exv10w1







Exhibit 10.1




VECTOR GROUP LTD.

SENIOR EXECUTIVE INCENTIVE COMPENSATION PLAN

Adopted January 14, 2011




1. Plan Purpose





     The Vector Group Ltd. Senior Executive Incentive Compensation Plan (the “Plan”) provides for
employees of the Company and its subsidiaries who are considered to be executive officers of the
Company (the “Executive Officers”) and other designated senior officers of the Company and its
subsidiaries (“Other Employees” and, together with the Executive Officers, the “Covered Employees”)
to receive annual and long-term incentive awards based on the achievement of specific goals and
objectives as established by the committee of the Company’s Board of Directors (the “Board”)
administering the Plan.



2. Administration




     Unless
otherwise designated by the Board, the Compensation Committee of the Board shall serve as
the committee to administer the Plan. The Compensation Committee has delegated to its
Performance-Based Compensation Subcommittee (the “Subcommittee”) the authority with respect to
awards under the Plan to the Executive Officers. The Subcommittee shall be comprised exclusively
of members of the Board who are “outside directors” within the meaning of Section 162(m)(4)(C) of
the Internal Revenue Code of 1986, as amended (the “Code”) and Treasury Regulation 1.162-27(e)(3).
The Subcommittee shall be appointed from time to time by the Board and shall consist of not less than
two of the then members of the Board who are “outside
directors”, as defined above. The Compensation Committee
and (in the case of Executive Officers) the Subcommittee (in either
case, as applicable, the “Committee”) shall have the authority, subject to the
provisions herein, (a) to select Covered Employees to participate in the Plan (the “Participants”);
(b) to establish and administer the performance goals and conditions, and to certify whether such
goals and conditions have been attained; (c) to determine whether payment of any individual award
or all awards should be made, and to determine whether any individual award or all awards should be
reduced or eliminated; (d) to construe and interpret the Plan and any agreement or instrument
entered into under or in connection with the Plan; (e) to establish, amend, and waive rules and
regulations for the Plan’s administration; and (f) to make all other determinations that may be
necessary or advisable for the administration of the Plan. The determinations under the Plan by
the Committee need not be uniform and may be made selectively among the
Participants, whether or not such Participants are similarly situated. Any determination by the
Committee pursuant to the Plan shall be final, binding and conclusive on all
employees and Participants and anyone claiming under or through any of them.



3. Eligibility




     Participation in the Plan is limited to selected Covered Employees as determined by the
Committee. With respect to awards under the Plan, the Committee shall select the Covered
Employees who shall participate in the Plan for any performance period no later than the applicable deadline (the
“Determination Date”) for the establishment of performance goals permitting the compensation
payable to such Covered Employee for such period  hereunder to qualify as “qualified performance-based
compensation” under Treasury Regulation 1.162-27(e).



 









 





4. Establishment of Performance Goals and Award Opportunities




     With
respect to performance period award opportunities under the Plan, the Committee shall establish, in
writing, no later than the Determination Date for each period, the method for computing the amount of
compensation that will be payable under the Plan to each Participant
for such period if the
performance goals established by the Committee for such period are attained in whole or in part and
if the Participant’s employment by the Company or a subsidiary continues without interruption
during that performance period (subject to the provisions of Section 7 hereof). Any such method shall be stated in terms of an
objective formula or standard that precludes discretion to increase the amount of the award that
would otherwise be due upon attainment of the goals and may be different for each Participant.
Notwithstanding anything to the contrary contained herein, the Committee may, however, exercise
negative discretion (within the meaning of Treasury Regulation 1.162-27(e)(2)(iii)(A)) with respect
to any award hereunder to reduce any amount that would otherwise be payable hereunder.



     No
later than the Determination Date for each performance period, the Committee shall
establish in writing the performance goal(s) for the applicable performance period, which shall be based on any of the following performance criteria, either alone
or in any combination, on either a consolidated or business unit or divisional level, and which
shall include or exclude discontinued operations, acquisition expenses and restructuring expenses,
as the Committee may determine: net earnings (either before or after interest, taxes, depreciation
and amortization), economic value-added (as determined by the Committee), sales or revenue, net
income (either before or after taxes), operating earnings, cash flow (including, but not limited
to, operating cash flow and free cash flow), cash flow return on capital, return on net assets,
return on stockholders’ equity, return on assets, return on capital, stockholder returns, dividends
and/or other distributions, return on sales, gross or net profit margin, productivity, expense,
margins, operating efficiency, customer satisfaction, working capital, debt, debt reduction,
earnings per share, price per share of stock, market share, completion of acquisitions, business
expansion, product diversification, new or expanded market penetration and other non-financial
operating and management performance objectives. The foregoing performance criteria shall have any
reasonable definitions that the Committee may specify, which may include or exclude any or all of
the following items, as the Committee may specify: extraordinary, unusual or non-recurring items;
effects of changes in tax law, accounting
principles or other such laws or provisions affecting reported results; effects of currency
fluctuations; effects of financing activities (e.g., effect on earnings per share of issuing
convertible debt securities); expenses for restructuring, productivity initiatives or new business
initiatives; impairment of tangible or intangible assets; litigation or claim judgments or
settlements; non-operating items; acquisition expenses; and effects of assets sales or
divestitures. Any such performance criterion or combination of such performance criteria may apply
to the Participant’s award opportunity in its entirety or to any designed portion or portions of
the award opportunity, as the Committee may specify.



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5. Maximum Award




     The maximum amount of compensation that may be paid to any Participant as an annual award
hereunder is $5,000,000, and the maximum amount of compensation that may be paid to any Participant
as a long-term award hereunder is $10,000,000.



6. Attainment of Performance Goals Required




     Awards shall be paid under this Plan for any year, or for any applicable multi-year
performance period, solely on account of the attainment of the performance goal(s) established by
the Committee with respect to such year or such applicable multi-year performance period. Awards
shall also be contingent upon the Participant remaining employed by the Company or a subsidiary of
the Company during such year or during such applicable multi-year performance period (subject to
the provisions of Section 7 hereof).



7. Effect of Termination of Employment




     With respect to any annual award under the Plan, in the event of termination of employment by
reason of death, disability or retirement (each as determined by the Committee) during the Plan
year, an award shall be payable under this Plan to the Participant or the Participant’s estate for
such year, which shall be paid at the same time as the award the Participant would have received
for such year had no termination of employment occurred, and which shall be equal to the amount of
such award multiplied by a fraction the numerator of which is the number of full or partial
calendar months elapsed in such year prior to termination of employment and the denominator of
which is the number twelve. With respect to any long-term award under the Plan, in the event of
termination of employment by reason of death or disability (as determined by the Committee) during
the applicable multi-year performance period, an award shall be payable under this Plan to the
Participant or the Participant’s estate only if the Participant was employed by the Company, or a
subsidiary thereof, during the applicable multi-year performance period for a number of months
exceeding 80% of the total duration of such multi-year performance period. In that eventuality, an
award shall be payable under this Plan to the Participant or the Participant’s estate for such
multi-year performance period, which shall be paid at the same time as the award the Participant
would have received for such multi-year performance period had no termination of employment
occurred, and which shall be equal to the amount of such award multiplied by a fraction the
numerator of which is the number of full or partial calendar months elapsed during such multi-year
performance period prior to the termination of employment, and the denominator of which is the
total number of
calendar months comprising the applicable multi-year performance period. A Participant whose
employment terminates prior to the end of a Plan year with respect to an annual award opportunity,
or prior to the end of any applicable multi-year performance period with respect to a long-term
award opportunity, for any reason other than as described in this Section 7 above, shall not be
entitled to any award under the Plan for that year, or for that multi-year performance period, as
the case may be.



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8. Stockholder Approval and Committee Certification Contingencies; Payment of Awards




     Payment of any awards under the Plan shall be contingent upon the approval of the Plan by the
affirmative vote of at least a majority of the Company’s stockholders casting votes (including
abstentions) at the next annual meeting of the Company’s stockholders. Unless and until such
stockholder approval is obtained, no award shall be paid pursuant to the Plan. Payment of any
award under the Plan shall also be contingent upon the Committee’s certifying in writing that the
performance goals, and any other material terms and conditions, applicable to such award were in
fact satisfied, in accordance with applicable Treasury Regulations under Code Section 162(m).
Unless and until the Committee so certifies, such award shall not be paid. Unless the Committee
provides otherwise, earned awards shall be paid no later than 2 1/2 months after the end of the
year, or the end of any applicable multi-year performance period, with respect to which such award
is earned. At the sole discretion of the Committee, in the case of long-term incentive
awards, up to 50% of such payment may be made in common stock of the Company (subject to any payroll tax
withholding the Company may determine applies).



     To the extent necessary for purposes of Code Section 162(m), the Plan shall be resubmitted to
stockholders for their re-approval with respect to awards payable for the taxable years of the
Company commencing on and after 5th anniversary of initial stockholder approval.



9. Amendment, Termination and Term of Plan




     The Board may amend, modify or terminate the Plan at any time in whole or in
part, but no such action shall adversely affect any rights or obligations with respect to awards
theretofore made under the Plan. The Plan will remain in effect until terminated by the Board.



10. Interpretation and Construction




     Any provision of the Plan to the contrary notwithstanding, (a) awards under the Plan are
intended to qualify as “qualified performance-based compensation” under Treasury Regulation
1.162-27(e) and (b) any provision of the Plan that would prevent an award under the Plan from so
qualifying shall be administered, interpreted and construed to carry out such intention and any
provision that cannot be so administered, interpreted and construed shall to that extent be
disregarded. No provision of the Plan, nor the selection of any Covered Employee to participate in
the Plan, shall constitute an employment agreement or affect the duration of any Participant’s
employment, which shall remain “employment at will” unless an employment agreement between the
Company and the Participant provides otherwise. Both the Participant and the Company shall remain
free to terminate the Participant’s employment at any time to the same extent as if the Plan has
not been adopted. The existence of the Plan and/or any award under the
Plan shall not limit, affect or restrict in any way the right or power of the Board or the
stockholders to take or authorize any action, or to refrain from taking or authorizing any action,
with respect to the stock, assets, obligations or business of the Company and/or any of its
subsidiaries.



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     Notwithstanding any provisions of the Plan to the contrary, if any benefit provided under the
Plan is subject to the provisions of Section 409A of the Code and the regulations issued
thereunder, the provisions of the Plan shall be administered, interpreted and construed in a manner
necessary to comply with Section 409A of the Code and the regulations and other guidance issued
thereunder (or disregarded to the extent such provision cannot be so administered, interpreted, or
construed) so that no Participant will be subject to any additional tax imposed under Section 409A
of the Code.



11. No Funding of Plan




     The Company shall not be required to establish any special or separate fund or to make any
other segregation of assets to assure the payment of any award under the Plan. All benefits under
the Plan shall be paid from the general assets of the Company. Participants in the Plan shall have
no rights to any awards or benefits provided hereunder greater than the rights of an unsecured
creditor of the Company.



12. Governing Law




     The terms of the Plan shall be governed by the laws of the State of Delaware, without
reference to the conflicts of laws principles thereof.




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