EX-10.1 2 d291925dex101.htm 2017 FORM OF PERFORMANCE STOCK UNIT AWARD AGREEMENT [3-Year Performance Period] [Name]
Exhibit 10.1
2017 FORM OF PERFORMANCE STOCK UNIT AWARD AGREEMENT
[3-Year Performance Period]
[Name]
Congratulations! On , [2017], Xxxxxxx & Xxxxx, Incorporated (the “Company”) granted you a Performance Stock Unit Award (the “Award”) under the Company’s Flexible Stock Plan (the “Plan”). The Award is granted subject to the enclosed Terms and Conditions – Performance Stock Unit Award ([2017-2019]) (the “Terms and Conditions”).
You have been granted a base award of [ ] Performance Stock Units. The number of PSUs for your base Award was determined by multiplying your current annual base salary by your Award multiple (set by Senior Management and approved by the Compensation Committee), and dividing this amount by the average closing share price of the Company’s stock for the 10 business days following the [2016] third quarter earnings release.
A percentage of your base award will vest on December 31, [2019] and will be paid out in a combination of cash and shares of the Company’s common stock, as described in the Terms and Conditions, by March 15, [2020].
As described in the Terms and Conditions, the payout you ultimately receive from this Award depends on the Company’s Total Shareholder Return compared to our Peer Group during the [2017-2019] Performance Period. A percentage of your base award will vest (ranging from 0% to 175%), according to the schedule below.
Percentile Rank of L&P TSR | Payout % of Your Base Award | |
25% | 25% | |
30% | 35% | |
35% | 45% | |
40% | 55% | |
45% | 65% | |
50% | 75% | |
55% | 95% | |
60% | 115% | |
65% | 135% | |
70% | 155% | |
75% | 175% |
By signing below, you confirm that you understand and agree that this Award of Performance Stock Units is granted subject to the Terms and Conditions and the Plan, and that the Terms and Conditions are included in this Agreement by reference. A summary of the Plan and the Company’s most recent Annual Report to Shareholders are available upon request to the Corporate Human Resources Department.
Accepted and Agreed: | ||
| Date: |
This award letter and the enclosed materials are part of a prospectus covering securities that have been registered under the Securities Act of 1933. Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved these securities or determined if this prospectus is truthful or complete.
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PERFORMANCE STOCK UNIT TERMS AND CONDITIONS
[2017-2019]
1. | Performance Period and Payout Percentage. Your payout under this Performance Stock Unit Award (the “Award”) will depend on (i) the base award shown on your Award Agreement and (ii) the Company’s performance during the three-year period beginning January 1, [2017] and ending December 31, [2019] (the “Performance Period”). The Company’s Total Shareholder Return (“TSR”) during the Performance Period will be compared to the TSR of similar companies (the “Peer Group”). The Peer Group includes all the companies in the Industrial, Consumer Discretionary and Materials sectors of the S&P 500 and the S&P 400. TSR is calculated as follows and assumes dividends are reinvested on the ex-dividend date: |
Stock Price at End of Period – Stock Price at Beginning of Period + Reinvested Dividends
Stock Price at Beginning of Period
Depending on how the Company’s TSR ranks within the Peer Group at the end of the Performance Period, you will earn from 0% to 175% of your base award, rounded to the nearest whole share (the “Payout Percentage”).
If the Company’s TSR during the Performance Period is equal to or greater than that of 75% of the Peer Group, your Award will pay out at 175% of the base award. If the Company’s TSR falls at the 50th percentile of the Peer Group, you will receive 75% of the base award. For performance at the 25th percentile, you will receive 25% of your base award. No payout will be earned under your Award if the Company does not meet the 25th percentile threshold. Additional payouts are shown in the chart below. Payouts will be interpolated for TSR falling between the levels shown.
Percentile Rank of L&P TSR | Payout % of Your Base Award | |
25% | 25% | |
30% | 35% | |
35% | 45% | |
40% | 55% | |
45% | 65% | |
50% | 75% | |
55% | 95% | |
60% | 115% | |
65% | 135% | |
70% | 155% | |
75% | 175% |
2. |
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(the “Payout Date”). On the Payout Date, the Company will issue to you (i) one share of the Company’s common stock for each vested Performance Stock Unit comprising the Stock Portion of your Award, subject to reduction for tax withholding, and (ii) a check with a gross value equal to the closing market price of the Company’s common stock on the last business day of the Performance Period (or the date of the Change of Control if Section 4 applies) times the number of vested Performance Stock Units comprising the Cash Portion of your Award, subject to reduction for tax withholding as described in Section 7. |
3. | Termination of Employment. |
a. | Except as provided in Section 3(b) and Section 4, if your employment is terminated for any reason before the Vesting Date, your right to this Award will terminate immediately upon such termination of employment. Termination of employment and similar terms when used in this Award refer to a termination employment that constitutes a separation from service within the meaning of Section 409A of the Internal Revenue Code. |
b. | If your termination of employment during the Performance Period is due to Retirement (as defined below), death, or Disability (as defined below), you will receive a pro rata number of shares following the end of the Performance Period which are prorated for the number of days during the Performance Period prior to your termination. |
“Retirement” means you voluntarily quit (i) on or after age 65, or (ii) on or after age 55 if you have at least 20 years of service with the Company or any company or division acquired by the Company.
“Disability” means the inability to substantially perform your duties and responsibilities by reason of any accident or illness that can be expected to result in death or to last for a continuous period of not less than one year; provided, however, the Award shall continue to vest for 18 months after Disability begins.
c. | The employment relationship will be treated as continuing intact while you are on military, sick leave or other bona fide leave of absence if (i) the Company does not terminate the employment relationship or (ii) your right to re-employment is guaranteed by statute or by contract. |
a. | Termination by Company for “Cause”. Termination for “Cause” under this Agreement shall be limited to the following: |
i. | Your conviction of any crime involving money or other property of the Company or any of its affiliates (including entering any plea bargain admitting criminal guilt), or a conviction of any other crime (whether or not involving the Company or any of its affiliates) that constitutes a felony in the jurisdiction involved; or |
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ii. | Your willful act or omission involving fraud, misappropriation, or dishonesty that (i) causes material injury to the Company or (ii) results in a material personal enrichment to you at the expense of the Company; or |
iii. | Your continued, repeated, willful failure to substantially perform your duties; provided, however, that no discharge shall be deemed for Cause under this subsection (a) unless you first receive written notice from the Company advising you of specific acts or omissions alleged to constitute a failure to perform your duties, and such failure continues after you have had a reasonable opportunity to correct the acts or omissions so complained of. |
A termination shall not be deemed for Cause if, for example, the termination results from the Company’s determination that your position is redundant or unnecessary or that your performance is unsatisfactory.
The actions or omissions which may lead to a termination of employment for Good Reason are as follows:
i. | A reduction by the Company in your base salary as in effect immediately prior to the Change in Control; or |
ii. | A change in your reporting responsibilities, titles or offices as in effect immediately prior to a Change in Control that results in a material diminution within the Company of title, status, authority or responsibility; or |
iii. | A material reduction in your target annual incentive opportunity as in effect immediately prior to the Change in Control, expressed as a percentage of base salary; or |
iv. | A requirement by the Company that you be based or perform your duties anywhere other than at the location immediately prior to the Change in Control, except for required travel on the Company’s business to an extent substantially consistent with your business travel obligations immediately prior to the Change in Control; or |
v. | A material reduction in annual target value of your long-term incentive awards as in effect immediately prior to the Change in Control (with the value determined in accordance with generally accepted accounting standards); or |
vi. | A failure by the Company to obtain the assumption agreement to perform this Agreement by any successor as contemplated by Section 12 of this Agreement; or |
vii. | Any purported termination of your employment for Disability or for Cause that is not carried out pursuant to a notice of termination which satisfies the requirements of Section 4(c); and for purposes of this Agreement, no such purported termination shall be effective. |
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Any dispute by a party hereto regarding a notice of termination delivered to such party must be conveyed to the other party within 30 days after the notice of termination is given. If the particulars of the dispute are not conveyed within the 30-day period, then the disputing party’s claims regarding the termination shall be forever deemed waived.
5. | Transferability. The Performance Stock Units may not be transferred, assigned, pledged or otherwise encumbered until the underlying shares have been issued or settled in cash. |
The income and tax withholding generated by your payout will be reported on your W-2. If your personal income tax rate is higher than the Company’s required withholding rate, you will owe additional tax on the issuance. After payment of the ordinary income tax, the shares you receive for the Stock Portion of your payout will have a tax basis equal to the closing price of L&P stock on the Payout Date.
If you violate the preceding paragraph, then you will pay to the Company any Award Gain you realized from this Award. “Award Gain” for the Cash Portion of your Award is equal to (i) the cash paid to you on the Payout Date of this Award (including the tax withholding), minus (ii) any non-refundable taxes paid by you as a result of the distribution. “Award Gain” for the Stock Portion of your Award is equal to (i) the number of shares distributed to you on the Payout Date of this Award times the fair market value of L&P stock on the Payout Date (including the tax withholding), minus (ii) any non-refundable taxes paid by you as a result of the distribution.
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If any restriction in this Section is deemed unenforceable, then you and the Company contemplate that the appropriate court will reduce the scope or other provisions and enforce the restrictions set out in this section in their reduced form. The covenants in this Section are in addition to any similar covenants under any other agreement between the Company and you.
In addition, the Committee may require repayment of the entire Award from any Award recipients determined, in its discretion, to be personally responsible for gross misconduct or fraud that caused the need for the restatement.
The Award recipient must repay the amount specified in the Notice of Repayment. The Committee may, in its discretion, reduce a current year Award payout as necessary to recoup any amounts outstanding under a previously issued Notice of Repayment.
This Award is intended to comply with the requirements of Section 162(m) of the Internal Revenue Code for performance-based compensation.
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This Award is entered into and accepted in Carthage, Missouri. The Award will be governed by Missouri law, excluding any conflicts or choice of law provision that might otherwise refer construction or interpretation of the Award to the substantive law of another jurisdiction.
Any action or proceeding arising from or related to this Award is subject to the exclusive venue and subject matter jurisdiction of the Circuit Court for Jasper County, Missouri or the United States District Court for the Western District of Missouri, and the parties agree to submit to the jurisdiction of such Courts. The parties also waive the defense of an inconvenient forum and agree not to seek any change of venue from such Courts.
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