Exhibit 10.20
FORM OF XYLEM
2011 OMNIBUS INCENTIVE PLAN
RESTRICTED STOCK UNIT AGREEMENT —
2011 TSR REPLACEMENT
THIS AGREEMENT (the “Agreement”), effective as of the 7th day of November, 2011,
by and between Xylem Inc. (the “Company”) and [name] (the “Grantee”),
WITNESSETH:
WHEREAS, the Grantee is now employed by the Company or an Affiliate (as defined
in the Company’s 2011 Omnibus Incentive Plan (the “Plan”)) as an employee, and
in recognition of the Grantee’s valued services, the Company, through the
Leadership Development and Compensation Committee of its Board of Directors (the
“Committee”), desires to provide an inducement to remain in service of the
Company and as an incentive for increased efforts during such service pursuant
to the provisions of the Plan.
NOW, THEREFORE, in consideration of the terms and conditions set forth in this
Agreement and the provisions of the Plan, a copy of which is attached hereto and
incorporated herein as part of this Agreement, and any administrative rules and
regulations related to the Plan as may be adopted by the Committee, the parties
hereto hereby agree as follows:

1.   Grant of Restricted Stock Units. In accordance with, and subject to, the
terms and conditions of the Plan and this Agreement, the Company hereby confirms
the grant on November 7, 2011 (the “Grant Date”) to the Grantee of #,###
Restricted Stock Units. The Restricted Stock Units are notional units of
measurement denominated in Shares of common stock (i.e., one Restricted Stock
Unit is equivalent in value to one share of common stock).

    The Restricted Stock Units represent an unfunded, unsecured right to receive
[cash payments equal to the Fair Market Value of such] Shares (and dividend
equivalent payments pursuant Section 2(b) hereof) in the future if the
conditions set forth in the Plan and this Agreement are satisfied.

2.   Terms and Conditions. It is understood and agreed that the Restricted Stock
Units are subject to the following terms and conditions:

  (a)   Restrictions. Except as otherwise provided in the Plan and this
Agreement, neither this Award nor any Restricted Stock Units subject to this
Award may be sold, assigned, pledged, exchanged, transferred, hypothecated or
encumbered, other than to the Company as a result of forfeiture of the
Restricted Stock Units.     (b)   Voting and Dividend Equivalent Rights. The
Grantee shall not have any privileges of a stockholder of the Company with
respect to the Restricted Stock Units or any Shares that may be delivered
hereunder, including without limitation any right to vote such Shares or to
receive dividends, unless and until such Shares are delivered upon vesting of
the Restricted Stock Units. Dividend equivalents shall be earned with respect to
each Restricted Stock Unit that vests. The amount of dividend equivalents earned
with respect to each such Restricted Stock Unit that vests shall be equal to the
total dividends declared on a Share where the record date of the dividend is
between the Grant Date of this

 

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

 

      Award and the date [a cash payment equal to the Fair Market Value of] a
Share is [paid/issued] upon vesting of the Restricted Stock Unit. Any dividend
equivalents earned shall be paid in cash to the Grantee when the Shares subject
to the vested Restricted Stock Units are issued. No dividend equivalents shall
be earned or paid with respect to any Restricted Stock Units that do not vest.
Dividend equivalents shall not accrue interest.     (c)   Vesting of Restricted
Stock Units and Payment. Subject to earlier vesting pursuant to subsections 2(d)
and 2(e) below, the Restricted Stock Units shall vest (meaning the Period of
Restriction shall lapse and the Restricted Stock Units shall become free of the
forfeiture provisions in this Agreement) on December 31, 2013, provided the
Grantee has been continuously employed by the Company or an Affiliate on a
full-time basis from the Grant Date through the date the Restricted Stock Units
vest. Except as provided in subsections 2(i)(i) and 2(i)(ii) below, upon vesting
of the Restricted Stock Units (including vesting pursuant to subsections 2(d) or
2(e) below), the Company will deliver to the Grantee (i) [a cash amount equal to
the Fair Market Value of such Shares/one Share for each vested Restricted Stock
Unit], with any fractional Shares resulting from proration pursuant to
subsection 2(e)(ii) to be rounded to [a cash amount equal to the Fair Market
Value of] the nearest whole Share (with 0.5 to be rounded up) and (ii) an amount
in cash attributable to any dividend equivalents earned in accordance with
subsection 2(b) above, less any Shares withheld in accordance with subsection
2(f) below. For the avoidance of doubt, continuous employment of a Grantee by
the Company or an Affiliate for purposes of vesting in the Restricted Stock
Units granted hereunder shall include continuous employment with the Company for
so long as the Grantee continues working at such entity.     (d)   Effect of
Acceleration Event. The Restricted Stock Units shall vest in full upon an
Acceleration Event.     (e)   Effect of Termination of Employment. If the
Grantee’s employment with the Company and its Affiliates is terminated for any
reason and such termination constitutes a “separation from service” within the
meaning of Section 409A of the Code and any related regulations or other
effective guidance promulgated thereunder (“Section 409A”), any Restricted Stock
Units that are not vested at the time of such separation from service shall be
immediately forfeited except as follows:

  (i)   Separation from Service due to Death or Disability. If the Grantee’s
separation from service is due to death or Disability (as defined below), the
Restricted Stock Units shall immediately become 100% vested as of such
separation from service. For purposes of this Agreement, the term “Disability”
shall mean the complete and permanent inability of the Grantee to perform all of
his or her duties under the terms of his or her employment, as determined by the
Committee upon the basis of such evidence, including independent medical reports
and data, as the Committee deems appropriate or necessary.     (ii)   Separation
from Service due to Retirement or Separation from Service by the Company for
Other than Cause. If the Grantee’s separation from service is due to Retirement
(as defined below) or an involuntary

2

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

 

      separation from service by the Company (or an Affiliate, as the case may
be) for other than cause (as determined by the Committee), a prorated portion of
the Restricted Stock Units shall immediately vest as of such separation from
service. For these purposes,

  A.   the prorated portion of the Restricted Stock Units shall be determined by
multiplying the total number of Restricted Stock Units subject to this Award by
a fraction, the numerator of which is the number of full months during which the
Grantee has been continually employed since the Grant Date, together with any
period during which the Grantee is entitled to receive severance in the form of
salary continuation (not to exceed 26 in the aggregate), and the denominator of
which is 26 (for avoidance of doubt, the period during which the Grantee may
receive severance in the form of salary continuation or otherwise shall not
affect the determination of the date of the Grantee’s separation from service or
the date of delivery of any Shares or dividend equivalent payments); and     B.
  full months of employment shall be based on monthly anniversaries of the Grant
Date, not calendar months.

      For purposes of this Agreement, the term “Retirement” shall mean the
Grantee’s separation from service if, at the time of such separation from
service, the Grantee is eligible to commence receipt of retirement benefits
under a traditional formula defined benefit pension plan maintained by the
Company or an Affiliate (or would be eligible to receive such benefits if he or
she were a participant in such traditional formula defined benefit pension plan)
or if no such plan is maintained, the first day of the month which coincides
with or follows the Grantee’s 65th birthday.

  (f)   Tax Withholding. In accordance with Article 15 of the Plan, the Company
may make such provisions and take such actions as it may deem necessary for the
withholding of all applicable taxes attributable to the Restricted Stock Units
and any related dividend equivalents. Unless the Committee determines otherwise,
the minimum statutory tax withholding required to be withheld upon delivery of
the [cash amount equal to the Fair Market Value of such] Shares and payment of
dividend equivalents shall be satisfied by withholding a [cash amount equal to
the Fair Market Value of a] number of Shares having an aggregate Fair Market
Value equal to the minimum statutory tax required to be withheld, [with any
fractional Shares to be rounded up to a cash amount equal to the Fair Market
Value of the nearest whole Share (with 0.5 to be rounded up)/ if such
withholding would result in a fractional Share being withheld, the number of
Shares so withheld shall be rounded up to the nearest whole Share.
Notwithstanding the foregoing, the Grantee may elect to satisfy such tax
withholding requirements by timely remittance of such amount by cash or check or
such other method that is acceptable to the Company, rather than by withholding
of Shares, provided such election is made in accordance with such conditions and
restrictions as the Company may establish]. If FICA taxes are required to be
withheld while the Award is outstanding, such withholding shall be made in a
manner determined by the Company.     (g)   Grantee Bound by Plan and Rules. The
Grantee hereby acknowledges receipt of a copy of the Plan and this Agreement and
agrees to be bound by the

3

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

 

      terms and provisions thereof. The Grantee agrees to be bound by any rules
and regulations for administering the Plan as may be adopted by the Committee
prior to the date the Restricted Stock Units vest. Terms used herein and not
otherwise defined shall be as defined in the Plan.     (h)   Governing Law. This
Agreement is issued, and the Restricted Stock Units evidenced hereby are
granted, in White Plains, New York, and shall be governed and construed in
accordance with the laws of the State of New York, excluding any conflicts or
choice of law rule or principle that might otherwise refer construction or
interpretation of this Agreement to the substantive law of another jurisdiction.
    (i)   Section 409A Compliance. To the extent applicable, it is intended that
the Plan and this Agreement comply with the requirements of Section 409A, and
the Plan and this Agreement shall be interpreted accordingly.

  (i)   If it is determined that all or a portion of the Award constitutes
deferred compensation for purposes of Section 409A, and if the Grantee is a
“specified employee,” as defined in Section 409A(a)(2)(B)(i) of the Code, at the
time of the Grantee’s separation from service, then, to the extent required
under Section 409A, any Shares that would otherwise be distributed [or cash
payments in lieu of such Shares] (along with the cash value of all dividend
equivalents that would be payable) upon the Grantee’s separation from service,
shall instead be delivered (and, in the case of the dividend equivalents, paid)
on the earlier of (x) the first business day of the seventh month following the
date of the Grantee’s separation from service or (y) the Grantee’s death.    
(ii)   If it is determined that all or a portion of the Award constitutes
deferred compensation for purposes of Section 409A, upon an Acceleration Event
that does not constitute a “change in the ownership” or a “change in the
effective control” of the Company or a “change in the ownership of a substantial
portion of a corporation’s assets” (as those terms are used in Section 409A),
the Restricted Stock Units shall vest at the time of the Acceleration Event, but
distribution [or payments in respect] of any Restricted Stock Units (or related
dividend equivalents) that constitute deferred compensation for purposes of
Section 409A shall not be accelerated (i.e., distribution shall occur when it
would have occurred absent the Acceleration Event).

4

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

 

IN WITNESS WHEREOF, the Company has caused this instrument to be executed by its
President and Chief Executive Officer, or a Vice President, as of the 7th day of
November, 2011.

     
Agreed to:
  XYLEM INC.
 
   
 
Grantee
   
 
   
(Online acceptance constitutes agreement)
   
 
   
Dated:                     
  Dated: November 7, 2011
 
   
Enclosures
   

5