RRI ENERGY, INC. 2002 LONG TERM INCENTIVE PLAN 2010 LONG TERM INCENTIVE AWARD FOR OFFICERS AWARD AGREEMENT
Exhibit 10.1
RRI ENERGY, INC.
2002 LONG TERM INCENTIVE PLAN
2010 LONG TERM INCENTIVE AWARD FOR OFFICERS
AWARD AGREEMENT
2002 LONG TERM INCENTIVE PLAN
2010 LONG TERM INCENTIVE AWARD FOR OFFICERS
AWARD AGREEMENT
Pursuant to this award agreement (“Agreement”), as of March
_____, 2010, RRI Energy, Inc.
(the “Company”) hereby grants to (the “Participant”), Restricted Stock
Units, Cash Performance Units and rights (the “Nonqualified Stock Options” or “Options”) to
purchase from the Company shares of Common Stock of the Company at $ per share. The
number of units and shares is subject to adjustment as provided in Section 15 of the RRI Energy
2002 Long-Term Incentive Plan (the “Plan”), subject to the terms, conditions and restrictions
described in the Plan and in this Agreement.
| 1. | Relationship to the Plan; Definitions. |
| (a) | This grant of Restricted Stock Units, Cash Performance Units and Options is
subject to all of the terms, conditions and provisions of the Plan and administrative
interpretations thereunder, if any, which have been adopted by the Committee and are
in effect on this date. If any provision of this Agreement conflicts with the express
terms of the Plan, the terms of the Plan control and, if necessary, the applicable
provisions of this Agreement are deemed amended so as to carry out the purpose and
intent of the Plan. References to the Participant also include the heirs or other
legal representatives of the Participant or the Participant’s estate. |
| (b) | Except as defined herein, capitalized terms have the same meanings as under
the Plan. |
Cash Performance Unit means a Cash Award with each unit equal to the Fair Market
Value of one share of Common Stock on the vesting date as determined pursuant to
Section 3.
Disability means a physical or mental impairment of sufficient severity such that
the Participant is receiving benefits under the Company’s long-term disability
plan.
Employment means employment with the Company or any of its subsidiaries.
Options mean Nonqualified Stock Options.
Option Period means the period beginning on the date of this Agreement and ending
on the date the Options expire pursuant to Section 4.
Option Shares means shares of Common Stock which the Participant may have the right
to purchase under this Agreement.
Performance Goal means the standard established by the Committee for the
performance period from March
_____, 2010 through March
_____, 2013 to determine
whether the Participant’s Cash Performance Units will vest. The Performance Goal
is attached as Exhibit I.
Restricted Stock Unit means a Stock Award with restrictions and subject to a
vesting condition as described in this Agreement.
Retirement means termination of Employment on or after attainment of age 55 with at
least five years of service with the Company.
| 2. | Account. The Awards granted pursuant to this Agreement will be implemented by a credit to a
bookkeeping account maintained by the Company evidencing the accrual in favor of the
Participant of the unfunded and unsecured right to receive the Restricted Stock Units, the
Cash Performance Units and the Options granted. Except as provided in Section 10, the Awards
credited to the bookkeeping account may not be sold, assigned, transferred, pledged or
otherwise encumbered until the Participant has been registered as the holder of shares of
Common Stock representing the Restricted Stock Units or exercised Options. |
| 3. | Vesting. Unless earlier forfeited as described below, the Awards will vest as follows: |
(i) The Restricted Stock Units will vest on March
_____, 2013. If the Participant’s
Employment is terminated for any reason on or prior to March
_____, 2013, the Participant’s
right to receive the Restricted Stock Units will be forfeited.
(ii) The Cash Performance Units will vest, if at all, upon the Committee’s
determination that the Performance Goal has been met on March
_____, 2013 and the performance
level achieved. If the Performance Goal has not been met by March
_____, 2013, the Cash
Performance Units will be forfeited. If the Participant’s Employment is terminated for any
reason before the earlier of the date the Committee determines that the Performance Goal
has been met or March
_____, 2013, the Participant’s right to receive the Cash Performance
Units will be forfeited.
(iii) The Options will vest and become exercisable in three cumulative annual
installments as follows:
_____ Option Shares exercisable on March
_____, 2011;
an additional
_____
Option Shares exercisable on March
_____, 2012;
and the remaining
_____
Option Shares exercisable on March
_____, 2013.
The Participant must be employed by the Company through the date of exercisability of each
installment for the Options to become exercisable with respect to additional shares of
Common Stock on such date.
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| 4. | Expiration of Option Period. The Option Period will expire on March
_____, 2016 except as
follows: |
(i) Upon termination of Employment of the Participant due to death or Disability, the
vested Options, if any, will expire upon the earlier of one year following the date of
termination of Employment or expiration of the Option Period.
(ii) Upon termination of Employment of the Participant because of Retirement, the
vested Options, if any, will expire upon the earlier of three years following the date of
termination of Employment or expiration of the Option Period.
(iii) Upon termination of Employment of the Participant by the Company or any of its
Subsidiaries for any reason or due to voluntary resignation by the Participant, the
unvested portion of the Options will expire immediately, and the vested Options, if any,
will expire upon the earlier of one year following the date of termination of Employment or
the expiration of the Option Period.
(iv) Notwithstanding anything herein to the contrary, in the event the Participant
dies following termination of Employment but prior to the expiration of the Option pursuant
to this Section 4, the portion of the Option exercisable upon the Participant’s death will
expire one year following the date of the Participant’s death or, if earlier, upon the
expiration of the Option Period.
| 5. | Payment of Restricted Stock Units. Upon the vesting of Participant’s right to receive
Restricted Stock Units, a number of shares of Common Stock equal to the number of vested
Restricted Stock Units will be registered in the Participant’s name as soon as practicable
after the vesting date, but in no event later than March 15 of the year immediately following
the year during which the vesting date occurs. The Company will have the right to withhold
applicable taxes from any such payment or from other compensation payable to the Participant
at the time of such vesting and delivery pursuant to Section 12 of the Plan. |
| 6. | Payment of Cash Performance Units. Upon the vesting, if at all, of Participant’s right to
receive Cash Performance Units, the Cash Performance Units will be settled by a cash payment
to the Participant based on the performance level achieved as soon as practicable after the
vesting date, but in no event later than March 15 of the year immediately following the year
during which the vesting date occurs. The Company will have the right to withhold applicable
taxes from any such payment or from other compensation payable to the Participant at the time
of such vesting and delivery pursuant to Section 12 of the Plan. |
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| 7. | Exercise of Options. Subject to the limitations set forth herein and in the Plan, the
Options may be exercised pursuant to the procedures established by the Committee. Unless
otherwise permitted by the Committee, upon exercise the Participant must provide to the
Company or its designated representative, cash,
check or money order payable to the Company equal to the full amount of the purchase price
for any shares of Common Stock being acquired or may remit the proceeds received from the
sale of Common Stock issuable pursuant to the exercise of the options. The Company will
have the right to withhold applicable taxes from compensation otherwise payable to the
Participant at the time of exercise pursuant to Section 12 of the Plan. |
| 8. | Cash Payment Upon a Change of Control. Notwithstanding anything herein to the contrary, upon
or immediately prior to the occurrence of any Change of Control of the Company prior to
vesting date: |
(i) Participant’s right to receive Restricted Stock Units will vest and will
be settled by a cash payment to Participant equal to the product of (A) the Fair
Market Value per share of Common Stock on the date immediately preceding the date
on which the Change of Control occurs and (B) the total number of Restricted Stock
Units;
(ii) Participant’s right to receive the Options (unless previously expired
pursuant to Section 4) shall be settled by a cash payment to the Participant equal
to the product of (A) the difference between (1) the Fair Market Value per share of
Common Stock on the date immediately preceding the date on which the Change in
Control occurs and (2) the exercise price of the Options and (B) the total number
of unexercised Option shares, regardless of whether such Option shares have become
exercisable under Section 3; and
(iii) Participant’s right to receive Cash Performance Units will vest on a
prorated basis at 100 percent performance achievement or performance as of the date
immediately preceding the date of the Change in Control, whichever is higher and be
settled by a cash payment equal to the product of the number of vested Cash
Performance Units and the Fair Market Value per share of Common Stock on the date
immediately preceding the date on which the Change in Control occurs. Such cash
payment will satisfy the rights of Participant and the obligations of the Company
under this Agreement in full.
| 9. | Notices. For purposes of this Agreement, notices and all other communications must be in
writing and will be deemed to have been given when personally delivered or when mailed by
United States registered or certified mail, return receipt requested, postage prepaid,
addressed to the Company at ▇▇▇▇ ▇▇▇▇ ▇▇., ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, and to the Participant at the
address on record for the Participant in the Company’s human resources department or to such
other address as either party may furnish to the other in writing in accordance with this
Section 9. |
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| 10. | Successors and Assigns. This Agreement is binding upon and inures to the benefit of the
Participant, the Company and their respective permitted successors and assigns.
Notwithstanding anything herein to the contrary, the Restricted Stock Units, Cash Performance
Units and/or Options are transferable by the
Participant to Immediate Family Members, Immediate Family Members Trusts and Immediate
Family Member Partnerships pursuant to Section 14 of the Plan. |
| 11. | No Employment Guaranteed. Nothing in this Agreement gives the Participant any rights to (or
imposes any obligations for) continued Employment by the Company or any Subsidiary thereof or
successor thereto, nor does it give those entities any rights (or impose any obligations) with
respect to continued performance of duties by the Participant. |
| 12. | Shareholder Rights. The Participant shall have no rights of a shareholder with respect to
the Restricted Stock Units or the Options unless and until the Participant is registered as
the holder of shares of Common Stock representing the Restricted Stock Units and/or the
Options on the records of the Company. |
| 13. | Section 409A of the Code. It is intended that this Agreement and any Awards under this
Agreement satisfy the short-term deferral exclusion under Section 490A of the Code. |
| RRI ENERGY, INC. |
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| /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ | ||||
| ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ | ||||
| Senior Vice President Human Resources, Chief Diversity Officer |
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EXHIBIT I
PERFORMANCE GOAL
Cash Performance Units will vest based on the three-year average Total Shareholder Return (“TSR”)
for the period beginning March
_____, 2010 and ending March
_____, 2013 relative to the composite
three-year average TSR for the same period for the Merchant Peer Companies. “Merchant Peer
Companies” shall mean Allegheny Energy, Inc., Calpine Corp., Dynegy, Inc., Mirant Corp., NRG
Energy, Inc. and PPL Corp.
Vesting of the Cash Performance Units shall be determined as follows:
RRI TOTAL SHAREHOLDER RETURN
| 100+% | Positive RRI TSR | RRI TSR 0 – -20% | RRI TSR Below -20% | |||||||||
Out perform
composite 0% |
100 – 200 | % | 50 – 100 | % | 0 – 50 | % | ||||||
Under perform
composite 0-25% |
75 – 99 | % | 0 – 49 | % | 0 | % | ||||||
Under perform
composite 26-50% |
50 – 74 | % | 0 | % | 0 | % | ||||||
Below 50% |
0 | % | 0 | % | 0 | % | ||||||
The calculation of performance is linear within each set of
possible outcomes.
In all events, the Compensation Committee retains downward discretion to adjust payments in the
event it determines, in its judgment, the calculated payment is not warranted in light of the
circumstances at a measurement date.
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