Exhibit 10.1


 


THE VALSPAR CORPORATION


AMENDED AND RESTATED 


KEY EMPLOYEE ANNUAL BONUS PLAN


 


June 5, 2012


 


PURPOSE:


The purpose of The Valspar Corporation Key Employee
Annual Bonus Plan (the "Plan") is to more closely align the goals and motivation of management with those of other Valspar
shareholders and to provide key personnel with a long-term capital appreciation opportunity. This purpose is accomplished by providing
cash bonuses based on performance; granting options to acquire Valspar stock; awarding Restricted Stock Units; and granting the
opportunity to earn Restricted Stock based on performance. This amended and restated Plan is effective for Fiscal Years ending
after 2012.


 


DEFINITIONS:


Any capitalized terms used in this Plan, but not defined
herein, shall have the meanings set forth in the Omnibus Equity Plan.


 


“Cash Bonus Target Amount” shall mean the
target bonus amount established for a Participant for a particular Fiscal Year as set forth in Section 2 below.


 


“Earned Cash Bonus Amount” shall mean the
amount of the actual cash bonus earned for the Fiscal Year based on performance, as set forth in Section 2 below.


 


“Earned Restricted Amount” shall mean the
dollar amount resulting from the percentage of the Restricted Target Amount earned by a Participant for the Fiscal Year based on
performance, as set forth in Section 3 below.


 


“Employee” shall mean each person who is
an employee of Valspar or any Subsidiary which term shall include both full and part-time employees but shall not include independent
contractors providing services to Valspar or its Subsidiaries.


 


“Fiscal Year” shall mean the period corresponding
with each of the fiscal years of Valspar.


 


“LTI Target Value” shall mean the target
long term incentive value established by the Committee for each Participant for each Fiscal Year, determined by the Committee as
provided herein.


 


“Omnibus Equity Plan” shall mean the 2009
Omnibus Equity Plan of Valspar, as amended.


 


“Participant” shall mean an Employee whom
the Committee has determined to permit to become a Participant, who remains a Participant pursuant to the provisions of Section 1
of the Plan.


 


“Plan” shall mean The Valspar Corporation
Key Employee Annual Bonus Plan, as set forth herein and as amended from time to time.


 


“Plan Administrator” shall mean the person
or persons designated as such from time to time by the Committee. If no person is designated as the Plan Administrator, the Plan
Administrator shall be the Secretary of Valspar.


 


“Restricted Target Amount” shall mean the
target dollar amount established for a Participant for the award of Restricted Stock for a particular Fiscal Year as set forth
in Section 3 below.


 


“Share Value” means the average closing
price of a share of Common Stock on the New York Stock Exchange for the ten (10) trading days prior to the date of an award of
Restricted Stock or Restricted Stock Units.


 


“Termination for Cause” shall mean the
termination of employment with Valspar as a result of an illegal act, gross insubordination or willful violation of a Valspar policy
by an Employee.


 


“Valspar” shall mean The Valspar Corporation,
a Delaware corporation, with its principal offices in Minneapolis, Minnesota.


 



    	



    	 



    

 


PLAN:


 


       1.       Participants:   Before
the first day of each Fiscal Year, the Committee shall determine the Employees who will be Participants under the Plan for that
Fiscal Year and the LTI Target Value for each Participant. The Committee may also designate newly hired or promoted Employees as
Participants during the Fiscal Year. A Participant will cease being a Participant upon the earlier of (i) his/her termination of
employment with Valspar for any reason or (ii) a determination by the Committee that he/she shall no longer be a Participant.


 


       2.       Cash Bonus Determination and Amount:


 


       (a)       Each Participant will be eligible for the
opportunity to earn a cash incentive bonus for the Fiscal Year. The amount of the cash bonus will be determined consistent with
the provisions of the Omnibus Equity Plan governing Performance Awards.


 


       (b)       The Cash Bonus Target Amount will be calculated
as a percentage of the Participant’s base salary earned in the Fiscal Year. The Earned Cash Bonus Amount will be a percentage
of the Cash Bonus Target Amount, to be determined based on the performance of the Participant and/or Valspar for such Fiscal Year.


 


       (c)       Notwithstanding the fact that the Earned
Cash Bonus Amount is not determined until after the end of each Fiscal Year, a person who is a Participant on the last day of a
Fiscal Year shall be entitled to his/her Earned Cash Bonus Amount for such Fiscal Year, even if he or she is not a Participant
on the date the Earned Cash Bonus Amount is determined, unless he or she was the subject of a Termination for Cause.


 


       3.       Restricted Stock (Performance-Based):


 


       (a)       Each Participant will be eligible to earn
an award of Restricted Stock for each Fiscal Year, to be awarded during the first fiscal quarter of the following Fiscal Year.
Each Participant will be notified of the number of shares of Restricted Stock awarded to him/her as soon as practicable after the
date of the award. Participants will receive quarterly cash dividends during the vesting period of the restricted stock award.
Terms of the Restricted Stock award are described in Exhibit A.


 


       (b)       The amount of the award of Restricted Stock
to a Participant for any Fiscal Year will be determined as follows: (i) the Committee will identify specific performance targets,
with the Restricted Target Amount for the award equal to twenty-five percent (25%) of the Participant’s LTI Target Value;
(ii) performance targets for the Restricted Target Amount may, but need not, be the same targets as those used for the cash incentive
bonus calculation described in Section 2(b); (iii) the award of Restricted Stock will be considered Performance Awards
and will be determined consistent with the provisions of the Omnibus Equity Plan governing Performance Awards; (iv) on or before
the award date for the Restricted Stock, the Committee will determine the Participant’s Earned Restricted Amount for the
Fiscal Year; (v) the number of shares of Restricted Stock covered by the award will be the Participant’s Earned Restricted
Amount, divided by the Share Value. Notwithstanding the foregoing, the Committee may elect to change the proportions of the Earned
Restricted Amount represented by Restricted Stock for any Participant for a Fiscal Year, to the extent permitted under Section 3(d)
or 3(e).


 


       (c)       A person who
is a Participant on the last day of a Fiscal Year and has a Retirement before the award date of the Restricted Stock for the Fiscal
Year will be entitled to receive his or her award of Restricted Stock during the first quarter of the following Fiscal Year.
In any other case, if a Participant is no longer an Employee at the time of such award date, the Participant
shall not receive the award of Restricted Stock.


 


       (d)       At any time before
the beginning of any Fiscal Year for which an award of Restricted Stock may be made to a Participant,
the Committee may elect, in its sole discretion, to award the Participant’s Earned Restricted Amount for that Fiscal Year
in the form of 100% Restricted Stock Units with accompanying Dividend Equivalents, or any combination of Restricted Stock and Restricted
Stock Units (including Dividend Equivalents); provided that the Restricted Stock Units will have the vesting and payment terms
described in Exhibit A for Restricted Stock Units, except that the Restricted Stock Units will vest on the third anniversary (rather
than the fourth anniversary) of the award date, or earlier upon death, Disability, Retirement or Change in Control. 


 


       (e)        At any time
before the award of Restricted Stock is made to a Participant for a Fiscal Year, the Committee
may elect, in its sole discretion, to (1) award to the Participant cash in lieu of all or any portion of the Restricted Stock component
of the Earned Restricted Amount or (2) otherwise change the form in which the Earned Restricted Amount will be paid, to the extent
such a change is consistent with (or is exempt from) the requirements of Code Section 409A and the regulations promulgated thereunder.


 



    	



    	 



    

 


       (f)       The first such grants of Restricted Stock
under this Amended and Restated Plan will be the grants for Fiscal Year 2013, to be granted in January 2014.


 


       4.       Restricted Stock Units (Time-Based):


 


       (a)       For each Fiscal Year, each
Participant will receive a restricted stock unit award (including Dividend Equivalents) under the Omnibus Equity Plan. The number
of restricted stock units covered by the award will be calculated so that the fair value of the restricted stock unit award as
determined by the Committee will be equal to twenty-five percent (25%) of the LTI Target Value for that Participant for the Fiscal
Year, divided by the Share Value. Each Participant will be notified of the number of Restricted Stock Units awards to him/her as
soon as practicable after the date of the award. Terms of the Restricted Stock Units award are described in Exhibit A.


 


       (b)       The restricted stock unit award will be
granted in October prior to the beginning of the Fiscal Year, with an effective date in January of the following year and subject
to four-year vesting. The award will include Dividend Equivalents which will accumulate over the vesting period and paid in cash
at the same time as the restricted stock unit award cash payment.


 


       (c)       The first such grants of Restricted Stock
Units under the Amended and Restated Plan will be the grants for Fiscal Year 2013, to be granted in October 2012, with an effective
date in January 2013.


 


5.       Non-Statutory Stock
Options:


 


       (a)       For each Fiscal Year, each Participant will
be granted a non-statutory stock option under the Omnibus Equity Plan in October prior to the beginning of the Fiscal Year. The
number of shares of Common Stock included in the stock option for each Participant will be calculated so that the fair value of
the stock option as determined by the Committee will be equal to fifty percent (50%) of the LTI Target Value for that Participant
for that Fiscal Year.


 


       (b)       Each Participant will be notified of the
number of shares subject to the stock option and the exercise price per share as soon as practicable after the date of the grant.
Terms of the stock options are described in Exhibit A.


 


       5.       Amendments: The Board of Directors
of Valspar or the Committee may, at any time and without further action on the part of the shareholders of Valspar, terminate this
Plan or make such amendments as it deems advisable and in the best interests of Valspar; provided, however, that no such termination
or amendment shall, without the consent of the Participant, materially adversely affect or impair the right of the Participant
with respect to an Earned Cash Bonus Amount or Earned Restricted Amount that the Participant has already earned or an award of
Restricted Stock and Restricted Stock Units or a grant of a non-statutory stock option or other benefits that the Participant has
already received under the Plan; provided, further, that no such amendment shall accelerate or defer the time or schedule of the
vesting or payment of the Restricted Stock, Restricted Stock Units, Dividend Equivalents or any other compensation that may be
paid under this Plan, except to the extent such acceleration or deferral is permitted or complies with (or is exempt from) the
requirements of Code Section 409A and the regulations promulgated thereunder.


 



    	



    	 



    

	Effective Fiscal 2013

EXHIBIT A

OFFICERS
	Restricted Stock – Performance-Based / Terms and Conditions
	Vesting/Forfeiture	·	The Restricted Stock vests on the third anniversary of the award date, or earlier upon death, Disability, Retirement* or Change in Control. The Restricted Stock will be forfeited if the Participant’s employment with Valspar terminates prior to vesting.
	Retirement*	·	100% vested, subject to forfeiture or repayment if the Participant violates his or her three-year non-compete agreement before the Restricted Stock would normally have vested (the third anniversary of the award date).
	Death and Disability	·	100% vested
	Change in Control	·	100% vested
	Restricted Stock Units (RSUs) – Time-Based / Terms and Conditions
	Rights Under RSUs and 
 Dividend Equivalents	·	The RSUs represent the right to receive future cash payments equal to the fair market value of the equivalent number of shares of Common Stock on the vesting date. If the Participant remains employed on a dividend record date for Common Stock, Dividend Equivalents are accrued and paid in cash on the same vest date of the RSU payment (unless payment is delayed for six months after a Retirement).
	Vesting/Forfeiture	·	The RSUs vest on the fourth anniversary of the award date, or earlier upon death, Disability, Retirement* or Change in Control. The RSUs will be forfeited if the Participant’s employment with Valspar terminates prior to vesting.
	Retirement*	·	100% vested*, subject to forfeiture or repayment if the Participant violates his or her three-year non-compete agreement before the award would normally have vested (the fourth anniversary of the award date). 
	Death and Disability	·	100% vested
	Change in Control	·	100% vested
	Payment of RSUs
 and Dividends	·	RSUs are paid in cash on or within 30 days after vesting at the end of four years along with accrued Dividend Equivalents; within 60 days in the case of Death, Disability or Change in Control; and six months after Retirement*.
	Stock Options / Terms and Conditions
	Option Term	·	10 years
	Vesting	·	33 1/3% per year, fully exercisable three years after date of grant
	Retirement*	·	100% vested
	 	·	fully exercisable for remainder of option term, provided the Participant does not violate his or her non-compete agreement
	Death and Disability	·	100% vested
	 	·	1 year to exercise, not to exceed original option term
	Change in Control	·	100% vested for remainder of option term
	Termination	·	per cent vested at time of termination
	 	·	30 days to exercise, not to exceed original option term
	Termination For Cause	·	forfeit unexercised options







* Retirement
is defined in Section 11.4 of the Omnibus Equity Plan as the termination of employment with the Company or a Subsidiary for any
reason other than death, Disability or Termination for Cause at any time after the Participant has attained the age of 55 if the
Participant has executed a three-year non-compete agreement. The award agreement for RSUs for any Participant may include additional
restrictions or requirements for a qualifying Retirement. If RSUs become vested upon a Retirement that qualifies under this Plan,
the RSUs (and any interim Dividend Equivalents) are paid six months after the Retirement date; provided that the Retirement is
a “separation from service” under Code Section 409A.


 



    	



    	 



    

 


	Effective
    Fiscal 2013

    EXHIBIT A

    KEY EMPLOYEES
	Restricted Stock – Performance-Based / Terms and Conditions
	Vesting/Forfeiture	·	The Restricted Stock vests on the third anniversary of the award date, or earlier upon death, Disability, Retirement* after age 55 or Change in Control. The Restricted Stock will be forfeited if the Participant’s employment with Valspar terminates prior to vesting.
	Retirement After Age 55*	·	100% vested, subject to forfeiture or repayment if the Participant violates his or her three-year non-compete agreement before the Restricted Stock would normally have vested (the third anniversary of the award date).
	Death and Disability	·	100% vested
	Change in Control	·	100% vested
	Restricted Stock Units (RSUs) – Time-Based / Terms and Conditions
	Rights Under RSUs and 
 Dividend Equivalents	·	The RSUs represent the right to receive future cash payments equal to the fair market value of the equivalent number of shares of Common Stock on the vesting date. If the Participant remains employed on a dividend record date for Common Stock, Dividend Equivalents are accrued and paid in cash on the same vest date of the RSU payment (unless payment is delayed for six months after a Retirement).
	Vesting/ Forfeiture	·	The RSUs vest on the fourth anniversary of the award date, or earlier upon death, Disability, Retirement* after age 55 or Change in Control. The RSUs will be forfeited if the Participant’s employment with Valspar terminates prior to vesting.
	Retirement After Age 55*	·	100% vested*, subject to forfeiture or repayment if the Participant violates his or her three-year non-compete agreement before the award would normally have vested (the fourth anniversary of the award date).
	Death and Disability	·	100% vested
	Change in Control	·	100% vested
	Payment of RSUs
 and Dividends	·	RSUs are paid in cash on or within 30 days after vesting at the end of four years along with accrued Dividend Equivalents; within 60 days in the case of Death, Disability or Change in Control; and six months after Retirement*.
	Stock Options / Terms and Conditions
	Option Term	·	10 years
	Vesting	·	33 1/3% per year, fully exercisable three years after date of grant
	Retirement After Age 60*	·	100% vested
	 	·	30 days to exercise, not to exceed original option term
	Death and Disability	·	100% vested
	 	·	1 year to exercise, not to exceed original option term
	Change in Control	·	100% vested for remainder of option term
	Termination	·	per cent vested at time of termination
	 	·	30 days to exercise, not to exceed original option term
	Termination For Cause	·	forfeit unexercised options










* Retirement
is defined as the termination of employment with the Company or a Subsidiary for any reason other than death, Disability or Termination
for Cause at any time after the Participant has attained the age of 55 for purposes of Restricted Stock
and Restricted Stock Units or 60 for purposes of stock options, in either case if the Participant has executed a three-year
non-compete agreement. The award agreement for RSUs for any Participant may include additional restrictions or requirements for
a qualifying Retirement. If RSUs become vested upon a Retirement that qualifies under this Plan, the RSUs (and any interim Dividend
Equivalents) are paid six months after the Retirement date; provided that the Retirement is a “separation from service”
under Code Section 409A.