Exhibit 10.10



 



EXHIBIT 10.10



TRG INCENTIVE PLAN

(as amended and restated, effective January 1, 2003)



The Ryland Group, Inc. (the “Company”) has established the TRG Incentive Plan
(the “Plan”) to provide incentive compensation for those key employees whose
efforts may significantly affect the Company’s earnings and performance. The
Plan provides for the payment of cash awards as well as the issuance of Common
Stock of the Company and the crediting of Stock Units as awards under The
Ryland Group, Inc. 2002 Equity Incentive Plan, the terms of which are
incorporated herein by reference for all relevant purposes.



	1.	 	Definitions.
	 
	 	 	The terms below shall have the following meanings:




	 	(a)	 	“Board” shall mean the Board of Directors of the Company.
	 
	 	(b)	 	“Cash Account” shall mean an account established for each
Participant to be credited with the cash portion of Performance
Awards. The Cash Account shall consist of separate sub-accounts for
amounts credited, if any, with respect to each Performance Year.
	 
	 	(c)	 	“Code” shall mean the Internal Revenue Code of 1986, as
amended from time-to-time and any successor to such Code.
	 
	 	(d)	 	“Committee” shall mean the Compensation Committee of the
Board or a subcommittee of the Compensation Committee composed of
two or more “outside directors” as defined in Code Section 162(m)
and the regulations thereunder.
	 
	 	(e)	 	“Common Stock” shall mean shares of Common Stock of the Company.
	 
	 	(f)	 	“Common Stock Account” shall mean an account established for
each Participant to be credited with the Stock Unit portion, if any,
of Performance Awards. The Common Stock Account shall consist of
separate sub-accounts for Stock Units credited, if any, with respect
to each Performance Year.
	 
	 	(g)	 	“Company” shall mean The Ryland Group, Inc., its
subsidiaries, partnerships and other related entities and
affiliates, except where the context applies solely to The Ryland
Group, Inc. as determined by the Committee.
	 
	 	(h)	 	“Employee” shall mean any person employed by the Company.
	 
	 	(i)	 	“Fair Market Value” shall mean a price or value for the
Common Stock of the Company, as determined by the Committee to be
the fair market value of the Common Stock, which can be the opening,
closing or other quoted price on the New York Stock Exchange or
other exchange on which the Common Stock is traded or the first,
last or other reported sales price if quoted on the NASDAQ National
Market System or other over-the-counter market.



1






 







	 	(j)	 	“Participant” shall mean an Employee selected to participate
in the Plan pursuant to Section 2.
	 
	 	(k)	 	“Performance Award” shall mean the amount of any award to a
Participant based on the Company’s achievement of the Performance
Goal(s) for a Performance Period.
	 
	 	(l)	 	“Performance Goal” shall mean the performance target selected
by the Committee to determine the amount of any Performance Award
under the Plan.
	 
	 	(m)	 	“Performance Period” shall mean the period as established
pursuant to Section 4 over which the Performance Goal(s) are
measured for the purpose of determining the extent to which a
Performance Award is earned.
	 
	 	(n)	 	“Performance Year” shall mean the final fiscal year of the
Company of the Performance Period over which Performance Goals are
measured for the purpose of determining the extent to which a
Performance Award is earned.
	 
	 	(o)	 	“Stock Unit” shall mean a unit representing one share of Common Stock.
	 
	 	(p)	 	“Vested Deferred Award” shall mean the portion of any
Deferred Award which is vested pursuant to the Plan, but which has
not been paid to the Participant.




	2.	 	Participants.
	 
	 	 	The Committee periodically determines those Employees who are eligible
and selected to participate in the Plan.
	 
	3.	 	Administration.
	 
	 	 	The Plan is administered by the Committee. The Committee shall establish
the Performance Goal(s) for each Performance Period, review the Company’s
actual performance results to assess the extent to which Performance
Goal(s) have been met and Performance Awards have been earned, approve
Performance Awards and make any other determinations, interpretations or
decisions required in connection with the Plan. The Committee shall have
the authority to amend, modify and interpret the Plan and make all
determinations relating to the Plan and the Participants. Decisions of
the Committee on all matters relating to the Plan are conclusive and
binding on all parties, including the Company and the Participants. No
member of the Committee is liable for any act done or determination made
in good faith in administering, construing or interpreting the Plan.
	 
	4.	 	Performance Awards.




	 	(a)	 	Establishment of Performance Awards. For each Performance
Year and/or Performance Period, the Committee shall determine and
set forth in writing not later than 90 days after the commencement
of the Performance Year:




	 	 	 
	 	(i)	
the Participants;



2






 




	 	 	 
	 	(ii)	
the target amount of and formula for determining Performance Awards;
	 	 	 
	 	(iii)	
the Performance Goal or Goals for determining Performance Awards;
	 	 	 
	 	(iv)	
whether the Performance Awards will be paid in
cash, Common Stock or Stock Units; and
	 	 	 
	 	(v)	
any other terms relating to Performance Awards under the Plan.




	 	 
	 	The Performance Goal or Goals shall be based upon the average return on
stockholders’ equity of the Company as set forth in the audited financial
statements for the Performance Year and the two fiscal years prior to the
Performance Year. The maximum Performance Award that may be earned by
any Participant for any Performance Year is $6,000,000. The Committee
may reduce or eliminate Performance Awards for any reason in its sole
discretion, but may not increase the amount of a Performance Award
payable to any Participant for a given Performance Period after the
Performance Goal for that period has been established.

	 	 



	 	(b)	 	Determination, Payment and Crediting of Performance Awards.



	 	 	 
	 	(i)	
Within 90 days after the end of each Performance
Year, the Committee shall determine and set forth in writing
the amount of any Performance Award earned by a Participant or
group of Participants.
	 	 	 
	 	(ii)	
One-third of each Performance Award (the “Initial
Payment”) shall vest as of January 1 of the Company’s first
fiscal year following the related Performance Year and shall
be payable within 90 days thereafter, but not earlier than the
Committee’s determination that such award was earned. As
determined by the Committee, either all or one-half of the
Initial Payment shall be paid in cash and either none or
one-half shall be paid in a whole number of shares of Common
Stock determined by dividing one-half of the Initial Payment
by the Fair Market Value of the Common Stock on the first
trading day of the Company’s first fiscal year following the
related Performance Year, provided that if a fractional number
of shares results, cash shall be paid in lieu of any
fractional share.
	 	 	 
	 	(iii)	
The remaining two-thirds of each Performance
Award (the “Deferred Award”) shall be credited to the
Participant’s Cash Account or, if applicable, to the
Participant’s Common Stock Account, effective as of January 1
of the Company’s first fiscal year following the related
Performance Year. As determined by the Committee, either all
or one-half of the Deferred Award shall be credited to the
Participant’s Cash Account and either none or one-half of the
Deferred Award shall be credited in the form of Stock Units to
the Participant’s Common Stock Account. For the purposes of
the foregoing, the number of Stock Units, if any, to be
credited to the Participant’s Common Stock Account shall be
equal to one-half of the Deferred Award earned divided by the
Fair Market Value of the Common Stock on the first trading day
of the Company’s first fiscal year following the related
Performance Year. If a fractional number of shares results
from the calculation of the Stock Units credited to a Common
Stock Account, cash will be credited to the Participant’s Cash
Account in lieu of any fractional shares.



3






 




	 	 	 
	 	(iv)	
No Performance Award(s) shall be earned or
credited for any Performance Year in which a Participant’s
termination of employment occurs.




	 	(c)	 	Rights in Respect of Stock Units. Stock Units shall not
represent an actual ownership interest in Common Stock and the
Participant shall have no voting or other rights as a stockholder in
respect of Stock Units including, except as provided in the next
sentence, any right to payment on account of dividends or
distributions in respect of the Common Stock represented thereby.
With respect to the total amount of any cash dividends paid annually
in respect of the Company’s Common Stock, Participants are entitled
to receive an annual cash payment in an amount equal to the annual
cumulative total of dividends declared and paid for any particular
calendar year (the “Dividend Determination Year”), to the extent of
any dividends not previously paid to or received by a Participant,
which the Participant would have received if the Stock Units
credited to the Participant’s Common Stock Account actually had
represented shares of Common Stock as of the record date (this
payment is referred to as the “Annual Payment”). The right to this
Annual Payment applies to the cumulative annual amount of cash
dividends paid on account of the Common Stock on any record date on
or after the end of a Performance Year related to the Stock Units
credited to the Participant’s Common Stock Account, to the extent of
any dividends not previously paid to or received by a Participant.
The Annual Payment shall be determined and paid within 45 days of
the later of October 15th or the third quarter record date for a
quarterly cash dividend payable during the Company’s fiscal year for
any applicable Dividend Determination Year.
	 
	 	(d)	 	Earnings on Cash Account. Earnings can be credited to a
Participant’s Cash Account on a basis, in a manner, and at the rate
established from time-to-time by the Committee that is reasonable
under Section 162(m) of the Internal Revenue Code.




	5.	 	Vesting and Payment of Deferred Awards.




	 	(a)	 	Vesting of Deferred Awards.




	 	 	 
	 	(i)	
The Deferred Award for a Performance Year will
vest in two equal installments on January 1 of each of the
Company’s second and third fiscal years following the related
Performance Year (the “Vesting Date”) provided the Participant
is employed by the Company on the Vesting Date.
	 	 	 
	 	(ii)	
Notwithstanding Section 5(a)(i), upon the death,
disability or retirement of a Participant, all amounts of
Deferred Awards shall become fully vested and be paid to the
Participant or the Participant’s beneficiary in accordance
with the terms of this Plan.
	 	 	 
	 	(iii)	
Upon a Participant’s voluntary termination of
employment with the Company, all Vested Deferred Awards shall
be paid to the Participant in accordance with the terms of
this Plan and any Deferred Awards which have not vested as of
the effective date of the Participant’s voluntary termination
of employment shall be forfeited.



4






 




	 	 	 
	 	(iv)	
Upon a Participant’s involuntary termination of
employment by the Company without cause, all Vested Deferred
Awards shall be paid to the Participant in accordance with the
terms of this Plan and any Deferred Awards which have not
vested as of the effective date of the Participant’s
involuntary termination of employment shall be forfeited.
	 	 	 
	 	(v)	
Upon a Participant’s termination of employment by
the Company “for cause,” the Participant forfeits all
Performance Awards, all Initial Payments that have not been
paid, and all unvested and Vested Deferred Awards credited to
the Participant’s Cash or Common Stock Accounts. A termination
“for cause” is a termination pursuant to a finding or
determination by the Company of theft, fraud, embezzlement or
any act which is detrimental or damaging to the business,
operation or reputation of the Company.




	 	(b)	 	Payment of Vested Deferred Awards. Vested Deferred Awards
shall be paid to a Participant within 90 days of the related Vesting
Date. Payments shall be made in cash to the extent the Vested
Deferred Award is credited to a Participant’s Cash Account and in a
number of shares of Common Stock equal to the Stock Units to the
extent the Vested Deferred Award is credited to the Participant’s
Common Stock Account. The Stock Units credited to a Participant’s
Common Stock Account in connection with a Vested Deferred Award can
be converted to and paid in cash, if determined by the Committee, in
the amount of the closing Fair Market Value of the shares of Common
Stock related to the Stock Units converted and paid in cash on the
first trading day of the Company’s fiscal year in which the
conversion or cash payment is made.




	6.	 	Dilution and Other Adjustments.
	 
	 	 	The Committee can, in its sole discretion, require an adjustment in the
Common Stock Accounts held by Participants in the event of any change in
the outstanding shares of Common Stock by reason of any stock dividend or
stock split, recapitalization, reclassification, merger, share exchange,
consolidation, combination or exchange of shares or other similar change.
	 
	7.	 	Change of Control.




	 	(a)	 	For purposes of this Plan, a Change of Control shall mean:




	 	 	 
	 	(i)	
The acquisition by any person, other than the
Company or any employee benefit plans of the Company, of
beneficial ownership of 20 percent or more of the combined
voting power of the Company’s then outstanding voting
securities;
	 	 	 
	 	(ii)	
The first purchase under a tender offer or
exchange offer, other than an offer by the Company or any
employee benefit plans of the Company, pursuant to which
shares of Common Stock have been purchased;
	 	 	 
	 	(iii)	
During any period of two consecutive years,
individuals who at the beginning of such period constitute the
Board of Directors of the Company cease for any reason to
constitute at least a majority thereof, unless the election or
the nomination for the election by stockholders of the Company
of each new director



5






 




	 	 	 
	 	 	
was approved by a vote of at least
two-thirds of the directors then still in office who were
directors at the beginning of the period; or
	 	 	 
	 	(iv)	
Approval by stockholders of the Company of a
merger, consolidation, liquidation or dissolution of the
Company, or the sale of all or substantially all of the assets
of the Company.




	 	(b)	 	Upon the occurrence of a Change of Control, all Deferred
Awards shall immediately vest and be paid to Participants within 14
days of the date on which the Change of Control occurs.




	8.	 	Miscellaneous.




	 	(a)	 	Tax Withholding. The Company shall have the right to deduct
from any payments made or benefits accrued under the Plan, any
Federal, state, or local taxes required by law to be withheld. In
the case of awards paid in Common Stock, a Participant may elect to
have any portion of any withholding taxes payable in respect of a
distribution of Common Stock satisfied through the retention by the
Company of shares of Common Stock having a Fair Market Value on the
date of withholding equal to the withholding amount, subject to
compliance with any requirements of applicable law and subject to
such other restrictions as the Company may impose.
	 
	 	(b)	 	Employment Rights. Neither the Plan nor any action taken
hereunder shall be construed as giving an Employee or Participant
any right to be retained in the employ of the Company nor shall any
action taken hereunder be construed as entitling the Company to the
services of any Employee or Participant for any period of time.
	 
	 	(c)	 	Beneficiaries. Each Participant shall have the right, at any
time, to designate a beneficiary or beneficiaries (both primary and
contingent) to whom payments under this Plan shall be made if the
Participant dies and amounts under this Plan are payable following
the Participant’s death. Any beneficiary designation shall be made
in writing and filed with the Company and shall become effective
only when received and accepted by the Company.




		
	 	A Participant may change his beneficiary designation by filing a new
designation with the Company. The filing of a new beneficiary
designation will cancel any and all beneficiary designations previously
filed.





		
	 	If a Participant fails to designate a beneficiary, or if all designated
beneficiaries predecease the Participant or die prior to complete
distribution of the Participant’s benefits, the payments under this Plan
shall be made to the Participant’s Estate.





	 	(d)	 	Nontransferability. A person’s rights and interest under
this Plan, including amounts payable, shall be solely the rights of
a general unsecured creditor of the Company and such rights may not
be assigned, pledged or transferred except to a designated
beneficiary as provided above.



6






 





	 	(e)	 	Governing Law. All matters relating to the Plan or to any
Performance Awards granted under the Plan shall be governed by the
laws of the State of Maryland.
	 
	 	(f)	 	Shareholder Approval. The Plan, as amended and restated
herein, shall be submitted to the Company’s stockholders for
approval in accordance with Code Section 162(m). After the Plan is
approved by the Company’s stockholders, this Plan may not be amended
or changed without stockholder approval if the amendment or change
would limit the deductibility of Performance Awards paid or
distributed pursuant to the Plan under Code Section 162(m).




	9.	 	Amendments.
	 
	 	 	Subject to Section 8(f) above. The Committee may, in their sole and
absolute discretion, amend, suspend or terminate the Plan or any portion
of the Plan at any time. The Committee may also, at any time, in their
sole and absolute discretion, amend, revise or modify the terms of a
Participant’s Performance Award(s) or any terms or conditions related to
a Participant’s Performance Award(s), including the terms and conditions
related to the vesting and payment of Performance Award(s), Initial
Payment(s) and any Deferred Awards, notwithstanding anything in this Plan
or in any Performance Award to the contrary.




7