination by the Committee of the level of achievement for
each Goal, the Committee will determine the percentage of vesting by interpolation (on a
straight-line basis) between Threshold and Maximum.
[For example, if the ROIC achievement is _____%, that is half-way between Threshold and Target, and
vesting at Threshold is 80%, while vesting at Target is 100%, the percentage of vesting for the
ROIC goal would be 90%, which is half-way between 80% and 100%.]
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