Exhibit 10.1

LOGO [g177180g41d50.jpg]

A. O. SMITH CORPORATION

SPECIAL RETENTION AWARD AGREEMENT

THIS AGREEMENT, made and entered into this              day of             ,
20     by and between A. O. Smith Corporation (hereinafter called the “Company”)
and              (hereinafter called “Executive”);

W I T N E S S E T H :

WHEREAS, the Board of Directors of the Company has adopted the A. O. Smith
Corporation Combined Incentive Compensation Plan, as amended and restated
February 10, 2009 (hereinafter called the “Plan”) which is administered by the
Personnel and Compensation Committee of the Board of Directors (hereinafter
called the “Committee”);

WHEREAS, the Executive, upon the terms and conditions herein set forth, is a
participant for the fiscal year of the Company commencing January 1, 20    ,
(hereinafter called the “Plan Year”) under the Plan, the terms and conditions of
which Plan are incorporated herein by reference;

WHEREAS, the Company desires to provide an additional incentive to the Executive
to remain in the employ of the Company through December 31, 20     to assist the
Company in achieving its performance objectives; and

WHEREAS, this Agreement constitutes a separate contract such as is provided for
in the Plan;

NOW, THEREFORE, in consideration of the payments herein provided, and of the
covenants and agreements herein set forth, the parties hereby mutually covenant
and agree as follows:

 

I.

Award. The Company awards the Executive up to a maximum of             
performance-based Restricted Stock Units (also known as phantom stock) which
shall vest on January 1, 20     in accordance with the conditions set forth
below.

 

  A.

The Executive shall earn the Restricted Stock Units based on the Return on
Invested Capital (“ROIC”) as a percentage of the cost of capital during the
period January 1, 20     through December 31, 20    . ROIC is calculated by
taking net income before after-tax cost of interest divided by total capital
including all debt and stockholders’ equity.

 

  (i)

The formula for calculating ROIC as a percentage of the cost of capital is set
forth below:

 

ROIC as % of Cost of Capital =   

Average ROIC during January 1, 20    

through December 31, 20    

   Year End 20     Cost of Capital

 

-1-

--------------------------------------------------------------------------------

  (ii)

The number of Restricted Stock Units in which the Executive shall vest shall be
determined in accordance with the following schedule.

 

ROIC as % of Cost of Capital

   Number of Restricted Units Earned  

Less than     %

     0   

    %

     _____   

    %

     _____   

    % or more

     _____   

 

  (iii)

The number of Restricted Stock Units to be vested will be interpolated between
points on the table through linear interpolation between __% and __% or between
__% and __%, as the case may be, provided that no Restricted Stock Units shall
vest if the ROIC as a % of Cost of Capital is less than __%. The number of
Restricted Stock Units earned shall be rounded to the nearest whole number.

 

  B.

The determination of the number of Restricted Stock Units that have vested to
the Executive shall be made as soon as practical after the vesting date of
January 1, 20    . The Executive shall receive Shares of Company stock equal to
the number of vested Restricted Stock Units no later than March 15, 20    .

 

  C.

The Executive will be credited with dividend equivalents on those Restricted
Stock Units which have vested equal to the amount of cash dividends which were
declared on the same number of actual Shares during the period January 1, 20    
through the date of delivery of the Shares to the Executive. Equivalent
dividends will be credited to Executive’s Deferred Compensation Account in the
Non-Qualified Deferred Compensation Plan as soon as the amount of dividends has
been determined but no earlier than January 1, 20     and no later than
March 15, 20    . If the Executive’s Deferred Compensation Account has been paid
in full prior to the time such credit would be otherwise made, he shall receive
a cash payment for the equivalent dividends no earlier than January 1, 20    
and no later than March 15, 20    .

 

-2-

--------------------------------------------------------------------------------

  D.

The calculation of ROIC as a % of Cost of Capital shall be adjusted by the
Committee to account for non-reoccurring factors, extraordinary gains or losses,
changes in accounting, acquisitions and divestures of more than $10,000,000,
stock issuances, stock dividends or stock buybacks in excess of 1,000,000
Shares.

 

  E.

If the Executive ceases to be an employee of the Company prior to December 31,
20     by reason of death, disability, or retirement and has been employed by
the Company for at least twelve full months during the three year performance
period, the Executive or his beneficiary shall be entitled to receive a pro-rata
portion of the Shares based on the period of his employment during the
three-year performance period. If the Executive ceases to be an employee of the
Company as a result of a “Qualifying Termination”, as that term is defined in
the A. O. Smith Corporation Senior Leadership Severance Plan, then this Award
shall be treated in accordance with the terms of that plan. If the Executive’s
employment with the Company shall be terminated prior to December 31, 20     for
any other reason, no Shares shall be payable.

 

  F.

In the event of a “Change in Control” of the Company, as defined in the A. O.
Smith Corporation Senior Leadership Severance Plan, then this Award shall be
treated in accordance with the provisions of that plan.

 

II.

Beneficiary. In accordance with the Plan, the Executive, by completing and
signing a “Designation of Beneficiary” shall have the right to designate a
beneficiary to receive any payment of this Award remaining unpaid at Executive’s
death, all in the manner and to the extent set forth in this Agreement. The
designation may be changed at any time by written notice delivered to the
Committee or its representative. If no Designation of Beneficiary is made, any
amount of this Award remaining unpaid, in whole or in part, at the time of death
of the Executive, shall be paid to his legal representative.

 

III.

Withholding. As to any payment of Shares or cash credited or paid pursuant to
this Agreement, the Committee may require that the Executive or his personal
representative, as the case may be, agree to any procedure necessary to enable
the Company to make adequate income tax withholdings.

 

IV.

Nonassignability. Neither the Executive nor any of his beneficiaries shall have
any right or power to alienate, anticipate, commute, pledge, encumber or assign
any right to receive any amount which hereafter may become or at any time be due
hereunder, and no attempt to effect any such alienation, anticipation,
commutation, pledge, encumbrance or assignment will be recognized, honored or
accepted by the Company.

 

V.

Forfeiture. So long as any portion of this Award remains unpaid or
undistributed, the Executive’s right to receive such amount shall be forfeited
if the Executive at any time during or after his employment with the Company or
its Affiliates shall do any act, or engage directly or indirectly (whether as
owner, partner, officer, employee or otherwise)

 

-3-

--------------------------------------------------------------------------------

 

in the operation or management of any business which, in the judgment of the
Company, is detrimental to or in competition with the Company or any of
Affiliates.

 

VI.

Clawback. To the extent permitted by governing law, the Company may under
certain circumstances recoup amounts paid to the Executive under this Award
Agreement. In the event of a restatement of the Company’s previously issued
financial statements as a result of errors, omission, fraud, or noncompliance
with any financial reporting requirement under the securities laws, the
Committee shall review the facts and circumstances underlying the restatement.
After this review, if it is determined that an Award amount was based on the
achievement of certain financial results that were the subject of a restatement,
the Committee may, in its discretion, require the Executive to reimburse the
Company for all or a portion of any Award actually paid to the Executive or, if
such Award has been deferred into the Non-Qualified Deferred Compensation Plan,
forfeit the Award so deferred. In each such instance, the Company may forfeit
(to the extent deferred) or seek to recover (to the extent paid) the amount by
which the Executive’s Award amount exceeded the lower amount, if any, that would
have been made based on the restated financial results. However, the Company
will not seek such recovery where the payment occurred more than three years
prior to the date the Company discloses the applicable restatement or for a time
period when the Executive was not an “executive officer.” The term “executive
officer” has the meaning given that term in Rule 3b-7 under the Securities
Exchange Act of 1934 determined as of the date the Company made the payment in
respect of the Award. The Company will determine, in its sole discretion (but
subject to the direction of the Committee), the method for obtaining
reimbursement from the Executive. The Company may forfeit and/or recoup amounts
paid in respect of an Award regardless of whether the Executive is still
employed by the Company or an affiliate on the date forfeiture and/or
reimbursement is required. Forfeiture of or recoupment of amounts paid in
respect of an Award does not limit any other remedies that the Company may have.

 

VII.

Defined Terms. Except as otherwise specifically defined in this Award Agreement,
the terms used in this Award Agreement shall have the same meaning as the terms
defined in the Plan.

IN WITNESS WHEREOF, the Company has caused this instrument to be executed by its
duly authorized officer, and the Executive has hereunto affixed his hand and
seal, the day and year first above written.

 

A. O. SMITH CORPORATION By       Chairman and Chief Executive Officer By      
[Executive Name]

 

-4-