SiteOne Landscape Supply, Inc. Form of Performance Stock Unit Agreement
Exhibit 10.1
SiteOne Landscape Supply, Inc.
Form of Performance Stock Unit Agreement
This Performance Stock Unit Agreement (this "Agreement") is made and entered into as of __________, 2024 (the "Grant Date") by and between SiteOne Landscape Supply, Inc., a Delaware corporation (the "Company") and _____________________________ (the "Participant").
1. Grant of Performance Share Units. Effective as of the Grant Date, the Company hereby grants to Participant an Award of Performance Stock Units (“PSUs”) in the amount of ______________________________ PSUs (the “Target Award”), each of which represents the right to receive one share of Company Common Stock (the “Share”) upon vesting of such PSU, subject to and in accordance with the terms, conditions and restrictions set forth in the SiteOne Landscape Supply, Inc. 2020 Omnibus Equity Incentive Plan (as it may be amended from time to time, the “Plan”) and this Agreement. The number of PSUs that Participant may earn hereunder shall range between zero to 200% of the Target Award and shall be determined based on the level of achievement of the performance conditions set forth in Exhibit A attached hereto (the “Performance Goals”) over the Performance Cycle (as defined in Section 2). In consideration of the receipt of this Award, Participant agrees to be bound by the covenants set forth in Exhibit B governing Competitive Activity. Capitalized terms not otherwise defined herein shall have the same meanings as in the Plan.
3.1 The number of PSUs earned by Participant for the Performance Cycle shall be determined at the end of the Performance Cycle based on the level of achievement of the Performance Goals in accordance with Exhibit A. All determinations of whether Performance Goals have been achieved, the number of PSUs earned by Participant, and all other matters related to this Section 3.1 shall be made by the Administrator in its sole discretion.
3.2 As soon as practicable following completion of the Performance Cycle, but no later than May 31, 2027, the Administrator shall review and certify in writing (a) whether, and to what extent, the Performance Goals for the Performance Cycle have been achieved, and (b) the number of PSUs earned by Participant, if any, subject to satisfaction of the requirements of Section 4 (the “Determination Date”). Such certification shall be final, conclusive and binding on Participant, and on all other persons, to the maximum extent permitted by law.
5. Termination of Continuous Service.
5.1 Except as otherwise provided in Sections 5.2, 5.3, 5.4 and 6, if Participant's Continuous Service terminates for any reason at any time before the Vesting Date, Participant's unvested PSUs shall be automatically forfeited upon such termination of Continuous Service and neither the Company nor any Affiliate shall have any further obligations to Participant under this Agreement.
5.2 If Participant’s Continuous Service is terminated by the Company without Cause or by Participant for Good Reason (provided Participant has not engaged in any Competitive Activity), Participant shall vest in the number of PSUs that would otherwise have vested (if any) based on actual performance level at the end of the Performance Cycle, determined by multiplying such number of PSUs by a fraction, the numerator of which equals the number of completed months that Participant was employed with the Company during the Performance Cycle and the denominator of which equals 36 months, provided, however, that the payout of such PSUs shall remain subject to all other terms and conditions of this Agreement, including the payment date described in Section 7 and the opportunity to earn a greater or lesser number of PSUs (subject to pro-ration as provided in this Section) as provided in Exhibit A.
5.3 If Participant's Continuous Service terminates during the Performance Cycle as a result of Participant's death or Disability, Participant shall vest on such date in a portion of the Target Award (based on target level performance), determined by multiplying the Target Award by a fraction, the numerator of which equals the number of completed months that Participant was employed with the Company during the Performance Cycle and the denominator of which equals 36 months, provided, however, the payout of such prorated Target Award shall remain subject to all other terms and conditions of this Agreement, including the payment dates described in Section 7.
5.4 In the event Participant’s Continuous Service terminates due to Retirement and Participant has not violated any of the terms set forth in Exhibit B, Participant shall vest in a pro-rated number of PSUs that would otherwise have vested (if any) based on actual performance level at the end of the Performance Cycle determined based on the following schedule:
Retirement Occurs During | Pro-Ration Factor |
Year 1 of Performance Cycle | 33% |
Year 2 of Performance Cycle | 67% |
Year 3 of Performance Cycle | 100% |
provided, however, that such PSUs shall remain subject to all other terms and conditions of this Agreement, including the payment date described in Section 7 and the opportunity to earn a greater or lesser number of PSUs (subject to pro-ration as provided in this Section) as provided in Exhibit A.
As used in this Agreement: “Retirement” means Participant’s voluntary resignation (a) where the sum of the Participant’s age and years of service equals or exceeds 65, with a minimum age of 55 and after providing a minimum of at least 5 years of service to the Company as an Employee (or, if approved by the Administrator, as a Consultant or Director), and (b) after providing Continuous Service for 6 or more months as an Employee (or, if approved by the Administrator, as a Consultant or Director) from the Grant Date.
9. Rights as Shareholder; Dividend Equivalents.
9.1 Participant shall not have any rights of a shareholder with respect to the Shares underlying the PSUs, including, but not limited to, voting rights and the right to receive or accrue dividends or dividend equivalents.
9.2 Upon and following the vesting of the PSUs and the issuance of Shares, Participant shall be the record owner of such Shares unless and until such Shares are sold or otherwise disposed of, and as record owner shall be entitled to all rights of a shareholder of the Company (including voting and dividend rights).
12. Tax Liability and Withholding.
12.1 Participant shall be required to pay to the Company, and the Company shall have the right to deduct from any compensation paid to Participant pursuant to the Plan, the amount of any required withholding taxes in respect of the PSUs and to take all such other action as the Administrator deems necessary to satisfy all obligations for the payment of such withholding taxes. Notwithstanding the preceding sentence, unless previously satisfied, the Company shall retain a number of Shares issued in respect of the vested PSU that have an aggregate Fair Market Value as of the Settlement Date equal to the amount of such taxes required to be withheld; provided that the number of such Shares retained shall not be in excess of the maximum amount required to satisfy the statutory withholding tax obligations. The number of Shares to be issued in respect of PSUs shall thereupon be reduced by the number of Shares so retained. The method of withholding set forth in the immediately preceding sentence shall not be available if withholding in this manner would violate any financing instrument of the Company or any of the Subsidiaries or result in material adverse accounting treatment for the Company as determined by the Administrator in its sole discretion.
12.2 Notwithstanding any action the Company takes with respect to any or all income tax, social insurance, payroll tax, or other tax-related withholding ("Tax-Related Items"), the ultimate liability for all Tax-Related Items is and remains Participant's sole responsibility and the Company (a) makes no representation or undertakings regarding the treatment of any Tax-Related Items in connection with this Award, vesting or settlement of the PSUs or the subsequent sale of any Shares, and (b) does not commit to structure the PSUs to reduce or eliminate Participant's liability for Tax-Related Items.
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SiteOne Landscape Supply, Inc.
Form of Performance Stock Unit Agreement
exhibit a
PSUs shall be earned based on 3-year relative EBTA growth and absolute ROIC. The Company’s EBTA shall be measured relative to the Peers plus the BICs. Relative performance shall be measured using the 12 most recent quarters reported as of the end of the Performance Cycle (as reported after all Form 10-K Annual Reports have been filed by the Peers reporting theirs results for such period). Absolute ROIC performance shall be measured over the Performance Cycle. Actual PSUs earned, if any, shall range from 0% to 200% of the Target Award based upon performance relative the Performance Goals. One hundred percent (100%) of the Company’s EBTA growth shall be measured relative to the Peers plus BICs. The 3-year average ROIC shall modify (plus/minus 20%) the PSUs earned for EBTA growth for performance above or below the range set forth in this Exhibit. Performance within the target range for ROIC set forth in this Exhibit shall have zero impact on PSUs earned for EBTA growth. Earned PSUs on EBTA growth shall be capped at 100% of the Target Award if absolute EBTA growth is negative. The ROIC modifier shall not result in a payout which exceeds 200% of the Target Award.
For purposes of this Award, the following terms shall have the following meanings:
“BICs” shall mean the two best-in-class distributors set forth in Schedule 1 to this Exhibit.
“EBTA” shall mean the generally accepted accounting principles (GAAP) pre-tax income, adjusted to exclude unusual and infrequent non-operating items, including, but not limited to, merger and related restructuring charges, goodwill impairments, gain/loss on sale of assets, gain/loss on sale of investments, insurance settlements and legal settlements, as reported in the financial statements, plus amortization. In determining the magnitude and appropriateness of such adjustments, the Administrator may utilize data sourced from a third-party financial data vendor for both the Company’s performance and the performance of the Peers and BICs.
“Peers” shall mean the 16 benchmarking peers set forth in Schedule 1 to this Exhibit.
“ROIC” shall mean the annual percentage return on invested capital calculated as follows:
ROIC = (Annual EBITA) / (Average Net Assets for the year)
EBITA = earnings before interest, taxes and amortization
Net Assets = Shareholder Equity + Net Debt (Net Debt = Debt + Capital Leases – Cash)
Average is the average for the 4-reporting quarter that fiscal year.
· | Annual ROIC shall be independently calculated for each of the three years during the Performance Cycle. |
· | Three annual ROIC values shall then be averaged to calculate average ROIC over the Performance Cycle to determine if the modifier shall have an impact. |
“Performance goals” shall mean:
Perf. Level |
Relative EBTA Growth |
% Target Award |
Perf. Level |
Avg. ROIC |
Modifier
to PSUs Earned based on Relative EBTA Growth* |
Maximum | >=75th percentile | 200% | Above Target | >20% | +20% |
Target | 50th percentile | 100% | Target | 12%-20% | 0% |
Threshold | 25th percentile | 50% | Below Target | <12% | -20% |
<Threshold | <25th percentile | 0% |
· | Payout on EBTA growth performance capped at 100% of target if Company’s absolute EBTA growth is negative. | |
· | Payout for performance between levels noted above shall be determined using straight-line interpolation. | |
· | Total payout shall be capped at 200% of target. |
Footnotes (for EBTA calculations):
1. | Source: Standard & Poor's Capital IQ or other third-party financial database | |
2. | Growth rates calculated as a 3-year cumulative compound annual growth rate (CAGR) such that growing the base year by the CAGR for each of the three years results in the sum of 3-year cumulative performance (i.e., all three years are included, not just the base and ending year) | |
3. | Cumulative negative actual performance off of a positive base year shown as -100% | |
4. | Any Peer or BIC company that (a) does not have 4-years of data or growth is not calculable due to a negative base year, shall be excluded from the percentile calculations, (b) is acquired by another company, including through a management buy-out or going-private transaction, will no longer be considered a Peer or BIC company for the Performance Cycle, (c) files a petition for reorganization under Chapter 11 of the U.S. Bankruptcy Code or liquidation under Chapter 7 of the U.S. Bankruptcy Code will remain a Peer or BIC company but EBTA for such company will be deemed to be -100% growth, and (d) does not file its Form 10-K or 10-Q, as applicable, within three months of the Company’s fiscal year end will no longer be considered a Peer or BIC company for the Performance Cycle. |
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SiteOne Landscape Supply, Inc.
Form of Performance Stock Unit Agreement
EXHIBIT A
PERFORMANCE GOALS
SCHEDULE 1
PEERS AND BIC
Advanced Drainage Systems, Inc.
Applied Industrial Technologies, Inc.
Beacon Roofing Supply, Inc.
Central Garden & Pet Company
Core & Main
Eagle Materials Inc.
Fastenal Company
GMS Inc.
Installed Building Products, Inc.
MRC Global Inc.
MSC Industrial Direct Co., Inc.
Pool Corporation
Summit Materials, Inc.
The Scotts Miracle-Gro Company
TopBuild Corp.
X.X. Xxxxxxxx, Inc.*
Watsco, Inc.
WESCO International, Inc.*
*BICs.
SiteOne Landscape Supply, Inc.
Form of Performance Stock Unit Agreement
exhibit B
All section references in this Exhibit B shall refer to the designated section(s) of this Exhibit B.
Section 1 Confidential Information. Except as otherwise provided in Section 5, Participant agrees not to disclose, divulge, publish, communicate, publicize, disseminate or otherwise reveal, either directly or indirectly, any Confidential Information to any person, natural or legal, except as required in the performance of Participant’s authorized employment duties to the Company. For the avoidance of doubt, Participant’s duty to hold the Confidential Information in confidence as set forth in this Section 1 shall remain in effect until the Confidential Information no longer qualifies as Confidential Information or until the Company provides written notice to Participant releasing Participant from such duty, whichever occurs first. The term “Confidential Information” means all information not generally known to the public in any form relating to the past, present or future business affairs of the Company or any of its Subsidiaries, including without limitation: all business plans and marketing strategies; information concerning existing and prospective markets, suppliers and customers; financial information; information concerning the development of new products and services; and technical and non-technical data related to software programs, design, specifications, compilations, inventions, improvements, patent applications, studies, research, methods, devices, prototypes, processes, procedures and techniques. Such Confidential Information includes all such information of the Company or a person not a party to this Agreement whose information the Company has in its possession under obligations of confidentiality, which is disclosed by the Company to Participant or which is produced or developed while Participant is an employee or director of the Company. “Confidential Information” shall also include trade secrets (as defined under applicable law) as well as information that does not rise to the level of a trade secret and includes information that has been entrusted to the Company by a third party under an obligation of confidentiality. The term “Confidential Information” shall not include any information of the Company which (i) becomes publicly known through no wrongful act of Participant, (ii) is received from a person not a party to this Agreement who is free to disclose it to Participant, or (iii) is lawfully required to be disclosed to any governmental agency or is otherwise required to be disclosed by law, subpoena or court order but only to the extent of such requirement, provided that before making such disclosure Participant shall give the Company an adequate opportunity to interpose an objection or take action to assure confidential handling of such information.
Section 2 Return of Company Property. Participant acknowledges that all tangible items containing any Confidential Information or any other proprietary information of the Company or any of its Subsidiaries, including without limitation memoranda, photographs, records, reports, manuals, drawings, blueprints, prototypes, notes, documents, drawings, specifications, software, media and other materials, including any copies thereof (including electronically recorded copies), are the exclusive property of the Company and its Subsidiaries, and Participant shall deliver to the Company all such material in Participant’s possession or control upon the Company’s request and in any event upon the termination of Participant’s employment with the Company. Participant shall also return any keys, equipment, identification or credit cards, or other property belonging to the Company or its Subsidiaries upon termination of Participant’s employment or the Company’s request.
Section 3 Non-competition and Non-solicitation.
3.1 Participant agrees that during Participant’s employment with the Company, Participant will not, directly or indirectly: (i) as an employee, consultant, owner, officer, director, manager, operator, or controlling person (including indirectly through a debt or equity investment), provide to a Competing Business services of the same or similar type provided by Participant to the Company during Participant’s employment with the Company; (ii) solicit, recruit, aid or induce any employee of the Company or its Subsidiaries to leave his or her employment with the Company or its Subsidiary in order to accept employment with or render services to another person or entity unaffiliated with the Company or its Subsidiaries; (iii) solicit, aid, or induce any customer of the Company or its Subsidiaries to purchase goods or services then sold by the Company or its Subsidiaries from another person or entity, or assist or aid any other person or entity in identifying or soliciting any such customer, or (iv) otherwise interfere with the relationship of the Company or any of its Subsidiaries with any of its employees, customers, agents, representatives or suppliers.
3.2 Participant agrees that during the 18-month period following the date on which Participant’s employment with the Company terminates for any reason (the “Non-compete Period”), Participant will not directly or indirectly, as an employee, consultant, owner, officer, director, manager, operator, or controlling person (including indirectly through a debt or equity investment), provide a Competing Business anywhere in the Territory services of the same or similar type provided by Participant to the Company within 2 years of the termination of Participant’s employment with the Company. Notwithstanding anything to the contrary in the preceding sentence, (i) if Participant’s employment terminates for any reason within the 1-year period following a Change in Control, the Non-compete Period shall be a 12-month period, and (ii) this Section 3.2 shall not apply if Participant’s employment is terminated by the Company without Cause. The term “Competing Business” means the sale or distribution of landscaping or irrigation products or supplies. The term “Territory” means those states, cities, and other regions of the United States, Canada, and any other country within which Participant had substantial responsibilities while employed by the Company. For the avoidance of doubt, if Participant is a senior officer of the Company, the restriction contained herein shall relate to all of the businesses of the Company and its Subsidiaries.
3.3 Participant agrees that during the 18-month period following the date on which Participant’s employment with the Company terminates for any reason, Participant will not, directly or indirectly, on Participant’s own behalf or on behalf of another, or in assistance or aid of another: (i) solicit, recruit, aid or induce any employee of the Company or its Subsidiaries to leave his or her employment with the Company or its Subsidiaries in order to accept employment with or render services to another person or entity unaffiliated with the Company or its Subsidiaries, (ii) solicit, aid, or induce any customer of the Company or its Subsidiaries, with whom Participant had material contact during the 2-year period prior to the date of termination of Participant’s employment with the Company, to purchase goods or services then sold by the Company or its Subsidiaries from another person or entity, or assist or aid any other person or entity in identifying or soliciting any such customer, or (iii) otherwise interfere with the relationship of the Company or any of its Subsidiaries with any of its employees, customers, agents, representatives or suppliers with whom Participant had material contact during the 2-year period prior to the date of termination of Participant’s employment with the Company.
3.4 For the avoidance of doubt, Participant’s agreement to the covenants set forth in Sections 3.2 and 3.3 of this Exhibit B are not a condition of continued employment with the Company; rather, agreement to these covenants is a condition of Participant’s participation in the Plan. Sections 3.2 and 3.3 do not apply to employment, competition, or recruitment in California. For the avoidance of doubt, with respect to any Participant who primarily resides or works in California at the time of his or her execution of this Agreement or at the time of his or her termination of employment from the Company, the provisions of Sections 3.2 and 3.3 of this Exhibit B will not apply.
Section 4 Remedies.
4.1 The Company and Participant agree that the provisions of this Exhibit B do not impose an undue hardship on Participant and are not injurious to the public; that these provisions are necessary to protect the business of the Company and its Subsidiaries; that the nature of Participant’s responsibilities with the Company provide and/or will provide Participant with access to Confidential Information that is valuable to the Company and its Subsidiaries; that the Company would not grant this Award to Participant if Participant did not agree to the provisions of this Exhibit B; that the provisions of this Exhibit B are reasonable in terms of length of time and scope; and that adequate consideration supports the provisions of this Exhibit B. In the event that a court determines that any provision of this Exhibit B is unreasonably broad or extensive, Participant agrees that such court should narrow such provision to the extent necessary to make it reasonable and enforce the provisions as narrowed. The Company reserves all rights to seek any and all remedies and damages permitted under law, including, but not limited to, injunctive relief, equitable relief and compensatory damages for any breach of Participant’s obligations under this Exhibit B.
4.2 Without limiting the generality of the remedies available to the Company pursuant to Section 4.1, if Participant, except with the prior written consent of the Company, materially breaches the restrictive covenants contained in this Exhibit B, Participant shall forfeit any PSU’s that vested during the 12-month period prior to the date of termination of Participant’s employment with the Company, and any Shares acquired on settlement of such PSU’s (including the proceeds from the sale of any such Shares) shall be subject to clawback or recoupment by the Company. These rights of forfeiture and recoupment are in addition to any other remedies the Company may have against Participant for Participant’s breach of the restrictive covenants contained in this Exhibit B. Participant’s obligations under this Exhibit B shall be cumulative (but not operate to extend the length of any such obligations) of any similar obligations Participant has under the Plan, the Agreement or any other agreement with the Company or any Affiliate.
Section 5 Protected Rights
5.1 Notwithstanding any other provision of this Agreement, nothing contained in this Agreement limits Participant’s ability to file a charge or complaint with the Equal Employment Opportunity Commission, the National Labor Relations Board, the Occupational Safety and Health Administration, the Securities and Exchange Commission or any other federal, state or local governmental agency or commission (collectively, “Government Agencies”), or prevents Participant from providing truthful information in response to a lawfully issued subpoena or court order. Further, this Agreement does not limit Participant’s ability to communicate with any Government Agencies or otherwise participate in any investigation or proceeding that may be conducted by any Government Agency, including providing documents or other information, without notice to the Company.
5.2 Participant is hereby notified that under the Defend Trade Secrets Act: (i) no individual will be held criminally or civilly liable under federal or state trade secret law for disclosure of a trade secret (as defined in the Economic Espionage Act) that is: (A) made in confidence to a federal, state, or local government official, either directly or indirectly, or to an attorney, and made solely for the purpose of reporting or investigating a suspected violation of law; or (B) made in a complaint or other document filed in a lawsuit or other proceeding, if such filing is made under seal so that it is not made public; and (ii) an individual who pursues a lawsuit for retaliation by an employer for reporting a suspected violation of the law may disclose the trade secret to the attorney of the individual and use the trade secret information in the court proceeding, if the individual files any document containing the trade secret under seal, and does not disclose the trade secret, except as permitted by court order.
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