Exhibit
10.1




 





 


 


TRIUMPH GROUP, INC.


 


EXECUTIVE INCENTIVE PLAN


 


(Effective September 28, 2010)


 




 





 

















 


ARTICLE I


 


DEFINITIONS


 


As used in this Plan, the following terms shall have the meanings
herein specified:


 


1.1           2004 Plan - shall mean the Triumph Group, Inc. 2004
Stock Incentive Plan, pursuant to which any Earned Stock Award or Triumph Stock
awarded under this Plan shall be issued.


 


1.2           Award Period - shall mean a period of three consecutive Plan
Years, which shall include a Performance Period followed by a Forfeiture
Period.


 


1.3           Board of Directors - shall mean the Board of Directors of the
Company.


 


1.4           Cause - shall mean:


 


(a)           the willful and continued failure of the Participant to perform
substantially the Participant’s duties with the Company (other than any such
failure resulting from incapacity due to physical or mental illness or
following notice of employment termination by the Participant) after a written
demand for substantial performance is delivered to the Participant by the Board
of Directors or any employee of the Company with supervisory authority over the
Participant  that specifically
identifies the manner in which the Board of Directors or such supervising
employee believes that the Participant has not substantially performed the
Participant’s duties; or


 


(b)           the willful engaging by the Participant in illegal conduct or gross
misconduct that is materially and demonstrably injurious to the Company.


 


No
act, or failure to act, on the part of the Participant shall be considered “willful”
unless it is done, or omitted to be done, by the Participant in bad faith or
without reasonable belief that the Participant’s action or omission was in the
best interests of the Company.  Any act, or failure to act, based upon
(A) authority given pursuant to a resolution duly adopted by the Board of
Directors, or if the Company is not the ultimate parent corporation of the
Company’s affiliates and is not publicly-traded, the board of directors of the
ultimate parent of the Company (the “Applicable Board”), or (B) the advice
of counsel for the Company shall be conclusively presumed to be done, or
omitted to be done, by the Participant in good faith and in the best interests
of the Company.  The cessation of employment of the Participant shall not
be deemed to be for Cause unless and until there shall have been delivered to
the Participant a copy of a resolution duly adopted by the affirmative vote of
not less than three-quarters of the entire membership of the Applicable Board
(excluding the Participant, if the Participant is a member of the Applicable
Board) at a meeting of the Applicable Board called and held for such purpose
(after reasonable notice is provided to the Participant and the Participant is
given an opportunity, together with counsel for the Participant, to be heard
before the Applicable Board), finding that, in the good faith opinion of the
Applicable Board, the Participant is guilty of the conduct described in Section 1.3(a) or
1.3(b), and specifying the particulars thereof in detail.


 

















 


1.5           Change of Control — shall mean:


 


(a)           Any individual, entity or group (within the meaning of Section 13(d)(3) or
14(d)(2) of the Securities Exchange Act of 1934, as amended (the “Exchange
Act”)) (a “Person”) becomes the beneficial owner (within the meaning of Rule 13d-3
promulgated under the Exchange Act) of 20% or more of either (A) the
then-outstanding shares of common stock of the Company (the “Outstanding
Company Common Stock”) or (B) the combined voting power of the
then-outstanding voting securities of the Company entitled to vote generally in
the election of directors (the “Outstanding Company Voting Securities”); provided, however, that,
for purposes of this Section 1.4, the following acquisitions shall not
constitute a Change of Control:  (i) any
acquisition directly from the Company, (ii) any acquisition by the
Company, (iii) any acquisition by any employee benefit plan (or related
trust) sponsored or maintained by the Company or any Affiliated Company or (iv) any
acquisition pursuant to a transaction that complies with Sections 1.4(c)(A),
1.4(c)(B) and 1.4(c)(C);


 


(b)           Individuals who, as of the date hereof, constitute the Board of Directors
(the “Incumbent Board”) cease for any reason to constitute at least a majority
of the Board of Directors; provided, however, that any individual becoming a director subsequent
to the date hereof whose election, or nomination for election by the Company’s
stockholders, was approved by a vote of at least a majority of the directors
then comprising the Incumbent Board shall be considered as though such
individual was a member of the Incumbent Board, but excluding, for this
purpose, any such individual whose initial assumption of office occurs as a
result of an actual or threatened election contest with respect to the election
or removal of directors or other actual or threatened solicitation of proxies
or consents by or on behalf of a Person other than the Board of Directors;


 


(c)           Consummation of a reorganization, merger, statutory share exchange or
consolidation or similar transaction involving the Company or any of its
subsidiaries, a sale or other disposition of all or substantially all of the
assets of the Company, or the acquisition of assets or stock of another entity
by the Company or any of its subsidiaries (each, a “Business Combination”), in
each case unless, following such Business Combination, (A) all or
substantially all of the individuals and entities that were the beneficial
owners of the Outstanding Company Common Stock and the Outstanding Company
Voting Securities immediately prior to such Business Combination beneficially
own, directly or indirectly, more than 50% of the then-outstanding shares of
common stock (or, for a non-corporate entity, equivalent securities) and the
combined voting power of the then-outstanding voting securities entitled to
vote generally in the election of directors (or, for a non-corporate entity,
equivalent governing body), as the case may be, of the entity resulting from
such Business Combination (including, without limitation, an entity that, as a
result of such transaction, owns the Company or all or substantially all of the
Company’s assets either directly or through one or more subsidiaries) in
substantially the same proportions as their ownership immediately prior to such
Business Combination of the Outstanding Company Common Stock and the
Outstanding Company Voting Securities, as the case may be, (B) no Person
(excluding any corporation resulting from such Business Combination or any
employee benefit plan (or related trust) of the Company or such corporation
resulting from such Business Combination) beneficially owns, directly or
indirectly, 20% or more of, respectively, the then-outstanding shares of common
stock of the corporation resulting from such Business Combination or the combined
voting power of the then-outstanding voting 


 


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securities of such
corporation, except to the extent that such ownership existed prior to the
Business Combination, and (C) at least a majority of the members of the
board of directors (or, for a non-corporate entity, equivalent governing body)
of the entity resulting from such Business Combination were members of the
Incumbent Board at the time of the execution of the initial agreement or of the
action of the Board of Directors providing for such Business Combination; or


 


(d)           Approval by the stockholders  of
the Company of a complete liquidation or dissolution of the Company.


 


No
event or transaction described in this Section 1.4 shall constitute a “Change
of Control” unless such event or transaction constitutes a “change in control
event” within the meaning of Treas. Reg. § 1.409A-3(i)(5).


 


1.6           Code - shall mean the Internal Revenue Code of 1986, as
amended.


 


1.7           Committee - shall mean the Compensation and Management
Development Committee of the Board of Directors.


 


1.8           Company - shall mean Triumph Group, Inc., a Delaware
corporation.  The term “Company” shall
include a subsidiary or affiliate of Triumph Group, Inc. or a corporation
succeeding to the business of Triumph Group, Inc. or a subsidiary or
affiliate of Triumph Group, Inc. by merger, consolidation or liquidation
or purchase of assets or stock or similar transaction.


 


1.9           Earned Cash Award — shall mean thirty percent (30%) of the
value of an Earned Incentive Award on the date the Committee determines the
Earned Incentive Award under Section 6.1(a), which amount shall be paid in
cash.


 


1.10         Earned Incentive Award — shall mean the amount of an Incentive Award
earned based on the achievement of the Performance Goals over the Performance
Period.


 


1.11         Earned Stock Award — shall mean seventy percent (70%) of the
value of an Earned Incentive Award on the date the Committee determines the
Earned Incentive Award under Section 6.1(a), which amount shall be paid in
the form of a Stock Award pursuant to the 2004 Plan.


 


1.12         Fair Market Value - shall mean, as of any date and in respect
of any share of Triumph Stock, the closing price on such date of a share of
Triumph Stock on such date in the New York Stock Exchange Composite
Transactions on such date, or if no sale shall have been made on such exchange
on that date, the closing price of a share of Triumph Stock in New York Stock
Exchange Composite Transactions on the last preceding date on which there was a
sale.  If there is no sale of shares of
Triumph Stock on the New York Stock Exchange for more than ten (10) days
immediately preceding such date, the Fair Market Value of the shares of Triumph
Stock shall be as determined by the Committee in such other manner as it may
deem appropriate.


 


1.13         Forfeiture Period - shall mean the final two Plan Years of an
Award Period.


 


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1.14         Incentive Award - shall mean the award granted to a Participant
under this Plan.


 


1.15         Overachievement Performance — shall mean the level of attainment of
Performance Goals for a Performance Period at which 200% of a Target Incentive
Award will be earned.


 


1.16         Participant - shall mean a person participating or eligible to
participate in the Plan, as determined under Section 2.4.


 


1.17         Performance Goals — shall mean shall mean the objective
financial or operating goals established by the Committee in accordance with
section 162(m) of the Code.  Such
Performance Goals may include specific targeted amounts of, or changes in,
return on net assets (“RONA”), earnings per share on a fully diluted basis,
operating income, earnings before interest, taxes, depreciation and
amortization (“EBITDA”), working capital, sales growth and/or internal rate of
return on capital expenditures. 
Performance Goals may be applied on an absolute Company, division or
subsidiary basis or relative to performance of peer group companies or other
external measure of the selected Performance Goal.  A Performance Goal may include or exclude
items that measure specific objectives, such as the cumulative effect of
changes in generally accepted accounting principles, losses resulting from
discontinued operations, securities gains and losses, restructuring,
merger-related and other nonrecurring costs, amortization of goodwill and other
intangible assets, extraordinary gains or losses and any unusual, nonrecurring
gain or loss that is separately quantified in the Company’s financial
statements.  Performance Goals expressed
on a per-share basis shall, in case of a recapitalization, stock dividend,
stock split or reverse stock split affecting the number of outstanding shares
of the Company, be mathematically adjusted by the Committee so that the change
in outstanding shares of the Company does not cause a substantive change in the
applicable Performance Goal.  The
Committee may adjust Performance Goals for any other objective events or
occurrences which occur during an Award Period, including, but not limited to,
changes in applicable tax laws or accounting principles.


 


1.18         Performance Period - shall be mean the first Plan Year of an
Award Period.


 


1.19         Plan - shall mean this Triumph Group, Inc.
Executive Incentive Plan, effective as of the date set forth in Section 2.2.


 


1.20         Plan Year - shall mean the fiscal year of the Company (April 1
— March 31).


 


1.21         Retirement — shall mean retirement under the Company’s
retirement plans.


 


1.22         Target Incentive Award — shall mean, for a Participant, the
Incentive Award, expressed as a percentage of the Participant’s base salary in
effect on the last day of the Performance Period on which the Participant is
employed with the Company, that the Participant will earn during a Performance
Period, subject to the attainment of the Performance Goals at target during the
Performance Period and subject to the other terms and conditions of this Plan,
including, but not limited to, the forfeiture restrictions set forth in Section 3.2.


 


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1.23         Target Performance — shall mean the level of attainment of
Performance Goals for a Performance Period at which a Target Incentive Award
will be earned.


 


1.24         Threshold Performance — shall mean the level of attainment of
Performance Goals for a Performance Period at which 50% of the Target Incentive
Award will be earned and below which no Incentive Award will be earned.


 


1.25         Triumph Stock — shall mean the common stock of the Company.


 


ARTICLE II


 


BACKGROUND, PURPOSE AND ELIGIBILITY


 


2.1           Purpose.  The
purpose of the Plan is to promote the achievement of the Company’s short- and
long-term, targeted business objectives by providing competitive incentive
reward opportunities to those selected executive officers who can significantly
impact the Company’s performance.  The
Plan enhances the Company’s ability to attract, develop and motivate
individuals as members of a talented management team while aligning their
interest with those of the shareholders.


 


2.2           Effective Date.  The Plan
is effective as of September 28, 2010, the date it was approved by the
Board of Directors.


 


2.3           Administration.  The
Committee shall have full power and authority to construe, interpret and
administer the Plan and to make rules and regulations subject to the
provisions of the Plan.  All decisions,
actions, determinations or interpretations of the Committee shall be made in
its sole discretion and shall be final, conclusive and binding on all parties.


 


2.4           Eligibility and Participation. 
Participation in the Plan is limited to senior executives of the Company
who are designated as Participants by the Committee.  No later than ninety (90) days after the
beginning of each Award Period, the Committee shall designate, in writing, the
Participants who are eligible to receive an Incentive Award for such Award
Period.


 


ARTICLE III


 


INCENTIVE AWARDS


 


3.1           Incentive Awards.  For
each Award Period, the Committee shall designate (a) the Target Incentive
Award for each Participant and (b) the Performance Goals applicable to
each Incentive Award.  The amount of any
Incentive Award earned will be based on the attainment of the designated
Performance Goals over the Performance Period, subject to reduction following
the Forfeiture Period, as provided in Section 3.2 below.  In no event may a Participant earn an
Incentive Award that is more than 200% of his or her Target Incentive Award.


 


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3.2           Forfeiture.  One-third
of a Participant’s Earned Incentive Award shall be forfeited in the event that
a level of Threshold Performance is not attained, on average over the Award
Period.


 


ARTICLE IV


 


PERFORMANCE GOALS


 


4.1           Performance Goals.  No
later than ninety (90) days after the beginning of an Award Period, the
Committee will establish, in writing, the Performance Goals and the Threshold
Performance, Target Performance and Overachievement Performance levels for the
applicable Performance Period and Award Period. 
Performance between the Threshold, Target and Overachievement
Performance levels shall be linear.  In
establishing the Performance Goals, the Committee shall take the necessary
steps to ensure that the ability to achieve the pre-established goals is
uncertain at the time the goals are set. 
The established written Performance Goals and the Threshold Performance,
Target Performance, Overachievement Performance levels shall be written in
terms of an objective formula, whereby any third party having knowledge of the
relevant Company performance results could calculate the amount to be
paid.  Such Performance Goals may vary by
Participant and by Incentive Award.  The
Committee, in its discretion (and within the time prescribed by Section 162(m) of
the Code), may adjust or modify the calculation of Performance Goals to prevent
dilution or enlargement of the rights of Participants:  (a) In the event of, in recognition of,
or in anticipation of, any unanticipated, unusual nonrecurring or extraordinary
corporate item, transaction, event, or development; or (b) in response to,
or in anticipation of, changes in applicable laws, regulations, accounting
principles, or business conditions.


 


4.2           Covered Employees. 
Unless otherwise determined by the Committee, if any provision of the
Plan or any Incentive Award granted to an individual who is a “covered employee”
as such term is defined under section 162(m) of the Code and guidance
thereunder  would not comply with section
162(m) of the Code, such provision or Incentive Award shall be construed
or deemed amended to conform to section 162(m) of the Code.


 


ARTICLE V


 


TERMINATION OF EMPLOYMENT


 


5.1           Forfeiture.  If a
Participant terminates his or her employment with the Company for any reason
other than Retirement, death or permanent disability (as determined by the
Committee) or if the Company terminates a Participant’s employment for any
reason, in each case prior to the last day of any Award Period, such
Participant will not receive payment of any Incentive Award for such Award
Period.  Likewise, if the Participant’s
employment with the Company is terminated for Cause during or after completion
of an Award Period and prior to the date the Earned Cash Award is paid and the
forfeiture and transfer restrictions lapse with respect to the Earned Stock
Award, the Participant will forfeit all rights to payment of the Earned Cash
Award and the Earned Stock Award.


 


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5.2           Death, Disability and Retirement.


 


(a)           A Participant whose employment terminates during the Performance Period
as a result of death or permanent disability (as determined by the Committee)
or due to Retirement, will forfeit the Incentive Award granted with respect to
that Performance Period.


 


(b)           A Participant whose employment terminates following the Performance
Period for an Incentive Award, but prior to the end of the Award Period, as a
result of death or permanent disability (as determined by the Committee), or
due to Retirement, will receive payment of the Incentive Award, subject to
reduction pursuant to Section 3.2, at the same time, and subject to the
same Incentive Award terms, as he or she would have received or been subject to
if he or she had remained employed with the Company through the end of the
Award Period.


 


ARTICLE VI


 


TIMING, FORM OF PAYMENT


 


6.1           Determination of Earned Incentive Award.


 


(a)           As soon as practicable following the end of the Performance Period, the
Committee shall determine each Participant’s Earned Incentive Award, if any,
based on the attainment of Performance Goals during the Performance Period and
shall certify in writing that the applicable Performance Goals, and any other
material terms and conditions of the Incentive Award, have been satisfied for
the Performance Period.  In making this
determination, the Committee will be entitled to rely upon an appropriate
officer’s certificate from the Company’s Chief Financial Officer.


 


(b)           The value of a Participant’s Earned Incentive Award shall be divided
between an Earned Cash Award and an Earned Stock Award, with the Earned Cash
Award equal to 30% of the value of the Earned Incentive Award and the Earned
Stock Award equal to 70% of the value of the Earned Incentive Award.  The number of shares of Common Stock subject
to the Earned Stock Award shall be determined by dividing the Earned Stock
Award by the Fair Market Value of a share of Triumph Stock on the date the
Committee determines the Earned Incentive Award under Section 6.1(a).


 


(c)           A Participant’s Earned Stock Award shall be issued to him or her no later
than the June 15th immediately following the Performance Period in the
form of a Stock Award under the 2004 Plan. 
In addition to being subject to the terms and provisions of the 2004
Plan, such Stock Award shall be subject to forfeiture and transfer restrictions
through the end of the Award Period under this Plan, which restrictions will be
specified in the applicable Stock Award Agreement.


 


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6.2           Certification and Payment of Incentive Award.


 


(a)           As soon as practicable following the end of the Award Period, the
Committee shall determine the average level at which the Performance Goals have
been attained for the Award Period, and determine whether any Earned Incentive
Awards are subject to reduction pursuant to Section 3.2.  In making this determination, the Committee
will be entitled to rely upon an appropriate officer’s certificate from the
Company’s Chief Financial Officer.  To
the extent that any Earned Incentive Award is subject to the one-third
reduction described in Section 3.2, such reduction shall reduce each of
the Earned Cash Award and Earned Stock Award portions of the Earned Incentive
Award by one-third.


 


(b)           Following the Award Period and prior to the payment of any Earned Cash
Award and the lapse of any forfeiture and transfer restrictions on any Earned
Stock Award under this Plan, the Committee shall certify in writing that the
applicable Performance Goals, and any other material terms or conditions of the
Incentive Award, have been satisfied.  In
making this certification, the Committee will be entitled to rely upon an appropriate
officer’s certificate from the Company’s Chief Financial Officer.


 


(c)           Upon approval by the Committee of the individual Incentive Awards for
each Participant, payment of the individual Incentive Awards will be made, less
the withholding of appropriate taxes, as follows.  Between April 1 and June 15
immediately following the Award Period, (i) a Participant will receive a
cash payment equal to the value of the Earned Cash Award, subject to any
reduction pursuant to Section 6.2(a) and 6.2(d), and (ii) the
transfer and forfeiture restrictions applicable to any Earned Stock Award will
lapse and the Participant will be issued unrestricted shares of Triumph Stock
in respect of the Earned Stock Award, subject to any reduction pursuant to Section 6.2(a) and
6.2(d).  In the event that a Participant
has died prior to receiving an Incentive Award to which he is entitled, the
Company shall pay such Incentive Award to the beneficiary designated in writing
by the Participant to the Committee, or in the absence of a designated
beneficiary, to the Participant’s estate.


 


(d)           The Committee will have the discretion, by Participant and by grant, to
reduce (but not to increase) some or all of the amount of any Incentive Award
that would otherwise be payable by reason of the satisfaction of the
Performance Goals.  In making any such
determination, the Committee is authorized to take into account any such factor
or factors it determines are appropriate, including but not limited to Company,
business unit and individual performance; provided, however,
the exercise of such negative discretion with respect to one Participant may
not be used to increase the amount of any award otherwise payable to another
Participant.


 


6.3           Clawback Provision.  The
Company shall have the right to recoup or “claw back” any payment made with
respect to a Participant under the Plan to the extent necessary to comply with
applicable Federal securities laws.


 


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ARTICLE VII


 


CHANGE
OF CONTROL


 


7.1           Change of Control.  In
the event of a Change of Control during the Award Period for an Incentive
Award, the Incentive Award shall be accelerated and paid within sixty (60) days
following the Change of Control.


 


(a)           In the event that the Change of Control occurs during the Performance
Period, the amount payable in respect of an Incentive Award shall be equal to  the Participant’s highest Earned Incentive
Award under the Plan or annual bonus earned under the Company’s annual
incentive plans, or any comparable bonus under any predecessor or successor
plan, for the last three full fiscal years prior to the Change of Control.  In the sole discretion of the Committee, all
or a portion of the Incentive Award that becomes payable pursuant to this Section 7.1(a) may
be paid in shares of Triumph Stock, which shall be issued under the 2004
Plan.  If any portion of such an
Incentive Award is paid in shares of Triumph Stock, the number of shares to be
delivered shall be determined by dividing the portion of the Incentive Award
payable in Triumph Stock by the Fair Market Value of such Triumph Stock on the
date of the Change in Control.


 


(b)           In the event that the Change of Control occurs after the end of the
Performance Period, but prior to the end of the Award Period, the amount
payable in respect of an Incentive Award shall be equal to the Earned Incentive
Award for the Award Period.  The Earned
Cash Award will be paid in cash and the Earned Stock Award will be paid in
unrestricted shares of Triumph Stock issued under the 2004 Plan or in cash
equal to the value of the number of shares of Triumph Stock subject to the
Earned Stock Award on the date of the Change in Control.


 


ARTICLE VIII


 


MISCELLANEOUS


 


8.1           Awards of Triumph Stock.  No
additional shares of Triumph Stock, whether newly authorized or treasury
shares, are authorized for issuance under this Plan.  Any Earned Stock Award granted under this
Plan, and any shares of Triumph Stock otherwise issued in payment of an
Incentive Award shall be made under the 2004 Plan and shall be subject to the
terms and conditions of such 2004 Plan.


 


8.2           No Right to Compensation or Employment. 
Nothing in this Plan or in any agreement or other instrument executed
pursuant thereto shall be construed as conferring upon any Participant the
right to receive executive incentive compensation or to be continued in the
employ of the Company and any rights conferred by this Plan may not be
transferred, sold, assigned, pledged, anticipated or otherwise disposed of
other than by will or intestate laws.


 


8.3           No Section 83(b) Election.  No
Participant may make an election under Section 83(b) of the Code with
respect to any Earned Stock Award paid hereunder.


 


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8.4           Amendment.  This Plan
may be amended at any time by the Committee and may be terminated in whole or
in part at any time by the Board of Directors. 
No such action may reduce the amount of any Earned Incentive Award that
has not yet been paid or accelerate the payment date of any Earned Incentive
Award, except as permitted under section 409A of the Code.  No amendment requiring shareholder approval
under section 162(m) of the Code will be made without obtaining such
shareholder approval.  This Plan shall be
effective until the shareholders’ meeting that occurs in the fifth year
following the year in which shareholders approve the terms of the Plan for the
first Award Period.


 


8.5           No Set-Aside.  Nothing in
this Plan shall obligate the Company to set aside funds to pay for the
Incentive Awards determined hereunder.


 


8.6           Withholding.  The
Company shall have the right to make all payments and distributions pursuant to
the Plan to a Participant, net of any applicable Federal, State and local taxes
required to be paid or withheld.  The
Company shall have the right to withhold from wages, Incentive Award payments,
or other amounts otherwise payable to such Participant such withholding taxes
as may be required by law, or to otherwise require the Participant to pay such
withholding taxes.


 


8.7           Successors and Assigns.  The
Plan shall be binding upon and inure to the benefit of the Company and its
successors and assigns.


 


8.8           Construction.  The
validity, construction and effect of the Plan or any Incentive Award payable
hereunder shall be determined in accordance with the laws of the Commonwealth
of Pennsylvania.


 


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