Exhibit 10.1

Performance unit award agreement

 

Non-transferable

GRANT TO

 

«Full_Name»

(“Grantee”)

 

by Sally Beauty Holdings, Inc. (the “Company”) of

 

performance units (the “Performance Units”) representing the right to earn, on a
one-for-one basis, shares of the Company’s common stock, par value $0.01
pursuant to and subject to the provisions of the Sally Beauty Holdings, Inc.
2019 Omnibus Incentive Plan (the “Plan”) and to the terms and conditions set
forth on the following pages (the “Terms and Conditions”).  By accepting the
Performance Units, Grantee shall be deemed to have agreed to the Terms and
Conditions set forth in this Award Agreement and the Plan.  

 

The target number of shares of Common Stock subject to this award is «PBRSUs»
(the “Target Award”).  Depending on the Company’s level of attainment of
specified targets for Adjusted Consolidated Operating Income Growth (ACOIG) for
the three-year performance period commencing on October 1, 2018 and ending on
September 30, 2021, and FY 2019 - 2021 Return on Invested Capital (ROIC) (as
such terms are defined in this Award Agreement), and Grantee’s continued service
with the Company or a Subsidiary, Grantee may earn 0% to 200% of the Target
Award, in accordance with the matrices attached hereto as Exhibit A and the
terms of this Certificate.  

 

IN WITNESS WHEREOF, Sally Beauty Holdings, Inc. has caused this Award Agreement
to be executed as of the Grant Date, as indicated below.

 

 

SALLY BEAUTY HOLDINGS, Inc.

 

 

By: ____________________________________________

Christian A. Brickman

 

Its: President, Chief Executive Officer & Director

 

Grant Date: January 31, 2019

 

 

Acknowledged and Accepted by Grantee:

 

__________________________________

 

 

 

 

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

TERMS AND CONDITIONS

 

1.Defined Terms.  Capitalized terms used herein and not otherwise defined shall
have the meanings assigned to such terms in the Plan.  In addition, for purposes
of this Certificate:

 

“Adjusted Consolidated Operating Income” for a fiscal year means adjusted
consolidated operating earnings as reported in the Company’s internal financial
reporting system.

 

“Adjusted Consolidated Operating Income Growth” or “ACOIG” means the “compounded
annual growth rate” over the Performance Period of the Company’s Adjusted
Consolidated Operating Income, represented as a percentage, and measured as
follows:

 

[gjiebtgwd5gf000001.jpg]

 

 

“Confirmed Performance Units” is defined on Exhibit A hereto.

 

“Conversion Date” is defined in Section 6 hereof.

 

“Invested Capital” for a fiscal year means the sum of stockholders’ equity and
interest bearing debt, reduced by cash on hand in excess of $50 million.

 

“Net Income” for a fiscal year means consolidated net earnings as reported in
the Company’s audited financial statements.

 

“Performance Multiplier” means the percentage, from 0% to 200%, that will be
applied to the Target Award to determine the number of Performance Units that
will convert to shares of Common Stock on the Conversion Date, as more fully
described in Exhibit A hereto.

 

“Performance Objectives” are FY 2019 - 2021 ROIC and Adjusted Consolidated
Operating Income Growth for the Performance Period, as more fully described in
Exhibit A hereto.

 

“Performance Period” means the fiscal years of the Company beginning on October
1, 2018 and ending on September 30, 2021.

 

 “FY 2019 - 2021 Return on Invested Capital” or “FY 2019 - 2021 ROIC” means net
income plus after-tax interest expense divided by monthly Invested Capital over
the 3-year performance period.

 

2.Performance Units.  

 

(a)Conversion Date. The Performance Units have been credited to a bookkeeping
account on behalf of Grantee.  The Performance Units will be earned in whole, in
part, or not at all, on the Conversion Date to the extent that the Performance
Objectives are attained, as provided on Exhibit A attached hereto.  Any
Performance Units that fail to vest in accordance with the terms of this Award
Agreement will be forfeited and reconveyed to the Company without further
consideration or any act or action by Grantee.

 

If the Committee determines that a change in the business, operations, corporate
structure or capital structure of the Company or the manner in which the Company
conducts its business, or other unusual or non-recurring events or circumstances
render Performance Objectives to be unsuitable, the Committee may modify the
Performance Objectives in whole or in part, as the Committee deems appropriate.

 

 

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

(b)Forfeiture of Performance Units.  If Grantee terminates service with the
Company and its Subsidiaries prior to the Conversion Date for any reason other
than as set forth in Section 2(c) or (d) hereof, then the Grantee shall, for no
consideration, forfeit all Performance Units.

 

(c)Death or Disability.  If, as a result of Grantee’s death or Disability,
Grantee terminates service with the Company and its Subsidiaries prior to the
Conversion Date, then, provided Grantee has provided continuous, eligible
service to the Company from the Grant Date until Grantee’s death or Disability,
Grantee or, as the case may be, Grantee’s estate, shall retain a portion of the
Performance Units determined by multiplying the total number of Performance
Units awarded under this Award Agreement by a fraction, the numerator of which
is the number of days elapsed from the commencement of the Performance Period
through the date of Grantee’s termination of service, and the denominator of
which is the number of days in the Performance Period (the “Retained
Death/Disability Award”), and the remainder of the Performance Units shall be
forfeited and canceled as of the date of Grantee’s termination of service.  The
Retained Death/Disability Award shall be earned, in whole, in part, or not at
all, on the Conversion Date to the extent that the Performance Objectives are
attained, as provided on Exhibit A attached hereto.

 

(d)Retirement.  If Grantee’s service with the Company is terminated as a result
of his or her Retirement and Grantee agrees to be bound by certain restrictive
covenants (including non-competition, non-solicitation, non-disclosure and
non-disparagement covenants as determined in the sole discretion of the Company)
(“Restrictive Covenants”), for the three-year period following his or her
Retirement, then provided Grantee has provided continuous, eligible service to
the Company from the Grant Date until Grantee’s Retirement, Grantee shall retain
a portion of the Performance Units determined by multiplying the total number of
Performance Units awarded under this Award Agreement by a fraction, the
numerator of which is the number of days elapsed from the commencement of the
Performance Period through the date of Grantee’s termination of service by
reason of his or her Retirement, and the denominator of which is the number of
days in the Performance Period (the “Retained Retirement Award”), and the
remainder of the Performance Units shall be forfeited and canceled as of the
date of Grantee’s termination of service.  The Retained Retirement Award shall
be earned, in whole, in part, or not at all, on the Conversion Date to the
extent that the Performance Objectives are attained, as provided on Exhibit A
attached hereto.  If, in the sole discretion of the Committee, Grantee violates
one of the Restrictive Covenants during the three-year period following
Grantee’s Retirement, then all Performance Units shall be immediately forfeited
and cancelled as of the date of such violation.  If Grantee’s service with the
Company is terminated as a result of his or her Retirement and Grantee does not
agree to be bound by Restrictive Covenants, then the Performance Units shall be
immediately forfeited and cancelled as of the date of Grantee’s termination of
service.  

 

(e)Change in Control.  Unless the Committee otherwise determines as provided in
Section 13.8(b) of the Plan, upon the occurrence of a Change in Control prior to
the Conversion Date, the Performance Units shall be canceled upon the Change in
Control in exchange for an amount equal to the product of (A) the Change in
Control Price (as defined in the Plan), multiplied by (B) the target number of
Performance Units awarded under this Award Agreement.

 

3.Restrictions on Transfer and Pledge.  Unless otherwise determined by the
Committee and provided in this Award Agreement or the Plan, the Performance
Units shall not be sold, assigned, pledged, exchanged, hypothecated or otherwise
transferred except by will or the laws of descent and distribution.  Any
attempted assignment of a Performance Unit in violation of this Award Agreement
shall be null and void.  The Company shall not be required to honor the transfer
of any Performance Units that have been sold or otherwise transferred in
violation of any of the provisions of this Award Agreement or the Plan.

 

4.Rights.  Performance Units represent an unsecured promise of the Company to
issue shares of Common Stock of the Company as otherwise provided in this Award
Agreement.  Other than the rights provided in this Award Agreement, Grantee
shall have no rights of a stockholder of the Company with respect to the
Performance Units awarded under this Award Agreement unless and until such
Performance Units have vested and the related shares of Common Stock have been
issued pursuant to the terms of this Award Agreement.  Upon conversion of the
Performance Units into shares of Common Stock, Grantee will obtain full voting
and other rights as a stockholder of the Company.  

 

 

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

5.Dividend Equivalents.  If any dividends or other distributions are paid with
respect to the shares of Common Stock while the Performance Units are
outstanding, the dollar amount or fair market value of such dividends or
distributions with respect to the number of shares of Common Stock then
underlying the Performance Units shall be credited to a bookkeeping account and
held (without interest) by the Company for the account of Grantee until the
Conversion Date.  Such amounts shall be subject to the same vesting and
forfeiture provisions as the Performance Units to which they relate.  Accrued
dividends held pursuant to the foregoing provision shall be paid by the Company
to Grantee on the Conversion Date, provided that Grantee has provided
continuous, eligible service to the Company through the Conversion Date.

 

6.Conversion to Common Stock.  Unless the Performance Units are forfeited prior
to the Conversion Date, the Confirmed Performance Units will convert to shares
of Common Stock on the sixtieth (60th) calendar day following the last day of
the Performance Period (the “Conversion Date”) provided that the Committee has
certified performance results as specified on Exhibit A attached hereto, and
provided, further, that that Grantee has provided continuous, eligible service
to the Company through the Conversion Date.  Evidence of the issuance of the
shares of Common Stock pursuant to this Award Agreement may be accomplished in
such manner as the Company or its authorized representatives shall deem
appropriate including, without limitation, electronic registration, book-entry
registration or issuance of a certificate or certificates in the name of the
Grantee or in the name of such other party or parties as the Company and its
authorized representatives shall deem appropriate. In the event the shares of
Common Stock issued pursuant to this Award Agreement remain subject to any
additional restrictions, the Company and its authorized representatives shall
ensure that the Grantee is prohibited from entering into any transaction that
would violate any such restrictions, until such restrictions lapse.

 

7. Post-Employment Non-Solicitation. Grantee agrees that for a period of one
year following Grantee’s termination of service with the Company for any reason,
Grantee will not either directly or indirectly solicit for employment or
otherwise interfere with the relationship of the Company or any Affiliate of the
Company with any natural person who is then-currently employed by or otherwise
engaged to perform services for the Company or any Affiliate of the Company. 
Grantee further agrees that Grantee will not interfere with the business
relationship between the Company and any Affiliate of the Company and one of its
customers, suppliers or vendors by soliciting, inducing, or otherwise
encouraging the customer, supplier or vendor to reduce or stop doing business
with the Company and any Affiliate of the Company.  In the event Grantee’s
service with the Company is terminated as a result of his or her Retirement, the
provisions of this Section 7 shall apply regardless of whether Grantee agrees to
be bound to Restrictive Covenants set forth in Section 2(d).

 

8.Tax Matters. 

 

(a)Grantee acknowledges that the tax consequences associated with the Award are
complex and that the Company has urged Grantee to review with Grantee’s own tax
advisors the federal, state, and local tax consequences of this Award.  Grantee
is relying solely on such advisors and not on any statements or representations
of the Company or any of its agents.  Grantee understands that Grantee (and not
the Company) shall be responsible for Grantee’s own tax liability that may arise
as a result of this Award Agreement.

 

(b)The Company or any Subsidiary employing Grantee has the authority and the
right to deduct or withhold, or require Grantee to remit to the employer, an
amount sufficient to satisfy federal, state, and local taxes (including
Grantee’s FICA obligation) required by law to be withheld with respect to any
taxable event arising as a result of the vesting or settlement of the
Performance Units.  The withholding requirement shall be satisfied by
withholding from the settlement of the Performance Units shares of Common Stock
having a Fair Market Value on the date of withholding equal to the amount
required to be withheld for tax purposes, all in accordance with such procedures
as the Company establishes.  The obligations of the Company under this
Certificate will be conditional on such payment or arrangements, and the Company
and, where applicable, its Subsidiaries will, to the extent permitted by law,
have the right to deduct any such taxes from any payment of any kind otherwise
due to Grantee.

 

9.Restrictions on Issuance of Shares of Common Stock.  If at any time the
Committee shall determine in its discretion, that registration, listing or
qualification of the shares of Common Stock covered by the Performance Units
upon any securities exchange or under any foreign, federal, or local law or
practice, or the consent or approval of any governmental regulatory body, is
necessary or desirable as a condition to the

 

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

settlement of the Performance Units, the Performance Units may not be settled in
whole or in part unless and until such registration, listing, qualification,
consent or approval shall have been effected or obtained free of any conditions
not acceptable to the Committee.

 

10.Plan Controls.  The terms contained in the Plan are incorporated into and
made a part of this Award Agreement and this Award Agreement shall be governed
by and construed in accordance with the Plan. In the event of any actual or
alleged conflict between the provisions of the Plan and the provisions of this
Award Agreement, the provisions of the Plan shall be controlling and
determinative.

 

11.No Right to Continued Service.  Nothing in this Award Agreement shall
interfere with or limit in any way the right of the Company or any Subsidiary to
terminate Grantee’s employment or service at any time, nor confer upon Grantee
any right to continue in employment or service of the Company or any Subsidiary.

 

12.Successors.  This Award Agreement shall be binding upon any successor of the
Company, in accordance with the terms of this Award Agreement and the Plan.

 

13.Notice.  Notices hereunder must be in writing, delivered personally or sent
by registered or certified U.S. mail, return receipt requested, postage prepaid.
Notices to the Company must be addressed to Sally Beauty Holdings, Inc., 3001
Colorado Boulevard, Denton, TX 76210, Attn: Secretary, or any other address
designated by the Company in a written notice to Grantee. Notices to Grantee
will be directed to the address of Grantee then currently on file with the
Company, or at any other address given by Grantee in a written notice to the
Company.

 

14.Amendments and Modifications.   The Committee or its designee may, in the
Committee’s or the designee’s sole and absolute discretion, as applicable, amend
or modify this Award Agreement in any manner that is either (i) not adverse to
Grantee, or (ii) consented to by Grantee.

 

15.Compensation Recoupment Policy.  This Award Agreement shall be subject to the
terms and conditions of any compensation recoupment policy adopted from time to
time by the Board or any committee of the Board, to the extent such policy is
applicable.