Exhibit 10.1

 

THE VALSPAR CORPORATION

AMENDED AND RESTATED

KEY EMPLOYEE ANNUAL BONUS PLAN

 

June 5, 2012

 

PURPOSE:

The purpose of The Valspar Corporation Key Employee Annual Bonus Plan (the
"Plan") is to more closely align the goals and motivation of management with
those of other Valspar shareholders and to provide key personnel with a
long-term capital appreciation opportunity. This purpose is accomplished by
providing cash bonuses based on performance; granting options to acquire Valspar
stock; awarding Restricted Stock Units; and granting the opportunity to earn
Restricted Stock based on performance. This amended and restated Plan is
effective for Fiscal Years ending after 2012.

 

DEFINITIONS:

Any capitalized terms used in this Plan, but not defined herein, shall have the
meanings set forth in the Omnibus Equity Plan.

 

“Cash Bonus Target Amount” shall mean the target bonus amount established for a
Participant for a particular Fiscal Year as set forth in Section 2 below.

 

“Earned Cash Bonus Amount” shall mean the amount of the actual cash bonus earned
for the Fiscal Year based on performance, as set forth in Section 2 below.

 

“Earned Restricted Amount” shall mean the dollar amount resulting from the
percentage of the Restricted Target Amount earned by a Participant for the
Fiscal Year based on performance, as set forth in Section 3 below.

 

“Employee” shall mean each person who is an employee of Valspar or any
Subsidiary which term shall include both full and part-time employees but shall
not include independent contractors providing services to Valspar or its
Subsidiaries.

 

“Fiscal Year” shall mean the period corresponding with each of the fiscal years
of Valspar.

 

“LTI Target Value” shall mean the target long term incentive value established
by the Committee for each Participant for each Fiscal Year, determined by the
Committee as provided herein.

 

“Omnibus Equity Plan” shall mean the 2009 Omnibus Equity Plan of Valspar, as
amended.

 

“Participant” shall mean an Employee whom the Committee has determined to permit
to become a Participant, who remains a Participant pursuant to the provisions of
Section 1 of the Plan.

 

“Plan” shall mean The Valspar Corporation Key Employee Annual Bonus Plan, as set
forth herein and as amended from time to time.

 

“Plan Administrator” shall mean the person or persons designated as such from
time to time by the Committee. If no person is designated as the Plan
Administrator, the Plan Administrator shall be the Secretary of Valspar.

 

“Restricted Target Amount” shall mean the target dollar amount established for a
Participant for the award of Restricted Stock for a particular Fiscal Year as
set forth in Section 3 below.

 

“Share Value” means the average closing price of a share of Common Stock on the
New York Stock Exchange for the ten (10) trading days prior to the date of an
award of Restricted Stock or Restricted Stock Units.

 

“Termination for Cause” shall mean the termination of employment with Valspar as
a result of an illegal act, gross insubordination or willful violation of a
Valspar policy by an Employee.

 

“Valspar” shall mean The Valspar Corporation, a Delaware corporation, with its
principal offices in Minneapolis, Minnesota.

 

 

 

PLAN:

 

       1.       Participants:   Before the first day of each Fiscal Year, the
Committee shall determine the Employees who will be Participants under the Plan
for that Fiscal Year and the LTI Target Value for each Participant. The
Committee may also designate newly hired or promoted Employees as Participants
during the Fiscal Year. A Participant will cease being a Participant upon the
earlier of (i) his/her termination of employment with Valspar for any reason or
(ii) a determination by the Committee that he/she shall no longer be a
Participant.

 

       2.       Cash Bonus Determination and Amount:

 

       (a)       Each Participant will be eligible for the opportunity to earn a
cash incentive bonus for the Fiscal Year. The amount of the cash bonus will be
determined consistent with the provisions of the Omnibus Equity Plan governing
Performance Awards.

 

       (b)       The Cash Bonus Target Amount will be calculated as a percentage
of the Participant’s base salary earned in the Fiscal Year. The Earned Cash
Bonus Amount will be a percentage of the Cash Bonus Target Amount, to be
determined based on the performance of the Participant and/or Valspar for such
Fiscal Year.

 

       (c)       Notwithstanding the fact that the Earned Cash Bonus Amount is
not determined until after the end of each Fiscal Year, a person who is a
Participant on the last day of a Fiscal Year shall be entitled to his/her Earned
Cash Bonus Amount for such Fiscal Year, even if he or she is not a Participant
on the date the Earned Cash Bonus Amount is determined, unless he or she was the
subject of a Termination for Cause.

 

       3.       Restricted Stock (Performance-Based):

 

       (a)       Each Participant will be eligible to earn an award of
Restricted Stock for each Fiscal Year, to be awarded during the first fiscal
quarter of the following Fiscal Year. Each Participant will be notified of the
number of shares of Restricted Stock awarded to him/her as soon as practicable
after the date of the award. Participants will receive quarterly cash dividends
during the vesting period of the restricted stock award. Terms of the Restricted
Stock award are described in Exhibit A.

 

       (b)       The amount of the award of Restricted Stock to a Participant
for any Fiscal Year will be determined as follows: (i) the Committee will
identify specific performance targets, with the Restricted Target Amount for the
award equal to twenty-five percent (25%) of the Participant’s LTI Target Value;
(ii) performance targets for the Restricted Target Amount may, but need not, be
the same targets as those used for the cash incentive bonus calculation
described in Section 2(b); (iii) the award of Restricted Stock will be
considered Performance Awards and will be determined consistent with the
provisions of the Omnibus Equity Plan governing Performance Awards; (iv) on or
before the award date for the Restricted Stock, the Committee will determine the
Participant’s Earned Restricted Amount for the Fiscal Year; (v) the number of
shares of Restricted Stock covered by the award will be the Participant’s Earned
Restricted Amount, divided by the Share Value. Notwithstanding the foregoing,
the Committee may elect to change the proportions of the Earned Restricted
Amount represented by Restricted Stock for any Participant for a Fiscal Year, to
the extent permitted under Section 3(d) or 3(e).

 

       (c)       A person who is a Participant on the last day of a Fiscal Year
and has a Retirement before the award date of the Restricted Stock for the
Fiscal Year will be entitled to receive his or her award of Restricted Stock
during the first quarter of the following Fiscal Year. In any other case, if a
Participant is no longer an Employee at the time of such award date, the
Participant shall not receive the award of Restricted Stock.

 

       (d)       At any time before the beginning of any Fiscal Year for which
an award of Restricted Stock may be made to a Participant, the Committee may
elect, in its sole discretion, to award the Participant’s Earned Restricted
Amount for that Fiscal Year in the form of 100% Restricted Stock Units with
accompanying Dividend Equivalents, or any combination of Restricted Stock and
Restricted Stock Units (including Dividend Equivalents); provided that the
Restricted Stock Units will have the vesting and payment terms described in
Exhibit A for Restricted Stock Units, except that the Restricted Stock Units
will vest on the third anniversary (rather than the fourth anniversary) of the
award date, or earlier upon death, Disability, Retirement or Change in Control.

 

       (e)        At any time before the award of Restricted Stock is made to a
Participant for a Fiscal Year, the Committee may elect, in its sole discretion,
to (1) award to the Participant cash in lieu of all or any portion of the
Restricted Stock component of the Earned Restricted Amount or (2) otherwise
change the form in which the Earned Restricted Amount will be paid, to the
extent such a change is consistent with (or is exempt from) the requirements of
Code Section 409A and the regulations promulgated thereunder.

 

 

 

       (f)       The first such grants of Restricted Stock under this Amended
and Restated Plan will be the grants for Fiscal Year 2013, to be granted in
January 2014.

 

       4.       Restricted Stock Units (Time-Based):

 

       (a)       For each Fiscal Year, each Participant will receive a
restricted stock unit award (including Dividend Equivalents) under the Omnibus
Equity Plan. The number of restricted stock units covered by the award will be
calculated so that the fair value of the restricted stock unit award as
determined by the Committee will be equal to twenty-five percent (25%) of the
LTI Target Value for that Participant for the Fiscal Year, divided by the Share
Value. Each Participant will be notified of the number of Restricted Stock Units
awards to him/her as soon as practicable after the date of the award. Terms of
the Restricted Stock Units award are described in Exhibit A.

 

       (b)       The restricted stock unit award will be granted in October
prior to the beginning of the Fiscal Year, with an effective date in January of
the following year and subject to four-year vesting. The award will include
Dividend Equivalents which will accumulate over the vesting period and paid in
cash at the same time as the restricted stock unit award cash payment.

 

       (c)       The first such grants of Restricted Stock Units under the
Amended and Restated Plan will be the grants for Fiscal Year 2013, to be granted
in October 2012, with an effective date in January 2013.

 

5.       Non-Statutory Stock Options:

 

       (a)       For each Fiscal Year, each Participant will be granted a
non-statutory stock option under the Omnibus Equity Plan in October prior to the
beginning of the Fiscal Year. The number of shares of Common Stock included in
the stock option for each Participant will be calculated so that the fair value
of the stock option as determined by the Committee will be equal to fifty
percent (50%) of the LTI Target Value for that Participant for that Fiscal Year.

 

       (b)       Each Participant will be notified of the number of shares
subject to the stock option and the exercise price per share as soon as
practicable after the date of the grant. Terms of the stock options are
described in Exhibit A.

 

       5.       Amendments: The Board of Directors of Valspar or the Committee
may, at any time and without further action on the part of the shareholders of
Valspar, terminate this Plan or make such amendments as it deems advisable and
in the best interests of Valspar; provided, however, that no such termination or
amendment shall, without the consent of the Participant, materially adversely
affect or impair the right of the Participant with respect to an Earned Cash
Bonus Amount or Earned Restricted Amount that the Participant has already earned
or an award of Restricted Stock and Restricted Stock Units or a grant of a
non-statutory stock option or other benefits that the Participant has already
received under the Plan; provided, further, that no such amendment shall
accelerate or defer the time or schedule of the vesting or payment of the
Restricted Stock, Restricted Stock Units, Dividend Equivalents or any other
compensation that may be paid under this Plan, except to the extent such
acceleration or deferral is permitted or complies with (or is exempt from) the
requirements of Code Section 409A and the regulations promulgated thereunder.

 

 

Effective Fiscal 2013
EXHIBIT A
OFFICERS Restricted Stock – Performance-Based / Terms and Conditions
Vesting/Forfeiture · The Restricted Stock vests on the third anniversary of the
award date, or earlier upon death, Disability, Retirement* or Change in Control.
The Restricted Stock will be forfeited if the Participant’s employment with
Valspar terminates prior to vesting. Retirement* · 100% vested, subject to
forfeiture or repayment if the Participant violates his or her three-year
non-compete agreement before the Restricted Stock would normally have vested
(the third anniversary of the award date). Death and Disability · 100% vested
Change in Control · 100% vested Restricted Stock Units (RSUs) – Time-Based /
Terms and Conditions Rights Under RSUs and
Dividend Equivalents · The RSUs represent the right to receive future cash
payments equal to the fair market value of the equivalent number of shares of
Common Stock on the vesting date. If the Participant remains employed on a
dividend record date for Common Stock, Dividend Equivalents are accrued and paid
in cash on the same vest date of the RSU payment (unless payment is delayed for
six months after a Retirement). Vesting/Forfeiture · The RSUs vest on the fourth
anniversary of the award date, or earlier upon death, Disability, Retirement* or
Change in Control. The RSUs will be forfeited if the Participant’s employment
with Valspar terminates prior to vesting. Retirement* · 100% vested*, subject to
forfeiture or repayment if the Participant violates his or her three-year
non-compete agreement before the award would normally have vested (the fourth
anniversary of the award date). Death and Disability · 100% vested Change in
Control · 100% vested Payment of RSUs
and Dividends · RSUs are paid in cash on or within 30 days after vesting at the
end of four years along with accrued Dividend Equivalents; within 60 days in the
case of Death, Disability or Change in Control; and six months after
Retirement*. Stock Options / Terms and Conditions Option Term · 10 years Vesting
· 33 1/3% per year, fully exercisable three years after date of grant
Retirement* · 100% vested   · fully exercisable for remainder of option term,
provided the Participant does not violate his or her non-compete agreement Death
and Disability · 100% vested   · 1 year to exercise, not to exceed original
option term Change in Control · 100% vested for remainder of option term
Termination · per cent vested at time of termination   · 30 days to exercise,
not to exceed original option term Termination For Cause · forfeit unexercised
options

* Retirement is defined in Section 11.4 of the Omnibus Equity Plan as the
termination of employment with the Company or a Subsidiary for any reason other
than death, Disability or Termination for Cause at any time after the
Participant has attained the age of 55 if the Participant has executed a
three-year non-compete agreement. The award agreement for RSUs for any
Participant may include additional restrictions or requirements for a qualifying
Retirement. If RSUs become vested upon a Retirement that qualifies under this
Plan, the RSUs (and any interim Dividend Equivalents) are paid six months after
the Retirement date; provided that the Retirement is a “separation from service”
under Code Section 409A.

 

 

 

Effective Fiscal 2013
EXHIBIT A
KEY EMPLOYEES Restricted Stock – Performance-Based / Terms and Conditions
Vesting/Forfeiture · The Restricted Stock vests on the third anniversary of the
award date, or earlier upon death, Disability, Retirement* after age 55 or
Change in Control. The Restricted Stock will be forfeited if the Participant’s
employment with Valspar terminates prior to vesting. Retirement After Age 55* ·
100% vested, subject to forfeiture or repayment if the Participant violates his
or her three-year non-compete agreement before the Restricted Stock would
normally have vested (the third anniversary of the award date). Death and
Disability · 100% vested Change in Control · 100% vested Restricted Stock Units
(RSUs) – Time-Based / Terms and Conditions Rights Under RSUs and
Dividend Equivalents · The RSUs represent the right to receive future cash
payments equal to the fair market value of the equivalent number of shares of
Common Stock on the vesting date. If the Participant remains employed on a
dividend record date for Common Stock, Dividend Equivalents are accrued and paid
in cash on the same vest date of the RSU payment (unless payment is delayed for
six months after a Retirement). Vesting/ Forfeiture · The RSUs vest on the
fourth anniversary of the award date, or earlier upon death, Disability,
Retirement* after age 55 or Change in Control. The RSUs will be forfeited if the
Participant’s employment with Valspar terminates prior to vesting. Retirement
After Age 55* · 100% vested*, subject to forfeiture or repayment if the
Participant violates his or her three-year non-compete agreement before the
award would normally have vested (the fourth anniversary of the award date).
Death and Disability · 100% vested Change in Control · 100% vested Payment of
RSUs
and Dividends · RSUs are paid in cash on or within 30 days after vesting at the
end of four years along with accrued Dividend Equivalents; within 60 days in the
case of Death, Disability or Change in Control; and six months after
Retirement*. Stock Options / Terms and Conditions Option Term · 10 years Vesting
· 33 1/3% per year, fully exercisable three years after date of grant Retirement
After Age 60* · 100% vested   · 30 days to exercise, not to exceed original
option term Death and Disability · 100% vested   · 1 year to exercise, not to
exceed original option term Change in Control · 100% vested for remainder of
option term Termination · per cent vested at time of termination   · 30 days to
exercise, not to exceed original option term Termination For Cause · forfeit
unexercised options

* Retirement is defined as the termination of employment with the Company or a
Subsidiary for any reason other than death, Disability or Termination for Cause
at any time after the Participant has attained the age of 55 for purposes of
Restricted Stock and Restricted Stock Units or 60 for purposes of stock options,
in either case if the Participant has executed a three-year non-compete
agreement. The award agreement for RSUs for any Participant may include
additional restrictions or requirements for a qualifying Retirement. If RSUs
become vested upon a Retirement that qualifies under this Plan, the RSUs (and
any interim Dividend Equivalents) are paid six months after the Retirement date;
provided that the Retirement is a “separation from service” under Code Section
409A.