Exhibit 10.1

 

THE VALSPAR CORPORATION

AMENDED AND RESTATED KEY EMPLOYEE

ANNUAL BONUS AND LONG-TERM INCENTIVE PLAN

 

September 30, 2014

 

PURPOSE:

The purpose of The Valspar Corporation Key Employee Annual Bonus and Long-Term
Incentive 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 annual cash bonuses based on performance; granting options to
acquire Valspar Common Stock; granting Restricted Stock Units earned based on
future performance; and granting Restricted Stock Units with vesting based on
service. This amended and restated Plan is effective for Fiscal Years ending
after 2014.

 

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.

 

“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, or any plan adopted and approved by Valspar’s stockholders to replace
the Omnibus Equity Plan.

 

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

 

“Performance Stock Units” shall mean Restricted Stock Units that may be earned
based upon the level of achievement of specified performance goals, subject to
vesting and other terms of such awards.

 

“Plan” shall mean The Valspar Corporation Key Employee Annual Bonus and
Long-Term Incentive 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.

 

 

 

“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 Performance Stock Units 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.

 

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 (a) his/her termination of employment with Valspar for any reason or
(b) 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.         Long-Term Incentive Opportunity: For each Fiscal Year, each
Participant will have a long-term incentive opportunity based on the LTI Target
Value established by the Committee. This opportunity will be delivered in three
components, including a Performance Stock Unit opportunity under Section 4, an
award of time-based Restricted Stock Units under Section 5 and an award of
non-statutory Stock Options under Section 6 of this Plan.

 

        4.         Performance Stock Units:

 

        (a)        For each Fiscal Year, each Participant will receive a
Performance Stock Unit award under the Omnibus Equity Plan during the first
ninety days of such Fiscal Year, typically in January. The award will become
payable, subject to vesting, in accordance with certain performance goals to be
achieved during a three-year performance period starting with such Fiscal Year,
and the number of Performance Stock Units will be as provided in Section 4(b).
The Performance Stock Unit award will specify whether it is payable in shares of
Common Stock or in cash. Each Participant will be notified of the target amount
and performance goals for the Performance Stock Unit award as soon as
practicable after the date of the award. Terms of the Performance Stock Unit
award, including Dividend Equivalents, are described in Exhibit A.

 

        (b)        The target Performance Stock Unit award for the Fiscal Year
is equal to thirty-five percent (35%) of the LTI Target Value determined for
each participant for such Fiscal Year, divided by the Share Value. The number of
Performance Stock Units earned and paid out for the three-year performance
period, subject to vesting, will range from 50% of the target number of
Performance Stock Units for threshold performance to a maximum of 250% of the
target number of Performance Stock Units. No Performance Stock Units are earned
if performance is below threshold.

 

 

 

        (c)        The first such grants of Performance Stock Units under this
Amended and Restated Plan will be the grants for Fiscal Year 2015, to be granted
in January 2015, with a performance period of Fiscal Years 2015 through 2017.

 

        5.         Restricted Stock Units (Time-Based):

 

        (a)        For each Fiscal Year, each Participant will receive a
time-vested Restricted Stock Unit award 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 Target LTI Value for that
Participant for the Fiscal Year, divided by the Share Value. The Restricted
Stock Unit award will specify whether it is payable in shares of Common Stock or
in cash. Each Participant will be notified of the number of Restricted Stock
Units awarded to him/her as soon as practicable after the date of the award.
Terms of the Restricted Stock Unit award, including Dividend Equivalents, are
described in Exhibit A.

 

        (b)        The Restricted Stock Unit award for a Fiscal Year will be
granted on the same grant date as the Performance Stock Unit and subject to
three-year vesting.

 

        (c)        The first such grants of Restricted Stock Units under the
Amended and Restated Plan will be the grants for Fiscal Year 2015, to be granted
in January 2015.

 

        6.         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 forty
percent (40%) 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.

 

        (c)        In lieu of the award of a non-statutory Stock Option to a
Participant for a Fiscal Year, the Committee may elect, in its sole discretion,
to award time-vested Restricted Stock Units in substitution for all or part of
the award of a non-statutory Stock Option. The substituted Restricted Stock
Units will have the payment and vesting terms described in Exhibit A for
time-vested Restricted Stock Units.

 

        7.         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 that the Participant has already earned, or an
award of Performance Stock Units or 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
Performance Stock Units, the Restricted Stock Units, any 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 2015

EXHIBIT A

OFFICERS

Performance Stock Units (PSUs) – Performance-Based Vesting / Terms and
Conditions Rights under PSUs ·   The Performance Stock Units (“PSUs”) represent
the right to receive future payouts of Common Stock or cash, with vesting and
payment determined according to the level of achievement of performance goals
established by the Committee at the time of the award. Settlement ·   Settled in
shares of Common Stock or cash as determined by the Committee in its discretion
at the time of the award. Any earned PSUs will be payable, subject to vesting,
in the equivalent number of shares of Common Stock or a cash amount equal to the
fair market value of the equivalent number of shares on the payment calculation
date.   ·   Except for Retirement*, such amounts will be payable as soon as
practicable following the vesting date, but not later than 2½ months after the
vesting date. Dividend Equivalents ·   The Participant will be credited with
Dividend Equivalents on the PSUs that are earned, in an amount equal to the
dividends that would have been paid on the equivalent number of shares of Common
Stock during the three-year performance period. The Dividend Equivalents will be
paid out in cash at the time of settlement of the PSUs. Vesting/Forfeiture ·  
The PSUs vest on the third anniversary of the award date, or earlier upon death,
Disability, Retirement* or Change in Control, but in any case only to the extent
that the performance goals specified in the award are achieved during the
three-year period (subject to the terms below for death, Disability or Change in
Control). Retirement* ·   The PSUs vest on the date of Retirement, provided that
the amount of the payout will be determined following the end of the three-year
performance period and will be based on the level of achievement of the
performance goals, proportionately reduced to the extent Retirement occurs
before the end of the first Fiscal Year of the performance period for the PSUs.
For example, if Retirement occurs on the last day of the eighth month of the
first Fiscal Year of the performance period for which the PSUs are awarded and
the target level of performance is achieved, the payout at the end of the
three-year period will equal two-thirds of the target performance amount.   ·  
Payout as soon as practicable following the end of the third Fiscal Year ending
after the award date, but not later than 2½ months after such date (unless
payment is delayed for six months after a Retirement)   ·   Subject to
forfeiture if the Participant violates his or her three-year non-compete
agreement before payout Death and Disability ·   100% vested.  Payout determined
using the actual performance level achieved for any Fiscal Year(s) completed
prior to termination and assuming the target performance level for any
subsequent Fiscal Year(s) during the Performance Period Change in Control ·  
100% vested.  Payout determined using the actual performance level achieved for
any Fiscal Year(s) completed prior to the Change in Control and assuming the
target performance level for any subsequent Fiscal Year(s) during the
Performance Period

 

 

 

Restricted Stock Units (RSUs) – Time-Based Vesting / Terms and Conditions Rights
Under RSUs ·   The time-based Restricted Stock Units (“RSUs”) represent the
right to receive future payouts of Common Stock or cash, with vesting and
payment established by the Committee at the time of the award. Settlement ·  

Settled in shares of Common Stock or cash as determined by the Committee in its
discretion at the time of the award. The RSUs will be payable, subject to
vesting, in the equivalent number of shares of Common Stock or a cash amount
equal to the fair market value of the equivalent number of shares on the payment
calculation date.

Such amounts will be payable as soon as practicable following the vesting date,
but not later than 2½ months after the vesting date (unless payment is delayed
for six months after a Retirement).

Dividend Equivalents ·   Dividend Equivalents will accrue and be paid out in
cash at the time of settlement of vested RSUs. Vesting/Forfeiture ·   The RSUs
vest on the third 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 otherwise terminates prior to vesting.
Retirement* ·   The RSUs vest on the date of Retirement*, provided that the
amount of the payout will be proportionately reduced to the extent Retirement
occurs before the end of the first Fiscal Year for which the RSUs are awarded.  
·   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 third anniversary of the award date). Death and Disability ·   100% vested
Change in Control ·   100% vested Stock Options / Terms and Conditions Option
Term ·   10 years Vesting ·   33 1/3% per year, fully exercisable three years
after date of grant Retirement* ·   The options vest on the date of Retirement*,
provided that the total amount vested will be proportionately reduced to the
extent Retirement occurs before the end of the first full Fiscal Year for which
the options are awarded   ·   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 ·   May be exercised to the extent 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 (or a different age specified for a
Participant for any Incentive) if the Participant has executed and delivered a
three-year non-compete agreement and release of claims, has completed 3 years of
continuous prior employment with the Company or a Subsidiary and the required
prior written notice, all as set forth in Section 11.4. If PSUs or RSUs become
vested upon a Retirement that qualifies under this Plan, the PSUs or RSUs (and
any interim Dividend Equivalents) will be paid six months after the later of the
Retirement date or a “separation from service” under Code Section 409A. However,
any PSUs that are vested upon Retirement will not be paid earlier than the
normal payment date.