Exhibit 10.1


 


As Amended and Restated


Effective 08-09-05


 


BRIGGS & STRATTON CORPORATION


 


PREMIUM OPTION AND STOCK AWARD PROGRAM


 


 


 


As adopted by the Compensation Committee on April 20, 2004 and
amended


through August 9, 2005


 





















 


BRIGGS & STRATTON CORPORATION


PREMIUM OPTION AND STOCK AWARD PROGRAM


 


1.0                                 Objectives


 


The Premium Option and
Stock Award Program (“POSA Program”) is designed to build upon the Company’s
Economic Value Added Incentive Compensation Plan (“EVA Plan”) by tying the
interests of all Senior Executives to the long term consolidated results of the
Company.  In this way, the objectives of
Senior Executives throughout the Company will be more closely aligned with the
Company’s Shareholders.  Whereas the EVA
Plan provides for near and intermediate term rewards, the POSA Program provides
a longer term focus by allowing Senior Executives to participate in the
long-term appreciation in the equity value of the Company.  In general, the POSA Program is structured
such that each year an amount equivalent to the Total Bonus Payout under the
EVA Plan is invested on behalf of Senior Executives in restricted and/or
deferred shares of the Company’s Stock (“Restricted and/or Deferred Stock”) and
an amount equivalent to the Senior Executive’s Target Incentive Award is
invested in premium options on the Company’s Stock (“PSOs”).  The shares of Restricted and/or Deferred
Stock vest five years after their date of grant.  The PSOs vest and become exercisable after
they have been held for three years, and they expire at the end of five
years.  The PSOs are structured so that a
fair return must be provided to the Company’s Shareholders before they become
valuable.


 


2.0                                 Restricted
and/or Deferred Stock Awards


 


For fiscal 2005 and
subsequent years, the dollar amount to be invested in Restricted and/or
Deferred Stock for each Senior Executive shall be equal to the amount of each
Participant’s Total Bonus Payout determined under the EVA Plan.  The number of shares of Restricted and/or
Deferred Stock awarded shall be determined by dividing (a) the dollar
amount of such Restricted and/or Deferred Stock award by (b) the Fair
Market Value of Company Stock on the date of grant as determined by the
Committee, rounded (up or down) to the nearest 10 shares.  Fair Market Value is defined in the Company’s
Incentive Compensation Plan (“ICP”).


 


The Compensation
Committee shall determine whether stock awards shall consist of Restricted
Stock, Deferred Stock or a mix of each type of stock, and may consider each
Senior Executive’s preference in making such determination.  All shares of Restricted and/or Deferred
Stock shall vest on the fifth anniversary of the date of grant regardless of
whether such vesting date occurs before or after retirement and shall have such
other terms and conditions as the Committee shall determine.


 


3.0                                 Premium
Stock Option Awards


 


For fiscal 2005 and
subsequent years, the dollar amount to be invested in PSOs for each Senior
Executive shall be equal to the amount of each Participant’s Target Incentive
Award determined under the EVA Plan.  The
number of PSOs awarded shall be determined by dividing (a) the dollar
amount of such PSO award by (b) the Black-Scholes value of a share of
Company stock based on its Fair Market Value on the date of the grant as
determined by the Committee, rounded (up or down) to the nearest 10
shares.  Fair Market Value is defined in
the ICP.


 


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All PSOs shall vest and
be exercisable beginning on the third anniversary of the date of grant and shall
terminate on the fifth anniversary of the date of grant unless sooner
exercised, unless the Committee determines other dates.


 


The exercise price for
PSOs shall be 110% of the Fair Market Value per share of the Company’s Stock on
the date of grant.


 


4.0                                 Limitations
on Grants and Carryover


 


Notwithstanding Sections
2 and 3, the maximum number of shares of Restricted and/or Deferred Stock that
may be granted to all Senior Executives for any Plan Year shall be 500,000, and
the maximum number of PSOs that may be granted to all Senior Executives for any
Plan Year shall be 730,000.  In the event
that the limitations shall be in effect for any Plan Year, the dollar amount to
be invested for each Senior Executive shall be reduced by proration based on
the aggregate Total Bonus Payouts or Target Incentive Awards of all Senior
Executives so that the limitations are not exceeded.  The amount of any such reduction shall be
carried forward to subsequent years and invested in Restricted and/or Deferred
Stock or PSOs to the extent the annual limitation is not exceeded in such
years.


 


5.0                                 The
Incentive Compensation Plan


 


Except as modified
herein, PSOs are Incentive Stock Options under the Company’s ICP as amended
from time to time to the extent they are eligible for treatment as such under Section 422
of the Internal Revenue Code.  If not
eligible for ISO treatment, the PSOs shall constitute nonqualified stock
options.  Except as specifically modified
herein, PSOs shall be governed by the terms of the Company’s ICP, and shall be
granted as described in this Program annually unless the Committee modifies or
terminates either the EVA Plan or the ICP. 
As provided in the ICP, all grants of PSOs to Participants who are
subject to Sec. 16(b) of the Securities Exchange Act of 1934 are subject
to approval of the Company Shareholders. 
In the event such approval is not obtained, this Program shall
terminate.


 


6.0                                 Definitions


 


All capitalized terms
used herein that are not otherwise defined shall have the same meaning given to
them in the Company’s EVA Plan and ICP.


 


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