Exhibit 10.1

 

2016 Long-Term Performance-Based Restricted Stock Unit Grant

Performance Goals Based on [Cumulative Free Cash Flow]//[Absolute TSR]

  

ARMSTRONG WORLD INDUSTRIES

2500 Columbia Ave., P.O. Box 3001

Lancaster, PA 17604

717. 397.0611

Company Confidential

 

 

 

 

 

I am pleased to inform you that the Company’s Management Development and
Compensation Committee granted you the following:

Date of Grant:

Performance Units (“Target Award”):

Performance Period (“Performance Period”): April 1, 2016 through December 31,
2018

This award recognizes the importance of your role in achieving the Company’s
long-term strategy and is subject to the terms of the 2011 Long-Term Incentive
Plan and the award agreement. The award agreement consists of this grant letter
with the Performance Goals attached as Exhibit A and the Terms and Conditions
attached as Exhibit B.

The Performance Units will be earned by achieving a Performance Goal based on
[Cumulative Free Cash Flow] // [absolute Total Shareholder Return], subject to
your continued employment through the end of the Performance Period. The
Committee has established the Performance Goal set forth on Exhibit A, which
allows you to earn up to [200%] [CFCF] // [300%] [TSR] of the Target Award, if
you remain continuously employed by the Employer through the end of the
Performance Period.

To the extent the Performance Goal is achieved and you satisfy the employment
requirements, a number of shares of Company Stock equal to the Performance Units
that are earned and vested will be distributed to you following the conclusion
of the Performance Period in accordance with the payment terms set forth in the
Terms and Conditions. The Company will withhold shares to satisfy your tax
obligations unless prohibited by country law or unless you provide a payment to
cover the tax withholding obligation. You have no ownership or voting rights
relative to the Performance Units.

If the Company makes cash dividend payments during the Performance Period, the
value of the dividends on shares attributable to the Performance Units will
accrue as dividend equivalents in a non-interest bearing bookkeeping account.
You will receive a cash payment equal to the accrued dividend equivalents at the
end of the Performance Period, adjusted for the number of Performance Units that
become earned and vested.

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Employment Events

The following chart is a summary of the provisions which apply to this award in
connection with termination of employment. The following is only a summary, and
in the event of termination of employment, the award will be governed by the
Terms and Conditions.

 

Event

  

Provisions

•       Voluntary Resignation

 

•       Termination for Cause

   All Performance Units and accrued dividend equivalents are forfeited.

•       “55 / 5” Rule Termination

 

(55 years of age or older with 5 years of service)

 

•       Involuntary Termination Without Cause

   If termination occurs after 10 months following the Date of Grant, then to
the extent that the Performance Goal is achieved for the Performance Period,
Performance Units and accrued dividend equivalents are earned and vested
pro-rata, based on the period of employment; otherwise the Performance Units and
accrued dividend equivalents are forfeited.

•       Death

 

•       Long-Term Disability

   To the extent that the Performance Goal is achieved for the Performance
Period, Performance Units and accrued dividend equivalents are earned and vested
pro-rata, based on the period of employment.

After a Change in Control:

 

•       Involuntary Termination Without Cause

 

•       Death

 

•       Long-Term Disability

   Upon a Change in Control, Performance Units and accrued dividend equivalents
are earned as described in Exhibit A and will vest as described in Exhibit B.

In the event of any inconsistency between the foregoing summary and the Terms
and Conditions or the 2011 Long-Term Incentive Plan, the Terms and Conditions or
the 2011 Long-Term Incentive Plan, as applicable, will govern. Capitalized terms
used but not defined in this grant letter will have the meanings set forth in
the 2011 Long-Term Incentive Plan or the Terms and Conditions, as applicable. As
described in the Terms and Conditions, if and to the extent that the terms of
this award agreement conflict with the terms of a change in control agreement or
employment agreement between you and the Company, the terms of this award
agreement shall supersede the terms of the change in control agreement or
employment agreement.

Please contact Kelly Strunk (717-396-3477) if you have questions.

 

Sincerely, Victor D. Grizzle Chief Executive Officer

The information contained in this letter is confidential and any discussion,
distribution or use of this information is prohibited.

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Exhibit A

Performance Goal

Cumulative Free Cash Flow: Cumulative Free Cash Flow is defined as cash flow
from operations, less cash used in investing activities, as determined by the
Committee.

 

Cumulative Free Cash Flow Performance Scale   Performance Level    Payout  

Below 80% of Target Performance

     0 % 

80% of Target Performance

     25 % 

Target Performance

     100 % 

113% of Target Performance

     150 % 

118% of Target Performance

     175 % 

125% of Target Performance or greater

     200 % 

Absolute Total Shareholder Return: Absolute Total Shareholder Return (“Absolute
TSR”) tracks the appreciation in share price of the Company Stock, including
dividends, and is annualized for the Performance Period, as determined by the
Committee. Specifically, Absolute TSR is calculated based on the following
formula:

 

  (Ending Share Price + Aggregate Dividends)   ^(1-2.75)-1     Starting Share
Price    

For purposes of the Absolute TSR calculation:

 

  •   “Ending Share Price” means the volume weighted average closing price of
the Company Stock for the highest consecutive 30 trading days in the 60 trading
day period beginning with and immediately following January 2, 2019.

 

  •   “Aggregate Dividends” means a cumulative number of shares of Company Stock
assuming same day reinvestment in Company Stock on the ex-dividend date of the
dividends paid on a share of Company Stock during the Performance Period.

 

  •   “Starting Share Price” means the volume weighted average closing price of
the Company Stock for the 30 trading days beginning with and immediately
following April 4, 2016.

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Absolute TSR   Performance Level    Payout  

Below 9%

     0 % 

9%

     25 % 

10%

     50 % 

12%

     100 % 

20%

     200 % 

30%

     300 % 

Threshold level performance must be achieved in order to earn any Performance
Units for the Performance Goal. If actual performance is between performance
levels, the number of Performance Units earned with respect to the Performance
Goal will be interpolated on a straight line basis for pro-rata achievement for
performance at or between performance levels. If the Performance Goal would
produce fractional units, the number of Performance Units earned shall be
rounded up to the nearest whole unit, but not in excess of an aggregate of
[200%][CFCF] // [300%][TSR] of the Target Award.

Change in Control:

[If a Change in Control occurs prior to the end of the Performance Period, the
number of Performance Units earned with respect to the Cumulative Free Cash Flow
Performance Goal will be based on actual Cumulative Free Cash Flow through the
date of the Change in Control relative to the 2016, 2017 and 2018 portions of
the total Cumulative Free Cash Flow target, as determined by the Committee
before the Change in Control in its sole discretion. Cumulative Free Cash Flow
through the date of the Change in Control shall be compared to the annual and
quarterly targets for the period through the date of the Change in Control.]
[CFCF]

[If a Change in Control occurs prior to the end of the Performance Period or
prior to the end of the 60 trading day period following the end of the
Performance Period, the number of Performance Units earned with respect to the
Absolute TSR Performance Goal will be based on Absolute TSR through the date of
the Change in Control, calculated by using the per-share sales price in the
Change in Control as the Ending Share Price and as if the Change in Control date
were the end of the Performance Period, as determined by the Committee before
the Change in Control in its sole discretion] [TSR].

The Committee reserves discretion to provide for accelerated vesting of the
earned Performance Units pursuant to Section 14(c) of the Plan.

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EXHIBIT B

ARMSTRONG WORLD INDUSTRIES, INC.

2011 LONG-TERM INCENTIVE PLAN

PERFORMANCE RESTRICTED STOCK UNIT GRANT

TERMS AND CONDITIONS

1. Grant.

(a) Subject to the terms set forth below, Armstrong World Industries, Inc. (the
“Company”) has granted to the designated employee (the “Grantee”) two target
awards (the “Target Award”) of performance-based restricted stock units (the
“Performance Units”) as specified in the 2016 Long-Term Performance Restricted
Stock Unit Grant Letters to which these Grant Conditions relate (the “Grant
Letters”). The “Date of Grant” is April 11, 2016. The Performance Units are
Stock Units with respect to common stock of the Company (“Company Stock”).

(b) The Performance Units shall be earned, vested and payable if and to the
extent that the Cumulative Free Cash Flow and Absolute TSR performance goals set
forth in the Grant Letters (the “Performance Goals”), employment conditions and
other terms of these Grant Conditions are met. The “Performance Period” for
which the attainment of the Performance Goals will be measured is the period
beginning April 1, 2016 and ending December 31, 2018.

(c) These Terms and Conditions (the “Grant Conditions”) are part of the Grant
Letters. This grant is made under the Armstrong World Industries, Inc. 2011
Long-Term Incentive Plan (the “Plan”). Any terms not defined herein shall have
the meanings set forth in the Plan.

2. Performance Goals; Vesting.

(a) The Grantee shall earn and vest in a number of Performance Units based on
the attainment of the Performance Goals for the Performance Period, provided
that the Grantee continues to be employed by the Company or its subsidiaries or
affiliates (collectively the “Employer”) through December 31, 2018 (the “Vesting
Date”). The Performance Units shall be earned based on attainment of the
Performance Goals and shall vest based on the Grantee’s continued employment
through the Vesting Date, or as otherwise provided below.

(b) After the end of the Performance Period, the Management Development and
Compensation Committee (the “Committee”) will determine whether and to what
extent the Performance Goals have been met and the amount earned with respect to
the Performance Units. The Grantee can earn up to 275% of the Target Award based
on attainment of the Performance Goals, as set forth in the Grant Letters.
Earned and vested Performance Units shall be payable as described in Section 5.

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(c) If a Change in Control occurs, the amount earned with respect to the
Performance Units shall be determined as of the date of the Change in Control as
described in the Grant Letters. The earned Performance Units shall continue to
vest based on the Grantee’s continued employment through the Vesting Date,
except as otherwise provided herein. Earned and vested Performance Units shall
be payable as described in Section 5. Notwithstanding the foregoing, if the
Performance Units are not assumed by, or replaced by substantially identical
grants by, the successor company in the Change in Control, the earned
Performance Units shall vest as of the date of the Change in Control, and such
earned and vested Performance Units shall be paid as of the date of the Change
in Control if the Change in Control is a 409A CIC (as defined below) and if
permitted by the plan termination provisions of the regulations under section
409A of the Code. If payment at the date of the Change in Control is not
permitted under section 409A, the earned and vested Performance Units shall be
payable as described in Section 5.

(d) Except as described below, no Performance Units shall be earned prior to the
Committee’s determination of achievement of the Performance Goals, and to the
extent that the Performance Goals are not attained, the Performance Units shall
be immediately forfeited and shall cease to be outstanding as of the date of the
Committee’s determination.

3. Termination of Employment.

(a) General Rule. Except as described below, if the Grantee ceases to be
employed by the Employer prior to the Vesting Date, the Performance Units shall
be forfeited as of the termination date and shall cease to be outstanding.

(b) “55/5” Rule Termination. If, after ten months following the Date of Grant
but prior to the Vesting Date, the Grantee ceases to be employed by the Employer
on account of a “55 / 5” Rule Termination (as defined below), the Grantee shall
earn and vest in a pro-rated portion of the outstanding Performance Units based
on the extent to which the Performance Goals are achieved for the Performance
Period. In the event of a Change in Control, the amount achieved for the
Performance Period shall be determined as of the Change in Control date as
described in the Grant Letters. The pro-rated portion shall be determined by
multiplying the number of Performance Units earned based on attainment of the
Performance Goals by a fraction, the numerator of which is the number of months
that elapsed during the period beginning on April 1, 2016 through the Grantee’s
termination date, and the denominator of which is 33. A partial month after the
month of grant shall count as a full month for purposes of this calculation. The
pro-rated earned Performance Units shall be paid as described in Section 5.

(c) Involuntary Termination before a Change in Control. If, before a Change in
Control and after ten months following the Date of Grant but prior to the
Vesting Date, the Grantee ceases to be employed by the Employer on account of
Involuntary Termination (as defined below), the Grantee shall earn and vest in a
pro-rated portion of the outstanding Performance Units based on the extent to
which the Performance Goals are achieved for the Performance Period. In the
event of a subsequent Change in Control, the amount achieved for the Performance
Period shall be determined as of the Change in Control date as described in the
Grant Letters. The pro-rated portion shall be determined

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by multiplying the number of Performance Units earned based on attainment of the
Performance Goals by a fraction, the numerator of which is the number of months
that elapsed during the period beginning on April 1, 2016 through the Grantee’s
termination date, and the denominator of which is 33. A partial month after the
month of grant shall count as a full month for purposes of this calculation. The
pro-rated earned Performance Units shall be paid as described in Section 5.

(d) Death or Long-Term Disability Before a Change in Control. If, before a
Change in Control, the Grantee ceases to be employed by the Employer prior to
the Vesting Date on account of death or Long-Term Disability (as defined below),
the Grantee shall earn and vest in a pro-rated portion of the outstanding
Performance Units based on the extent to which the Performance Goals are
achieved for the Performance Period. In the event of a subsequent Change in
Control, the amount achieved for the Performance Period shall be determined as
of the Change in Control date as described in the Grant Letters. The pro-rated
portion shall be determined by multiplying the number of Performance Units
earned based on attainment of the Performance Goals by a fraction, the numerator
of which is the number of months that elapsed during the period beginning on
April 1, 2016 through the Grantee’s termination date and the denominator of
which is 33. A partial month after the month of grant shall count as a full
month for purposes of this calculation. The pro-rated earned Performance Units
shall be paid as described in Section 5.

(e) Involuntary Termination, Death and Disability on or after a Change in
Control. If the Grantee’s employment terminates on account of Involuntary
Termination, death or Long-Term Disability on or after a Change in Control and
prior to the Vesting Date, the Grantee shall vest in the Performance Units
earned as of the Change in Control date as described in the Grant Letters. If
the Grantee has a Change in Control Severance Agreement with the Company
(“Change in Control Agreement”), on and after a Change in Control, the term
“Involuntary Termination” shall have the meaning given a termination by the
Company without Cause in the Change in Control Agreement, and shall include
without limitation a termination for Good Reason as defined in the Change in
Control Agreement. The Grantee agrees that, subject to the immediately preceding
sentence, if and to the extent that these Grant Conditions conflict with the
terms of the Change in Control Agreement or any employment agreement between the
Company and the Grantee, these Grant Conditions shall supersede the provisions
of the Change in Control Agreement and employment agreement applicable to
vesting of performance units on and after a Change in Control, notwithstanding
anything in the Change in Control Agreement or employment agreement to the
contrary.

(f) Coordination of Provisions. If the Grantee terminates employment in a
termination that is both a “‘55 / 5’ Rule Termination” and an Involuntary
Termination, the termination shall be treated as an Involuntary Termination for
purposes of the Grant Condition and Grant Letters.

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4. Definitions. For purposes of these Grant Conditions and the Grant Letters:

(a) “‘55 / 5’ Rule Termination” shall mean the Grantee’s termination of
employment other than for Cause after the Grantee has attained age 55 and has
completed at least five years of service with the Employer.

(b) “Cause” shall mean any of the following, as determined in the sole
discretion of the Employer: (i) commission of a felony or a crime involving
moral turpitude; (ii) fraud, dishonesty, misrepresentation, theft or
misappropriation of funds with respect to the Employer; (iii) violation of the
Employer’s Code of Conduct or employment policies, as in effect from time to
time; (iv) breach of any written noncompetition, confidentiality or
nonsolicitation covenant of the Grantee with respect to the Employer; or
(v) gross negligence or misconduct in the performance of the Grantee’s duties
with the Employer.

(c) “Involuntary Termination” shall mean the Employer’s termination of the
Grantee’s employment other than for Cause.

(d) “Long-Term Disability” shall mean the Grantee is receiving long-term
disability benefits under the Employer’s long-term disability plan.

5. Payment.

(a) Except as provided below, after the end of the Performance Period, if the
Committee certifies that the Performance Goals and other conditions to payment
of the Performance Units have been met, the Company shall issue shares of
Company Stock to the Grantee equal to the number of earned and vested
Performance Units, subject to applicable tax withholding and subject to
compliance with section 409A of the Code and as described in Section 20(h) of
the Plan. Payment of earned and vested Performance Units shall be made in 2019
as soon as practicable after the Committee certifies the extent to which the
Performance Goals and other conditions to payment of the Performance Units have
been met, but not later than May 31, 2019, except as provided below. All unpaid
Performance Units shall be forfeited in the event of termination for Cause.

(b) If the Grantee’s employment terminates for any reason other than Cause upon
or within two years after a Change in Control that meets the requirements of a
409A CIC, the Grantee’s Performance Units that are unpaid, earned and vested (if
any) shall be paid within 60 days after the termination date, subject to
compliance with section 409A of the Code, if applicable, and as described in
Section 20(h) of the Plan. The Company shall issue shares of Company Stock to
the Grantee equal to the number of the earned and vested Performance Units,
subject to applicable tax withholding. If a Change in Control does not meet the
requirements of a 409A CIC, the Grantee’s earned and vested Performance Units
(if any) shall be paid on the date described in subsection (a).

(c) Any fractional shares will be rounded up to the nearest whole share, but not
exceeding 275% of the Target Award.

6. Dividend Equivalents. Dividend Equivalents shall accrue with respect to
Performance Units and shall be payable subject to the same Performance Goals,
vesting terms and other conditions as the Performance Units to which they
relate. Dividend

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Equivalents shall be credited on the Performance Units when dividends are
declared on shares of Company Stock from the Date of Grant until the payment
date for the vested Performance Units. The Company will keep records of Dividend
Equivalents in a non-interest bearing bookkeeping account for the Grantee. No
interest will be credited to any such account. Vested Dividend Equivalents shall
be paid in cash at the same time and subject to the same terms as the underlying
vested Performance Units. If and to the extent that the underlying Performance
Units are forfeited, all related Dividend Equivalents shall also be forfeited.

7. Delivery of Shares. The Company’s obligation to deliver shares upon the
vesting of the Performance Units shall be subject to applicable laws, rules and
regulations and also to such approvals by governmental agencies as may be deemed
appropriate to comply with relevant securities laws and regulations.

8. Holding Requirements. Shares of Company Stock distributed for Performance
Units earned in excess of the applicable Target Award must be held by the
Grantee for one year following the Vesting Date (the “Holding Period”) and may
not be assigned, transferred, pledged or otherwise disposed of by the Grantee,
other than by will or the laws of descent and distribution, during the Holding
Period. However, if the Grantee’s employment with the Employer terminates for
any reason, or a Change in Control occurs, the holding requirement of this
Section 8 shall lapse as of the date of the Grantee’s termination of employment
or the Change in Control, as applicable.

9. No Shareholder Rights. No shares of Company Stock shall be issued to the
Grantee on the Date of Grant, and the Grantee shall not be, nor have any of the
rights or privileges of, a shareholder of the Company with respect to any
Performance Units.

10. No Right to Continued Employment. The grant of Performance Units shall not
confer upon the Grantee any right to continued employment with the Employer or
interfere with the right of the Employer to terminate the Grantee’s employment
at any time.

11. Incorporation of Plan by Reference. The Grant Letters and these Grant
Conditions are made pursuant to the terms of the Plan, the terms of which are
incorporated herein by reference, and shall in all respects be interpreted in
accordance therewith. The decisions of the Committee shall be conclusive upon
any question arising hereunder. The Grantee’s receipt of the Performance Units
constitutes the Grantee’s acknowledgment that all decisions and determinations
of the Committee with respect to the Plan, the Grant Letters, these Grant
Conditions, and the Performance Units shall be final and binding on the Grantee
and any other person claiming an interest in the Performance Units.

12. Withholding Taxes. The Employer shall have the right to deduct from all
payments made hereunder and from other compensation an amount equal to the
federal (including FICA), state, local and foreign taxes required by law to be
withheld with respect to the Performance Units. The Employer will withhold
shares of Company Stock payable hereunder to satisfy the tax withholding
obligation on amounts payable in shares, unless the Grantee provides a payment
to the Employer to cover such taxes, in accordance with procedures established
by the Committee. The share withholding amount shall not exceed the Grantee’s
minimum applicable tax withholding amount.

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13. Company Policies. All amounts payable under the Grant Letters and these
Grant Conditions shall be subject to any applicable clawback or recoupment
policies, share trading policies and other policies that may be implemented by
the Company’s Board of Directors from time to time.

14. Assignment. The Grant Letters and these Grant Conditions shall bind and
inure to the benefit of the successors and assignees of the Company. The Grantee
may not sell, assign, transfer, pledge or otherwise dispose of the Performance
Units, except to a successor grantee in the event of the Grantee’s death.

15. Section 409A. The Grant Letters and these Grant Conditions are intended to
comply with section 409A of the Code or an exemption, consistent with
Section 20(h) of the Plan, including the six-month delay for specified employees
in accordance with the requirements of section 409A of the Code, if applicable.
In furtherance of the foregoing, if the Performance Units or related Dividend
Equivalents constitute “nonqualified deferred compensation” within the meaning
of section 409A of the Code, vested Performance Units and related Dividend
Equivalents shall be settled on the earliest date that would be permitted under
section 409A of the Code without incurring penalty or accelerated taxes
thereunder.

16. Successors. The provisions of the Grant Letters and these Grant Conditions
shall extend to any business that becomes a successor to the Company or its
subsidiaries or affiliates on account of a merger, consolidation, sale of
assets, spinoff or similar transaction with respect to any business of the
Company or its subsidiaries or affiliates with which the Grantee is employed,
and if this grant continues in effect after such corporate event, references to
the “Company or its subsidiaries or affiliates” or the “Employer” in the Grant
Letters and these Grant Conditions shall include the successor business and its
affiliates, as appropriate. In that event, the Company may make such
modifications to the Grant Letters and these Grant Conditions as it deems
appropriate to reflect the corporate event.

17. Governing Law. The validity, construction, interpretation and effect of the
Grant Letters and these Grant Conditions shall be governed by, and determined in
accordance with, the applicable laws of the Commonwealth of Pennsylvania,
excluding any conflicts or choice of law rule or principle.

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