EXHIBIT 10.1

 

 

 

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FuelCell Energy, Inc.

 

Long Term Incentive Plan

 

As Approved August 24, 2020

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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FUELCELL ENERGY, INC.

LONG TERM INCENTIVE PLAN

  

Background:   This Long Term Incentive Plan (this “LTI Plan”) of FuelCell
Energy, Inc. (the “Company”) is a sub-plan consisting of awards made under the
Company’s 2018 Omnibus Incentive Plan (the “Omnibus Plan”).  This LTI Plan and
all awards described herein are subject to the Omnibus Plan and the individual
award agreements entered into in connection with this LTI Plan.  Capitalized
terms used in this LTI Plan and not otherwise defined will have the meaning
given in the Omnibus Plan.  

 

Eligible Participants:   The executive officers of the Company and other members
of senior management designated by the Board of Directors of the Company or its
Compensation Committee (the “Committee”) will be eligible for awards under this
LTI Plan.  In addition, subject to the limitations described below under
“Delegated Award Authority,” the Company’s Chief Executive Officer (“CEO”) may
designate additional participants to receive CEO Discretionary Awards (as
defined below).

 

Purpose:   To attract, retain, motivate, and reward key employees and executives
for meeting or exceeding long term financial objectives of the Company and to
align the long-term growth and performance goals of key employees and executives
with those of shareholders.

 

Awards:   There will be three (3) award components granted annually under this
LTI Plan:  

 

 

•

Relative Total Shareholder Return (“TSR”) Performance Shares, representing 40%
of the total target award amount;

 

 

•

Absolute TSR Performance Shares, representing 40% of the total target award
amount; and

 

 

•

Time-Vesting Restricted Stock Units (“RSUs”), representing 20% of the total
target award amount.

 

CEO Discretionary Awards may consist of some or all of the above in different
proportions selected by the CEO.

 

Award Determination:   Target award values for the awards of Performance Shares
and RSUs (other than CEO Discretionary Awards and the target award value for the
CEO) shall be established and approved by the Committee. The target value for
the CEO award shall be determined by the independent members of the Board of
Directors of the Company with a recommendation from the Committee, and target
award values for the CEO Discretionary Awards shall be determined by the CEO as
described under “Delegated Award Authority.” Performance Shares and RSUs are
valued for this purpose based on the average closing price of the Company’s
common stock over the 20 trading days immediately preceding the grant date.  The
grant date of awards other than CEO Discretionary Awards shall, unless otherwise
determined by the Committee (or the Board of Directors of the Company, in the
case of the CEO award), be the date on which the Committee (or the Board of
Directors of the Company, in the case of the CEO award) approves the award.

 

Notwithstanding any other provisions of this LTI Plan document, all
determinations with regard to awards for the Company’s executive officers
(including target award values) shall be made exclusively by the Committee,
except for the award to the CEO (including the CEO target award value), which
shall be made by the independent directors of the Board of Directors of the
Company, based on a recommendation from the Committee.

 

Performance Criteria for Performance Shares:  Performance Shares granted to LTI
Plan participants will be earned only upon achievement of the performance
criteria set forth below.  The Performance Shares will have a performance period
ending on the last day of the second full fiscal year that follows the year in
which

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the Performance Shares are granted, with a continued service-based vesting
requirement until the third anniversary of the date of grant.

 

The number of Performance Shares that will be deemed earned by each LTI Plan
participant will be determined as of the end of the Performance Period.  

 

The performance criteria and certain other terms of the Performance Shares are
described below:

 

 

1.

Relative TSR Performance Shares

 

Performance Assessment:  

TSR of the Company relative to the TSR of the Russell 2000

Performance Period:  

The three consecutive fiscal years beginning with the fiscal year that includes
the grant date (provided that, for the Performance Shares granted in fiscal year
2020, the Performance Period shall be May 8, 2020 through October 31, 2022)

Payout Calibration:  

•100% plus or minus 0.5x the difference between the Company’s TSR and the
Russell 2000 index composite TSR

•Payout is capped at 200% of the target number of Performance Shares

•Payout is capped at 100% of the target number of Performance Shares if the
Company’s absolute TSR over the performance period is negative

 

The Company’s TSR is calculated by subtracting Beginning Stock Price from Ending
Stock Price (as each term is defined below) for the Performance Period, adding
any dividends during the period, and then dividing the result by the Company’s
Beginning Stock Price.

 

“Beginning Stock Price” shall mean the average closing price of the Company’s
common stock over the 20 consecutive trading days ending on the last trading day
immediately prior to the beginning of the Performance Period (or, in the case of
the Performance Shares granted in fiscal year 2020, May 8, 2020).

 

“Ending Stock Price” shall mean the average closing price of the Company’s
common stock over the 20 consecutive trading days ending on the last day of the
Performance Period.

 

Performance Shares earned on the basis of Relative TSR Performance remain
subject to vesting based on continued service until the third anniversary of the
grant date.

 

 

2.

Absolute TSR Performance Shares

 

Performance Assessment:  

Closing stock price

Performance Period:  

The three consecutive fiscal years beginning with the fiscal year that includes
the grant date (provided that, for the Performance Shares granted in fiscal year
2020, the Performance Period shall be May 8, 2020 through October 31, 2022)

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Payout Calibration:  

•An increase, in an amount specified by the Committee, in the price of the
Company’s common stock over the average closing price of the Company’s common
stock over the 20 consecutive trading days ending on the last trading day
immediately prior to the beginning of the Performance Period (or, in the case of
the Performance Shares granted in fiscal year 2020, ending on May 8, 2020) earns
50% of the target number of Performance Shares

•An increase, in an amount specified by the Committee, in the price of the
Company’s common stock over the average closing price of the Company’s common
stock over the 20 consecutive trading days ending on the last trading day
immediately prior to the beginning of the Performance Period (or, in the case of
the Performance Shares granted in fiscal year 2020, ending on May 8, 2020) earns
100% of the target number of Performance Shares

•An increase, in an amount specified by the Committee, in the price of the
Company’s common stock over the average closing price of the Company’s common
stock over the 20 consecutive trading days ending on the last trading day
immediately prior to the beginning of the Performance Period (or, in the case of
the Performance Shares granted in fiscal year 2020, ending on May 8, 2020) earns
200% of the target number of Performance Shares

•Each price hurdle must be met for 20 consecutive trading days

•Price hurdles may be met at any point during the Performance Period

 

Performance Shares earned on the basis of Absolute TSR Performance remain
subject to vesting based on continued service until the third anniversary of the
grant date.

 

Vesting Criteria for Restricted Stock Units:  RSUs granted to LTI Plan
participants will vest based on continued service at a rate of one-third (1/3)
of the total number of RSUs granted on each of the first three anniversaries of
the grant date.

 

Effect of Termination: If a participant’s employment terminates for any reason
prior to the date Performance Shares or RSUs are fully vested, then all
Performance Shares or RSUs that have not vested shall be immediately forfeited,
except as may otherwise be provided by the Committee (or in the case of the CEO,
the independent members of the Board of Directors of the Company) or under the
Omnibus Plan.

 

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No Dividend Equivalents: No dividend equivalents will be paid on Performance
Shares and RSUs, nor will the Performance Shares or RSUs represent any right to
dividends with respect to the shares subject to the Performance Share or RSU
awards.

 

Termination and Amendment.  The Committee or the Board of Directors of the
Company may amend, modify or terminate this LTI Plan at any time; provided that
no such amendment, modification or termination shall adversely affect awards
previously granted under this LTI Plan without the consent of the award holder
except to the extent permitted without such consent by the terms of the
applicable award agreement or the Omnibus Plan.

 

Delegated Award Authority:  The CEO is delegated the authority to grant
Performance Shares and RSUs (“CEO Discretionary Awards”) to employees of, or
other service providers to, the Company other than any executive officer, any
person recruited or hired as a successor to any executive officer or any other
direct report to the CEO, or any Executive Vice President, Senior Vice President
or Vice President, and to administer and modify such Performance Shares and
RSUs; provided that (1) the CEO Discretionary Awards made in any single fiscal
year shall not relate to more than an aggregate of a number of shares of the
Company’s common stock specified by the Committee and (2) the CEO Discretionary
Awards granted to any individual under this Delegated Award Authority in any
fiscal year shall not relate to more than a specified value as determined by the
Committee. Subject to the limits in the preceding sentence, the CEO shall
determine the target value of each CEO Discretionary Award.  The effective grant
date of any CEO Discretionary Award shall be the third trading day following the
first earnings release issued by the Company after the CEO’s approval of such
CEO Discretionary Award.  At each regularly scheduled meeting of the Committee,
the Committee shall receive a report (for information and not for approval or
ratification) of the CEO Discretionary Awards approved by the CEO pursuant to
this Delegated Award Authority since the preceding meeting of the Committee.

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