EXHIBIT 10.6


 


 


Executive Incentive Plan


 


Mueller Water Products, Inc.


 

















 


Contents


 


	
  Article 1. Establishment, Objectives, and
  Duration

  	
   

  	
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  Article 2. Definitions

  	
   

  	
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  Article 3. Administration

  	
   

  	
  A-4

  
	
   

  	
   

  	
   

  
	
  Article 4. Eligibility and Participation

  	
   

  	
  A-5

  
	
   

  	
   

  	
   

  
	
  Article 5. Awards

  	
   

  	
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  Article 6. Beneficiary Designation

  	
   

  	
  A-6

  
	
   

  	
   

  	
   

  
	
  Article 7. Deferrals

  	
   

  	
  A-6

  
	
   

  	
   

  	
   

  
	
  Article 8. No Right to Employment or
  Participation

  	
   

  	
  A-6

  
	
   

  	
   

  	
   

  
	
  Article 9. Amendment, Modification, and
  Termination

  	
   

  	
  A-6

  
	
   

  	
   

  	
   

  
	
  Article 10. Withholding

  	
   

  	
  A-6

  
	
   

  	
   

  	
   

  
	
  Article 11.
  Successors

  	
   

  	
  A-7

  
	
   

  	
   

  	
   

  
	
  Article 12. Legal Construction

  	
   

  	
  A-7

  



 


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Mueller Water
Products, Inc. 

Executive Incentive Plan


 


Article 1. Establishment, Objectives, and
Duration


 


1.1                         Establishment
of the Plan. Mueller Water Products, Inc., a Delaware corporation (the
“Company”), hereby establishes an incentive compensation plan to be known as
the “Mueller Water Products, Inc. Executive Incentive Plan” (the “Plan”),
as set forth herein and as it may be amended from time to time.


 


Subject to approval by the Company’s shareholders, the
Plan shall become effective as of the date the shareholders first approve the
Plan (the “Effective Date”), and shall remain in effect as provided in Section 1.3
hereof.


 


1.2                         Objectives
of the Plan. The primary objectives of the Plan are: (a) to attract,
motivate, and retain high-caliber individuals by providing competitive annual
incentive opportunities, (b) to provide an incentive to key employees of
the Company who have significant responsibility for the success and growth of
the Company, and (c) to satisfy the requirements of Section 162(m) of
the Code.


 


1.3                         Duration
of the Plan. The Plan shall commence on the Effective Date and shall remain
in effect, subject to the right of the Committee to amend or terminate the Plan
at any time pursuant to Article 9 hereof, for a period of ten (10) years,
at which time the right to grant Awards under the Plan shall terminate.


 


Article 2. Definitions


 


Whenever the following terms
are used in the Plan, with their initial letter(s) capitalized, they shall have
the meanings set forth below:


 


(a)                            “Award” means an award described in Article 5 hereof.


 


(b)                           “Award Pool” means, with respect to a Plan Year, three
percent (3%) of the Company’s operating income for the Plan Year.


 


(c)                            “Beneficial Owner” or “Beneficial Ownership”
shall have the meaning ascribed to such term in Rule 13d-3 of the General Rules and
Regulations under the Exchange Act, as amended from time to time, or any
successor rule.


 


(d)                           “Board” or “Board of Directors”
means the Board of Directors of the Company.


 


(e)                            “Code” means the Internal Revenue Code of 1986, as amended
from time to time.


 


(f)                              “Committee” means the Compensation Committee of the Board or
any other committee appointed by the Board to administer the Plan and Awards to
Participants hereunder, as specified in Article 3 hereof.


 


(g)                           “Company” means Mueller Water Products, Inc., a Delaware
corporation, and any successor thereto as provided in Article 11 hereof.


 


(h)                           “Director” means any individual who is a member of the Board.


 


(i)                               “Effective Date” shall have the meaning ascribed to such term
in Section 1.1 hereof.


 


(j)                               “Employee” means any employee of the Company or of a Subsidiary.
Directors who are employed by the Company or by a Subsidiary shall be
considered Employees under the Plan.


 


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(k)                            “Exchange Act” means the Securities Exchange Act of 1934, as
amended from time to time, or any successor statute.


 


(l)                               “Insider” means an individual who is, on the relevant date,
subject to the reporting requirements of Section 16(a) of the
Exchange Act.


 


(m)                         “Participant” means a key Employee who has been selected to
receive an Award or who holds an outstanding Award.


 


(n)                           “Performance-Based Exception” means the performance-based
exception from the tax deductibility limitation imposed by Code Section 162(m),
as set forth in Code Section 162(m) (4) (C).


 


(o)                           “Plan” means the Mueller Water Products, Inc. Executive
Incentive Plan, as set forth herein and as it may be amended from time to time.


 


(p)                           “Plan Year” means the Company’s fiscal year.


 


(q)                           “Subsidiary” means a corporation, partnership, joint venture,
or other entity in which the Company has an ownership or other proprietary
interest of more than fifty percent (50%).


 


Article 3. Administration


 


3.1                         General.
Except as otherwise determined by the Board in its discretion, the Plan shall
be administered by the Committee, which shall consist exclusively of two (2) or
more nonemployee Directors within the meaning of the rules promulgated by
the Securities and Exchange Commission under Section 16 of the Exchange
Act who also qualify as outside directors within the meaning of Code Section 162(m)
and the related regulations under the Code. The members of the Committee shall
be appointed from time to time by, and shall serve at the discretion of, the
Board. The Committee shall have the authority to delegate administrative duties
to officers or Directors of the Company; provided that the Committee may
not delegate its authority with respect to: (a) nonministerial actions
with respect to Insiders; (b) nonministerial actions with respect to
Awards that are intended to qualify for the Performance-Based Exception;
and (c) certifying that any performance goals and other material
terms attributable to Awards intended to qualify for the Performance-Based
Exception have been satisfied.


 


3.2                         Authority
of the Committee. Except as limited by law or by the Certificate of
Incorporation or Bylaws of the Company, and subject to the provisions hereof,
the Committee shall have full power in its discretion to select key Employees
who shall participate in the Plan; determine the sizes and types of Awards;
determine the terms and conditions of Awards in a manner consistent with the
Plan; construe and interpret the Plan and any Award, document, or instrument
issued under the Plan; establish, amend, or waive rules and regulations
for the Plan’s administration; and (subject to the provisions of Article 9
hereof) amend the terms and conditions of any outstanding Award as provided in
the Plan. Further, the Committee shall make all other determinations that may
be necessary or advisable for the administration of the Plan.


 


3.3                         Decisions
Binding. All determinations and decisions made by the Committee pursuant to
the provisions of the Plan and all related orders and resolutions of the
Committee shall be final, conclusive, and binding on all persons, including the
Company, its shareholders, Directors, Employees, Participants, and their
estates and beneficiaries.


 


3.4                         Performance-Based
Awards. For purposes of the Plan, it shall be presumed, unless the
Committee indicates to the contrary, that all Awards are intended to qualify
for the Performance-Based Exception. If the Committee does not intend an Award
to qualify for the Performance-Based Exception, the Committee shall reflect its
intent in its records in such manner as the Committee determines to be
appropriate.


 


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Article 4. Eligibility and Participation


 


4.1                         Eligibility.
All key Employees are eligible to participate in the Plan.


 


4.2                         Actual
Participation. Subject to the provisions of the Plan, the Committee may,
from time to time, select from all eligible Employees those to whom Awards
shall be granted and shall determine the nature and amount of each Award.


 


Article 5. Awards


 


5.1                         Grant
of Awards.  All Awards under the Plan
shall be granted upon terms approved by the Committee. However, no Award shall
be inconsistent with the terms of the Plan or fail to satisfy the requirements
of applicable law. Each Award shall relate to a designated Plan Year.


 


5.2                         Award
Pool Limitation. The sum of the Awards for a single Plan Year shall not
exceed one hundred percent (100%) of the amount in the Award Pool for that Plan
Year.


 


5.3                         Individual
Maximum Awards. For any given Plan Year, no one Participant shall receive
an Award in excess of fifty percent (50%) of the Award Pool.


 


5.4                         Limitations
on Committee Discretion. The Committee may reduce, but may not increase,
any of the following:


 


(a)                            The
maximum Award for any Participant; and


 


(b)                           The
size of the Award Pool.


 


5.5                         Payment.
Payment of Awards shall be subject to the following:


 


(a)                            Unless
otherwise determined by the Committee, in its sole discretion, a Participant
shall have no right to receive a payment under an Award for a Plan Year unless
the Participant is employed by the Company or a Subsidiary at all times during
the Plan Year.


 


(b)                           The
Committee may, in its discretion, authorize payment to a Participant of less
than the Participant’s maximum Award and may provide that a Participant shall
not receive any payment with respect to an Award. In exercising its discretion,
the Committee shall consider such factors as it considers appropriate. The
Committee’s decision shall be final and binding upon any person claiming a
right to a payment under the Plan.


 


(c)                            In
no event may the portion of the Award Pool allocated to a Participant for a
given Plan Year be increased in any way, including as a result of the reduction
of any other Participant’s allocated portion.


 


(d)                           Payments
of Awards shall be wholly in cash.


 


(e)                            Each
Award shall be paid on a date prescribed by the Committee, but in no event
later than two and one-half (21⁄2) months following the end of the Plan Year.


 


Article 6. Beneficiary Designation


 


Each Participant may, from
time to time, name any beneficiary or beneficiaries (who may be named
contingently or successively) to whom any benefit under the Plan is to be paid
in case of the Participant’s death before the Participant receives any or all
of such benefit. Each such designation shall revoke all prior designations


 


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by the same Participant
with respect to such benefit, shall be in a form prescribed by the Company, and
shall be effective only when filed by the Participant in writing with the
Company during the Participant’s lifetime. In the absence of any such
designation, any benefits remaining unpaid under the Plan at the Participant’s
death shall be paid to the Participant’s estate.


 


Article 7. Deferrals


 


The Committee may permit or
require a Participant to defer such Participant’s receipt of the payment of
cash that would otherwise be due to such Participant in connection with any
Awards. If any such deferral election is required or permitted, the
Committee shall, in its discretion, establish rules and procedures for
such payment deferrals that meet the requirements of Section 409A of
the Code.


 


Article 8. No Right to Employment or
Participation


 


8.1                         Employment.
The Plan shall not interfere with or limit in any way the right of the Company
or of any Subsidiary to terminate any Participant’s employment at any time, and
the Plan shall not confer upon any Participant the right to continue in the
employ of the Company or of any Subsidiary.


 


8.2                         Participation.
No Employee shall have the right to be selected to receive an Award or, having
been so selected, to be selected to receive a future Award.


 


Article 9. Amendment, Modification, and
Termination


 


9.1                         Amendment,
Modification, and Termination. Subject to the terms of the Plan, the
Committee may at any time and from time to time, alter, amend, suspend, or
terminate the Plan in whole or in part; provided that unless the Committee
specifically provides otherwise, any revision or amendment that would cause the
Plan to fail to comply with any requirement of applicable law, regulation, or rule if
such amendment were not approved by the shareholders of the Company shall not
be effective unless and until shareholder approval is obtained.


 


9.2                         Adjustment
of Awards Upon the Occurrence of Certain Unusual or Nonrecurring Events.
The Committee may make adjustments in the terms and conditions of, and the
criteria included in, Awards in recognition of unusual or nonrecurring events
affecting the Company or the financial statements of the Company or of changes
in applicable laws, regulations, or accounting principles, whenever the
Committee determines that such adjustments are appropriate in order to prevent
dilution or enlargement of the benefits or potential benefits intended to be
made available under the Plan; provided that the Committee shall not be
authorized to adjust an Award that the Committee intends to qualify for the
Performance-Based Exception if such adjustment (or the authority to make such
adjustment) would prevent the Award from qualifying for the Performance-Based
Exception.


 


9.3                         Awards
Previously Granted. Notwithstanding any other provision of the Plan to the
contrary (but subject to Section 1.1 hereof), no termination, amendment,
or modification of the Plan shall cause any previously granted Awards to be
forfeited. After the termination of the Plan, any previously granted Award
shall remain in effect and shall continue to be governed by the terms of the
Plan and the Award.


 


Article 10. Withholding


 


The Company and its
Subsidiaries shall have the power and the right to deduct or withhold, or to
require a Participant to remit to the Company or to a Subsidiary, an amount
that the Company or a Subsidiary reasonably determines to be required to comply
with federal, state, local, or foreign tax withholding requirements.


 


Article 11. Successors


 


All obligations of the Company
under the Plan with respect to Awards granted hereunder shall be binding on any
successor to the Company, whether the existence of such successor is the result
of a direct or indirect purchase, merger, consolidation, or otherwise, of all
or substantially all of the business and/or assets of the Company.


 


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Article 12. Legal Construction


 


12.1                                          Gender
and Number. Except where otherwise indicated by the context, any masculine
term used herein also shall include the feminine, any feminine term used herein
also shall include the masculine, and the plural shall include the singular and
the singular shall include the plural.


 


12.2                                          Severability.
If any provision of the Plan shall be held illegal or invalid for any reason,
such illegality or invalidity shall not affect the remaining parts of the Plan,
and the Plan shall be construed and enforced as if the illegal or invalid
provision had not been included.


 


12.3                                          Requirements
of Law. The granting of Awards under the Plan shall be subject to all
applicable laws, rules, and regulations, and to such approvals by any
governmental agencies as may be required.


 


12.4                                          Governing
Law. The Plan and all Awards shall be construed in accordance with
and governed by the laws of the state of Delaware (without regard to the
legislative or judicial conflict of laws rules of any state), except to the
extent superseded by federal law.


 


12.5                                          Section 409A.
To the extent an Award would be subject to the requirements of Code Section 409A
and the regulations thereunder, the Plan shall be construed and administered so
that the Award complies with Code Section 409A.


 


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