Exhibit 10.1

 

WATTS WATER TECHNOLOGIES, INC.

EXECUTIVE OFFICER INCENTIVE BONUS PLAN

 

I.                                        ESTABLISHMENT AND PURPOSE

 

The Watts Water Technologies, Inc. Executive Officer Incentive Bonus Plan (the
“Plan”) is hereby adopted by Watts Water Technologies, Inc. (the “Company”)
effective January 1, 2019.    The purpose of the Plan is to (i) attract and
retain highly qualified individuals; (ii) establish performance goals;
(iii) underscore the importance of achieving business objectives for the short
and long term; and (iv) include in such individual’s compensation package an
annual incentive component which is tied directly to the achievement of those
objectives.

 

II.                                   EFFECTIVE DATE; TERM

 

A.                                    The Plan will be effective as of
January 1, 2019.  Once effective, the Plan shall remain in effect until such
time as it shall be terminated by the Committee (as defined below).  The
Committee may terminate the Plan at any time; provided, however that except in
the event of a Change in Control, the Committee may not terminate the Plan
during any performance period without payment of a pro rata portion of any bonus
based on the period of time elapsed during the performance period and a
determination as to satisfaction of pro rata Performance Goals for such period.
For this purpose, a “Change in Control” shall mean (i) the dissolution or
liquidation of the Company, (ii) the sale of all or substantially all of the
assets of the Company on a consolidated basis to an unrelated person or entity,
(iii) a merger, reorganization or consolidation in which the outstanding shares
of stock of the Company are converted into or exchanged for a different kind of
securities of the successor entity and the holders of the Company’s outstanding
voting power immediately prior to such transaction do not own a majority of the
outstanding voting power of the successor entity immediately upon completion of
such transaction, or (iv) the sale of all of the stock of the Company to an
unrelated person or entity.

 

III.                              ADMINISTRATION

 

A.                                    Committee.  The Plan shall be administered
by the Compensation Committee of the Board of Directors of the Company (the
“Committee”).

 

B.                                    Authority.  The Committee shall have full
power to construe and interpret the Plan, establish and amend rules and
regulations for its administration, and perform all other acts relating to the
Plan, including the delegation of administrative responsibilities, that it
believes reasonable and proper and in conformity with the purposes of the Plan.

 

C.                                    Determinations.  Any decision made, or
action taken, by the Committee arising out of or in connection with the
interpretation and/or administration of the Plan shall be final, conclusive and
binding on all persons affected thereby. All powers of the Committee shall be
executed in its sole discretion, in the best interest of the Company, not as a
fiduciary, and in keeping with the objectives of the Plan and need not be
uniform as to similarly situated individuals.

 

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IV.                               ELIGIBILITY AND PARTICIPATION

 

Eligibility to participate in the Plan is limited to certain officers of the
Company as determined and selected by the Committee (each a “Participant”).

 

V.                                    BUSINESS CRITERIA

 

A.                                    Performance Goals.  A Participant may
receive a bonus payment under the Plan based upon the attainment of performance
objectives which are established by the Committee and relate to one or more of
the business criteria listed in Appendix A with respect to the Company, any of
its subsidiaries, divisions, business units, segments or regions or any
individual performance objective (the “Performance Goals”), any of which may be
measured either in subjective or absolute terms or as compared to any
incremental increase or decrease or as compared to results of a peer group or to
market performance indicators or indices or the Committee’s assessment of
individual performance.

 

B.                                    Adjustments.  The Committee may, in its
sole discretion, provide that one or more adjustments shall be made to one or
more of the Performance Goals.  Such adjustments may include but are not limited
to:  (i) a change in accounting principle, (ii) financing activities,
(iii) expenses for restructuring or productivity initiatives, (iv) other
non-operating items, (v) acquisitions or dispositions, (vi) the business
operations of an entity acquired by the Company during the performance period,
(vii) discontinued operations, (viii) stock dividend, split, combination or
exchange of stock, (ix) unusual or extraordinary events, transactions or
developments, (x) amortization of intangible assets, (xi) other significant
income or expense outside the Company’s core on-going business activities,
(xii) other nonrecurring items, (xiii) goodwill or intangible writeoffs, or
(xiv) changes in applicable law.

 

VI.                               BONUS DETERMINATIONS

 

A.                                    Bonus Formulas.  Any bonuses paid to
Participants under the Plan shall be based upon bonus formulas that tie such
bonuses to one or more performance objectives relating to the Performance
Goals.  The Committee will select the Performance Goals applicable for each
performance period.  The performance period shall be the Company’s fiscal year,
which commences on January 1st and ends on December 31st.  Participants need not
be employed on the first day of a performance period.  If a Participant becomes
eligible to participate in the Plan during a performance period, the Committee
shall determine if such Participant shall be eligible to participate in an award
for such performance period and whether or not such award may be prorated for
such period.

 

B.                                    Adjustment of Bonuses.  The Committee may
in its sole discretion increase or decrease a bonus payable to a Participant
pursuant to the applicable bonus formula to account for demonstrated quality of
performance or the occurrence of significant, unforeseen events or changes;
provided that with respect to any performance period the amount of the bonus
payable to a Participant under this Plan may not exceed 200% of the
Participant’s target bonus as established by the Committee.

 

C.                                    Continued Employment.  The payment of a
bonus to a Participant with respect to a performance period shall be conditioned
upon the Participant’s employment by the Company

 

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on the date on which the bonus is paid; provided, however, that in the
discretion of the Committee, (i) full bonuses may be paid to Participants who
have terminated employment due to disability or following a Change in Control,
or to the designee or estate of a Participant who died during such period and
(ii) pro rata bonuses may be paid to a Participant whose employment is
terminated or who retires during the performance period based on actual
performance.

 

VII.                          ADDITIONAL CONDITIONS

 

A.                                    Additional Criteria.  Once a bonus formula
is established under Section VI based on one or more of the Performance Goals,
the Committee may with the consent of the Participant establish (and once
established, rescind, waive or amend) additional conditions and terms of payment
of awards (including but not limited to the achievement of other financial,
strategic or individual goals, which may be objective or subjective) as it deems
desirable in carrying out the purposes of the Plan and may take into account
such other factors as it deems appropriate in administering any aspect of the
Plan.

 

B.                                    Forfeiture and Claw-Back Provisions.  The
Committee may provide that any bonuses paid under the Plan shall be subject to
the provisions of any claw-back policy implemented by the Company, including,
without limitation, any claw-back policy adopted to comply with the requirements
of the Dodd-Frank Wall Street Reform and Consumer Protection Act and any
rules or regulations thereunder, to the extent set forth in such claw-back
policy.

 

VIII.                     PAYMENT OF AWARDS

 

A.                                    Form of Payment.  All awards shall be paid
in (i) cash or (ii) with the consent of the Participant and the Committee,
restricted stock units pursuant to the terms of the Company’s Management Stock
Purchase Plan, as it may be amended from time to time, or any successor equity
incentive plan thereto.

 

B.                                    Approval Required.  No awards shall be
paid unless and until the Committee approves the amounts payable with respect to
each award.

 

C.                                    Timing of Payments.  Awards shall be paid
as soon as practicable following the end of the performance period, but in no
event shall payment be made later than two and one half months following the end
of the performance period.

 

IX.                              SPECIAL AWARDS AND OTHER PLANS

 

Nothing contained in the Plan shall prohibit the Company from granting awards or
authorizing other compensation to any person under any other plan or authority
or limit the authority of the Company to establish other special awards or
incentive compensation plans providing for the payment of incentive compensation
to employees (including those employees who are eligible to participate in the
Plan).

 

X.                                   AMENDMENT OF THE PLAN

 

The Committee shall have the right to amend the Plan from time to time or to
repeal it entirely or to direct the discontinuance of awards either temporarily
or permanently.

 

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XI.                              RIGHTS OF PLAN PARTICIPANTS

 

A.                                    No Right to Continued Employment.  Neither
the Plan, nor the adoption or operation of the Plan, nor any documents
describing or referring to the Plan (or any part hereof) shall confer upon any
Participant any right to continue in the employ of the Company or shall
interfere with or restrict in any way the rights of the Company, which are
hereby expressly reserved, to discharge any Participant at any time for any
reason whatsoever, with or without cause.

 

B.                                    No Right to Company Assets.  No individual
to whom an award has been made or any other party shall have any interest in the
cash or any other asset of the Company prior to such amount being paid.

 

C.                                    Awards Not Transferrable.  No right or
interest of any Participant shall be assignable or transferable, or subject to
any claims of any creditor or subject to any lien.

 

D.                                    No Right to Continued Participation.  In
no event shall the Company be obligated to pay to any Participant an award for
any period by reason of the Company’s payment of an award to such Participant in
any other period, or by reason of the Company’s payment of an award to any other
Participant or Participants in such period or in any other period.  Nothing
contained in this Plan shall confer upon any person any claim or right to any
payments hereunder.  Such payments shall be made at the sole discretion of the
Committee.

 

E.                                     Forfeiture and Claw-Back Provisions.  The
Committee may provide that any bonuses paid under the Plan shall be subject to
the provisions of any claw-back policy implemented by the Company, including,
without limitation, any claw-back policy adopted to comply with the requirements
of the Dodd-Frank Wall Street Reform and Consumer Protection Act and any
rules or regulations thereunder, to the extent set forth in such claw-back
policy.

 

XII.                         SECTION 409A

 

Awards under this Plan shall either be exempt from or be designed to comply with
Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”). 
Notwithstanding anything to the contrary in the Plan or any award, if and to the
extent the Committee shall determine that the terms of any award may result in
the failure of such award to be exempt from or comply with the requirements of
Section 409A of the Code, or any applicable regulations or guidance promulgated
by the Secretary of the Treasury in connection therewith, the Committee shall
have authority to take such action to amend, modify, cancel or terminate the
Plan or any award as it deems necessary or advisable, including without
limitation:

 

1.                                      amendment or modification of the Plan or
any award to conform the Plan or such award to the requirements of Section 409A
of the Code or any regulations or other guidance thereunder (including, without
limitation, any amendment or modification of the terms of any award regarding
vesting, exercise, or the timing or form of payment);

 

2.                                      cancellation or termination of any
unvested award, or portion thereof, without any payment to the Participant
holding such award.

 

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Any such amendment, modification, cancellation, or termination of the Plan or
any award may adversely affect the rights of a Participant with respect to such
award without the Participant’s consent.

 

XIII.                    MISCELLANEOUS

 

A.                                    Withholding.  The Company shall deduct all
federal, state and local taxes required by law or Company policy from any award
paid hereunder.

 

B.                                    Unfunded Plan.  The Plan shall be unfunded
and is not intended to be subject to the Employee Retirement Income Security Act
of 1974, as amended.  Amounts payable under the Plan are not and will not be
transferred into a trust or otherwise set aside.  The Company shall not be
required to establish any special or separate fund or to make any other
segregation of assets to assure the payment of any award under the Plan.  Any
accounts under the Plan are for bookkeeping purposes only and do not represent a
claim against the specific assets of the Company.

 

C.                                    Severability.  Any provision of the Plan
that is prohibited or unenforceable shall be ineffective to the extent of such
prohibition or unenforceability without invalidating the remaining provisions of
the Plan.

 

D.                                    Governing Law.  The Plan and the rights
and obligations of the parties to the Plan shall be governed by, and construed
and interpreted in accordance with, the law of the State of Delaware (without
regard to principles of conflicts of law).

 

*  *  *  *  *

 

The Plan was duly authorized, approved and adopted by the Board of Directors of
the Company on February 6, 2019.

 

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APPENDIX A

 

·                  earnings (either before or after one or more of the
following: (i) interest, (ii) taxes, (iii) depreciation and (iv) amortization)

 

·                  economic value-added (as determined by the Committee)

 

·                  sales or revenue

 

·                  net income (either before or after taxes)

 

·                  cash flow (including, but not limited to, operating cash flow
and free cash flow)

 

·                  return on capital

 

·                  return on invested capital

 

·                  return on stockholders’ equity

 

·                  return on assets

 

·                  stockholder return

 

·                  return on sales

 

·                  gross or net profit

 

·                  productivity

 

·                  expenses

 

·                  operating margin

 

·                  operating efficiency

 

·                  customer satisfaction

 

·                  working capital

 

·                  earnings per share

 

·                  price per share of class A common stock

 

·                  market share

 

·                  costs

 

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·                  cash flow conversion rate

 

·                  improvement of financial ratings

 

·                  gross operating profit

 

·                  capital deployment

 

·                  implementation or completion of critical projects

 

·                  funds from operations

 

·                  achievement of balance sheet of income statement objectives

 

·                  organizational or succession planning

 

·                  sales growth (organic and/or inorganic)

 

·                  improvements in capital structure

 

·                  productivity ratios

 

·                  operating efficiency

 

·                  enterprise value

 

·                  safety record

 

·                  completion of acquisitions or business expansions

 

·                  completion of dispositions of assets or business units

 

·                  working capital percentage to sales

 

·                  quality record

 

·                  on-time delivery

 

·                  inventory value

 

·                  inventory turns

 

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