Exhibit 10.3

INDEPENDENCE REALTY TRUST, INC.

2017 Cash Bonus Award Grant Agreement

 

To:  [Name]

 

Attached as Appendix A hereto is the 2017 Annual Cash Bonus Plan (the “Annual
Cash Bonus Plan”) as adopted pursuant to Article X of the Independence Realty
Trust 2016 Long Term Incentive Plan (the “Plan”).  You have been granted a cash
award (the “2017 Cash Bonus Award”) under the Annual Cash Bonus Plan.  This 2017
Cash Bonus Award Grant Agreement (the “Grant Agreement”) sets forth the terms
and conditions related to such Cash Bonus Award.  The Award is contingent upon
your acknowledgement and acceptance of the terms and conditions as set forth in
this Grant Agreement and the Plan.

 

Grant Date:

February 28, 2017

 

Target Cash Bonus Amount:

[Dollar amount]

 

Cash Award Opportunity:

Subject to the terms and conditions set forth in this Grant Agreement and the
Plan, the Company hereby notifies you that you have the opportunity to receive a
Target Cash Bonus Award in an amount calculated with respect to your Target Cash
Bonus Amount in the manner set forth in the Annual Cash Bonus Plan.  The actual
amount of the Target Cash Bonus Award shall be determined according to the
achievement or non-achievement of performance targets (the “Performance
Targets”) established by the Committee on February 28, 2017 and set forth in in
the Annual Cash Bonus Plan.  The Participant shall not be entitled to receive
any portion of the 2017 Target Cash Bonus Award that does not become payable
because of the failure to fully satisfy the Performance Targets.

 

Tax Liability and Payment of Taxes:

You acknowledge and agree that any income or other taxes due from you with
respect to the Target Cash Bonus Award issued pursuant to this Grant Agreement
shall be your responsibility.  Upon payment of the Target Cash Bonus Award, the
Company will withhold a portion of such Target Cash Bonus Award in order to
satisfy your tax obligations.

 

Delivery:

The actual payment of the Target Cash Bonus Award, as adjusted pursuant to this
Grant Agreement or the Plan, will be made as soon as practicable following the
Committee’s determination of the achievement or nonachievement of the
Performance Targets; provided, however, that, in order to comply with certain
rules concerning the regulation of deferred compensation under Section 409A of
the Internal Revenue Code of 1986, as amended, in no event will any such payment
be made later than March 15, 2018.

 

Transferability:

You may not transfer or assign the Target Cash Bonus Award for any reason, other
than under your will or as required by intestate laws.  Any attempted transfer
or assignment will be null and void.

 

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Savings:

Any amounts paid pursuant to this Target Cash Bonus Award are intended to be
considered “qualified performance-based compensation” under section 162(m) of
the Code and Article IX of the Plan   If any provision of this Grant Agreement
with respect to such portion is determined to be inconsistent with the
requirements of Internal Revenue Code Section 162(m)(4)(C) or such Article, such
portion shall be deemed to be a Target Cash Bonus Award made solely under
Article X of the Plan.

 

Clawback:

In addition to, and not in limitation of, the forfeiture of the Target Cash
Bonus Award (or any portion thereof) as provided in this Grant Agreement or the
Plan, the Company may recover amounts paid to you pursuant to this Target Cash
Bonus Award to the extent that the Committee, following an appropriate
investigation and consideration of all relevant circumstances, determines that
you have engaged in fraud or willful misconduct that caused the requirement for
a material accounting restatement of the Company’s financial statements due to
material noncompliance with any financial reporting requirement (excluding any
restatement due solely to a change in accounting rules).

 

Miscellaneous:

As a condition of the granting of this Target Cash Bonus Award, you agree, for
yourself and your legal representatives and/or guardians, that this Grant
Agreement shall be interpreted by the Committee and that any such interpretation
of the terms of this Grant Agreement and any determination made by the Committee
pursuant to this Grant Agreement shall be final, binding and conclusive.  This
Grant Agreement may be executed in counterparts.  This Grant Agreement and the
Target Cash Bonus Award granted hereunder shall be governed by Maryland Law.

 

This Grant Agreement and the Target Cash Bonus Award granted hereunder are
granted under and governed by the terms and conditions of the Plan, the
provisions of which are incorporated herein by reference.  Additional provisions
regarding your Target Cash Bonus Award and definitions of capitalized terms used
and not defined in this Grant Agreement can be found in the Plan.  Any
inconsistency between this Grant Agreement and the Plan shall be resolved in
favor of the Plan. You hereby acknowledges receipt of a copy of the Plan. The
invalidity or unenforceability of any provisions of this Grant Agreement shall
not affect the validity or enforceability of any other provision of this Grant
Agreement, which shall remain in full force and effect.  In the event that any
provision of this Grant Agreement or any word, phrase, clause, sentence, or
other portion hereof (or omission thereof) should be held to be unenforceable or
invalid for any reason, such provision or portion thereof shall be modified or
deleted in such a manner so as to make this Grant Agreement as so modified legal
and enforceable to the fullest extent permitted under applicable law.

 

BY SIGNING BELOW AND ACCEPTING THIS GRANT AGREEMENT AND THE TARGET CASH BONUS
AWARD GRANTED HEREUNDER, YOU AGREE TO ALL OF THE TERMS AND CONDITIONS DESCRIBED
HEREIN AND IN THE PLAN.  YOU ALSO ACKNOWLEDGE RECEIPT OF THE PLAN.

 

_______________________________________________________________

Authorized Officer[Name]

 

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Appendix A

2017 ANNUAL CASH BONUS PLAN

 

2017 Cash Bonus Awards

 

Beginning with IRT’s 2017 fiscal year, the Compensation Committee is
implementing the new Annual Cash Bonus Plan that it believes will incentivize
the Eligible Officers to produce a high level of operational performance by
explicitly linking the majority of their annual bonuses to certain objectives
and formulaic metrics that the Compensation Committee believes are important
drivers in the creation of shareholder value, while also rewarding more
subjective elements of each Eligible Officer’s performance through a subjective
component.  This new program will set forth a target cash bonus award level for
each Eligible Officer participant composed of two components, as described
below:  

 

 

•

“Objective/Formulaic Component” — the objective/formulaic component of the
Annual Cash Bonus Award that may be earned by each Eligible Officer will be
determined by IRT’s performance relative to specified objective performance
criteria established by the Compensation Committee as described below.  

 

 

•

“Subjective Component” – the subjective component of the Annual Cash Bonus Award
may be determined based on the Compensation Committee’s subjective evaluation of
such participant’s performance.  

 

 

•

Allocation of Components and Calculation of the Annual Cash Bonus Award. For
2017, the 2017 Cash Bonus Awards are allocated 75% to the objective/formulaic
component and 25% to the subjective component.   The amount of the 2017 Cash
Bonus Award of any Eligible Officer will be calculated by: (a) determining the
sum of the results of multiplying the 2017 weighting for each metric (described
below) by the Relevant Percentage (described below) achieved with respect to
each metric, (b) multiplying such sum by the objective criteria allocation of
75% to obtain a percentage referred to as the “Objective Criteria Bonus Earned”,
(c) determining the result of multiplying the subjective criteria Relevant
Percentage by the subjective criteria allocation of 25% to obtain to obtain a
percentage referred to as the “Subjective Criteria Bonus Earned”, (d)
multiplying the 2017 base salary of the relevant Eligible Officer by the sum the
Objective Criteria Bonus Earned and the Subjective Criteria Bonus Earned.   The
actual 2017 Annual Cash Bonus Award earned by a participant may range from 0% to
each Eligible Officer’s maximum Relevant Percentage of base salary based on
actual performance for the year.

 

The individual 2017 Cash Bonus Award ranges, as a percentage (each, a “Relevant
Percentage”) of base salary for Threshold, Target and Maximum performance levels
for each of the Eligible Officers as follows:  

 

 

 

2017 Cash Bonus Award Ranges

Executive

2017 Base
Salary

Threshold

Target

Maximum

Scott F. Schaeffer

$618,600

100%

164%

250%

Farrell M. Ender

$308,600

57%

117%

177%

James J. Sebra

$398,600

50%

100%

150%

 

 

2017 Cash Bonus Award

Executive

Threshold

Target

Maximum

Scott F. Schaeffer

$618,600

$1,015,000

$1,546,500

Farrell M. Ender

$176,000

$      361,000

$   546,000

James J. Sebra

$199,300

$   398,600

$   597,900

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Objective/Formulaic Criteria

 

The Compensation Committee has established the following objective performance
metrics to be utilized in determining any payout with respect to the 2017 Cash
Bonus Awards weighted based on these performance measurements with their 2017
relative weighting:

 

Objective Performance Criteria

2017 Weighting

CORE FFO per share

40%

The increase in same store property net operating income as compared to the
previous year

20%

Property net operating income margin

15%

General and Administrative expenses (excluding stock based compensation) as a
percentage of revenues

15%

IRT’s ratio of net debt to Adjusted EBITDA

10%

 

All of these objective performance criteria shall be calculated in a manner
consistent with how IRT discloses the metric in its public reporting; provided
that the Compensation Committee will retain discretion to adjust the calculation
of these metrics if it determines, due to unanticipated business developments,
transactions or other factors affecting the calculation of such metrics, that
such an adjustment would enhance incentivizing or rewarding actions in the best
interests of IRT’s stockholders.  The actual 2017 Cash Bonus Award payment
realized by an Eligible Officer with respect to each applicable metric will
depend on IRT’s achievement of at least the “Threshold” level of performance
established by the Compensation Committee with respect to that metric.  There
will be no 2017 Cash Bonus Award payable for that metric in the event IRT
achieves less than the Threshold level.   IRT’s achievement of the Threshold
level for a designated metric will result in a payout of such Eligible Officer’s
Relevant Percentage of the proportion of the 2017 Cash Bonus Award allocated to
that metric; the achievement of the Target level for a designated metric will
result in a payout of such Eligible Officer’s Relevant Percentage of the
proportion of the 2017 Cash Bonus Award allocated to that metric; and the
achievement of the Maximum level for a designated metric will result in a payout
of such Eligible Officer’s Relevant Percentage of the proportion of the 2017
Cash Bonus Award allocated to that metric. If the calculated percentage is
between Threshold and Target or between Target and Maximum for an annual
performance period, then the earned percentage will be prorated.   See
“Allocation of Components and Calculation of the Annual Cash Bonus Award” above
for a description of how the 2017 Cash Bonus Awards will be calculated.  The
threshold, target and maximum amounts of each objective performance criteria
have been separately communicated to each Eligible Officer.

 

Subjective Criteria

 

The Subjective Bonus Award portion of each Eligible Officer’s Cash Bonus will be
based on the Compensation Committee’s subjective evaluation of the Eligible
Officer’s performance relative to achieving specified individual criteria
established for 2017 for each participant, which the Compensation Committee has
determined are also important elements of each Eligible Officer’s contribution
to the creation of overall shareholder value.  These include the following
elements; provided that the Compensation Committee will retain discretion to add
or modify subjective criteria if it determines, due to unanticipated business
developments, transactions or other factors affecting IRT, that such additions
or modifications to the subjective criteria would enhance incentivizing or
rewarding actions in the best interests of IRT’s stockholders:

 

oBroaden Company’s institutional shareholder base.

 

oPursue financial transactions to lower cost of capital, extend debt maturities
and enhance liquidity profile

oIncrease analyst coverage of the Company

 

oComplete systems separation from RAIT Financial Trust (“RAIT”), including
staffing and back office requirements in 2017.  

 

The Eligible Officer’s achievement of the Threshold level for subjective
criteria will result in a payout of such Eligible Officer’s Relevant Percentage
of the proportion of the 2017 Cash Bonus Award allocated to subjective criteria;
the achievement of the Target level for subjective criteria will result in a
payout of such Eligible Officer’s Relevant

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Percentage of the proportion of the 2017 Cash Bonus Award allocated to that
metric; and the achievement of the Maximum level for subjective criteria will
result in a payout of such Eligible Officer’s Relevant Percentage of the
proportion of the 2017 Cash Bonus Award allocated to subjective criteria. If the
calculated percentage is between Threshold and Target or between Target and
Maximum for an annual performance period, then the earned percentage will be
prorated. See “Allocation of Components and Calculation of the Annual Cash Bonus
Award” above for a description of how the 2017 Cash Bonus Awards will be
calculated.

 

Cash Bonus Award Payments

 

 

•

All Cash Bonus Award payments will be made in the year following the completion
of the annual performance period to which the Cash Bonus Award payment
relates.  The actual payment to each Eligible Officer will be made as soon as
practical after final certification of the underlying performance results and
approval of such payment by the Compensation Committee; provided, however, that,
in order to comply with certain rules concerning the regulation of deferred
compensation under the Internal Revenue Code of 1986, as amended, in no event
will any such payment be made later than March 15 of such year.

 

 

•

An Eligible Officer who terminates employment with IRT prior to the conclusion
of any applicable performance period with respect to which an applicable Cash
Bonus Award payment relates will not receive a Cash Bonus Award payment, except
that:

 

 

o

In the event of such participant’s death or disability (as defined in the
relevant Eligible Employee’s employment agreement, or, if not so defined,
determined in accordance with the 2016 Plan) (“Disability”) prior to the end of
the annual performance period, an otherwise eligible participant may receive a
Cash Bonus Award payment in the amount of such participant’s full Cash Bonus
Award, as determined by the Compensation Committee, provided a Cash Bonus Award
was approved for such participant for the applicable performance period.

 

 

o

In the event of the termination of such participant’s employment, other than
voluntarily or for Cause (as defined in the relevant employment agreement for
each Eligible Officer), following a Change of Control (as defined in the
relevant Eligible Employee’s employment agreement, or, if not so defined, in the
2016 Plan) but prior to end of the annual performance period, an otherwise
eligible participant may receive an Cash Bonus Award payment in the amount of
such participant’s full Cash Bonus Award, as determined by the Compensation
Committee, provided a Cash Bonus Award was approved for such participant for the
applicable annual performance period.

 

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